Ateeq Ur Rehman EntrePreneurship (193

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AIOU BBA

Roll No. 408071991 Autumn 2009

Q-1 (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 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. Schumpeter's View of Entrepreneurship Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an emphasis on innovation, such as:  new products  new production methods new markets new forms of organization 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 innovative manner to generate value to the customer with the hope that this value will exceed the cost of the input factors, thus generating superior returns that result in the creation of wealth. Entrepreneurship vs. Small Business Many people use the terms "entrepreneur" and "small business owner" synonymously. While they may have much in common, there are significant differences between the entrepreneurial venture and the small business. Entrepreneurial ventures differ from small businesses in these ways: 1. Amount of wealth creation - rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit. 2. Speed of wealth creation - while a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for example, within 5 years. 3. Risk - the risk of an entrepreneurial venture must be high; otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity no longer would exist. 4. Innovation - entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it. CIT (Centre Of Information Technology) 1

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

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Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

Q1 (b)
Importance of Entrepreneurship 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. If you have entrepreneurial skills then you will recognize a genuine opportunity when you come across one. Now the reasons why entrepreneurship holds a dominant position in the society? The following reasons are responsible for the same:1) Provides employment to huge mass of people:- people often hold a view that all those who do 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. What’s more is that approximately 34 million of fresh employment opportunities were created by entrepreneurs from the period of 1980. This data makes it clear that entrepreneurship heads nation towards better opportunities, which is a significant input to an economy. 2) Contributed towards research and development system:- almost 2/3% of all innovations are due to the entrepreneurs. Without the boom of inventions the world would have been a much dry place to live in. Inventions provide an easier way of getting things done through better and standardized technology. 3) Creates wealth for nation and for individuals as well:- all individuals who search business opportunities usually, create wealth by entering into entrepreneurship. The wealth created by the 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 are also a great help to the nation. 4) Sky-scraping heights of apparent prospects:- the individual gets maximum scope for growth and opportunity if he enters into entrepreneurship. He not only earns, the right term would be he learns while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skills he develops while owning his enterprise are his assets for life time which usually, lacks when a person is under employment. The individual goes through a grooming process when he becomes an entrepreneur. In this way it not only benefits him but also the economy as a whole. 5) It is a challenging opportunity for the people:- although entrepreneurship is a challenging task but in most of the cases the rewards it gives are much more than what one anticipates. It does not only reward an CIT (Centre Of Information Technology) 3

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

entrepreneur at financial levels but also on individual level. It provides self satisfaction to the entrepreneur. 6) Entrepreneurship provides self sufficiency:- the entrepreneur not only become self sufficient but also provide great standards of living to its employees. It provides opportunity to a number of people working in the organization. The basic factors which become a cause of happiness may be liberty, monetary rewards, and the feeling of contentment that one gets after doing the job. Therefore the contribution of entrepreneurs makes the economy an improved place to live in.

Q2 (a)
Entrepreneur An entrepreneur is a person who has possession of a new enterprise, venture or idea, 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 a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. Jean-Baptiste 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, especially a contractor, acting as intermediatory between capital and labour". 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 opportunity and exploit it by organizing their resources effectively to accomplish an outcome that changes existing interactions within a given sector. Observers see them as being willing to accept a high level of personal, professional or financial risk to pursue opportunity. Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs," while social entrepreneurs' principal objectives include the creation of a social and/or environmental benefit. Entrepreneur as a leader Scholar Robert. B. Reich considers leadership, management ability, and teambuilding as essential qualities of an entrepreneur. A more generally held theory is that entrepreneurs emerge from the population on demand, from the combination of opportunities and people well-positioned to take 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 would-be entrepreneurs and on the CIT (Centre Of Information Technology) 4

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

other, how environmental factors change the rate of a society's production of entrepreneurs. A prominent theorist Joseph Schumpeter, who saw the entrepreneur as innovators and popularized the uses of the phrase creative destruction to describe his view of the role of entrepreneurs in changing business norms. Creative destruction dealt with the changes entrepreneurial activity makes every time a new process, product or company enters the market. Research into entrepreneurs 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. Social Entrepreneur 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 the NHS and also the 'Love One Water' drinks brand.

Q2 (b)
Types of Entrepreneurs Types of Entrepreneurs can be classified on different basis. Some of these basis include  Type of business  Use of Technology  Motivation  Growth  Stages in Development  Others The entrepreneurs which come under these basis are as follows  Type of business  Business entrepreneur: Convert ideas into reality; deal with both manufacturing and trading aspect of business (Small trading and manufacturing business)  Trading entrepreneur: Undertakes trading activities; concerned with marketing (Domestic and international level)  Industrial entrepreneur: Undertakes manufacturing activities only; new product development etc (textile, electronics, etc)  Corporate entrepreneur: Interested in management part of organisation; exceptional organising, coordinating skills to manage a corporate undertaking (Ambani, Tata families)  Agricultural entrepreneur: Production and marketing of agricultural inputs and outputs (Dairy, horticulture, forestry) CIT (Centre Of Information Technology) 5

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

 Use of Technology  Technical entrepreneur: Production oriented, possesses innovative skills in manufacturing, quality control etc.  Non technical entrepreneur: Develops marketing, distribution facilities and strategies  Professional entrepreneur: Uses the proceeds from sale of one business to start another one. Brimming with ideas to start new ventures  Motivation  Pure entrepreneur: Psychological and economic rewards motivate him  Induced entrepreneur: Incentives, concessions, benefits offered by government for entrepreneurs motivates him  Motivated entrepreneur: Sense of achievement and fulfillment motivate him  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 upward growth curve  Stages in Development  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 and dynamic market  Classical entrepreneur: One who gives more importance to consistent returns than to growth; concerned about customer and marketing needs  Others  Area- Rural and Urban entrepreneur  Gender/Age- Men and Women entrepreneur  Scale- Small and Large scale entrepreneur

Q3 (a)

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Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

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Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

Q3 (b) Role of Ethics and Social Responsibility in context of Entrepreneurship
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 manager’s 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 relative with a relatively new company who have few role models usually develop an internal ethical code. Entrepreneurs tend to depend on their own personal value systems much more than other manager when determining ethically appropriate course of action. 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 made by the individuals in his relationship with others. Business ethic is the study of behavior and morals in a business situation. Business ethics is “any business decision that creates value for customer by matching quality and price.” 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 essential quality of existence. Ethical Decisions i) provide the customer with valid data about the product and service. ii) Enable the customer to make a free and informed choice, and iii) Generate customer commitment to the product and the organization that provides it. Violations of these three rules produce unethical behavior- invalid and false data, coerced and manipulated decisions, and low integrity and poor reputation for the firm. Research on business ethics can be broken down into four broad classifications: 1. pedagogically oriented inquiry, including both theory and empherical studies 2. Theory-building without empherical testing. 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, primarily of managers within large organization. In summary the ethics and responsibilities of entrepreneurs are:

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Ateeq Ur Rehman EntrePreneurship (193)

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Roll No. 408071991 Autumn 2009

1. Support law and professional code: The entrepreneurs have to follow

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the rules and regulations of the country. They should also follow the code of conduct prepared by their professional association. 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 the human values and norms. Involve in pedagogical Inquiry: The entrepreneurs have to inquire about the theoretical and empirical aspect of entrepreneurship. They should involve in research and development studies to find out the techniques and ideas of good entrepreneurship. Environmental Research: The entrepreneurs should involve in external environmental research and collect the data of different variables. It will help new entrepreneurs for finding out the feasibility of their undertaking. Imparting ethical insight to the business students: The entrepreneurs should help the academicians while imparting the ethical insights to the students. They should provide financial support to the students who involve in entrepreneurial research. Create Employment: Entrepreneurs should create and develop new opportunities for job to the people of the country. They should try to reduce the unemployment problem of the country. 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 should be confirmed so that they can be conserved for future generations. Increase favorable attitude of people: The earning of the enterprise should facilitate the society’s 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 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.

Ways to Generate Entrepreneurial Ventures
1. Alternative approaches to existing innovations You identify innovations that are coming to the market and look for alternate solutions that will address the same need or alternate needs that could be addressed with the same solution. A good example is the company Scribd. CIT (Centre Of Information Technology) 9

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

Scribd has done to books what Youtube has done for videos. You upload your documents and they make it easy to share with the world. 2. Annoyance-driven innovation List all annoyances that you experience everyday and pick the one that applies to most people and come up with solutions. Tripit is a company that was founded to solve the frustrations everybody faces with the myriad of reservations (air, car, hotel, theme park etc) to organize and locate while traveling. How many times have you misplaced the car reservation that you made online? Once Tripit identified that this is an annoyance everyone faces, they came up with a very elegant solution. 3. Drive an innovation down-market 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 for mid-large companies costing at least $100,000 to buy, implement and maintain keeping it out of the reach of homes and small businesses. Pixily democratized this expensive technology and has packaged it in a form that consumers and small businesses can afford and use. 4. Trend driven innovation Follow the trends. That is, look for changes in social norms, demography and technology and then see how you can innovate to align with those trends. A great example is the iPhone. There are so many innovative applications that have been created for the iphone that one could not have been imagined: Filing Insurance claims form the scene of the accident, turn the iPhone into an instrument, and using physics and crayons to create fun games are just few examples of great iPhone applications.

Q5 (a) Entrepreneurship around the globe: Adapting to different national environments
The prerequisites of entrepreneurship
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 starting a business from scratch or operating within an established organization. The right regulatory and tax environment is also key. Stringent regulations can hinder entrepreneurs, who must move quickly to exploit new opportunities. High personal and corporate tax rates can significantly reduce an entrepreneur’s potential reward, discouraging the risk taking that is a vital component of entrepreneurial behavior. The most important prerequisite of entrepreneurship, though, is a social and cultural environment in which achievement and wealth creation are held in CIT (Centre Of Information Technology) 10

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

high regard. A well known company Accenture conducted a survey in 26 countries and revealed only a handful of nations where society as a whole appears to embrace an entrepreneurial culture. In contrast, there are other countries where the motives of entrepreneurs are viewed as suspect or the legitimacy of their financial gain called into question. In some countries, an Entrepreneurship models

Three models illustrate the range of ways countries or regions can create conditions that support entrepreneurship. entrepreneurial failure can all but end an individual’s career. Yet other countries exhibit a societal preference for the underdog, the gallant runner-up or the individual who is poor but noble. These are deep-rooted 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 entrepreneurial behavior in a way consistent with societal norms. Working models for entrepreneurship worldwide 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 conditions under which entrepreneurship can flourish. 1. The Free Market Model Examples: The United States and Canada 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, and can remove many of the obstacles that get in the way, but the rest is up to the private sector. 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 protection is generally low. CIT (Centre Of Information Technology) 11

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

2. The Guided Individualism Model Examples: Singapore and Taiwan This model, too, is based on the encouragement of individual enterprise. Its distinctive feature, though, is the role of public policy in determining the broad sweep of entrepreneurial activity—in effect, signaling the sectors and industries in which entrepreneurial energies can most usefully be directed. 3. The Social Democrat Model Examples: Sweden and Germany 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, such as employers, employees and government. The collective nature of the social partnership system means that initiatives to encourage entrepreneurship—such as those promoting greater labor flexibility —can 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 society at large for the key measures needed to strengthen the productive base of the economy. Characterizing a country’s entrepreneurial style These models represent three frequently occupied positions along the two axes pictured in Figure. 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 countries where they are headquartered or do business. To position a country along the vertical axis, which indicates the extent of government involvement in the economy, consider: • How high is taxation in the country? • To what extent is state ownership seen as appropriate? • To what extent does the state manage the economy through regulation? • How willing is the state to promote and protect trade and foreign investment? • How involved is the state in labor mobility, wages, and terms and conditions? To position a country along the horizontal axis, which characterizes respect for individual action versus collective action, consider: • To what degree does society aim to ensure the well-being of its members in such areas as health and education? • Does the country have a fairly homogeneous culture or identity? • To what extent is wealth distribution equal or unequal? • How does the society react to success and failure? • Do people generally play an active role in their communities? Building an entrepreneurial spirit CIT (Centre Of Information Technology) 12

Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

Leaders of companies that operate primarily within one nation’s boundaries can use knowledge of the prevailing model to their advantage, tailoring the entrepreneurial approaches they use to stimulate entrepreneurship to the entrepreneurial climate of that country. A CEO with a good understanding of the model can fine-tune the company’s goals or shared values, its approaches to training and motivating employees, and its system for recognizing and rewarding entrepreneurial actions—not 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 appropriately to the predominant models in each area of the globe where they operate, while still retaining a strong core of systems and values to hold the company together.

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Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

Q5 (b) The Entrepreneurial Process
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, there are four steps of the entrepreneurial process he/she has to follow: • Spot and assess the opportunity. • Draw up a business plan. • Establish the resources needed and get them. • Run the company created.

Spot and assess the opportunity, to identify an opportunity and analyse its potential in terms of: market needs, competitors and market potential and product life-cycle. It is important the entrepreneur to test his/her business idea/concept with potential customers, asking if they would 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, threats and opportunities. Draw up the business plan. The business plan is an important part of the entrepreneurial process. A wellplanned business will have more chance to succeed all the other aspects of the company being equal. It is crucial for the entrepreneur to know how to plan his/her actions and lay out strategies for the business to be created or under expansion. Establish the resources needed and provide them. The entrepreneur should use his/her planning ability and bargaining skills to get to know the best alternatives on the financing market for their business, that is, which will offer the best cost-benefit ratio. Run the firm created. Running the company can seem to be the easiest part of the entrepreneurial process, since the opportunity has been identified, the business plan developed and the source of funding provided. But running a company is not as straightforward as it seems. The entrepreneur must recognise his/her limitations, recruit a first-rate team to help manage the company, implementing actions to minimise problems and maximise profits. That is, the

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Ateeq Ur Rehman EntrePreneurship (193)

AIOU BBA

Roll No. 408071991 Autumn 2009

firm has to produce more, with the fewest resources possible, combining efficiency and efficacy.

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