Syllabus for mid exam

AS ECON 231

Entrepreneur:

The word entrepreneur is derived from the French word ‘enterprendre’ it means “to

undertake” or “to do something”

• Entrepreneur is an individual who takes risk and starts something new.

• An Entrepreneur is one who organizes, operates and assumes the risks in a business venture

in an expectation of making a profit. -Oxford dictionary (1933)

Examples of Entrepreneurs:

1. Bill Gates, founder of Microsoft. There are probably not many people that have not been

touched by one of his products, such as Microsoft Windows, Microsoft Office and

Internet Explorer.

2. Steve Jobs, co-founder of Apple computers, which produces Macs, iPods and iPhones, as

well as Apple TV.

3. Mark Zuckerberg, the founder of Facebook.

4. Pierre Omidyar, founder of eBay.

5. Arianna Huffington, founder of the Huffington Post, a well-known online news site.

6. Caterina Fake, co-founder of Flikr, which hosts images and videos on the Internet.

Entrepreneurship
 It is the process of creating something new with value of devoting the necessary

time and effort, assuming the accompanying financial, psychic and social risk and receiving the

resulting rewards of monetary and personal satisfaction and independence.

It is also defined as the dynamic process of creating incremental wealth. It is the ability to

create and build a vision from practically nothing.

In all the definitions of entrepreneurship, we are talking about a kind of behavior that includes;

i. Initiative taking

ii. Organizing and re-organizing of social and economic mechanism to run resources

iii. The acceptance of risks of failure.

Management .

Management is a process with a social element.

It requires the efficient use of resources combined with the guidance of people in

order to reach a specific organizational objective. It involves responsibility to achieve the

objectives and to fulfill specific organizational purposes through economical and effective

planning and regulation. It’s about taking charge and ensuring focus is placed on the things and

aspects of the business that help achieve the vision and the goals.

Functions of management:

1. Planning

2. -Organizing

3. -Directing

4. –Motivation

5. –Ordering

6. –Leading

7. –Supervision

8. -Communication

9. -Control

1. Planning:
 It is the basic function of management. It deals with chalking out a future course

of action & deciding in advance the most appropriate course of actions for achievement

of pre-determined goals.

According to KOONTZ, “Planning is deciding in advance - what to do, when

to do & how to do. It bridges the gap from where we are & where we want to be”.

A plan is a future course of actions. It is an exercise in problem solving & decision

making. Planning is determination of courses of action to achieve desired goals. Thus,

planning is a systematic thinking about ways & means for accomplishment of pre-

determined goals. Planning is necessary to ensure proper utilization of human & non-

human resources. It is all pervasive, it is an intellectual activity and it also helps in

avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing:

It is the process of bringing together physical, financial and human

resources and developing productive relationship amongst them for achievement of

organizational goals.

According to Henry Fayol, “To organize a business is to provide it with everything

useful or its functioning i.e. raw material, tools, capital and personnel’s”. To

organize a business involves determining & providing human and non-human resources

to the organizational structure. Organizing as a process involves:

 Identification of activities.
  Classification of grouping of activities.

 Assignment of duties.

 Delegation of authority and creation of responsibility.

 Coordinating authority and responsibility relationships

3. Directing:

It is that part of managerial function which actuates the organizational methods

to work efficiently for achievement of organizational purposes. It is considered life-

spark of the enterprise which sets it in motion the action of people because planning,

organizing and staffing are the mere preparations for doing the work. Direction is that

inert-personnel aspect of management which deals directly with influencing, guiding,

supervising, motivating sub-ordinate for the achievement of organizational goals.

4. Motivation:

means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,

negative, monetary, non-monetary incentives may be used for this purpose.

5. Ordering:

The Order Management function is responsible for collecting, validating and

submitting (many times, entering it into an Order Management or ERP system) all of the

information required to accurately fulfill a customer order. The Order Management

function is a bridge between the Sales, Production and Distribution functions of a

company. It mediates between the supply or push of production and the demand or pull of

consumption. A successful customer order requires coordination between marketing,

 sales, pricing and quotation, inventory tracking, production, packaging and shipping

groups.

6. Leading:

It may be defined as a process by which manager guides and influences the work of

subordinates in desired direction

7. Supervision:

It implies overseeing the work of subordinates by their superiors. It is the act of watching

& directing work & workers

8. Communication:

Is the process of passing information, experience, opinion etc from one person to another.

It is a bridge of understanding.

9. Control:

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals.

The purpose of controlling is to ensure that everything occurs in conformities with

the standards. An efficient system of control helps to predict deviations before they actually

occur.
 According to Theo Haimann, “Controlling is the process of checking whether or not

proper progress is being made towards the objectives and goals and acting if necessary, to

correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement & correction of

performance activities of subordinates in order to make sure that the enterprise objectives

and plans desired to obtain them as being accomplished”.

Therefore controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.

c. Comparison of actual performance with the standards and finding out deviation if any.

d. Corrective action
 Capital in Business:

Business owners are, capitalists, by definition, because they own capital.

This capital is in the form of assets (things of value).

 Capital is a necessary part of business ownership because businesses must use assets to create
products and services to sell to customers.

 Capital is the amount of cash and other assets owned by a business. These business
assets include accounts receivable, equipment, and land/buildings of the business.

 Capital can also represent the accumulated wealth of a business, represented by its assets
minus liabilities.

 Capital can also mean stock or ownership in a company.

Financial Management:

Financial Management means planning, organizing, directing and controlling the

financial activities such as procurement and utilization of funds of the enterprise. It means

applying general management principles to financial resources of the enterprise.

 Functions of Financial Management

1. Estimation of capital requirements:

A finance manager has to make estimation with regards to capital requirements of

the company. This will depend upon expected costs and profits and future programs and

policies of a concern. Estimations have to be made in an adequate manner which

increases earning capacity of enterprise.

2. Determination of capital composition:

Once the estimation has been made, the capital structure have to be decided. This

involves short- term and long- term debt equity analysis. This will depend upon the

proportion of equity capital a company is possessing and additional funds which have to

be raised from outside parties.

3. Choice of sources of funds:

For additional funds to be procured, a company has many choices like-

a. Issue of shares and debentures

b. Loans to be taken from banks and financial institutions

c. Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and

period of financing.

4. Investment of funds:

The finance manager has to decide to allocate funds into profitable ventures so

that there is safety on investment and regular returns is possible.

5. Disposal of surplus:

The net profits decision has to be made by the finance manager. This can be done

in two ways:

a. Dividend declaration - It includes identifying the rate of dividends and other

benefits like bonus.

b. Retained profits - The volume has to be decided which will depend upon

expansion, innovational, diversification plans of the company.

 6. Management of cash:

Finance manager has to make decisions with regards to cash management. Cash is

required for many purposes like payment of wages and salaries, payment of electricity

and water bills, payment to creditors, meeting current liabilities, maintenance of enough

stock, purchase of raw materials, etc.

7. Financial controls:
The finance manager has not only to plan, procure and utilize the funds but he also has to

exercise control over finances. This can be done through many techniques like ratio analysis,

financial forecasting, cost and profit control, etc.

 What Are Financial Statements?

Financial statements are written records that convey the business activities and the

financial performance of a company. Financial statements are often audited by government

agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing

purposes. Financial statements include:

 Balance sheet

 Income statement

 Cash flow statement.

*Balance Sheets:

It is a statement of the financial position of a business which states the assets, liabilities and

owner’s equity at a particular time.

The balance sheet provides an overview of a company's assets, liabilities, and stockholders'

equity as a snapshot in time. The date at the top of the balance sheet tells you when the

snapshot was taken, which is generally the end of the fiscal year/financial year.

The Balance Sheet Formula:

Assets = (Liabilities + Owner’s Equity)

Items Included in the Balance Sheet:

Assets: Cash and cash equivalents are liquid assets, which may include Treasury

bills and certificates of deposit.

 Accounts receivables are the amount of money owed to the company by its customers for

the sale of its product and service.

 Inventory

Liabilities : Debt including long-term debt

 Rent, tax, and utilities

 Wages payable

 Dividends payable

Shareholders' Equity

 Shareholders' equity is a company's total assets minus its total liabilities. Shareholders'

equity represents the amount of money that would be returned to shareholders if all of

the assets were liquidated and all of the company's debt was paid off.
  Retained earnings are part of shareholders' equity and are the percentage of net

earnings that were not paid to shareholders as dividends.

PROJECT
Planned set of interrelated tasks to be executed over a fixed period and within certain cost

and other limitations.

“a series of activities aimed at bringing about clearly specified objectives within a

defined time-period and with a defined budget”

PROJECT CYCLE

The ‘project cycle’ is a way of viewing the main elements that projects have in common, and

how they relate to each other in sequence. The precise formulation of the cycle and its phases

varies from one agency to another, but the basic components are same.

The project cycle represents a logical sequence of all activities to be carried out to achieve the

objectives and intentions.

Knowledge of this sequence is important in principle – this way you will be able to successfully

plan all the resources you need to engage in the implementation of each project: time, money,

personnel, subcontractors, etc. When working with grant projects, knowledge of the project cycle

is important because the same principles apply for applications mechanism (when you

prepare, import and run your project) and grants (strategic planning, management, allocation and

reporting of resources from the relevant government authorities).

SEVEN STAGE PROCESS :

(1) Identification:

Stage where one project-idea out of several alternatives is chosen and defined.

(2) Preparation:

Defined idea is carefully developed to the appraisal stage.

(3) Appraisal:

Every aspect of the project idea is subjected to systematic and comprehensive evaluation,

and a project plan is prepared.

(4) Presentation:

Detailed plan is submitted for approval and financing to the appropriate entities.

(5) Implementation:

With necessary approvals and financing in place, the project plan is implemented.

(6) Monitoring:

At every stage the progress of the project is assessed against the plan.

(7) Evaluation:

Upon completion the project is reassessed in terms of its efficiency and performance.
SWOT Analysis:(Manual)