Course Code: BCOA-001
Course Title: Business Communication and Entrepreneurship
Assignment Code: BCOA-001/TMA/2014-15
Coverage: All Blocks
Maximum Marks: 100
Attempt all the questions.
1. (a) Entrepreneurship is nothing but a combined effect of innovation and its effective management.” Do you agree with this statement? Explain.
(b) What are the different types of insurance? Explain the importance of insurance in uncertain clients. (10+10)
Solution:
a) Entrepreneurship is nothing but a combined effect of innovation and its effective management.” Do you agree with this statement? Explain.
Entrepreneurship
Entrepreneurship is the act of being an entrepreneur, which can be defined as “one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods”. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting a new outfit referred as new Business-Startup however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations.
A Definition of Entrepreneurship
The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population.
On the other extreme of definitions, anyone who wants to work for himself or herself is considered to be an entrepreneur.
The word entrepreneur originates from the French word, entreprendre, which means “to undertake.” In a business context, it means to start a business.
The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.
Characteristics of entrepreneurship
Entrepreneurial activities are substantially different depending on the type of organization and creativity involved.
Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many “high value” entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business.
Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs including specialized government agencies, business incubators, science parks, and some NGOs.
In more recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.
Some theory of Entrepreneurship
In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek.
In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called “the gale of creative destruction” to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models.
In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics.
An alternate description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw.
Concept of Entrepreneurship
It has assumed super importance for accelerating economic growth both in developed and developing countries.
It promotes capital formation and creates wealth in country.
It is the hope and dreams of millions of individuals around the world.
It reduces unemployment and poverty and it is a pathway to prosper.
Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain.
It is the process of planning, organising, opportunities and assuming.
It is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost
(b) What are the different types of insurance? Explain the importance of insurance in uncertain clients.
Any risk that can be quantified can potentially be insured.. Below are exhaustive lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A home insurance policy in the U.S. typically includes coverage for damage to the home and the owner’s belongings, certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner’s property.
Types of Insurance:
Life insurance
Life insurance provides a monetary benefit to a descendant’s family or other designated beneficiary, and may specifically provide for income to an insured person’s family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies, are regulated as insurance, and require the same kinds of actuarial and investment management expertise that life insurance requires.
Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed.
In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.
Home insurance
Home insurance provides coverage for damage or destruction of the policyholder’s home. In some geographical areas, the policy may exclude certain types of risks, such as flood or earthquake that require additional coverage. Maintenance-related issues are typically the homeowner’s responsibility. The policy may include inventory, or this can be bought as a separate policy, especially for people who rent housing. In some countries, insurers offer a package which may include liability and legal responsibility for injuries and property damage caused by members of the household, including pets
Under this category there are four type of insurance are there
Health insurance
Disability insurance
long term disability
Short term disability
Total Permanent disability
Disability overhead insurance
Workers’ compensation insurance
Health insurance policies issued by publicly-funded health programs, such as cost of medical treatments.
Dental insurance, like medical insurance, is protects policyholders for dental costs. In the U.S. and Canada, dental insurance is often part of an employer’s benefits package, along with health insurance.
Disability insurance policies provide financial support in the event of the policyholder becoming unable to work because of disabling illness or injury. It provides monthly support to help pay such obligations as mortgage loans and credit cards. Short-term and long-term disability policies are available to individuals, but considering the expense, long-term policies are generally obtained only by those with at least six-figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a person for a period typically up to six months, paying a stipend each month to cover medical bills and other necessities
Long-term disability insurance covers an individual’s expenses for the long term, up until such time as they are considered permanently disabled and thereafter. Insurance companies will often try to encourage the person back into employment in preference to and before declaring them unable to work at all and therefore totally disabled.
Disability overhead insurance allows business owners to cover the overhead expenses of their business while they are unable to work.
Total permanent disability insurance provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.
Workers’ compensation insurance replaces all or part of a worker’s wages lost and accompanying medical expenses incurred because of a job-related injury.
Property insurance
Property insurance provides protection against risks to property, such as fire, theft or weather damage. This may include specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance., be used as a broad category of various subtypes of insurance, some of which are listed below:
Fire insurance is a insurance that cover property, such as home shop or other fixed asset protection against fire, burn Etc…
It also covers distraction of property due to fire
Aviation insurance protects aircraft hulls and spares, and associated liability risks, such as passenger and third-party liability. Airports may also appear under this subcategory, including air traffic control and refueling operations for international airports through to smaller domestic exposures.
Boiler insurance (also known as boiler and machinery insurance, or equipment breakdown insurance) insures against accidental physical damage to boilers, equipment or machinery.
Builder’s risk insurance insures against the risk of physical loss or damage to property during construction. Builder’s risk insurance is typically written on an “all risk” basis covering damage arising from any not otherwise expressly excluded. Builder’s risk insurance is coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from an insured peril.
Crop insurance may be purchased by farmers to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease.
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary home insurance policies do not cover earthquake damage. Earthquake insurance policies generally feature a high deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the construction of the home.
Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some parts of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.
Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on inland waterways, and of cargo in transit, regardless of the method of transit. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier’s insurance. Many marine insurance underwriters will include “time element” coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
Natural disaster insurance covers specified expenses after a natural disaster renders the policyholder’s home uninhabitable. Periodic payments are made directly to the insured until the home is rebuilt or a specified time period has elapsed.
Volcano insurance
Windstorm insurance
Terrorism insurance provides protection against any loss or damage caused by terrorist activities. In the U.S. in the wake of 9/11, the Terrorism Risk Insurance Act 2002 (TRIA) set up a federal Program providing a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism.
The demand for terrorism insurance surged after 9/11
Other types:
All-risk insurance
Bloodstock insurance
Business interruption insurance
Collateral protection insurance.
Legal expenses insurance
Locked funds insurance
Livestock
Nuclear incident insurance
Pet insurance.
Pollution insurance
Travel insurance
IMPORTANCE OF INSURANCE
Human beings, his family and properties are always exposed to different kinds of risks. Risk involves the losses. Insurance is a tool which reduces the cost of loss or effect of loss caused by variety of risk. It accumulates funds to meet individual losses. It is not device to prevent unwanted event of happening or cause of loss but protects them against that loss by compensating which as lost. The role and importance of insurance are discussed as follows:
1. Insurance provides security
Insurance provides safety and security against the loss on a particular event. Life insurance provides security against death and old age sufferings. Fire insurance protects against loss due to fire while Marine insurance provides protection and safety against loss of ship and cargo. For personal accident and sickness insurance financial protection is given when the individual is unable to earn. In other insurance too, this security is provided against the loss at a given contingency.
2. Insurance reduces business risk or losses
In Business, commerce and industry, huge properties are employed. Because of slight negligence, the property may be turned in to ashes. A person may not be sure of his life, health and cannot continue the business up to the longer period to support his dependents. By the help of insurance, he can be sure of his earning, because the insurance company will pay a fixed amount at the time of death, damage by fire, theft, accident and other perils.
3. Insurance provides peace of mind
Insurance removes the tensions, fears, anxiety, frustrate or weaken of the human mind associated with the future uncertainty. By providing financial position and promise to compensate losses arise out from various risk, it provides peace of mind and stimulates more and better work performance of an individual.
4. Life insurance encourages saving
The insured has an obligation to pay premium regularly and cannot be withdrawn easily before the expiry of the term of policy. Life insurance encourages the habit of regular and systematic saving through premium and after a certain period, it would be a part of necessary saving of the insured person.
5. Insurance accelerates the economic growth of the country
To develop the economic growth of the country, insurance provides strong hand and mind, with protection against loss of property and capital to produce more wealth. It provides protection against different kinds of loss caused by risk. It accumulates the capital from the insured and utilizes for the development of country. Thus, the insurance meets all the requirements for the economic growth of a country.
6. Insurance provides credit facilities
The insured person can get loan by pledging insurance policy and the interest will not exceed the cash value of policy charged by insurer. In case of death of insured person, the policy can be utilized for setting of the loan with interest. Business person can take loan on the basis of insurance documents from the bank also.
7. Insurance helps to reduce inflation
Inflation created from oversupply of money and on less production entities. Insurance can help to reduce the inflationary pressure in two ways. Firstly, it collects money as an amount of premium which controls over supply of money and secondly, it provides sufficient funds for increase production entities. Thus, it reduces the impact of inflation.
8. Insurance makes security and welfare of employees
The security and welfare of employees is the responsibility of employer. These security and welfare are easily met by life insurance, accident and sickness benefit and pension which are generally provided by group insurance. The premium for group insurance is normally paid by the employer. Insurance is the simple method for employer to fulfill their responsibility. Due to these benefits, employee will devote their maximum capacities to complete their job.
9. Other Importance of Insurance
Insurance helps to promote foreign trade providing protection again trade risk.
Insurance increases business efficiency eliminating the loss of damage, destruction, or disappearance of property of goods.
Insurance protects the social wealth providing protection against social evil.
Development of insurance business helps to solve the evil of unemployment, generating employment opportunity in the country.
The insured gets tax benefit in life insurance.
2. List out the complete range of words you are familiar with. Classify them into active vocabulary and passive vocabulary.
(a) What are words you have added to your vocabulary?
(b) How many words have shifted from the passive list to the active list.
Solution:- See the Book for answer of this question.
3. Differentiate between the following:
(a) Entrepreneurship & Intrapreneurship
(b) Innovation & Creativity
(c) Financial Appraisal and Marketing Appraisal.
(d) Cash Book and Ledger
(a) Entrepreneurship & Intrapreneurship
Entrepreneurs provide the spark. Intrapreneurs keep the flame going.
Entrepreneurs are found anywhere their vision takes them. Intrapreneurs work within the confines of an organization.
Entrepreneurs face many hurdles, and are sometimes ridiculed and riddled with setbacks. Intrapreneurs may sometimes have to deal with conflict within the organization.
Entrepreneurs may find it difficult to get resources. Intrapreneurs have their resources readily available to them.
Entrepreneurs may lose everything when they fail. Intrapreneurs still have a paycheck to look forward to (at least for now) if they fail.
Entrepreneurs know the business on a macro scale. Intrapreneurs are highly skilled and specialized.
There’s a lot of confusion surrounding creativity and innovation. “Creative types,” in particular, claim that creativity and innovation can’t be measured. Performance, however, demands measurement so you can identify what success looks like. In a world that changes every two seconds, it’s imperative that companies figure out the difference between creativity and innovation.
You better believe they’re different.
(b) Innovation & Creativity
Creativity vs. Innovation
The main difference between creativity and innovation is the focus. Creativity is about unleashing the potential of the mind to conceive new ideas. Those concepts could manifest themselves in any number of ways, but most often, they become something we can see, hear, smell, touch, or taste. However, creative ideas can also be thought experiments within one person’s mind.
Creativity is subjective, making it hard to measure, as our creative friends assert.
Innovation, on the other hand, is completely measurable. Innovation is about introducing change into relatively stable systems. It’s also concerned with the work required to make an idea viable. By identifying an unrecognized and unmet need, an organization can use innovation to apply its creative resources to design an appropriate solution and reap a return on its investment.
Organizations often chase creativity, but what they really need to pursue is innovation. Theodore Levitt puts it best: “What is often lacking is not creativity in the idea-creating sense but innovation in the action-producing sense, i.e. putting ideas to work.”
Managing Innovation
Because creativity and innovation are often confused, it’s long been assumed that you cannot force innovation within an organization. It’s either there, or it isn’t. The introduction of a common language for innovation — design thinking — enables organizations to better measure milestones in their innovative efforts.
In order to employ design thinking, it’s necessary to understand it as a system of overlapping spaces, rather than a set of process steps to move through. Those spaces are: inspiration, during which the problem that motivates solution-finding is identified; ideation, the process of generating and developing ideas; and implementation, the activities that enable a creative idea to move from the drawing board to the marketplace. Any design thinking-based project may loop back to an earlier space more than once as a team explores, develops, and implements its idea.
Design thinking provides a consistent approach to defining challenges. It helps organizations identify problems before they even begin the brainstorming sessions most associated with creativity. Now, organizations can actually see what they were missing when previous ideas didn’t reach market sustainability.
Using design thinking, organizations can capitalize on creativity by paying attention to the life of the idea after its initial development. To be of value, applied creativity must always lead to innovation — linking a great idea with an actual customer need (or, better yet, the needs of a whole market!). The use of design thinking in this manner also demands the guidance of engaged leadership.
Leaders are critical to the success of any group’s long-term innovation strategy. It’s their job to ensure that innovation is consistently pursued and their employees don’t settle into business as usual. They set the tone for what is, and is not, possible in the business through their attention and action.
(c) Financial Appraisal and Marketing Appraisal.
Financial Appraisal
Financial appraisal is a method used to evaluate the viability of a proposed project by assessing the value of net cash flows that result from its implementation.
Projects may involve asset construction, purchase, lease or sale and may be financed in a wide variety of ways – grants, borrowings, revenues, supplier finance or a combination of these.
The sponsoring agency should undertake a structured, internal but independent review of the project’s expected returns. The reviewer should be satisfied with the treatments of:
outputs and outcomes of the project;
range and realism of options considered;
completeness of the list of costs and impacts and their appropriate valuation;
adequacy of the investigation of the sensitivity of the results to variations in key parameters;
risks faced by the project as well as the implications of such risks to equity and debt parties;
the rate at which cash flows have been discounted;
identification of where the impacts associated with the project fall; and, identification of the parties responsible for project implementation and for monitoring the execution of the project and its results
Marketing Appraisal
Whether demand projections made for the output of the project is reasonable?
– Based on available survey
– Based on industry association projection
– Independent market survey
Adequacy of marketing infrastructure
– Distribution network
– Transport facilities
– Warehousing and stock level
Competency of marketing personnel
Market Survey
– Defining the target population
– Selecting the sampling scheme and sample size
– Developing Questionnaire
– Recruiting and training the field investigators
– Obtaining information as per the questionnaire from respondents
– Scrutinizing the gathered information
– Analyzing and interpreting the information
Characteristics of the market
– Demand of the product in past and present
– Price
– Falling demand
– Analysis
– Distribution Methods and sales promotion
– Consumers
– Supply and competition
– Government policy
Demand Forecasting
– Qualitative Method
Executive opinion method- A group of managers plans for expected future sales and estimates the sales that need to be achieved.
Delphi Method- A panel of experts make there opinion through a questionnaire for a given situation. These responses are summarized by a central coordinator and again sent back to panel for refinement.
– Time Series Method
Trend Projection Method- Past consumption trends are used for future demand projection.
Moving Average Method- Sales forecast for next period is done on the basis of average sales of the past several periods.
(d) Cash Book and Ledger
A Cash Book is of different types. There may be a cash book with cash column only in which you post only transaction relating to cash, or there may be a cash book with two columns, that is bank and cash that shows a summary of both of your cash and bank account transactions. There is also a cash book with both cash and discounts columns. For example: Transactions related to payment of expenses in cash, or issuing a cheque to a party, or withdrawing cash from bank account, or depositing cash into the bank, or receiving some money in the form of cash or through a cheque. A transaction in which both bank and cash are involved is known as “Contra” entry denoted by “C”.
While in the case of a ledger, it consists of all the entries of the accounts with which a person deals in the ordinary course of business. The ledger includes commonly the following sets of accounts:
1. Furniture account showing the furniture bought for carrying out the business.
2. Goods (“Purchases”/”Sales”) account depicting the goods bought or sold in the ordinary course of business.
3. Accounts in the names of debtors to whom goods have been sold or services have been rendered on credit.
4. Accounts in the names of creditors to whom you owe money against certain goods or services acquired on credit.
3. Returns accounts that may be “Purchase Returns” that is the goods returned to the purchaser due to certain default, or “Sales Returns” that is the goods returned by the debtor due to certain default.
4. Cash Account showing only the income received in or expenses paid in cash.
5. Bank Account depicting the transactions of the bank.
6. Other accounts depicting the assets used or liabilities incurred in the business.
Both Cash Book and Ledger are summary of accounts, but cash book only has cash, or both cash and bank accounts, or cash with discount column, while ledger has other accounts too including cash and bank.
4. Briefly comment on the following: -
a) Entrepreneurs play a key role in any economy
b) Startup business ideas comes from entrepreneurs to help start your business
c) Small scale industries are businesses that require few people to run
d) Entrepreneurs are born not made
Solution:-
a) Entrepreneurs play a key role in any economy
The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy is discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up. of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities,, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.
(7) Promotes Country’s Export Trade:
Entrepreneurs help in promoting a country’s export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.
(8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country.
(9) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialisation is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.
b) Startup business ideas comes from entrepreneurs to help start your business
The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population.
On the other extreme of definitions, anyone who wants to work for himself or herself is considered to be an entrepreneur.
The word entrepreneur originates from the French word, entreprendre, which means “to undertake.” In a business context, it means to start a business.
The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise.
Entrepreneurial activities are substantially different depending on the type of organization and creativity involved.
Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many “high value” entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business.
Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs including specialized government agencies, business incubators, science parks, and some NGOs.
In more recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.
It has assumed super importance for accelerating economic growth both in developed and developing countries.
It promotes capital formation and creates wealth in country.
It is the hope and dreams of millions of individuals around the world.
It reduces unemployment and poverty and it is a pathway to prosper.
Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain.
It is the process of planning, organising, opportunities and assuming.
It is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost
c) Small scale industries are businesses that require few people to run
A small scale industry (SSI) is an industrial undertaking in which the investment in fixed assets in plant & machinery, whether held on ownership term or on lease or hire purchase, does not exceed Rs. 1Crore. However, this investment limit is varied by the Government from time to time.
Entrepreneurs in small scale sector are normally not required to obtain a licence either from the Central Government or the State Government for setting up units in any part of the country. Registration of a small scale unit is also not compulsory. But, its registration with the State Directorate or Commissioner of Industries or DIC’s makes the unit eligible for availing different types of Government assistance like financial assistance from the Department of Industries, medium and long term loans from State Financial Corporations and other commercial banks, machinery on hire-purchase basis from the National Small Industries Corporation, etc. Registration is also an essential requirement for getting benefits of special schemes for promotion of SSI viz. Credit guarantee Scheme, Capital subsidy, Reduced custom duty on selected items, ISO-9000 Certification reimbursement & several other benefits provided by the State Government.
The Ministry of Micro, Small and Medium Enterprises acts as the nodal agency for growth and development of SSIs in the country. The ministry formulates and implements policies and programmes in order to promote small scale industries and enhance their competitiveness. It is assisted by various public sector enterprises like:-
Small Industry Development Organisation (SIDO) is the apex body for assisting the Government in formulating and overseeing the implementation of its policies and programmes/projects/schemes.
National Small Industries Corporation Ltd (NSIC) was established by the Government with a view to promoting, aiding and fostering the growth of SSI in the country, with focus on commercial aspects of their operation.
The Ministry has established three National Entrepreneurship Development Institutes which are engaged in development of training modules, undertaking research and training and providing consultancy services for entrepreneurship development in the SSI sector. These are:-
National Institute of Small Industry Extension Training (NISIET) at Hyderabad,
National Institute of Entrepreneurship and Small Business Development (NIESBUD) at NOIDA
Indian Institute of Entrepreneurship (IIE) at Guwahati
The National Commission for Enterprises in the Unorganised Sector (NCEUS) has been constituted with the mandate to examine the problems of enterprises in the unorganised sector and suggest measures to overcome them.
Small Industries Development Bank of India (SIDBI) acts as apex institution for financing SSIs through various credit schemes.
Provisions relating to taxation of Small Scale Industries
In a developing country like India, Small Scale Industries play a significant role in economic development of the country. They are a vital segment of Indian economy in terms of their contribution towards country’s industrial production,exports,employment and creation of an entrepreneurial base.These industries by and large represent a stage in economic transition from traditional to modern technology. Small industry plays a very important role in widening the base of entrepreneurship. The development of small industries offers an easy and effective means of achieving broad based ownership of industry, the diffusion of enterprise and initiative in the industrial field.
Given their importance, the Government policy framework right from the First plan has highlighted the need for the development of SSI sector keeping in view its strategic importance in the overall economic development of India. Accordingly, the policy support from the Government towards Small Scale Industries has tended to be conducive and favourable to the development of small entrepreneurial class. Government accords the highest preference to development of SSI by framing and implementing suitable policies and promotional schemes.
The most important promotional policy of the Government for the SSI’s is fiscal incentives in the form of tax concessions and exemptions of direct or indirect taxes leviable on production or profits.
d) Entrepreneurs are born not made
Two-thirds of entrepreneurs claim they were inspired by innate desire, not education or training, according to a new survey.
A new survey may help resolve a debate that has raged for years among the self-made set — whether entrepreneurs are born or made.
The verdict: born. At least that’s according to the survey by Northeastern University’s School of Technological Entrepreneurship.
Nearly two-thirds of entrepreneurs claim they were inspired to start their own companies by their innate desire and determination, rather than by their education or work experience.
Only 1 percent of more than 200 U.S. entrepreneurs surveyed cited higher education as a significant motivator toward starting their own venture, while 61 percent cited their “innate drive.” Other motivators cited were work experience (21 percent) and success of entrepreneurial peers within their industry (16 percent).
“The survey results indicate a major issue in academia today: institutions of higher education are not adequately preparing students for careers in entrepreneurship,” Paul Zavracky, dean of School of Technological Entrepreneurship, said in a statement.
While entrepreneurship skills can be taught, the survey results suggest that the desire to be an entrepreneur usually is not. Rather, as 42 percent of survey respondents said they launched their first venture in childhood, it seems as though the enterprising spirit is discovered within the individual, not developed by the individual’s experience.
Thirty-three percent of respondents launched their first venture between the ages of 18 and 30; 13 percent between 30 and 40; and only 12 percent started their first business after the age of 40.
The survey also suggests that the majority of entrepreneurs were confident about the success of their first venture. Thirty-two percent said they had no fear that their venture would not succeed, while 42 percent had some fear but characterized themselves as confident. Only 14 percent said they experienced significant fear that their first venture would fail, while 12 percent said fear of failure delayed their leap into entrepreneurship.
5. Write short notes on the following:
a) Corporate Entrepreneurial Strategies
b) Significance of Business plan
c) Venture Capitalist
d) Vocational skills
a) Corporate Entrepreneurial Strategies
b) Significance of Business plan
Business plans are documents used for planning out specific details about your business. They can range in size from a simple few sentences to more than 100 pages with formal sections, a table of contents and a title page. According to Entrepreneur Magazine, typical business plans average 15 to 20 pages. Comprehensive business plans have three sections–business concept, marketplace and financial–and these are broken down into seven components that include the overview or summary of the plan, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information. Even small one-page business plans have importance and purpose for the success of the business however.
Clarify Direction
The primary purpose of a business plan is to define what the business is or what it intends to be over time. Clarifying the purpose and direction of your business allows you to understand what needs to be done for forward movement. Clarifying can consist of a simple description of your business and its products or services, or it can specify the exact product lines and services you’ll offer, as well as a detailed description of your ideal customer.
Future Vision
Businesses evolve and adapt over time, and factoring future growth and direction into the business plan can be an effective way to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows. Although clarifying direction in the business plan lets you know where you’re starting, future vision allows you to have goals to reach for.
Attract Financing
The Small Business Administration states, “The development of a comprehensive business plan shows whether or not a business has the potential to make a profit.” By putting statistics, facts, figures and detailed plans in writing, a new business has a better chance of attracting investors to provide the capital needed for getting started.
Attract Team Members
Business plans can be designed as a sale tool to attract partners, secure supplier accounts and attract executive level employees into the new venture. Business plans can be shared with the executive candidates or desired partners to help convince them of the potential for the business, and persuade them to join the team.
Manage Company
A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.
Venture Capitalist
Venture capital is a subset of private equity and refers to equity investments made for the launch, early development, or expansion of a business
Among different countries, there are variations in what is meant by venture capital and private equity
In Europe, these terms are generally used interchangeably and venture capital thus includes management buy-outs and buy-ins (MBO/MBIs).
This is in contrast to the US, where MBO/MBIs are not classified as venture capital.
Why companies need financing?
For start-ups or growing companies, as well as those facing a major change, financing is one of the key business issues. New capital is needed e.g. for
- Financing of product development
- Financing of market penetration
- Financing of investments
- Working capital financing to secure operative continuity
- Maintaining liquidity to be able to cover daily payments
Vocational skills
Vocational skills are empirical skills that individuals acquire in a specific area of interest. Vocational skills are more practical than theoretical skills. Individuals learn vocational skills from hands-on experience.
Instruction in vocational skills offers hands-on training in a specific trade or job industry. The training takes place outside the traditional classroom setting. Students are placed in manual labor intern positions that coincide with their vocational career choice. Students are exposed to hands-on activities through first-hand experience, and they acquire classroom knowledge. Training allows individuals to work in their areas of interest while obtaining first-hand knowledge and experience, while possibly earning a paycheck.