Unit – III - Creating and Starting New Venture

Unit – III
Creating and Starting New Venture

Stages in starting a New Venture

An enterprise also means an undertaking, a business firm or venture. Here is a

step-by-step approach for starting a new venture. These can be divided into
three stages:

 Pre-launch Stage
 Launch Stage
 Post launch Stage

A step by step approach is provided to assist the potential entrepreneur.

1. Pre-launch Stage

The following steps are involved in a Pre-launch stage in starting of a new

venture.

1. Identify, Analyze and Decide on the business idea.

2. Analysis of strengths, weaknesses, opportunities and threats.
3. Analyze competition and select the positioning strategy.
4. Estimate and forecast the market size, growth and marketing feasibility
which involves measurement of demand — supply gap.
5. Whether to be an ancillary unit.
6. Understand the technology, process and selection of the idea.
7. Decide on the size of the enterprise in terms of production capacity,
employees.
 Unit – III - Creating and Starting New Venture

8. Decide on the location of the venture.

9. Identify the incentives given by the Government to promote the small and
medium industries.
10.Understand the relevant laws which are applicable for the business.
11. Analyse the business idea as opportunity in terms of Profit, costs,
expenditure, income, sales, market share.
12.Estimation of manpower requirements.

Pre-Launch Stage of a new venture involves collection of information

through primary and secondary sources of data. It is a critical stage. The skills
that are required are entrepreneurial skills of business opportunity identification
and analytical skills.

The functional areas of marketing and finance dominate this stage.

Forecasting skills are also required in this stage.

2. Launch Stage

1. Selection of the Name of the enterprise.

2. Hiring or construction of building
3. Deciding on the ownership pattern — sole proprietor, partnership, private
or public limited company and limited liability partnership.
4. Registration of the firm. If it is a partnership firm, then agreements has
to be signed. The registration processes of SMEs have been streamlined.
Now provisional registration certificate can be obtained online with District
Industries Centre.
5. Preparation of business plan and project report.
6. Deciding on the product mix and markets to serve.
7. Application for loan to banks. If private or public, issue of shares.
8. Raising of finance.
9. Ordering and installation of machinery.
 Unit – III - Creating and Starting New Venture

10.Recruitment of people.
11. Deciding on the channel of distribution.
12.Sources of raw materials to be finalized and purchases made.
13.Production started.
14.Products to be made available in the market.

In Launch stage of a new venture, operational actions and decisions are

taken. It requires managerial skills of coordination with the various agencies.
Project management skills are required.

There is lead time from planning to implementation stage. Close

monitoring has to be made to see that the launch is as per the plan. Delay will
increase the cost and have impact on the finances of the firm.

3. Post Launch

1. Teething problems to be solved.

2. Systems to be developed in all the areas of management
3. Feedback on the product
4. Changes if needed to be introduced.
5. Expansion decisions.

After launch of the business, the gestation period varies from one to
three years. The provisional certificate is valid for a year. After commencement
of business, permanent certificate is to be obtained from District Industries
Centre.

An entrepreneur has to plan and prepare for this critical period. The
profits will start flowing once the business settles down. All the businesses may
not succeed, so mental preparation for failure and exit route should also be a
part of the business plan.
 Unit – III - Creating and Starting New Venture

Business Plan

Business plan is the blue print of the step-by-step procedure that would
be followed to convert a business idea into a successful business venture. A
business plan first of all identifies an innovative idea, researches the external
environment to list the opportunities and threats, identifies internal strengths
and weakness, assesses feasibility of idea and then arranges resources
(production/ operation, finance, human resources) in the best possible manner
to make the plan successful.

The objectives of business plan are:

 To give directions to the vision formulated by entrepreneur.

 To objectively evaluate the prospects of business
 To monitor the progress after implementing the plan.
 To persuade others to join the business.
 To seek loans from financial institution
 To visualize the concept in terms of market availability, organizational,
 operational and financial feasibility.
 To guide the entrepreneur in actual implementation of the plan.
 To identify strengths and weakness of the plan.
 To identify challenges in terms of opportunities and threats from the
external markets.
 To clarify ideas and identify gaps in management information about their
business, competitors and the market.
 To identify the resources that would be required to implement the plan.
 To document ownership arrangements, future prospects and projected
growths of the business venture.
 Unit – III - Creating and Starting New Venture

Preparing a Business Plan

Preparing a Business Plan is not an easy task. A plan, which looks very lucrative/
feasible at the first instance, might actually not be when details are drawn.
Hence documenting the business plan is the first step that an entrepreneur
should take. The various steps involved in preparing a business plan are:

I Preliminary Investigation: Before preparing the plan entrepreneur should:

 Review available business plans (if any). - Draw key business assumptions
on which the plans will be based (e.g. inflation, exchange rates, market
growth, competitive pressures, etc.)
 Scan the external environment and internal environment to assess the
strengths, weakness, opportunities and threats. - Seek professional advice
from a friend/ relative or a person who is already into similar business. (If
any)

Business Planning Process

As discussed above the successful entrepreneur lays down a step-by-step plan

that she/ he follows in starting a new business. This business plan acts as a
guiding tool to the entrepreneur and is dynamic in nature – needs a continuous
review and updating so that the plan remains viable even in the changing
business situations. The Various Steps involved in Business Planning Process are:

1. Idea Generation:- As discussed in the previous chapters, entrepreneurship is

not just limited to innovation (generation of entirely new concept, product or
service but it also encompasses incremental value addition to the concept/
product/ services offered to the consumer, shareholder & employee). Hence value
addition is the key word that an entrepreneur needs to keep in mind while
generating new ideas even at the inception stage. Idea generation is the first
stage of business planning process. This step differentiates between an
 Unit – III - Creating and Starting New Venture

entrepreneur and businessman distinctly. An entrepreneur is highly creative

person who gets an innovative idea about a product or service that could be
brought into the market. Let us make it very clear again at this stage that it
is not necessary to have an idea which is entirely new; even value added to the
new products in the market is included in the innovative products/ services. Idea
generation is the first stage of business planning process. It involves generation
of new concept, ides, products or services to satisfy the existing demands,
latent demands & future demands of the market. The various sources of new
ideas are:

 Consumer/ Customers
 Existing Companies
 Research & Development
 Employees
 Dealers, retailers

2. Environmental Scanning:- Once a promissory idea emerges through idea

generation phase the next step is environmental scanning which is carried out to
analyze the prospective strengths, weakness, opportunities & threats of the
business enterprise. Hence before getting into the finer details of setting up
business it is advisable to scan the environment – both external & internal and
collect the information about the possible opportunities, threats from the
external environment and strength & weaknesses from the internal environment.
The various variables to be scanned are in terms of Socio-cultural, economic,
governmental, technological, demographic changes taking place in the external
environment and availability of raw material, machinery, finance, human resource
etc with the entrepreneur. The various sources for gathering the information are
Informal Sources (Family, friends, colleagues etc.) and formal sources (bankers,
magazines, newspaper, government departments, seminars, suppliers, dealers,
competitors). The Objective for a successful environmental scanning should be to
 Unit – III - Creating and Starting New Venture

maximize the information and hence the entrepreneur should collect information
from as many resources as possible and then analyze them to understand
whether the given information would be supportive / obstructive to the business
venture. The more supportive the information the greater is the confidence for
the success of the business.

External Environment Internal Environment

- Socio-cultural Appraisal - Raw Material

- Technological Appraisal - Production/ Operation
- Demographic Appraisal - Finance
- Governmental Appraisal - Market
- Human Resource

3. Feasibility Study:- This study is done to find whether the proposed project
(considering the above environmental appraisal) would be feasible or not. It is
important to demarcate environmental appraisal & feasibility study at this
point. Environmental appraisal is carried out to assess the external & internal
environment of the geographical area/ areas where entrepreneur intends to setup
his business enterprise whereas feasibility study is carried out to assess the
feasibility of the project itself in a particular environment in greater details.
Hence, though feasibility study would be dependent on environmental appraisal
yet it is far more descriptive. The various variables/ dimensions are

- Market Analysis
- Technical/ Operational Analysis
- Analysis of Choice of technology:
- Plant Location
- Machineries & equipment:
 Unit – III - Creating and Starting New Venture

4. Drawing Functional Plans:- After positive results from the feasibility study
functional plans are drawn. (Some of the scholars and writers prefer to include
feasibility study with the functional plans but they have been taken separately
in this book as feasibility study is precursor to plan & is done to check viability
of the projected from various dimensions, whereas after the feasibility study
gives positive indication about the viability of the proposed projected one can go
into the details of drawing functional plans which would plan the strategies for
all the operational areas : marketing, finance, HR & production.

- Marketing plan
- Production/ Operation Plan
- Organizational Plan
- Financial Plan

4. Project Report Preparation:- After environmental scanning and feasibility

analysis, project report is being prepared. The business plan is a written
document that describes step-by step strategies involved in starting and running
a business.

5. Evaluations, Control & Review:- As stated earlier it is imperative to

continuously review and evaluate the business constantly. This is because the
competition in today’s globalized world is high and the technological changes are
taking place at much faster rates. In this dynamic business environment it is
important to evaluate, control and review the business periodically and introduce
changes to keep up with the market share.
 Unit – III - Creating and Starting New Venture

Elements of Business Plan

1. Executive Summary

Executive summary should appear first in business plan. It should summarize

what expect your business to accomplish. Since it’s meant to highlight what
intend to discuss in the rest of the plan, the Small Business Administration
suggests that write this section last.

A good executive summary is compelling. It reveals the company’s mission

statement, along with a short description of its products and services. It might
also be a good idea to briefly explain why starting the company and include
details about your experience in the industry that you’re entering.

2. Company Description

A company description includes key information about business, goals and the
target customers that want to serve. This is explain why company stands out
from other competitors in the industry and break down its strengths, including
how it offers solutions for customers, and the competitive advantages that will
give business an edge to succeed.

3. Market Analysis

This is where show that a key understanding of the ins and outs of the industry
and the specific market plan to enter. Here you will substantiate the strengths
that highlighted in company description with data and statistics that break down
industry trends and themes. Show what other businesses are doing and how they
are succeeding or failing. The market analysis should also help visualize the target
customers. This includes how much money they make, what their buying habits
are, which services they want and need, among other target customer
preferences. Above all, the numbers should help answer why business can do it
better.
 Unit – III - Creating and Starting New Venture

4. Competitive Analysis
A good business plan will present a clear
comparison of your business vs your direct and
indirect competitors. This is where you prove your
knowledge of the industry by breaking down their
strengths and weaknesses. Your end goal is show
how your business will stack up. And if there are
any issues that could prevent you from jumping
into the market, like high upfront costs, this is
where you will need to be forthcoming. Your
competitive analysis will go in your market analysis
section.

5. Description of Management and Organization

Business must also outline how organization is set up. Introduce the company
managers here and summarize their skills and primary job responsibilities. An
effective way could be to create a diagram that maps out chain of command.

Don’t forget to indicate whether business will operate as a partnership, a sole

proprietorship or a business with a different ownership structure. If there is a
board of directors, than need to identify the members.

6. Breakdown of Your Products and Services

While company description is an overview, a detailed breakdown of products and

services is intended to give a complementary but fuller description about the
products that are creating and selling, how long they could last and how they
will meet existing demand.

This is mention for suppliers, as well as other key information about how much
it will cost to make the products and how much money are hoping to bring in.
 Unit – III - Creating and Starting New Venture

Also list here all relevant information pertaining to patents and copyright
concerns as well.

7. Marketing Plan

This is where describe how business intend to get their products and services in
front of the target customers. Break down here the steps that will take to
promote products and the budget that will need to implement strategies.

8. Sales Strategy

This section should answer how business will sell the products that are building
or carry out the services that intend to offer. Sales strategy must be specific.
Break down how many sales reps will need to hire and how will recruit them and
bring them on board. Make sure to include sales targets as well.

9. Request for Funding

If business needs funding, this section focuses on the amount of money that
needs to set up the business and how plan to use the capital that are raising.
You might want to include a timeline here for additional funding that you may
require to complete other important projects.

10. Financial Projections

This final section breaks down the financial goals
and expectations that you’ve set based on
market research. You’ll report your anticipated
revenue for the first 12 months and your annual
projected earnings for the second, third, fourth
and fifth years of business.

If you’re trying to apply for a personal loan or a

small business loan, you can always add an
appendix or another section that provides
additional financial or background information.
 Unit – III - Creating and Starting New Venture

Types of Business Plans

Start-Up Business Plans

New businesses should detail the steps to start the new enterprise with a
start-up business plan. This document typically includes sections describing the
company, the product or service your business will supply, market evaluations
and your projected management team. Potential investors will also require a
financial analysis with spreadsheets describing financial areas including, but not
limited to, income, profit and cash flow projections.

Internal Business Plans

Internal business plans target a specific audience within the business, for
example, the marketing team who need to evaluate a proposed project. This
document will describe the company’s current state, including operational costs
and profitability, then calculate if and how the business will repay any
capital needed for the project. Internal plans provide information about project
marketing, hiring and tech costs. They also typically include a market analysis
illustrating target demographics, market size and the market’s positive effect on
the company income.

Strategic Business Plans

A strategic business plan provides a high-level view of a company’s goals and how
it will achieve them, laying out a foundational plan for the entire company.
While the structure of a strategic plan differs from company to company, most
include five elements: business vision, mission statement, definition of critical
success factors, strategies for achieving objectives and an implementation
schedule. A strategic business plan brings all levels of the business into the big
picture, inspiring employees to work together to create a successful culmination
to the company’s goals.
 Unit – III - Creating and Starting New Venture

Feasibility Business Plans

A feasibility business plan answers two primary questions about a proposed

business venture: who, if anyone, will purchase the service or product a company
wants to sell, and if the venture can turn a profit. Feasibility business plans
include, but are not limited to, sections describing the need for the product or
service, target demographics and required capital. A feasibility plan ends with
recommendations for going forward.

Operations Business Plans

Operations plans are internal plans that consist of elements related to company
operations. An operations plan, specifies implementation markers and deadlines
for the coming year. The operations plan outlines employees’ responsibilities.

Growth Business Plans

Growth plans or expansion plans are in-depth descriptions of proposed

growth and are written for internal or external purposes. If company growth
requires investment, a growth plan may include complete descriptions of the
company, its management and officers. The plan must provide all company
details to satisfy potential investors. If a growth plan needs no capital, the
authors may forego obvious company descriptions, but will include financial sales
and expense projections.

Types of Organizations –

1. Line Structure Organization

Line structure organization is the simplest and oldest form of organization
structure. It is called as a scalar type of military or divisional or organization.
Under this system, authority flows directly and vertically downward from the
top of the managerial hierarchy to different levels of managers and subordinates,
and down to the operative level of workers. It is also known as the chain of
command or scalar principle.
 Unit – III - Creating and Starting New Venture

Advantages of Line Structure Organization: –

 Simple to understand and simple to operate;
 Communication is fast and easy;
 Feedback can be acted upon faster;
 Responsibility is fixed and unified at each level and authority and
accountability are clear-cut, hence each individual knows to whom he is
responsible and who is or in truth responsible to him;
 Since it is especially useful when the company is small in size, it provides
for greater control and discipline in the organization.
 It is a stable form of organization.
Disadvantages of Line Structure Organization: –
 It is a rigid and inflexible form of organization;
 Line authority has a tendency to become dictatorial;
 It overloads the executive with suppressive activities so that long-range
planning and policy making are often neglected;
 Unit – III - Creating and Starting New Venture

 A line organization can suffer from a lack of specialization. This is because

each department manager is concerned only with the activities of his
own department.
 Different departments may be more interested in their interests rather
than overall organizational interests and welfare;
 This is likely to encourage nepotism;
 It might stop progress and prevent the unit to work effectively.
 It does not provide any means by which a good worker can be rewarded
and a bad one can be punished.

2. Line and Staff Organization

Line and staff organization, in management, approach authorities (For example:
– managers) establish goals and instructions that are then met by employees
and other workers. A line and staff organizational structure attempts to present
a large and complex enterprise in a more flexible way without sacrificing
managerial authority. Staff groups support those who are engaged in the central
productive activity of the enterprise. They back up their work. Staff groups help
the organisation in analysing, researching, counselling, monitoring, and in
evaluating activities.
 Unit – III - Creating and Starting New Venture

Advantages of Line and Staff Organization: –

 Line officers can mainly focus on the task as planning and checking is done by
the employees. Specialization provides expert advice and proficiency in
management.
 Since the organization includes line and staff functions, decisions can be made
easily.
 Staff officers provide complete factual data to line officers covering activity
within and without their units. This will help to create more coordination.
 It provides ample opportunities for the advancement of workers.
 Staff services provide a training ground for various positions.
 This arrangement is flexible for newcomers in that employees can be forced to
make early adjustments to the line arrangement.
 Staff experts are ideologically oriented to look forward and have time to
undertake program and strategic planning and analyze the potential impacts of
future potential events.

Disadvantages of Line and Staff Organization: –

 Confusion and conflict may arise between the line and the staff. Because the
allocation of authority and responsibility is not clear and the lower level
members may be confused with various line orders and staff advice.
 The staff usually advises the lines, but the line makes decisions and tasks. So
employees often feel powerless.
 Too much reliance on staff officers may not be beneficial to the business as
line officers may have to lose a lot about their decisions and duplication.
 Since staff specialists demand high pay, it is expensive.
 Employees are unable to carry out its plan or recommendations due to lack of
authority. So they sometimes become ineffective, this will make them careless
and indifferent to their jobs.
 As the line is performed, with advice provided by employees, if things go
right, the employee takes credit and if things go wrong, the line gets the
blame for it.
 Unit – III - Creating and Starting New Venture

3. Functional Structure Organization

Functional Structure Organization is one of the most common structures of
organization. They are grouped based on their specific skills and knowledge. Under
this structure, the employees are divided into groups by the organization
according to a particular or group of tasks. Where functional structures operate
well in stable environments, where business strategies have little inclination for
change or mobility, the level of bureaucracy makes it difficult for organizations
to react quickly to market changes.

Advantages of Functional Structure Organization: –

 The executive or the team leader has the knowledge and experience of that
particular field. For example, the person heading the IT department will have
the education and skill necessary to shoulder this responsibility and successfully
run his team.
 Unit – III - Creating and Starting New Venture

 Because the employee has expertise in that particular field, the work is more
efficient and precise. There are fewer mistakes. This also helps with
the motivation of the employees of the company.
 Since all team members come from similar backgrounds it allows them to
share ideas and come up with solutions. There is a sharing of knowledge, which
is always beneficial.
 The employees also having a clear idea of the hierarchy of the firm. They need
not report or answer to several managers.
 Also, the employees feel secure in their work. They see that their work and
efforts is not going unnoticed. This sense of security helps them perform
better.

Disadvantages of Functional Structure Organization: –

 The work can be quite one dimensional. After a while, the employees may
start feeling monotony or boredom. The lack of new challenges can make them
unenthusiastic for the job at hand.
 In this structure, the manager must take care of the appraisal system. If the
correct approach is not taken then conflicts may arise between the employees
regarding promotions or appraisals.
 Also, this form of organization requires a high degree of specialization which is
difficult to establish
 If there is a necessary change of personnel it can disrupt the whole system
and its balance. Also, it is quite a rigid structure, not leaving a lot of scope
for adaptation.
 In Functional Organizational Structure, the employees never gain any
knowledge or skills outside their own department. This can cause difficulties in
inter-departmental communication.

4. Matrix Structure Organization

A matrix organizational structure is a structure of organization in which
some individuals report to more than one supervisor or leader, which is described
as solid line or dotted line reporting. More broadly, it can also describe the
management of cross-functional, cross-business groups and other work models
 Unit – III - Creating and Starting New Venture

that do not maintain rigid business units or silos grouped by function and
geography. For example, an employee may have a primary manager they report
to as well as one or more project managers they work under.

Advantages of Matrix Organization: –

 Since there is both vertical and horizontal communication, it increases
coordination and this leads to greater and more effective control over
operations.
 As the matrix organization is handling many projects, the available resources
will be fully utilized.
 It focuses organizational resources on specified projects, thus enabling better
planning and control.
 It is highly flexible in following rules, procedures etc. Experience here is the
best guide for setting rules and procedures.
 As any department has to put its efforts towards the completion of any one
project, employees are effectively motivated.

Disadvantages of Matrix Organization: –

 Since, there is more than one supervisor for each worker, this causes
confusion and conflict and reduces effective control.
 There is continuous communication both vertically and horizontally, which
increases paper work and costs.
 Unit – III - Creating and Starting New Venture

 It is difficult to achieve downward balance on projects technical and

administrative aspects.

5. Project Structure Organization

A project structure organizational structure is used to determine the hierarchy
and authority of people involved in a specific project. This organizational
structure is temporarily created for specific projects for a particular period, for
the project to achieve the goal of developing a new product, specialize in various
functional departments such as production, engineering, quality control,
marketing research etc. and will be ready to work together. These specialists
return to their duties as soon as the project is completed.
In fact, the project organization is established with the aim of overcoming the
major weakness of functional organization, such as absence of unity of command,
delay in decision making and lack of coordination.

When to use the project structure organization?

 It is a one-time task and is fixed in the context of a single, specific goal.
 It is big in scope It is unfamiliar or lacks precedent.
 It is complex and calls for a high degree of freedom.
 Successful completion of the project has a high stake.
 The result is very important for the organization.
 Unit – III - Creating and Starting New Venture

Advantages of Project Structure Organization: –

 It is a notable depiction of the relationship between environment, strategy
and structure.
 The team can focus properly.
 The clustering of activities on the basis of each project initiates new
authorization patterns.
 As experts from different organizations are ready to work together under the
project organization, it helps in coordination.
 This makes for personal control and determination of personal responsibility.

Disadvantages of Project Structure Organization: –

 The uncertainty can be attributed to the diverse background of the
professional who is deputed in the project.
 The project manager finds it difficult to control in the traditional way in
order to motivate and control employees, in the absence of a norm of lines
and norms responsible for communication.
 Project completion may be delayed.
 Effective project management can also be hindered by top management who
may not be fully aware of the problems in the project center.

Ownership Organization

The first and foremost question in organizing a small – scale industry is that of
ownership, represented by the right of an individual or a group of individuals to
acquire legal title to assets for the purpose of controlling an industrial operation
and enjoying the gains or profits flowing from such activities.
The chief forms of an ownership are

1. Sole proprietorship.
2. Partnership
3. Co – operative society and
4. Joint stock company.
 Unit – III - Creating and Starting New Venture

Sole Proprietorship
“Sole proprietorship is a form of business organization in which an individual
invests his own capital uses his own skill and intelligence in the management of
its affairs and is solely responsible for the results of its operation.”The individual
with the assistance of other workers or by is won labour and capital, may run
the industry. This form of organization is also known as individual
entrepreneurship – the oldest and the most sought after form of enterprise in
the filed of small scale industry and the easiest and simplest form of
entrepreneurship from the operational point of view. The individual entrepreneur
embarks upon some industrial activity with his own savings or with funds
borrowed from his friends or relatives. The industry may be started either in a
portion of the entrepreneurs own house or in rented premises.

The import features of a sole proprietorship are:

1. Sole ownership
2. One man control.
3. Unlimited risk
4. Undivided risk
5. No separate entity of the firm
6. No government regulations.

Partnership Organization
Partnership organization grew and gained importance as an individual is not
competent enough to possess enormous capital and knowledge or competence to
manage everything. With the expansion of business and enlargement of the sale
of its operations it became necessary for a group of persons to join hands
together and supply the necessary capital and skills. Often it is found that a
person may be having a huge capital but may not possess the required skill.
Individually none of them can run a business enterprise single – handed but
together they may be highly successful in its operations. Thus partnership
organization has been adopted to arrange more capital, offer better skill, control
and management to take advantage of high degree of specialization and division
of labour and to share the risks.
 Unit – III - Creating and Starting New Venture

Joint stock companies

The growth of joint stock companies constitute an important step in the
historical evolution of forms of ownership of business enterprises. With the
enlargement of the scale of business operations, it became difficult for a sole
trader or partnership firm to cope with the problems of finding more resources
and arranging for more specialized management.

Salient features
A joint stock company exists as a separate legal entity quite apart from
that of the members comprising the organization unlike a partnership. In other
words, this company is considered to be a “person” in the eyes of law. Also
these company possesses the right to own and transfer any property.
In India only 3 % of the units exist as joint – stock companies. In a sense
it is an extension of the partnership form; it is an association of a number of
members which has a legal sanction behind it. Because of the complicated and
cumbersome legal procedures, heavy taxation and the possibility of unscrupulous
promoting securing capital for an undesirable concern, this system has not made
any headway in the small scale industries sector.

The Co – operatives
A Co – operative society is essentially an association of persons who join
together or a voluntary basis for the furtherance of their common economic
interests. The International Labor Organization (ILO) defines a cooperative as “
an association of persons usually of limited means, who voluntarily join together
to achieve a common economic end through the formation of a democratically
controlled business organization , making an equitable contribution to the capital
required and accepting a fair share of the risks and benefits of the undertaking.
These are mainly in such industries as wooden furniture and fixtures, utensils,
agricultural hand tools and implements, printing and washing soaps.
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 Unit – III - Creating and Starting New Venture

International Entrepreneurship
One of the most vital driving forces behind the growth of economies, individual
and regional wealth, and social development is the Entrepreneurship. It will only
happen in the developing and emerging markets around both commercial sectors
as well as in democratic political systems.

In today’s era, the global dream of an

Entrepreneur across the globe is
Entrepreneurship and When the business
covers all areas within own country, then
they will think about moving towards
International Entrepreneurship. In the
domestic market, it is helpful to improve
the business values.

Another best reason to move forward with the international

Entrepreneurship is that if the sales of a business are quite low domestically,
then it is better to go beyond the borderlines. When the high level of maturity
is achieved in the domestic market, then it is the best time to shift towards
international Entrepreneurship and maximize their profit.

Definition of International Entrepreneurship

According to McDougall and Oviatt, “International Entrepreneurship is a
combination of innovative, proactive, and risk-seeking behavior that crosses
national borders and is intended to create value in organizations.“

Meaning international Entrepreneurship?

When an Entrepreneur goes to other countries to run and operate their
business, then it is known as International Entrepreneurship. These are the
industries that cross the national boundaries of their nation. These types of
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Entrepreneurship include exporting of goods, licensing as well as commencing a

sales office in other countries. Under this, an Entrepreneur operates all the
business activities out the boundaries of the nation and it indicates the
development of the business internationally.
Most of the businesses across the national border to establish value and
grow the business. A different set of innovative activities performed by most of
the businesses across the borderlines and enhance those opportunities to create
some creative products and services.
In short words, International Entrepreneurship defined as the development
of a new venture on a global basis, and their operation domain is considered
international from the very beginning stages of operations.
Also See: Women Entrepreneurs: Need, Scope, Functions, Qualities and Roles

Famous Examples Of International Entrepreneurs

There are many industries that have produced numerous international
entrepreneurs Coca-Cola, Nike, MacDonald, BMW, Puma, Philips and Tata etc.
But most famous entrepreneurs are came from techy world, who started there
business from a small ventures but then took it to international level. Some
examples are
 Apple- Steve Jobs
 Google- Larry Page and Sergey Brin
 Microsoft- Bill Gates
 Facebook- Mark Zukerberg
 Yahoo- Jerry Yang and David Filo
 Amazon- Jeff Bezos
 Alibaba- Jack Ma
 Tiktok- Zhang Yiming
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International Entrepreneurship Opportunities

Entrepreneurial opportunity means the situation where cost of production is less
than the selling price of the products or you can say where an entrepreneur can
make profit by selling his or her products. Although it’s all in entrepreneur’s
mind that how he is going to make profit, and things sorted for his business.
International entrepreneurship provides many opportunities to entrepreneurs who
are willing to expand their business beyond national boundaries. Following are the
5 International entrepreneurship opportunities that are explained below.
 Cultural Opportunity:- Every country has their own cultural priority and they
love doing it. But people across the country wants to see culture of other
countries that how they live their life and what things or products they
use. Here a person from other country can take advantages by finding the
opportunity of selling products of his culture.
 Food Taste Opportunity:- Pizza was originated by Italy; hamburger was made in
USA and firstly noodles were made in china. So, all the counties have their
own food which it is famous for. An entrepreneur can take benefit from the
food taste of country. He can give tasty food of his country to the rest of
the world and make an international brand of it.
 Environmental Opportunity:- New Zealand and England are too cold, South
Africa is warm, Columbia is too rainy. If you are an entrepreneur from any
country then you can go to New Zealand and make products that are needed
mostly in winter, same is the case for other countries. Think about the
environment of any particular country and provide a solution to it and create
international entrepreneurship opportunity.
 Filling a Need:- International entrepreneurship opportunity can also exist in
filling the need of local person from any country. People across the world
have their own problems that big brand can never understand. You as an
entrepreneur can realize the basic need and provide a solution to them.
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 Buying a franchise:- There are many franchisees that are making a huge profit
and selling their products in millions. As an entrepreneur, one should think
about the profit as he or she cannot go for making a new brand and spend
time in investing something. Rather one can go for buying franchisee of any
international brand that is not present in the country. That way, he can
create an opportunity for his business.
There are plenty of other international entrepreneurship opportunities
present in the global market but if you don’t try then you can never know.

Importance of International Entrepreneurship

For the satisfaction of foreign customers, they have to produce the products
that meet the demands internationally. One important thing that every
Entrepreneur has to consider is the quality of the products in global as well as
domestic markets and fulfill all the requirements of the potential customers.
Customer satisfaction is important to run the business smoothly.
Thus, International Entrepreneurship is of utmost importance for the people
living across various areas of the nation. Let us have a look at some of the vital
points due to which the international Entrepreneurship is considered on top.
 A Decline in domestic Market
If the sales of products are low in the domestic market, then the Entrepreneur
has a very effective option to sell the same at the global market. Thus, they
can sell their products in the international market as per the demand instead of
wasting such products by keeping them in the warehouse.
 Maturity Stage
First off, an Entrepreneur should grow their business within the domestic
nation, and then, the best time to move forward for international business is
when it reaches the maturity stage. When the business is well-developed in own
nation, then it is more significant to choose international Entrepreneurship.
 Reduce Manufacturing Costs
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The majority of the companies have fixed costs at a high level that can also be
helpful to lower the manufacturing cost of the products. When the products are
selling in the global market, then a large number of units are required and
hence, the manufacturing cost reduces.
 Enhance Reputation
As the products are selling in the international market, then it is obvious that
there is a positive impact on the reputation of the business and it helps to
establish a professional image of the business. Not only reputation but also they
can compete with other firms that are engaged in the same arena.
 Meet the Quality Expectations
Entrepreneurs who want to fulfill all the expectations of their foreign customers
have to provide a high quality of products to meet the expectations of their
customers. An international Entrepreneur will not only in the global market but
also produce premium quality products in the national market.
 Customer Relationship Management
Through the expansion of the business out of the borderlines, an international
Entrepreneur learns how to inculcate the habit of customer relationship
management. So, it improves the relationship between the business and its
potential customers. Moreover, it develops respect and become sensitive towards
all sort of customers and develop foreign habits.
 Hire Employees Globally
As the business is going to expand its arms across other nations, then it is
obvious that there is a need to hire staff that is from that particular location.
It is helpful to deal with the customers of that nation as the employees can
easily understand the demand of people residing over there. So, international
Entrepreneurship creates a large number of employment opportunities at various
locations across the nationwide. Thus, they can look internationally and begin
developing an outlook from a global perspective.