NCERT Solutions for Class 12 Entrepreneurship Chapter-1 Entrepreneurial Opportunity
TEXTBOOK QUESTIONS SOLVED
A.VERY SHORT ANSWER TYPE QUESTIONS
Q1. What is a business opportunity?
Ans. It refers to an attractive and accessable economic idea which could be implemented to create a business, earn maximum profit, and leads to further growth.
Q2. What factors are involved in the process of sensing an entrepreneurial opportunity?
Ans.
Q3. Define the term environment scanning.
Ans. Environment scanning refers to careful monitoring of an organization’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans.
Q4. List the environmental factors affecting external environment.
Ans. Climate, technology, social, economy, ecological, political, legal, competition, media and fashion.
Q5. What is the meaning of trend spotting?
Ans. It is an immediate identification of new trends like fashions, activities, designs, assumptions, etc.
Q6. What is required to convert an idea into opportunity?
Ans. Sensing entrepreneurial opportunities is only a process of converting an idea into an opportunity and then into an enterprise.
Q7. What is Idea Generation?
Ans. The process of creating, developing, and communicating ideas which are in an abstract, concrete, or visual form. It includes the process of constructing through the idea, innovating the concept, developing the process, and bringing the concept to reality.
B. SHORT ANSWER TYPE QUESTIONS-I
Q1. What is the purpose to scan the environment?
Ans. The main purpose of environmental scanning is to know the rapid changes occurring in the environment by which organizations gather information on changing conditions and incorporate those observations into a process where necessary changes can be made.
Q2. What are the factors involved in sensing opportunities?
Ans. The most important factors involved in the process are:
(i)Ability to perceive and preserve basic ideas which could be used commercially,
(ii)Ability to harness different sources of information,
(iii)Vision and creativity.
Q3. Draw the enterprise process diagram.
Ans.
Q4. What is PESTEL model? Explain it.
Ans. “PESTEL model involves the collection and portrayal of information about external factors which have, or may have, an impact on business.” It is an analysis of the political, economic, social and technological factors in the external environment of an organization, which can affect its activities and performance.
C. SHORT ANSWER TYPE QUESTIONS-II
Q1. Enlist the various sources which lead to the emergence of basic ideas.
Or
Explain any three sources which lead to the emergence of basic ideas.[CBSE Sample Paper 2016]
Ans. The various sources which lead to the emergence of basic ideas.
(i) Problems: When a problem exists, an idea leads to a solution to resolve that problem, emerges as a business opportunity.
(ii)Change: A change in social, legal, technological aspects etc. leads to new opportunities to start a business,
(iii) Inventions: New products or services leads to new business opportunities.
(iv)Competition: Competition often results in emergence of new and better ideas that result in new business opportunities.
(v)Innovation: Creating new things of value as well as new and creative processes that add value to the existing products or services. For example, computers to tablets.
Q2. Write the meaning of product identification in terms of business opportunity.
Ans. So the first step is to obtain a concept of the product or service suggested bone idea. We should also see whether this product is already available in the market or not. If it is, then we should identify the reason for introducing the same product or service in the market. For example, innovating a new pen drive especially for teachers which will have a built in antivirus and which can be worn like a watch. So, it minimises the problem of losing the pen drive.
Q3. What are the factors an entrepreneur has to keep in mind while assessing the market?
Or
Give the details of market assessment.
Ans. (i) Demand: The demand assessment will be based on the size of market being targeted and also involve a study of the groups of consumers, their preferences, tastes, etc.
(ii)Supply and nature of competition: It is a study supply position what is meant is the complete picture of quantities of the product made available in the market by all the existing players including future supplies.
(iii)Cost and price of product: To determine what will be the actual cost price and preferable selling price. This will influence the delivery mechanism of the identified product or service.
(iv)Project innovation and change:Market assessment will require a study of prevailing innovations and changes being carried out by existing entrepreneurs using technological advancements in the field.
Q4. What are the various ways in which an entrepreneur spot trends?
Ans. (i) Read trends:
(a)Entrepreneurs regularly read the leading publications and websites affecting their business.
(b)Publications include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.
(c)They scan information from a wide variety of sources – from international news on down to niche bloggers focused on specific aspects of their industry. Obviously, there is a sunami of information available. They use tech-tools like RSS feeds, e-mail newsletters or websites and forums to keep on top out of all and get the information they want. They understand quickly which sources are valuable and which should be avoided.
(ii)Talk trends:
(a)Talking to people is an equally important trend-spotting tactic. They get involved in specific industry’s trade association and attending events both online and offline.
(b)From social networking tools like social network websites and forums.
(c )They even start or join groups on the networks and see what people are buzzing about the latest trends to customers regarding what customers thinking, buying, doing, etc. what customers are saying about the business, but what they’re saying about the competitor’s business.
(iii)Watch trends:
(a)Watching and observing the customers in the market place.
(b)If the customers are teenagers, in the local mall.
(c)If they are business class people, it might be restaurant or office park restaurant center.
(d)The entrepreneur spends some time simply watching and observing, what people are eating, doing, wearing, using.
(iv)Think trends:
(a)As an entrepreneur begins gathering all these information regularly, they will start to develop a “trend-spotter mind.”
(b)They collect from what they read, heard and observed, and they start to making connections and observations that will lead to business-boosting insights.
D.LONG ANSWER TYPE QUESTIONS
Q1. “An opportunity may be derived from the needs and problems of the society.” Comment.
Ans. “An opportunity may be derived from the needs and problems of the society”. Yes, it is a correct statement.
An entrepreneur is one who perceive opportunities, synthesize the available information and analyse emerging patterns that escape the attention of other people. It is the first step of an entrepreneur to grab the opportunity and setup a business enterprise to offer the solution of various problems and needs that exist.
This involves awareness about the surrounding environment, determining and evaluating the needs of people, problems faced by the people in their day-to-day life related with any type of goods or services, etc.
A rational entrepreneur with a vision senses the opportunities present in the environment and finds creative solution to the problems coming in between him and the success through analysis and observation.
Entrepreneurs see and craft opportunities that other people miss, even though the opportunity manifests themselves. He uses his sharpened skills of observation, analysis and synthesis to identify an opening.
For example,
(i)Detergent Nirma captured the market by introducing a low priced detergent. Here the entrepreneur sensed the need of low priced product in the society.
(ii)With the increase in number of murders and other crimes taking place in big cities entrepreneurs can tap the niche of households for installing security systems like alarms, CCTVs, cameras and other safety gadgets, etc.
Q2, “Sensitivity to environmental factors is essential for an entrepreneur.” In light of above statement explain the importance of environment scanning.
Ans. Importance of Environment: Sensitivity to environmental factors is crucial for an entrepreneur. If a company is able to adapt to its environment, it would succeed in the long run. For example, Sony is failing to understand the changing trends in mobile phones and therefore losing its market share. The benefits of understanding the relevant environment of business are:
(i)Identification of opportunities to get first mover advantage: An entrepreneur must be keen and alert and must be aware of all the changes in the external environment, so that he can identify opportunities and find strategies to capitalise on the opportunities at the earliest.
For example, Volvo, the Swedish brand, has 74% share in the luxury bus segment as it had entered India earlier.
(ii)Formulation of strategies and policies: An entrepreneur must be capable of formulation of strategies and policies which is really going to help in identifying threats and opportunities in the market.
(iii)Tapping useful resources: If an entrepreneur has complete and a thorough knowledge of the external environment, then easily he can tap raw materials, technology and even financial resources from the market at economical prices, at the right time.
(iv)Better performance: Proper understanding of the various elements of the external environment is necessary to take timely action to deal with threats and avail opportunities for the purpose of improvement in the performance of the firm.
(v)Sensitisation of entrepreneurs to cope up with rapid changes: A keen watch on the trends in the environment would help sensitise the entrepreneur to changing technology, competition, government policies and changing needs and taste of the customers. For example, trends in clothing, outdoor celebration of family events. Showing more interest in fast food, changing fitness trend.
(vi)Image building: If a company is sensitive to the external environment, it will come out with new products and services to meet the requirements of the customers. This would build the image or reputation of the firm in the eyes of the general public.
For example, call-radio taxis with additional features like GPS systems, online booking, etc.
Q3. Entrepreneurship does not emerge and grow spontaneously. Rather it is dependent upon several various environmental factors. Explain them.
Ans. Yes,itiscorrecttosaythat“Entrepreneurship does not emerge and grow spontaneously.” It is dependent upon several factors , like economic, social, political, legal and other factors.
The basic PESTEL analysis includes four factors:
Political factors are basically to what degree the government intervenes in
the economy. Various political factors include areas are:
(i)Taxation Policy, Trade Regulations, Tariffs policy, Policy regarding export and import.
(ii) Government Affairs: Government in power, attitude of government towards different groups of the societies, Government Stability, Policy changes implemented by changed government, Labour laws, Unemployment policy.
(iii)Goods and services which the government wants to produce and how much quantity to be produced.
(iv)It also influences the health, education, and infrastructure of a nation.
Economic factors:
(i)Gross domestic product, Income level at national level and per capita income, economic growth.
(ii)Profit earning rate, interest rate, exchange rate, inflation rate, fiscal and monetary policy of the government. For example, interest rates will affect the cost of debt and, potentially, the cost of equity, e.g. when interest rates increase the cost of debt increases, which increases the firms cost of capital to what extent a business grows and expands.
(iii)Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy.
(iv)It includes the close study of important variables like supply and demand. Details of consumer trends, economic preference, costing, discounting, etc. are all economic decisions.
(v)Economic details will also help the entrepreneur in determining the size of the project and the reasons of finance and have major impacts on how businesses operate and make decisions.
Social factors:
(i) Social factors include the cultural aspects and include health conscious¬ness, population growth rate, age distribution, career attitudes and emphasis on safety.
(ii)Trends in social factors affect the demand for a company’s products and how that company operates.
(iii)For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labour).
(iv)Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).
Technological factors:
(i)An entrepreneur must be aware of importance of technological development for the firm and how it is to be resolved.
(ii)He should show complete knowledge of technology required to produce the product?
(iii)Availability of training at a local area or can outsource it.
(iv)What would be the position of supply of plant and machinery for such a technology?
(v)It also includes technological aspects such as resources and development activity, automation, technology incentives and the rate of technological change.
(vi)Influence various decision for better and latest technology, costs, quality, and lead to innovation.
Environmental factors:
(i)It includes ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.
(ii)Growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.
Legal factors:
(i)It includes discrimination law, consumer law, antitrust law, employment law, and health and safety law.
(ii)These factors can affect how a company operates, its costs, and the demand for its products.
Q4. Explain creative process.
Ans. Creativity means bring something new into existence. Creativity is the ability. Creativity is a process leads to evolution of idea. Those ideas are further enhanced and developed by the entrepreneurs. It consists of five stages:
Idea Germination:
(i)It is the first stage or seeding stage of new idea.
(ii)In this stage an entrepreneur recognises that an opportunity exists in an environment.
(iii)The first stage takes a shape only when an entrepreneur shows an interest and curiosity according to which opportunity is explored and exploited to its best potential.
(iv)Creative idea germinates on the basis of needs and problems of people and according to the area of study.
For example, Mansukhbhai Prajapati, who thought of a non-stick pan made from clay and a clay refrigerator that works without electricity. He wanted to explore the idea of making the refrigerator which will be eco-friendly. He conceived this idea in 2001, but the final product could take shape only in 2004.
Preparation:
(i)More interest and curiosity, the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea.
(ii)Again market research is to be conducted, if the idea is to launch a new product or service.
(iii)Market research helps an entrepreneur to foresee the future of the product. For example, in the aforesaid story of Mansukhbhai since his wife could not afford to buy a non-stick TAYA (pan).Mansukhbhai’s brain stormed immediately that, not only his wife but other housewives are also in need of a nonstick-TAVA. And he decided to go ahead.
Incubation:
(i)This is the subconscious assimilation of information.
(ii)It is also considered as the transition period (Change of one stage to another stage).
(iii)The entrepreneur starts thinking about the idea, imaginating and thinking about implementation in his sub-conscious mind.
For example, Manshukhbhai went through the process of studying the pros and cons of manufacturing the product before he had launched it.
Illumination: In this period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting raw-material, arranging funds, policy-making for the implementation of idea.
In this case of Mansukhbhai it was important to have enough of funds in hand to buy and keep in store enough raw-material.
Verification: Also called the validation or testing stage. This is where the idea is verified to prove that it has value. This is the most difficult phase of creativity as obstacles begin to appear.
This is the developing stage in which knowledge is developed into application.
Q5. What is Innovation and explain the elements of innovation process?
Ans. Innovation: It is the process of entrepreneurship which involves the translation of a useful idea into an application which has commercial value. It takes persistent effort on work out analytically on the details of the enterprise or service, to develop marketing strategies, to organize finances and strategize operations.
(i)Analytical Planning: Identifying the important features, its design and the resources required for the selected product or services.
(ii)Resource Organization: Arranging and obtaining the required resources, materials, technology, human or capital resources.
(iii)Implementation: Utilization of the resources in order to accomplish the plans and delivering results and objectives. Or converting the input into output.
(iv)Commercial Application: The provision of value to customers, reward employees, and satisfy the stake holders.
E.VERY LONG ANSWER TYPE QUESTIONS
Q1. Elaborate the factors involved in sensing opportunities.
Ans. To sense an entrepreneurial opportunity, an entrepreneur employs his sharpened skills of observation, analysis and synthesis to identify an opening.
The most important factors involved in the process are:
(i)Ability to perceive and preserve basic ideas which could be used commercially.
(ii)Ability to harness different sources of information.
(iii)Vision and creativity.
(i)Ability to perceive and preserve basic ideas: Basic ideas emerge from various sources. These ideas can be categorized as follows:
(ii) Ability to harness different sources of knowledge and information: The information gathered from different sources has to be analyzed and utilized for identification of the right opportunity. Various sources like magazines, journals, books, seminars, trade shows, family members, customers, friends, etc. help in getting information that results in evolution of basic ideas. Bring together various sources of information and knowledge, and analyze it to the best possible extent. The analysis helps in the identification of the right opportunity to start a new business.
(iii) Vision and Creativity: Creativity is the most striking behavioural characteristics of an entrepreneur. He should be able to develop an idea through a process of creativity and build something of value to solve a generated problem. Once the solution is identified their vision to convert the solution into business opportunity help them to move forward, overcoming all the obstacles. They constantly:
(a)overcome the adversity (b) are able to exercise control over the business (c) are capable of making significant difference.
Vision and Creativity: e.g. Code Division Multiple Access (CDMA) technology to common man. Introducing WhatsApp free messaging, text, pictures.
Q2. Examine the sources from where business ideas emerge.
Ans. Basic ideas emerge from various sources. These ideas can be categorized as follows:
Q3. Discuss the steps involved in the investigation of ideas.
Or
Explain the steps involved in idea and opportunity assessment.
Ans. (i) Product Identification:
(a)To select a product or services which is in demand and an entrepreneur can sell easily.
(b)To check with the product whether it is available in the market or not.
(c)If it is, then he should identify the reason for introducing the same product or service in the market.
(d) Take further step to further improvisation of the product.
For example, entrepreneur selected pen drive but it is already available in the market but he improvised V the same by innovating a new pen drive especially for teachers which will have a built in anti-virus and which can be worn like a watch so it minimises the problem of losing the pen drive.
(ii)Application and Use:
(a)Ideas should be examined for their real life use and application.
(b)If it already exists in the market then finding out its present use, improvisation of the product, modifying it for better use.
(c)For example, the new pen drive especially for teachers which will have a built in antivirus and which can be worn like a watch. This example of pen drive and watch is an already existing product produced by many companies but according to new trend an entrepreneur has innovated a new type of pen drive especially for teachers which will have a inbuilt antivirus which shows improvisation and modifying a product for a better use.
(iii) Level of Operation:
(a)This is a crucial test for product/ service identification.
(b)Depending on the nature of the enterprise, the production is undertaken, the enterprise can be cottage industry, small scale, medium scale or large scale industry.
(c)Quantity of production is considered.
(d)Requirement of labour, technical experts, skilled labour, etc. all are to be considered.
(iv) Cost:
(а)An entrepreneur first finds out the cost price of the product and then ultimately decides the sale price.
(b)Every entrepreneur must answer the following questions before deciding the selling price of the product:
•What is the per unit cost of the product at particular level of operation?
•Whether this cost is comparable with that of other competitive products?
For example, a large manufacturing unit would be expected to have a lower cost per unit of output than a smaller unit, all other factors being equal, while a company with many facilities should have a cost advantage over a competitor with fewer.
(v) Competition:
(а)The extent, intensity and trends in competition are to be analysed. This has direct impact on production capacity and supply.
(b)Any product or service will face market competition at some stage.
(c) An entrepreneur should be assessed through a study of the trends in demand and supply.
(vi) Technical Complexity: What type of technology is required to produce the product? Whether training and application of such technology will be locally available or will it have to be supported from other places? What would be the position of supply of plant and machinery for such a technology? These are important issues that have to be resolved.
(vii) Annual turnover and profit margin:
(a)An entrepreneur has to examine the basis of expected annual turnover. It refers the total sales of the year.
(b)This will also indicate the market share or profit margin of the product or service.
(c)Once the entrepreneur has assessed the opportunities on these basis he should go ahead and assess the market also.
Q4. What do you understand by Trend Spotting? What are the ways by which entrepreneurs can spot trends?
Ans. Trend spotting refers to identification of new trends which helps an entrepreneur to understand the market and produce goods or provide services in sync with the market trends.
(i)Read trends:
(a)Entrepreneurs regularly read the leading publications and websites affecting their business.
(b)Publications include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.
(c)They scan information from a wide variety of sources – from international news on down to niche bloggers focused on specific aspects of their industry. Obviously, there’s a tsunami of information available. They use tech-tools like RSS feeds, e-mail, newsletters or websites and forums to keep on top out of all and get the information they want. They understand quickly which sources are valuable and which should be avoided.
(ii) Talk trends:
(a)Talking to people is an equally important trend-spotting tactic. They get involved in specific industry’s trade association and attending events both online and offline.
(b)From social networking tools like social network websites and forums.
(c)They even start or join groups on the networks and see what people are buzzing about the latest trends. To customers regarding what customers thinking, buying, doing, etc. What customers are saying about the business, but what they’re saying about the competitor’s business.
(iii)Watch trends:
(а)Watching and observing the customers in the market place.
(b)If the customers are teenagers, in the local mall.
(c)If they are business class people, it might be restaurant or office park restaurant center.
(d)The entrepreneur spends some time simply watching and observing what people are eating, doing, wearing, using.
(iv)Think trends:
(а)As an entrepreneur begins gathering all these information regularly, they will start to develop a “trend-spotter mind.”
(b)They collect from what they read, heard and observed, and they start to making connections and observations that will lead to business-boosting insights.
Q5. Explain in detail Idea Fields.
Ans. Idea fields are well defined frames of reference that guide the generation of ideas.
Various idea fields are examined below: (i) Natural resources: The idea for a product or service can be derived from the available natural resources like
(a)Agricultural
(b)Breeding and Caring of animals (animal husbandry)
(c)Cultivation or Horticulture
(d)Human
(e)Mineral or Soil
(f) Solar
(g)Tidal
(h)Wind
Entirely new products or service related ideas can be generated from these resources or ideas to supplement these natural resources can be derived.
(ii)Current products or services: It requires careful analysis of the existing products or services and put the expertise and imagination to improve the current products or services. The demand for a product or service or the need to tackle the competition will also help in origination of a new idea. As the value addition to the existing product or service is as good as inventing a new product, the existing products or services also act as a good source of new ideas.
(iii)Demand or Market: Conducting a research in the market to procure the information relation to the gap between demand and supply, changing consumer preferences, trends, technology helps in the generation of new ideas for products or services. The data gathered is analyzed using business intelligence and helps as a good sources of new ideas.
In addition to this, the demand prevailing in the market will also help in generation of new ideas.
The analysis of the products and services offered by the competitors will also act as a valuable source for generating a new idea.
(iv)Trade: As the globalization has expanded the scope of business to the entire world, a careful analyis of the prevailing trades and methods will act as a good source of idea generation. Earlier the trading was limited to local distribution network or grocery stores. However the trade has expanded from the local market to import and export of goods. The most recent revolution in the trade is e-commerce and has broadened the scope of trading globally and is not time bound. Thus it became a valuable, most effective, less risk prone area for originating new ideas.
(v)Service sector: As the society is becoming more educated and as there is tremendous growth in information and technology, it opened up new challenges and opportunities and became a great source for generation of new ideas in various entrepreneurial sectors. Few of the sources are in the
(a)Service of home appliances
(b)Automobile servicing
(c)Fast food
(d)Cool drink outlets
(e)Ice cream outlets
(f) Tourism
(g)Personal grooming
(h)Career counseling
(i) Emigration services
(vi)Creativity: Creativity being one of the most important competency of an entrepreneur plays a vital role in getting an idea for a new product or service or improving an existing product or service. Most often it is noticed that the need to solve a problem triggers creativity to come up with new ideas. It helps in
(a)Adding additional value to an existing product or service
(b)Innovate a new product or service
(c)Innovate a new methodology or material to produce a product
(d)Expand the demand and market for the current product or service
(e)Expand the usability of an existing product or service
F. HIGHER ORDER THINKING SKILLS
Q1. Aditi started her boutique business near an industrial area and she was not getting clients as she had expected. What are the factors which have been ignored before starting the boutique? Suggest the various factors that she has to look into before venturing into business.
Ans. Aditi started her boutique business near an industrial area and she was not getting clients as she had expected because selection of a product or service will depend upon many factors. They are:
(i)Demand
(ii)Supply and Nature of Competition
(iii)Cost and Price of Product
(iv)Project Innovation and Change Here, the main factor which had been ignored before starting the boutique is DEMAND of the product. It is to be suggested to Aditi that while assessing the market, an entrepreneur has to prepare details on the following lines:
(i)Demandl:
(a)The demand assessment will be based on the size of market being targeted.
(b)The different types of markets are local markets, market at state level or national/international market.
(c)It involves a detailed study of the target groups of consumers, their preferences, tastes and other related variables.
(ii)Supply and nature of competition:
(a)Supply position refers to the complete picture of quantities of the product made available in the market by all the existing players.
(b)It should take into account future supplies from possible entrants in the field.
(iii)Cost and price of product:
(a)It is important to determine the cost of the product and its comparison with available products in the market.
(b)Cost variable of competitors in terms of transportation delays, wastage, storage etc., have to be studied to spot cost advantage. This will influence the delivery mechanism of the identified product or service.
(iv)Project innovation and change: (a) Market assessment will require a study of prevailing innovations and changes being carried out by existing entrepreneurs.
(b) Technological advancements in the field have to be analysed because they may change the quality and influence the cost and price ultimately.
Q2. Mr. Raghav had always wanted to manufacture an innovative, energy efficient fan. He was looking into various options and has finally narrowed it down to one option. He understands that the entire idea would have to follow a process. Identify and explain the process.
Ans. The process is idea and opportunity assessment.
(i)Product identification: An idea should lead the entrepreneur to a definite product/service which he can sell. So the first step is to obtain a concept of the product or service suggested by one idea. We should also see whether this product is already available in the market or not. If it is, then we should identify the reason for introducing the same product or service in the market. For example, innovating a new pen drive especially for teachers which will have a built in antivirus and which can be worn like a watch so it minimises the problem of losing the pen drive.
(ii)Application and use: Ideas should be examined for their real life use and application. If it already exists in the market we will have to find out its present use, then we may think of modifying it for better use. In the above mentioned example, we can clearly see that even though there are lot of companies manufacturing pen drives, the latest will be in consonance with the upcoming trends.
(iii)Level of operation: This is a crucial test for product/service identification. Depending on the use of the product/ service the entrepreneur will produce it in a cottage industry or a small scale industry or a large scale industry.
(iv)Cost: What is the per unit cost of the product at particular level of operation? Whether this cost is comparable with that of other competitive products? These are some of the questions that have to be answered. This will ultimately decide the sale price.
(v)Competition: Any product or service will face market competition at some stage. So market competition should be assessed through a study of the trends in demand and supply.
(vi)Technical complexity: What type of technology is required to produce the product? Whether training and application of such technology will be locally available or will it have to be supported from other places? What would be the position of supply of plant and machinery for such a technology? These are important issues that have to be resolved.
(vii)Annual turnover and profit margin: Ideas should also have to be examined on the basis of expected annual turnover. This will also indicate the market share of the product or service. Once the entrepreneur has assessed the opportunities on these basis he should go ahead and assess the market also.
Q3. These are convenient frames of reference for streamlining the process of generation of ideas. Identify them and explain any three briefly.
Ans.
(i) Natural resources: Ideas can be generated based on natural resources. A product/service may be desired from forest resources, agriculture, horticulture, mineral marine, or aqua mineral, animal husbandry, wind, sun and human resources. A further exercise with a field may generate many useful products ideas. For example:
If we are getting ideas in the field of forest resources, we think wood- based product, bio-fertilizers, etc. Solar energy is used for many purpose like cooking, electricity consumption and water heater.
(ii) Existing Products/Services: Existing products and services can general number of ideas to improvise the product, to come up with cheaper substitution or sometimes by reducing the price of the product.
There is a constant and consistent effort on the part of all entrepreneurs to improve the product/services already existing in the market. This can be improved by using old techniques with more care or using newly developed technology. So, thinking about existing product/ services he can generate number of ideas to improve them.
For example:
(a) Thinking of introducing Laser Printer in place of Dot Matrix Printers.
(b) In an area, where automobiles are being made, there is a scope of starting a small unit of spare parts.
(iii) Service Sector Ideas:
(a)Service sector field is the most growing field these days all over the world. It emerges knowledge to societies doing advance research in information technology.
(b)An entrepreneur identifies new opportunities and by understanding it he links services to develop various business activities.
(c)Various service base units in an enterprise are transport, security, catering, recruitment, training and communication, health care centres.
(d)It serves the purpose of helping enterprise to satisfy their day-to-day needs like bill collection, water tank cleaning, travel arrangement, etc.
(e)For example: Cyber cafe (internet facilities), ATM Facilities and other banking services, Metro trains, etc. In Amongst the most interesting ones in the food sector are the following:
•Indian fast food chains: McDonald’s and Pizza Hut can be the role models in terms of efficiency of service, hygiene, quality, and overall value.
•Family dinner: Nirula’s offering Indian style “Plated or Combo” meals with table service and overall good price-value equation.
•Ice-cream and Juice/Beverage Parlours, (Indian “desserts” and “snack food” chains).
Lastly, in the genre of food and food service chains, one of the biggest opportunities remains in starting national or at least regional chains offering Indian mithai, namkeen/ farsaans, and snack-foods such as pakodas and samosas. Haldiram’s success should certainly put any doubt on this opportunity to rest.
(iv)Market driven or demand driven ideas:
(a)For an entrepreneur market is the only place where he can carry out or generate maximum ideas. Such a study yields valuable data about trends of supply, demand and consumer taste and preferences.
(b)Market research is any organized effort to gather information about target markets or customers as it is one of the important component of business strategy.
(c)Market research is a key factor to maintain competitiveness over
competitors and it provides important information to identify and analyze the market need, market size and competition.
(d)It also includes social and opinion research by systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision-making.
(e)Idea generation develops from knowledge of the consumer, the market, the technology and the general environment, and it creates newness in product, production and marketing. It systematically develops product ideas to satisfy the aim of the project and therefore the business strategy.
(v) Trading related ideas:
(a)Trade in simple terms is buying goods and services and selling them to consumers at a profit. One big advantage that trading has over other types of businesses is that it is easier to launch and less risky.
(b)Trading these days is not limited to ordinary grocer or distributor outlets. With increasing consumerism, the scope and nature of trade has enlarged; local trade, import and export, e-commerce are all making trading a very wide area of enterprise. It is however, necessary for a prospective trader to be aware of the trends in an economy.
(c)With the opening of the market to International Companies, large size departmental stores, chain shops and umbrella markets have become omnipresent; competition has become intense and to survive in the market new entrants will have to acquire skills, competencies and knowledge required to launch, manage and expand business opportunities.
Q4. Varun decided to start his own venture and was looking into various ideas. Explain to him various sources from where he can get some good business ideas.
Ans. Varun decided to start his own venture and was looking into various ideas. The process of generation of ideas can be streamlined by developing an awareness for different idea fields. This will help the Varun in enlarging the scope of thinking, at the same time structuring the ideas according to convenient frames of reference. By following different ways for generating ideas Varun collects a number of good business ideas.
G.EVALUATION AND MULTI-DISCIPLINARY QUESTIONS
Q1. ‘Environmental factors exert influence upon each other and do not operate in isolation’. Discuss.
Ans. Yes, it is true. All environmental factors are interrelated and exert the influence upon each other.
Political Factor: Political factor is the outcome of a combination of various ideologies advocated by different political parties. The rules and regulations and the laws that monitor and regulate the market forces are framed and promulgated by the Government.
The policies of the Government in power have to be reckoned and implemented:
(i)for taking a business decision,
(ii)growth of trade industry and commerce,
(iii)aims at improving infrastructural facilities which encourage new business ventures,
(iv)relaxation of import-export policies, Example: Taxation Policy, Trade regulations, Governmental stability, Unemployment Policy, etc.
Socio-cultural Factor:
(i)Business is born and develops in society and in it various social factors exist.
(ii)It involves a close study of the life styles, beliefs, customs, conventions, practices, etc. Expectations of individuals their preferences on the basis of their family background, age group and education will also form a part of this study.
(iii)This is a crucial process for the simple reason that the product or service that the entrepreneur envisages will have to satisfy the need of these individuals.
Example. An entrepreneur wants to open a showroom of branded foot wears.
Economic Factor: It includes the close study of important variables like supply and demand. Details of consumer trends, economic preference, costing, discounting etc. are all economic decisions. Inflation rate, growth in spending power, economic details will also help the entrepreneur in determining the size of the project and the reasons of finance.
(i)Legal: Legal scanning of the environment demands analyzing the legal requirements in the establishment of a project. Managing of the project and also in getting assistance from different sources, e.g. welfare of employees, safety, simple contracts entered into with suppliers of raw materials financer’s, health and safety.
(ii)Product Safety: Advertising regulations, product labeling, labour laws etc., real estate owners., etc. require legal assistance.
Technical Factor: It is influenced by government spending on research, new discoveries and development, Internet, E-commerce, Social Media, Electronic Media, Research and Development, Rate of technological change government and industry focus employment law.
Value points:
(i) Truthfulness (ii) Universal
(iii)Faithful justice (iv) Discipline
(v)Helpfulness (vi)Readiness to cooperate.
Q2. “If you don’t adapt, you don’t endure”. Evaluate the validity of the statement.
Ans. Yes, it is correct. The business environment is increasingly becoming uncertain and complex due to political realignments, economic crises, terrorism threats, technological innovations and natural disasters.
In rapidly changing environments, one rule of thumb applies: If you don’t adapt, you don’t endure. It is the core idea behind environmental scanning, which refers to the means by which organizations gather information on changing conditions and incorporate those observations into a process where necessary changes are made.
The right information, combined with the right adaptations, can determine an organization’s future viability. Environmental scanning can help you identify the trends that are most likely to directly affect the organisation and product. Then an entrepreneur can craft a strategy that will help him take advantage of various changes occurring and get through the success and at the same time if he is not aware of what the environment surrounding his business he is sure to fail.
(i)E.g., HMT watches lost its market to Titan;
(ii)Sony failing to understand the changing trends in mobile phones and therefore losing it’s market share.
Value Points:
(i)Spirit of Enquiry
(ii)Services to others
(iii)Initiative
(iv)Self-existent
(v)Awareness of responsibility of citizenship
(vi)Social service
(vii)Endurance (viii) Tolerance
(ix)To protect national property.
H.APPLICATION-BASED QUESTION
Q1. Vinay was a young entrepreneur who wanted to start a new business with an initial investment of 25 lakhs. He was not sure of what business he has to undertake. His friend suggested seeking the help of professionals who would spot the latest trends in the market and give him an idea, but Vinay decided to do it by himself. Suggest the various ways by which he can do it.
Ans. Vinay is a young entrepreneur and wanted to start a new business with some initial investment, accordingly he can follow different sources of business idea ways for generating ideas.
Sources of business ideas
(i)Vinay must examine his own skill set for business ideas
(ii)Keep up with current events and be ready to take advantage of business opportunities
(iii)Invent a new product or service
(iv)Add value to an existing product
(v)Investigate others markets
(vi)Improve an existing product or service
(vii)Get on the band wagon.
MORE QUESTIONS SOLVED
I. VERY SHORT ANSWER TYPE QUESTIONS
Q1. What is the basic test for a successful entrepreneur?
Ans. The basic test of a successful entrepreneur is the identification of business opportunity in the environment and initiating steps to produce and sell goods and services to make use of the opportunity.
Q2. How Peter F. Drucker defined the word entrepreneur?
Ans. Peter F. Drucker defined entrepreneur as one who has always searches for an opportunity.
Q3. What do you understand by the word ‘Scan’?
Ans. The word ‘scan’ – means to examine closely especially in search of something.
Q4. How scanning of environment is beneficial to an entrepreneurs?
Ans. Scanning of environment is always beneficial to an entrepreneur to know the present situation in the market, the various changes occurring in the economy as new trends, issues and expectations of people due to changes in the environment.
Q5. Who said, “Entrepreneur as one who always searches for an opportunity”.
Ans. Peter F. Druker.
Q6. Define Entrepreneurship Environment.
Ans. Entrepreneurship environment refers to the various forces within which various small, medium and large enterprises operate. These factors exert influence upon each other and do not operate in isolation.
Q7. Name two levels of external environment.
Ans. The two levels of external environment: (a) Micro environment (b) Macro environment
Q8. State the components of micro environment.
Ans.
Q9. State the components of macro environment.
Ans.
Q10. What do you mean by product line?
Ans. It refers to a series of different products which form a group, all made by the same company.
Or it is a set of sequential operations established in a factory whereby materials are put through a refining process to produce an end-product that is suitable for onward consumption; or components are assembled to make a finished article.
Q11. What is problem identification?
Ans.A problem is a road block in a situation, something that sets up a conflict and forces you to find a solution. When an entrepreneur identifies such a road block he is said to have identified the problem.
Q12. How an entrepreneur is different from others?
Ans. The entrepreneurs perceive opportunities, synthesize the available information and analyse emerging patterns that escape the attention of other people. They are people with vision, capable of persuading others such as customers, partners, employees and suppliers to see the opportunity, share and support it.
Q13. From where does a business opportunity or ideas comes from? Give one example.
Ans. A business idea or opportunity comes from day-to-day problems of people and an entrepreneur is the person who solves it and fulfils it by providing product or services to people.
Q14. State some sources of information which helps an entrepreneur to get information that results in evolution of basic ideas.
Ans. Some sources of information are:
Magazines, journals, books, seminars, trade shows, family members, customers, friends, competitors.
Q15. Why an entrepreneur should be able to creatively identify an idea?
Ans. The entrepreneur should be able to creatively identify an idea so that he can easily generate a valuable solution to a problem.
Q16. Once the solution is identified by an entrepreneur how it helps him?
Ans. Once the solution is identified their vision to convert the solution into business opportunity help them to move forward, overcoming all the obstacles.
Q17. What is the key component of the talents and abilities needed for an entrepreneur.
Ans. Creativity is an important key component of the talents and abilities needed for an entrepreneur.
Q18. What are born as a result of problem solving?
Ans. Creative products and services are born as results of problem solving.
Q19. A prospective entrepreneur find opportunity?
Ans. For a prospective entrepreneur an opportunity may be derived from the needs and problems of the society.
Q20. Give one advantage that trading has over other types of businesses.
Ans. One big advantage that trading has over other types of businesses is that it is easier to launch and less risky.
Q21. State few cost variable of competitors which have to be studied to spot cost advantage.
Ans. Cost variable of competitors in terms of transportation delays, wastage, storage, etc., have to be studied to spot cost advantage.
Q22. How trend spotting will helps an entrepreneur?
Ans. Trend spotting will helps the entrepreneur to understand the market and produce goods or provide services in collaborate and integrate with the market trends, changing habits, consumers taste and preferences, etc.
Q23. Who are called Professional trend-spotters?
Ans. Professional trend-spotters are some entrepreneurs who spot the trends themselves and charge big money for reports and industry trend updates.
Q24. Who is a trend spotter?
Ans. A trend spotter refers to someone who specializes in identifying new market trends and make the changes possible. He is a keen observer, alert and notices on new fashions, changing habits, activities in the market. He can be forecaster, business leader, politician, stock analysist, futurist who identify trends and talk about the future to transmit a story into value for others.
In short, the role of a trend spotter is to tell persuasive stories about the present and the future to influence others.
Q25. “A trend is a description of a change taking place in the long term or short term”. Comment.
Or
What do you understand by the term trend?
Ans. Atrend can be short term manifestations, e.g. a fashion, design, assumption. A trend can also be a long term mega trends, which typically has a minimum of 30-50 years relevance, e.g. globalization, individualization, digitalization.
Q26. Give one example of each “Trends can be invisible and visible”.
Ans. Trends can be visible e.g. change in the gender roles; Trends can be visible, e.g. Gadgets
Q27. Why creativity is important to entreprneurs?
Ans. Creativity is important to entrepreneurs because it is the first stage in the process of innovation, providing the stimulus for opportunity discovery and new venture creation.
Q28. When is the illumination period starts for an entrepreneur?
Ans. Illumination starts when an entrepreneur re-surfaces the idea in realistic way and entrepreneur comes out with viable plan to give practical shape and implement an idea.
Q29. What should an entrepreneur do, “if the opportunity looks promising”?
Ans. When the opportunity looks promising, an entrepreneur should look into the environmental factors before choosing the best opportunity.
Q30. Kartik wants to start a new ready made garments shop in his colony. He knows that it is the best opportunity for him and it is going to give him high rate of promising returns. How do you agree with Kartik that he has selected a right opportunity?
Ans. Kartik should look into various factors before deciding on the opportunity. Even if the opportunity looks promising, he must took into the environmental factors (PESTEL) before choosing the best opportunity.
Q31. What do you understand by supply position?
Ans. Supply position is the complete picture of quantities of the product made available in the market by all the existing players.
Q32. From what do entrepreneurs spot business opportunities?
Ans. Entrepreneurs spot business opportunities from problems and needs that exist in the environment.
Q33. State two main objectives of environment study by an entrepreneur.
Ans. (i) To get familiar with environment
(ii)To get .stability in the environment
Q34. What develops an idea into viable and success