Entrepreneurship Assignment 1

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AteeqUrRehman EntrePreneurship(193)

RollNo.408071991 Autumn2009
Q1 (a) 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 verysmall fractionof the population. On the other extreme of definitions, anyone whowantstoworkforhimselforherselfisconsideredtobeanentrepreneur.
The word entrepreneur originates from the French word, entreprendre, which means "to undertake." In a business context, it means to start a business. The MerriamWebster Dictionary presentsthedefinitionofanentrepreneurasonewhoorganizes,manages,andassumestherisks ofabusinessorenterprise.
Schumpeter'sViewofEntrepreneurship Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an emphasis on innovation,suchas: newproducts newproductionmethods newmarkets newformsoforganization
Wealth is created when such innovation results in new demand. From this viewpoint, one can define the function of the entrepreneur as one of combining various input factors in an innovativemannertogeneratevaluetothecustomerwiththehopethatthisvaluewillexceedthe costoftheinputfactors,thusgeneratingsuperiorreturnsthatresultinthecreationofwealth.
Entrepreneurshipvs.SmallBusiness Many people use the terms "entrepreneur" and "small business owner" synonymously. While they may have much in common, there are significant differences between the entrepreneurialventureandthesmallbusiness. Entrepreneurialventuresdifferfromsmallbusinessesintheseways:
1. Amount of wealth creation rather than simply generating an income stream that replaces traditional employment, a successfulentrepreneurial venture creates substantialwealth, typicallyinexcessofseveralmilliondollarsofprofit.
2. Speed of wealth creation while a successful small business can generate several million dollarsofprofitoveralifetime,entrepreneurialwealthcreationoftenisrapid;forexample,within 5years.
3. Risktheriskofanentrepreneurialventuremustbehigh;otherwise,withtheincentiveof sureprofitsmanyentrepreneurswouldbepursuingtheideaandtheopportunitynolongerwould exist.
4. Innovation entrepreneurship often involves substantial innovation beyond what a small businessmightexhibit.Thisinnovationgivestheventurethecompetitiveadvantagethatresultsin wealth creation. The innovation may be in the product or service itself, or in the business processesusedtodeliverit. CIT(CentreOfInformationTechnology) 1
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Q1 (b)
ImportanceofEntrepreneurship The importance of entrepreneurship to any economy is like that of entrepreneurship in any community. Entrepreneurial activity and the resultant financial gain are always of benefit to a country.Ifyouhaveentrepreneurialskillsthenyouwillrecognizeagenuineopportunitywhenyou comeacrossone. Now the reasons whyentrepreneurshipholds a dominant position in the society? The following reasonsareresponsibleforthesame: 1)Providesemploymenttohugemassofpeople:peopleoftenholdaviewthatallthosewhodo not get employed anywhere jump into entrepreneurship, a real contrast to this is that 76% of establishments of new business in the year 2003 were due to an aspiration to chase openings. This emphasizes the fact that entrepreneurship is not at all an encumbrance to an economy. Whatsmoreisthatapproximately34millionoffreshemploymentopportunitieswerecreatedby entrepreneurs from the period of 1980. This data makes it clear that entrepreneurship heads nationtowardsbetteropportunities,whichisasignificantinputtoaneconomy. 2) Contributed towards research and development system: almost 2/3% of all innovations are duetotheentrepreneurs.Withouttheboomofinventionstheworldwouldhavebeenamuchdry place to live in. Inventions provide an easier way of getting things done through better and standardizedtechnology. 3) Creates wealth for nation and for individuals as well: all individuals who search business opportunitiesusually,createwealthbyenteringintoentrepreneurship.Thewealthcreatedbythe same play a considerable role in the development of nation. The business as well as the entrepreneur contributes in some or other way to the economy, may be in the form of products or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, and inventions arealsoagreathelptothenation. 4) Skyscraping heights of apparent prospects: the individual gets maximum scope for growth andopportunityifheentersintoentrepreneurship.Henotonlyearns,therighttermwouldbehe learns while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skillshedevelopswhileowninghisenterprisearehisassetsforlifetimewhichusually,lackswhen apersonisunderemployment.Theindividualgoesthroughagroomingprocesswhenhebecomes anentrepreneur.Inthiswayitnotonlybenefitshimbutalsotheeconomyasawhole. 5)Itisachallengingopportunity forthepeople:althoughentrepreneurshipisachallengingtask butinmostofthecasestherewardsitgivesaremuchmorethanwhatoneanticipates.Itdoesnot only reward an entrepreneur at financial levels but also on individual level. It provides self satisfactiontotheentrepreneur. 6) Entrepreneurship provides self sufficiency: the entrepreneur not only become self sufficient butalsoprovidegreatstandardsoflivingtoitsemployees.Itprovidesopportunitytoanumberof people working in the organization. The basic factors which become a cause of happiness may be CIT(CentreOfInformationTechnology) 2
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liberty, monetary rewards, and the feeling of contentment that one gets after doing the job. Thereforethecontributionofentrepreneursmakestheeconomyanimprovedplacetolivein.
Q2 (a)
Entrepreneur Anentrepreneuris a person who has possession of a newenterprise,ventureoridea, and assumes significant accountability for the inherent risks and the outcome. He or she is an ambitious leader who combines land, labor, and capital to often create and market new goods or services.The term is aloanwordfromFrenchand was first defined by the Irish economistRichard Cantillon.EntrepreneurinEnglishisatermappliedtothetypeofpersonalitywhoiswillingtotake upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome.JeanBaptiste Say, a French economist, is believed to have coined the word Entrepreneur first in about at 1800. He said an entrepreneur is "one who undertakes an enterprise,especiallyacontractor,actingasintermediatorybetweencapitalandlabour". The word entrepreneur is often synonymous with founder. Most commonly, the term entrepreneur applies to someone who creates value by offering a product or service, by carving out a niche in the market that may not exist currently. Entrepreneurs tend to identify a market opportunityandexploititbyorganizingtheirresourceseffectivelytoaccomplishanoutcomethat changesexistinginteractionswithinagivensector. Observers see them as being willing to accept a high level of personal, professional or financialrisktopursueopportunity. Business entrepreneurs are viewed as fundamentally important in thecapitalisticsociety. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs," whilesocial entrepreneurs' principal objectives include the creation of a social and/or environmentalbenefit. Entrepreneurasaleader ScholarRobert. B. Reichconsiders leadership, management ability, andteambuildingas essential qualitiesofanentrepreneur.Amoregenerallyheldtheoryisthatentrepreneursemergefromthe populationondemand,fromthecombinationofopportunitiesandpeoplewellpositionedtotake advantage of them. An entrepreneur may perceive that they are among the few to recognize or be able to solve a problem. In this view, one studies on one side the distribution of information available to wouldbe entrepreneurs and on the other, how environmental factors change the rateofasociety'sproductionofentrepreneurs. A prominent theoristJoseph Schumpeter, who saw the entrepreneur as innovators and popularized the uses of the phrasecreative destructionto describe his view of the role of entrepreneurs in changing business norms. Creative destruction dealt with the changes entrepreneurialactivitymakeseverytimeanewprocess,productorcompanyentersthemarket. Researchintoentrepreneurs
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Schumpeter argues that the entrepreneur is an innovator, one that introduces new technologies into the workplace or market, increasing efficiency, productivity or generating new products or services. SocialEntrepreneur Social entrepreneurs act within a market aiming to create social value through the improvement of goods and services offered to the community. Their main aim is to help offer a better service improving the community as a whole and are predominately run as non profit schemes. To support this point Zahra et al said that social entrepreneurs make significant and diverse contributions to their communities and societies, adopting business models to offer creative solutions to complex and persistent social problems. Examples of socially run businesses include theNHSandalsothe'LoveOneWater'drinksbrand.
Q2 (b)
TypesofEntrepreneurs TypesofEntrepreneurscanbeclassifiedondifferentbasis.Someofthesebasisinclude Typeofbusiness UseofTechnology Motivation Growth StagesinDevelopment Others Theentrepreneurswhichcomeunderthesebasisareasfollows Typeofbusiness Business entrepreneur: Convert ideas into reality; deal with both manufacturing and tradingaspectofbusiness(Smalltradingandmanufacturingbusiness) Trading entrepreneur: Undertakes trading activities; concerned with marketing (Domestic andinternationallevel) Industrial entrepreneur: Undertakes manufacturing activities only; new product developmentetc(textile,electronics,etc) Corporate entrepreneur: Interested in management part of organisation; exceptional organising,coordinatingskillstomanageacorporateundertaking(Ambani,Tatafamilies) Agricultural entrepreneur: Production and marketing of agricultural inputs and outputs (Dairy,horticulture,forestry) UseofTechnology Technicalentrepreneur:Productionoriented,possessesinnovativeskillsinmanufacturing, qualitycontroletc. Nontechnicalentrepreneur:Developsmarketing,distributionfacilitiesandstrategies Professional entrepreneur: Uses the proceeds from sale of one business to start another one.Brimmingwithideastostartnewventures Motivation Pureentrepreneur:Psychologicalandeconomicrewardsmotivatehim Induced entrepreneur: Incentives, concessions, benefits offered by government for entrepreneursmotivateshim Motivatedentrepreneur:Senseofachievementandfulfillmentmotivatehim CIT(CentreOfInformationTechnology) 4
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Spontaneous entrepreneur: Born entrepreneurs with inborn traits of confidence, vision, initiative Growth Growth entrepreneur: One who enters a sector with a high growth rate; is a positive thinker Super growth entrepreneur: One who enters a business and shows a quick, steep and upwardgrowthcurve StagesinDevelopment First generation entrepreneur: Innovator, risk taker, among the firsts in family to enter business Modern entrepreneur: Who considers feasibility of business, which can adapt to change anddynamicmarket Classical entrepreneur: One who gives more importance to consistent returns than to growth;concernedaboutcustomerandmarketingneeds Others AreaRuralandUrbanentrepreneur Gender/AgeMenandWomenentrepreneur ScaleSmallandLargescaleentrepreneur
Q3 (a)
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Q3 (b)
RoleofEthicsandSocialResponsibilityincontextofEntrepreneurship
An entrepreneur must take risks with his or her own capital in order to sell and deliver products and services while expanding greater energy than the average businessperson in order to innovate. A managers attitudes concerning corporate responsibility are related to the organizational climate perceived to be supportive of laws and professional codes of ethics. On the other hand, entrepreneurs with a relativewith a relatively new company who have few role models usually develop an internal ethical code. Entrepreneurs tend to depend on their own personal value systemsmuchmorethanothermanagerwhendeterminingethicallyappropriatecourseofaction. Ethics refer to the study of whatever is right ands good for human being, business ethics concerns itself with the investigation of business practices in light of human values. Ethics is the broad field of study exploring the general nature of morals and the specific moral choices to be madebytheindividualsinhisrelationshipwithothers. Business ethic is the study of behavior and morals in a business situation. Business ethics is any businessdecisionthatcreatesvalueforcustomerbymatchingqualityandprice. Although the English word ethics is generally recognized as stemming from the Greek ethos, meaning custom and usage, it is more properly identified as originating from swedhethos, in which the concepts of individual morality and behavioral habits are related and identified as an essentialqualityofexistence. EthicalDecisions i) providethecustomerwithvaliddataabouttheproductandservice. ii) Enablethecustomertomakeafreeandinformedchoice,and iii) Generatecustomercommitmenttotheproductandtheorganizationthatprovidesit. Violations of these three rules produce unethical behavior invalid and false data, coerced and manipulateddecisions,andlowintegrityandpoorreputationforthefirm. Researchonbusinessethicscanbebrokendownintofourbroadclassifications: 1. pedagogicallyorientedinquiry,includingboththeoryandemphericalstudies 2. Theorybuildingwithoutemphericaltesting. 3. Empherical research, measuring the attitudes and ethical beliefs of student and academic faculty 4. Empherical research within business environments, measuring the attitudes and ethical views,primarilyofmanagerswithinlargeorganization. Insummarytheethicsandresponsibilitiesofentrepreneursare: 1. Support law and professional code:The entrepreneurs have to follow the rules and regulations of the country. They should also follow the code of conduct prepared by their professionalassociation. 2. Follow business ethics:Ethics refers to what is right and good for the human beings and society. The business practices should be developed and used which will be favorable for thehumanvaluesandnorms.
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3. Involve in pedagogical Inquiry:The entrepreneurs have to inquire about the theoretical and empirical aspect of entrepreneurship. They should involve in research and developmentstudiestofindoutthetechniquesandideasofgoodentrepreneurship. 4. Environmental Research:The entrepreneurs should involve in external environmental research and collect the data of different variables. It will help new entrepreneurs for findingoutthefeasibilityoftheirundertaking. 5. Imparting ethical insight to the business students:The entrepreneurs should help the academicians while imparting the ethical insights to the students. They should provide financialsupporttothestudentswhoinvolveinentrepreneurialresearch. 6. Create Employment:Entrepreneurs should create and develop new opportunities for job tothepeopleofthecountry.Theyshouldtrytoreducetheunemploymentproblemofthe country. 7. Mobilization of the idle resources:The natural resources of the country should be mobilized. While mobilizing the natural resources, the optimum use of such resources shouldbeconfirmedsothattheycanbeconservedforfuturegenerations. 8. Increase favorable attitude of people:The earning of the enterprise should facilitate the societys people. It should share its benefit with the society in the form of community development programs, health and sanitation programs, opening of schools and colleges etc.
Q4 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 verysmall fractionof the population. On the other extreme of definitions, anyone whowantstoworkforhimselforherselfisconsideredtobeanentrepreneur.
The word entrepreneur originates from the French word, entreprendre, which means "to undertake." In a business context, it means to start a business. The MerriamWebster Dictionary presentsthedefinitionofanentrepreneurasonewhoorganizes,manages,andassumestherisks ofabusinessorenterprise.
WaystoGenerateEntrepreneurialVentures
1.Alternativeapproachestoexistinginnovations You identify innovations that are coming to the market and look for alternate solutions that will addressthesameneedoralternateneedsthatcouldbeaddressedwiththesamesolution.Agood example is the companyScribd. Scribd has done to books whatYoutubehas done for videos. You uploadyourdocumentsandtheymakeiteasytosharewiththeworld. 2.Annoyancedriveninnovation Listallannoyancesthatyouexperienceeverydayandpicktheonethatappliestomostpeopleand come up with solutions.Tripitis a company that was founded to solve the frustrations everybody faceswiththemyriadofreservations(air,car,hotel,themeparketc)toorganizeandlocatewhile traveling. How many times have you misplaced the car reservation that you made online? Once
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Tripit identified that this is an annoyance everyone faces, they came up with a very elegant solution. 3.Driveaninnovationdownmarket There are a number of products and services that are targeted at large customers. They are expensive and may offer more than one needs.Pixily, the company is one example. Document Management solutions that address both paper and digital documents have only been available formidlargecompaniescostingatleast$100,000tobuy,implementandmaintainkeepingitout of the reach of homes and small businesses. Pixily democratized this expensive technology and haspackageditinaformthatconsumersandsmallbusinessescanaffordanduse. 4.Trenddriveninnovation Followthetrends.Thatis,lookforchangesinsocialnorms,demographyandtechnologyandthen see how you can innovate to align with those trends. A great example is the iPhone. There areso manyinnovativeapplicationsthathavebeencreatedfortheiphonethatonecouldnothavebeen imagined:Filing Insurance claims form the scene of the accident,turn the iPhone into an instrument, andusing physics and crayons to create fun gamesare just few examples of great iPhoneapplications.
Q5 (a) Entrepreneurshiparoundtheglobe:Adaptingtodifferentnationalenvironments
Theprerequisitesofentrepreneurship
Wherever a company is headquartered or does business, certain basic elements must be in place for an entrepreneurial climate to evolve. Access to capital is vital whether an entrepreneur is startingabusinessfromscratchoroperatingwithinanestablishedorganization. The right regulatory and tax environment is also key. Stringent regulations can hinder entrepreneurs,whomustmovequicklytoexploitnewopportunities.Highpersonalandcorporate tax rates can significantly reduce an entrepreneurs potential reward, discouraging the risk taking thatisavitalcomponentofentrepreneurialbehavior. Themostimportantprerequisiteofentrepreneurship,though,isasocialandculturalenvironment in which achievement and wealth creation are held in high regard. A well known company Accenture conducted a survey in 26 countries and revealed only a handful of nations where societyasawholeappearstoembraceanentrepreneurialculture. In contrast, there are other countries where the motives of entrepreneurs are viewed as suspect orthelegitimacyoftheirfinancialgaincalledintoquestion.Insomecountries,an
Entrepreneurshipmodels
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Threemodelsillustratetherangeofwayscountriesorregionscancreateconditionsthat supportentrepreneurship.
entrepreneurialfailurecanallbutendanindividualscareer.Yetothercountriesexhibitasocietal preferencefortheunderdog,thegallantrunneruportheindividualwhoispoorbutnoble. These are deeprooted realities and no one company is likely to change them in the short term. Still, leaders of the most successful companies may find ways to motivate and reward entrepreneurialbehaviorinawayconsistentwithsocietalnorms.
Workingmodelsforentrepreneurshipworldwide How can CEOs characterize the entrepreneurial environment in which their companies operate? Countries and regions around the world differ in the extent of government involvement in the economy and in the way society values individual action versus collective action. Looking at entrepreneurial countries along those dimensions three illustrative models were developed for conditionsunderwhichentrepreneurshipcanflourish. 1.TheFreeMarketModel Examples:TheUnitedStatesandCanada In this model, the role of government is fairly limited. Public policy can create some of the basic conditions required for an entrepreneurial culture to flourish, such as good telecommunications infrastructure,andcanremovemanyoftheobstaclesthatgetintheway,buttherestisuptothe privatesector. This model thrives in a culture in which entrepreneurial success is celebrated rather then denigrated. The tax structure rewards initiative and financial gain, but the degree of social protectionisgenerallylow. 2.TheGuidedIndividualismModel Examples:SingaporeandTaiwan This model, too, is based on the encouragement of individual enterprise. Its distinctive feature, though, is the role of public policy in determining thebroad sweep of entrepreneurial activityin effect,signaling thesectorsand industries in which entrepreneurial energies canmost usefullybe directed. CIT(CentreOfInformationTechnology) 9
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3.TheSocialDemocratModel Examples:SwedenandGermany This model combines the encouragement of enterprise with an emphasis on social protection. Countries that follow this model create a sort of social partnership, with key aspects of the economic and social framework determined by negotiations between the different social partners,suchasemployers,employeesandgovernment. The collective nature of the social partnership system means that initiatives to encourage entrepreneurshipsuch as those promoting greater labor flexibilitycan be accompanied by other measures (for example, retraining schemes and unemployment benefits) to offset any adverse impacts on particular sections of society. It thus becomes easier to gain the approval of societyatlargeforthekeymeasuresneededtostrengthentheproductivebaseoftheeconomy.
Characterizingacountrysentrepreneurialstyle ThesemodelsrepresentthreefrequentlyoccupiedpositionsalongthetwoaxespicturedinFigure. Still, they are not the only possibilities, and many countries will not fit readily into any one. The important first step for a corporate leader, then, is to characterize and position the country or countrieswheretheyareheadquarteredordobusiness.
To position a country along the vertical axis, which indicates the extent of government involvementintheeconomy,consider: Howhighistaxationinthecountry? Towhatextentisstateownershipseenasappropriate? Towhatextentdoesthestatemanagetheeconomythroughregulation? Howwillingisthestatetopromoteandprotecttradeandforeigninvestment? Howinvolvedisthestateinlabormobility,wages,andtermsandconditions?
Topositionacountryalongthehorizontalaxis,whichcharacterizesrespectforindividualaction versuscollectiveaction,consider: To what degree does society aim to ensure the wellbeing of its members in such areas ashealthandeducation? Doesthecountryhaveafairlyhomogeneouscultureoridentity? Towhatextentiswealthdistributionequalorunequal? Howdoesthesocietyreacttosuccessandfailure? Dopeoplegenerallyplayanactiveroleintheircommunities?
Buildinganentrepreneurialspirit Leadersofcompaniesthatoperateprimarilywithinonenationsboundariescanuseknowledgeof the prevailing model to their advantage, tailoring the entrepreneurial approaches they use to stimulateentrepreneurshiptotheentrepreneurialclimateofthatcountry. A CEO with a good understanding of the model can finetune the companys goals or shared values, its approaches to training and motivating employees, and its system for recognizing and rewarding entrepreneurial actionsnot only those actions that succeed but also intelligent failures. For the leaders of multinational companies, the challenge is greater, but so are the potential benefits of ideas generated by diverse environments. Such companies need to adapt appropriatelytothepredominantmodelsineachareaoftheglobewheretheyoperate,whilestill retainingastrongcoreofsystemsandvaluestoholdthecompanytogether.
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Q5 (b) TheEntrepreneurialProcess
A wide range of factors could influence someone to become an entrepreneur, including environmental, social, personal ones, or a combination of them. After one decides to be an entrepreneur,therearefourstepsoftheentrepreneurialprocesshe/shehastofollow: Spotandassesstheopportunity. Drawupabusinessplan. Establishtheresourcesneededandgetthem. Runthecompanycreated.
Spot and assess the opportunity, to identify an opportunity and analyse its potential in terms of: market needs, competitors and market potential and product lifecycle. It is important the entrepreneurtotesthis/herbusinessidea/conceptwithpotentialcustomers,askingiftheywould buy the product or service, doing some research to find the market size and whether if it is growing, stable or stagnating, finding out about his/her competitors strengths and weaknesses, threatsandopportunities.
Drawupthebusinessplan. The business plan is an important part of the entrepreneurial process. A wellplanned business willhavemorechancetosucceedalltheotheraspectsofthecompanybeingequal.Itiscrucialfor theentrepreneurtoknowhowtoplanhis/heractionsandlayoutstrategiesforthebusinesstobe createdorunderexpansion.
Establishtheresourcesneededandprovidethem. The entrepreneurshould use his/her planning ability and bargainingskills to get to know the best alternatives on the financing market for their business, that is, which will offer the best cost benefitratio.
Runthefirmcreated. Running the company can seem to be the easiest part of the entrepreneurial process, since the opportunityhasbeenidentified,thebusinessplandevelopedandthesourceoffundingprovided. But running a company is not as straightforward as it seems. The entrepreneur must recognise his/herlimitations,recruitafirstrateteamtohelpmanagethecompany,implementingactionsto minimise problems and maximise profits. That is, the firm has to produce more, with the fewest resourcespossible,combiningefficiencyandefficacy.

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3. Risktheriskofanentrepreneurialventuremustbehigh;otherwise,withtheincentiveof sureprofitsmanyentrepreneurswouldbepursuingtheideaandtheopportunitynolongerwould exist.

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