Feb drive 2011
Bachelor of Business
Administration-BBA Semester 6
BB0028 –
Entrepreneurship Development- 4 Credits
Note: Each question carries 10 Marks. Answer all the questions.
Q.1 What are the essential characteristics of Entrepreneurship?
Ans : Entrepreneurship is the act of setting out on
your own and starting a business instead of working for someone else in his
business. While entrepreneurs must deal with a larger number of obstacles and
fears than hourly or salaried employees, the payoff may be far greater as well.
1. Interest and Vision:
The first factor for entrepreneurial success is interest. Since
entrepreneurship pays off according to performance rather than time spent on a
particular effort, an entrepreneur must work in an area that interests her.
Otherwise, she will not be able to maintain a high level of work ethic, and she
will most likely fail. This interest must also translate into a vision for the
company's growth. Even if the day-to-day activities of a business are
interesting to an entrepreneur, this is not enough for success unless she can
turn this interest into a vision of growth and expansion. This vision must be
strong enough that she can communicate it to investors and employees.
2.Skill:
All of the interest and vision cannot make up for a total lack of
applicable skill. As the head of a company, whether he has employees or not, an
entrepreneur must be able to wear many hats and do so effectively. For
instance, if he wants to start a business that creates mobile games, he should
have specialized knowledge in mobile technology, the gaming industry, game
design, mobile app marketing or programming.
3. Investment:
An entrepreneur must invest in her company. This investment may be
something less tangible, such as the time she spends or the skills or
reputation she brings with her, but it also tends to involve a significant
investment of assets with a clear value, whether they be cash, real estate or
intellectual property. An entrepreneur who will not or cannot invest in her company
cannot expect others to do so and cannot expect it to succeed.
4. Organization and Delegation:
While many new businesses start as a one-man show, successful
entrepreneurship is characterized by quick and stable growth. This means hiring
other people to do specialized jobs. For this reason, entrepreneurship requires
extensive organization and delegation of tasks. It is important for
entrepreneurs to pay close attention to everything that goes on in their
companies, but if they want their companies to succeed, they must learn to hire
the right people for the right jobs and let them do their jobs with minimal
interference from management.
5. Risk and Rewards:
Entrepreneurship requires risk. The measurement of this risk equates to
the amount of time and money you invest into your business. However, this risk
also tends to relate directly to the rewards involved. An entrepreneur who
invests in a franchise pays for someone else's business plan and receives a
respectable income, while an entrepreneur who undertakes groundbreaking
innovations risks everything on an assumption that something revolutionary will
work in the market.
Q.2 Explain the different phases in entrepreneurial development
programme.
Ans : EDP is primarily designed to induce motivation
and competence among young prospective entrepreneurs. So the cause and
curriculum of Entrepreneurship Development programme will be so designed that
it will induce motivation and competency. The course curriculum of EDP should
be designed to cover the following aspects:
- It will
give general introduction to entrepreneurship.
- It will
afford motivational training.
- It will
increase managerial skill of the entrepreneur,
- It makes
entrepreneur to have expert knowledge on various support systems and
procedure.
- It will
give fundamental idea on project feasibility study.
- It will
encourage plant visit to afford practical knowledge to entrepreneurs.
After deciding on course contents and curriculum on EDP, the next
important task is to decide various phases of EDP. There are three different
phases of EDP like:
- Pre-training
phase
- Training
phase
- Follow-up
phase
1. Pre-training phase:
Pre-training phase consists of all activities and preparation to launch
training programme. Pre-training phase of EDP consists of the following
activities :
- Selection
of entrepreneurs for the training programme.
- Arrangements
of infrastructure are for the programme like selection of place of
training.
- Deciding
guest faculty for the programme from education industry and banks.
- Taking necessary
steps for inauguration of programme.
- Formation
of selection committee to select trainees from the programme.
- Making
provision with regard to publicity and campaigning for the programme.
2. Training Phase:
The primary objective of training programme is to develop motivation and
skill or competency amongst the potential entrepreneurs. Care should be taken
to impart both theoretical and practical knowledge to various trainees. The
training phase of EDP will be so designed that it will answer the following
questions:
(a) Whether the attitude of the entrepreneur has been tuned towards the
proposed project or no.
(b) Whether the trainee has been motivated to accept entrepreneurship as
a career.
(c) How the trainee behaves like an entrepreneur.
(d) Whether the trainee has sufficient knowledge on resources and
technology or not.
(e) What kind of entrepreneurial traits he lacks and what steps should be
taken to set it.
3. Follow-up Phase:
Follow up phase of EDP has been termed as post-training phase. The
ultimate objective is to develop competent entrepreneurs. So that they can
start their project. Post-training phase is a review phase of training
programme. It consists of reviewing of work in the following manner:
- Review of
pre-training work
- Review of actual
training programme
- Review of
post training programme so that cost effectiveness of the present
programme can be evaluated
Q.3 What are the basic problems faced by the women entrepreneurs?
Ans : Women entrepreneurs
face a series of problems right from the beginning till the enterprise
functions. Being a woman itself poses various problems to a woman entrepreneur,
The problems of Indian women pertains to her responsibility towards family,
society and lion work. Besides the above basic problems the other
problems faced by women entrepreneurs are as follows:
1. Family ties:
Women in India
2. Male dominated society:
Even though our constitution speaks of equality between sexes, male
chauvinism is still the order of the day. Women are not treated equal to men.
Their entry to business requires the approval of the head of the family.
Entrepreneurship has traditionally been seen as a male preserve. All these puts
a break in the growth of women entrepreneurs.
3. Lack of education:
Women in India
4. Social barriers:
The traditions and customs prevailed in Indian societies towards women
sometimes stand as an obstacle before them to grow and prosper. Castes and
religions dominate with one another and hinders women entrepreneurs too. In
rural areas, they face more social barriers. They are always seen with
suspicious eyes.
5. Shortage of raw materials:
The scarcity of raw materials, sometimes nor, availability of proper and
adequate raw materials sounds the death-knell of the enterprises run by women
entrepreneurs. Women entrepreneurs really face a tough task in getting the
required raw material and other necessary inputs for the enterprises when the
prices are very high.
6. Problem of finance:
Women entrepreneurs stiffer a lot in raising and meeting the financial
needs of the business. Bankers, creditors and financial institutes are not
coming forward to provide financial assistance to women borrowers on the ground
of their less credit worthiness and more chances of business failure. They also
face financial problem due to blockage of funds in raw materials,
work-in-progress finished goods and non-receipt of payment from customers in
time.
7. Tough competition:
Usually women entrepreneurs employ low technology in the process of
production. In a market where the competition is too high, they have to fight
hard to survive in the market against the organised sector and their male
counterpart who have vast experience and capacity to adopt advanced technology
in managing enterprises
Q.4 What are the sources from which an entrepreneur can obtain business
ideas.
Ans : In practice there are many ways in which the
business opportunity and idea is first spotted.
As we shall see, sometimes luck plays a big part; at other times there
is a role for approaches which encourage deliberate creativity. Here are some of the main sources of business ideas for start-ups:
1. Business experience:
Many ideas for successful businesses come from people who have experience
of working in a particular market or industry.
For the start-up, there are several advantages of applying this
experience to a new business:
- Better and
more detailed understanding of what customers want
- Knowledge
of competitors, pricing, suppliers etc
- Less need
for start-up market research
Entrepreneur is able to make more realistic assumptions in the business
plan about sales, costs etc
Industry contacts, who might then become the first customers of the
start-up!
All of the above help the business planning process and you could argue
that they reduce the risks of a start-up.
On the other hand, you might argue that “familiarity breeds
contempt”. In other words, detailed
experience of an industry means that the budding entrepreneur doesn’t have a
fresh perspective. Someone who is new to
a market may be able to exploit approaches that have worked in other industries
to make an impact with the start-up.
2. Personal experience:
Many ideas come to entrepreneurs from their day-to-day dealings in life,
or from their hobbies and interests. For some of us, frustrating or bad
experiences are a source of irritation.
For the entrepreneur they might suggest a business opportunity.
It is often said that one of the best ways to spot a business opportunity
is to look for examples of poor customer service (complaints, product returns,
persistent queues etc). Such examples
suggest that there is an opportunity to do something better, quicker or cheaper
than the existing products.
Hobbies and interests are also a rich source of business ideas, although
you have to be careful to avoid assuming that, just because you have a passion
for collecting rare tin openers, there is a ready market from people with
similar interests! Many people have
tried to turn their hobby into a business and found that generates only a small
contribution to household income.
3. Observation:
Simply observing what goes on around you can be a good way of spotting an
idea. Often an idea will be launched in
another country and has not yet been tried in other, similar economies. When Stephen Warring was in the USA attending
a wedding, by luck he sat next to someone who ran a household service business
(treating lawns). After some brief
market research, Stephen found out that there was no similar business in the
UK, so he launched one.
Q.5 Mr. Latha G. wants to set up her own garment manufacturing unit.
She needs to submit report about the project ,in order to get the loan. What
all essential details she should mention in the project report.
Ans : The details that Mr. Latha G needs to mention are:-
1. Aim of Project:-
What do we want to produce? The aim of the project is a mixture of the
reasons for doing the project and the benefits that are expected from it. This
section of the plan can be either fulfilled by linking to the main business
case, or by restating it in language for the expected audience.
2. Outputs:-
Given the aim of the project, what do we actually need to produce to get
there? What will your completed project be made up of? These need to be clearly
defined. For example, your project's aim may be to upgrade the IT
infrastructure in an organisation. Your final output would be a completed
computer network, a new computer on every desk, and all appropriate software
installed and ready to go.
3. Quality Criteria:-
Now we have the outputs, we need to understand what quality they need to
be of. In the example above, we have an output of a completed computer network.
However, we need to know that the network can actually cope with the amount of
traffic going over it!
4. Resources:
We have now set down what outputs we need to produce, and what quality
they need to be at. This means we are now in a position to look at the
resources we will need to achieve this. Resources include staff time,
particular knowledge or skill sets, money (e.g. buying equipment), and time (some
tasks can't be increased by throwing more people at the problem, e.g. delivery
times, setting time for concrete, etc.).
5. Management Structure:-
How are we going to manage the work? You need to describe the general
approach to the project here. Who will be the decision makers for the various
different streams of work? For example, you may be doing a significant
procurement - who makes the decision about what company to buy from?
6. Milestones:-
Here you need to think about how you will break up the project. Unless it
is very small, you don't want to have the entire project as one lump of work,
with the only check on progress at the very end. Instead, it makes sense to
break the project up into discrete chunks, where related tasks can be lumped
together, with a sensible milestone at the end of them.
7. Tolerances:-
You will have already looked at the resources you need. Now we need to
set how far you, or the project executive, can let the project stray from these
targets before needing to sound the alarm. For example, you could set a
tolerance in terms of finance of +/- 5%, and a tolerance in terms of time of
+/- 10%. Equally, you may want to look at tolerances of quality.
8. Dependencies:-
This is where you look at what needs to happen before something else. For
example, in our example above, you need to complete the requirements gathering
before you can finish the tender documentation.
Q.6 Mr. Raghvan is the owner of Furniture manufacturing company. He
needs some more finance to get some new machines and also expand his business.
Suggest the different sources of finance he could use to get the required
funds.
Ans : An entrepreneur might
face the major hurdle of acquiring financing to jumpstart a business and
increase the likelihood for success. Depending on the services or products
provided, your company might require thousands of dollars to open for business.
Fortunately, an array of finance sources is available. However, you must select
the source based on your personal financial standing and that best meets your
needs.
1. Small Business Administration Loan:
The SBA is a federal government agency that provides financial assistance
to new and existing businesses. Offices exist throughout the United States to
assist small businesses. Business cash flow is the primary consideration for a
loan. Owners with 20 percent or more ownership must personally guarantee the
loan. Because there are three SBA loan programs, contact a local office or
lender before completing an application to determine the plan best for your
company.
2. Private Loan:
You might need complete funding of your new business or a loan amount
that augments your existing funds. Consider a loan from family or friends.
Execute a loan note that defines the loan amount and terms, including the
interest rate. This document becomes a business record that might affect
business profit and taxes.
3. Personal Credit Card:
Although it is best to separate personal and business transactions, you
might consider using your personal credit card to start up a company. Keep
records of business-related charges to your credit card. This funding might
build equity in the company. However, you might elect instead to reimburse
yourself from future revenue.
4. Personal Bank Loan:
You might initiate a personal bank loan that you personally guarantee,
perhaps with a lean on your home. If your company has other owners, they are
not liable for this debt, regardless of the company’s use of funds that you
provide. However, you might consider documenting a personal loan to the company
in the amount provided by you.
5. Venture Capital Investors:
Generally, venture capital investors provide funds to early-stage start up
companies. These investors are interested in industries with high-growth
potential, such as information technology. Normally, venture capital investors
provide funds to a company in exchange for company shares. These investors
require a business plan that demonstrates the probability of success.
6. Retirement Funds:
If you have an Individual Retirement Account or 401k retirement plan, you
might withdraw funds to invest in a new business or provide capital for an
existing company. For example, you might use funds from your IRA to purchase
inventory or expand your office space. Check with a financial institution to
initiate access to your retirement plan
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