Entrepreneurship

Development
 Entrepreneur
• The word entrepreneur is derived from the French word
‘enterprendre’ it means “to undertake” and literally
translated means “between-taker” or “go-between”.
• Entrepreneur is an individual who takes risk and starts
something new.
• Development of entrepreneurship
- Earliest period.
- Middle Ages.
- 17th Century.
- 18th Century.
- 19th and 20th centuries.
 Entrepreneurship
• Entrepreneurship 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.
 Functions of Entrepreneur
• Innovation.
- The unexpected success or failure or any unexpected outside event.
- Innovation based on process need.
- Changes in industry and market structure.
- Demographics changes.
- New knowledge.
• Risk and uncertainty bearing.
• Organization building.
- Perception of market opportunities.
- Gaining command over scarce resources.
- Purchasing inputs.
- Marketing the products.
- Dealing with bureaucrats.
- Managing human relations within the firm.
- Managing customer and supplier relations.
- Managing finance.
- Managing production.
- Acquiring and overseeing assembly of the factory.
- Upgrading process and product.
- Introducing new production techniques and products.
 Type of Entrepreneur
Classification according to type of business.
• Business Entrepreneurs.
• Trading Entrepreneurs.
• Industrial Entrepreneurs.
• Corporate Entrepreneurs.
• Agricultural Entrepreneurs.
Classification according to use of technology.
• Technical entrepreneur.
• Professional entrepreneur.
• Non-technical entrepreneur.
• High-tech entrepreneur.
 Type of Entrepreneur
Classification according to motivation of entrepreneur.
• Pure entrepreneur.
• Induced entrepreneur.
• Motivated entrepreneur.
• Spontaneous entrepreneur.
Classification according to growth.
• Growth entrepreneur.
• Super growth entrepreneur.
Classification according to stages of development.
• First generation entrepreneur.
• Modern entrepreneur.
• Classical entrepreneur.
 Entrepreneur and Entrepreneurship
Entrepreneur Entrepreneurship
Person Process
Visualizer Vision
Organizer Organization
Decision maker Decision Making
Innovator Innovation
Risk bearer Risk bearing
Motivator Motivation
Creator Creation
Leader Leadership
Manager Management
Initiator Initiation
Planner Planning
Technician Technology
Communicator Communication
Administrator Administration
 Stages of Entrepreneurial Process
• Conducting Opportunity Analysis.

• Developing the plan and setting up the company.

• Acquiring financial partners and sources of funding.

• Determining resources required and implementing

the plan.

• Scaling and harvesting the venture.

 Role of Entrepreneurs in Economic
Development.
• Capital formation.
• Generation of employment.
• Improvement in per capita income.
• Reduces concentration of wealth.
• Balanced regional development.
• Resource mobilization.
• Improvement in standard of living.
• National self-reliance.
• Harnessing natural resources.
• Backward and forward linkages.
• Sense of purpose.
 Creativity and Innovation
• Sources of new ideas.
- consumers.
- Existing companies.
- Distribution channels.
- federal Government.
- Research and development.
• Methods of generating ideas.
- Focus Groups.
- Brainstorming.
- Problem inventory analysis.
 Creativity and Innovation
• Creative problem solving.
- Brainstorming.
- Reverse brainstorming.
- synectics.
- Gordon method.
- checklist method.
- Free association.
- Forced relationship.
- collective notebook method.
- Heuristics.
- Attribute listing.
- Big dream approach.
- Parameter analysis.
 Innovation and Entrepreneurship
Schumpeter has firmly expressed his opinion that
the function of entrepreneurship is innovation.
• Innovation of new product.
• Innovation of new technology.
• Innovation of new process of production
methods.
• Exploration of new markets.
• Searching for the new sources and supply.
• Innovation of industrial reconstruction method.
Importance of Protecting Intellectual Property Right

• Protection to an invention for the exclusive use of it by its

inventor
• Leverage business
• Legal recognition to the invention
• Enables its enforcement in the court of law
• Incentive for further development
• Public use
• Huge source of information
• Source for further developmental work by third party
• Encourage fair trading
• Contribute to social and economic development
 Classification of Intellectual Property
Intellectual Property Rights are generally classified as follows:

 Invention: Patents

 Letters, numbers, words, colors, phrase, sound, smell, logo, shape, picture, or
combination of these: Trademark

 Art, literature, music, broadcast and computer programs: Copyright

 2D/3D product design: Design Registration

 New plant varieties: Plant Breeder’s right

 Confidential information: Trade secret

 National Laws
•The Patents Act 1970 (as amended)
•The Copyright Act 1957 (as amended)
•The Trade Marks Act 1999
•The Designs Act 2001
•The Geographical Indications of Goods (Registrations and
Protection) Act, 1999
•The Semiconductor Integrated circuit Layout-Design Act 2000
•The Protection of Plant Varieties and Farmers Rights Act 2001
•The Biological Diversity Act 2002
 The Business Plan
The Business plan will take more than 200 to 300
hours to prepare, depending upon the experience
and knowledge of the entrepreneur as well as the
purpose it is intended to serve.
The detail outline of the business plan is as follows:
• Introductory Page.
- Name and address of the business.
- Name and address of the entrepreneur.
- Nature of the business.
- statement of financing need.
- statement of confidentiality of report.
 The Business Plan
• Executive summary.
- The summary should be at least four pages that summarizing the
complete business plan.
• Industry analysis.
- Future outlook and trends.
- analysis of competitors.
- Market segmentation.
- Industry forecasts.
• Description of ventures.
- product.
- services.
- size of business.
- office equipment and personnel.
- background of entrepreneurs.
 The Business Plan
• Production plan.
- Manufacturing process.
- Physical plant.
- Machinery and equipment.
- Names of suppliers of raw materials.
• Marketing plan.
- Pricing.
- distribution.
- promotion.
- product forecast.
• Organizational Plan.
- From of ownership.
- Identification of partners or shareholders.
- Authority of principals.
- Management team background.
 The Business Plan
• Assessment of risk
- evaluate weakness of business.
- New technologies.
- contingency plans.
• Financial plans.
- pro forma income statements.
- cash flow projections.
- pro forma balance sheet.
- Break-even analysis.
- sources and applications of funds.
• Appendix.
- Letters.
- Market research data.
- Leases or contract.
- Price lists from suppliers.
 The Business Plan
• The business plan is designed to guide the
entrepreneur through the first year of operations.
• There has been the tendency among many
entrepreneurs to avoid planning.
• Planning is an important part of any business
operations.
• Without good planning the entrepreneur is likely
to pay an enormous price.
• Without good planning the employees will not
understand the company’s goals and how they are
expected to perform in their jobs.
 The Business Plan
• Sources of information.
- Small business administration.
- Department of commerce.
- federal information centers.
- Bureau of census.
- state and municipal governments.
- banks.
- chamber of commerce.
- trade associations.
- trade journals.
- libraries.
- Universities and community colleges.
 The Marketing Plan
• Industry Analysis
• Competitor Analysis
• Marketing Research
- Defining the Purpose or objectives.
- Gathering data from secondary sources.
- Gathering information from primary sources.
- Analyzing and interpreting the results.
• Understanding the marketing plan
- Situation Analysis.
Background of venture.
Strengths and weaknesses of venture.
Market opportunities and threats.
competitor analysis.
• Marketing objectives and goals
• Marketing strategy and action programs.
• Budgets
 The Marketing Plan
Characteristics of Marketing plan:
• It should provide a strategy for accomplishing
the company mission or goal.
• It should be based on facts and valid
assumptions.
• Should be able to meet long term objectives.
• An appropriate organization must be described
to implement the marketing plan.
 External
Environment
Internal
Economy, culture,
Entrepreneur Environment
Technology,
Financial resource,
demand, legal
suppliers, goals and
consideration, raw Marketing objectives
material, decision management team
competition
Marketing
strategy
directed to
customers Feedback

Purchase
decision of
customers
 The Marketing Plan
Steps in preparing the marketing plan
• Defining the business situation.
• Defining the target market/opportunities and
threats.
• Considering strengths and weakness
• Establishing goals and objectives.
• Defining marketing strategy and action
programs.
• Marketing strategy- consumer vs B to B Markets.
• Budgeting the marketing strategy
• Implementation of the Marketing Plan
• Monitoring progress of marketing actions.
 Production Plan
• Plant location
- Availability of raw materials.
- Proximity to market.
- Infrastructural facilities.
- Government Policy.
- Availability of man power.
- Local laws, regulations and taxes.
- Ecological and environmental factors.
- competition.
- Incentives, land costs, subsidies and backward areas.
- Climatic conditions.
- Political conditions.
• Plant Layout
- Production technology and production mix.
- Efficiency, economic and uninterrupted flow of men and work.
- Adequate space for maintenance work.
- Proper lighting and ventilation.
- Proper provision for effluent disposal.
 Production Plan
Advantages of proper plant layout.
- increase in productivity.
- optimum utilization of floor space.
- effective supervision and control over industrial
activities.
- improvement in working environment.
- economy in material handling.
• Product design.
• Production design.
- scheduling.
 Production Plan
• Flow of materials.
- quality of raw material.
- availability of alternative sources of raw material.
- prices charged by different suppliers.
- transportation cost.
- trade policy of the suppliers.
- Promptness in delivering the materials.
- regularity in supplying the materials.
- space required for storage of raw materials.
• Inventory control.
- raw material.
- work in progress.
- finished goods.
• Material handling.
 The Organizational Plan
• Developing the management team.
• Legal forms of business
- ownership.
- liability of owner.
- costs of starting a business.
- continuity of business.
- transferability of interest.
- capital requirement.
- management control.
- distribution of profits and losses.
- attractiveness for raising capital.
• Tax attributes of forms of business.
 Feasibility Study
• The feasibility of a project can be ascertained in terms
of technical factors and economic factors.
• Project feasibility refers to the probability of a project
with respect to its inflow and outflow of funds.
• Reasons to conduct feasibility study.
– Helps to determine the profitability.
– Helps to make decisions.
– Cost benefit approach.
– Helps to prove the existence of the market, liquidity and
expected ROI
– Identify flaws, business challenges, strengths, weakness,
opportunities, threats and unforeseen circumstances.
 Feasibility Study
Steps involved in feasibility study.
- Recognize the people or firms that will be involved
in preparing the various aspects of the study.
- Examine the market feasibility.
- Find out if the project is technically feasible.
- Proceed with management study.
- Determine the financially feasibility.
- Assess the social desirability of the project.
- Summary of feasibility study.
Institution Supporting Entrepreneurs
Small industries financing in developing countries.
• Investment in plant and machinery is up to 1 crore.
• Importance of small scale industries – employment
opportunities, balanced regional development.
• Problems – insufficient ownership capital to start up and run
business enterprise.
• Measures to overcome the problem:
- rent a building.
- purchase of second hand machineries.
- keep inventory level low.
- seek cash sales.
- hire a machinery.
- substitute equipments by labour.
 Institution Supporting Entrepreneurs
SIDBI (Small Industries Development Bank of India).
- Established in April 2, 1990.
Schemes of refinance assistance.
- Schemes for setting up SSI units – 300 Lakhs.
- Composite loan schemes – cottage, tiny & village industries.
- Schemes for acquisition – in house QC, Diesel generating sets, computers,
installing renewable energy systems.
- Equipment refinance schemes.
- Small road transport operations.
- Schemes for marketing activities – 25 lakhs – 50% DP.
- Schemes for medical profession – 45 lakhs.
- Schemes for tourism related activities – 45 lakhs.
- Schemes for hotel and restaurant projects. – 45 lakhs.
- Schemes for infrastructure development. 300 lakhs.
- Schemes for women entrepreneurs – Mahila udyam nidhi scheme- 10 lakhs.
 SIDBI- Small Industries Development Bank of India

• Objectives
- Initiating steps for technological up gradation.
- Expanding the channels for marketing.
• Functions
- Refinances loans and advances.
- Discounts and rediscounts bills arising
 Family Business
• Ownership control by members of a family.
• “A business in which one or more members of one or more
families have a significant ownership interest and significant
commitments towards the business”.
Characteristics of Family Business:
- Loyal to principles and ideals of the founder.
- Family relationship is most important factor in determination
of the position a person hold in the business.
- Family influences the business and business environment
influences the family.
- Succession is the final test for family business.
- Family businesses face unique management challenges
 Family Business
Importance of family business
- Contributes over half of the globe GDP.
- 85% of the EU and 90% of US business are
family controlled.
- 75% of top 100 companies.
- Performs better than non family business.
- 95% of the Indian co’s are family business.
- Examples: Wal-mart, Samsung, Fiat, L’oral,
IKEA etc.
 Family Business
Types of Family Business
- Sole proprietorships.
- Partnerships.
- Limited liability companies.
- Holding companies.
- Family controlled companies.
Various forms of ownership
- Sole proprietorship
- Partnership
- Joint stock companies
 Family Business
Sole Proprietorship
• Merits
- Easy formation.
- Less expensive.
- least government interference.
- complete control
- Prompt decisions.
- Tax benefits.
- personal interest.
• Demerits
- Limited resources.
- unlimited liabilities.
- possibility of wrong decision.
 Family Business
Partnership
• Merits
- easy formation.
- more financial resources.
- collective decision making.
- sharing of risk.
- flexibility.
- credit worthiness.
• Demerits
- Uncertain existence.
- Limited funds.
 Family Business
Joint Stock Company
• Merits
- diffused risk.
- more financial resources.
- transferability of ownership.
- Perpetual existence.
- economies of scale.
- capital formation.
• Demerits
- difficulties in formation.
-lack of personal interest.
- difficult to maintain business secrets.
 Family Business
Cooperative organisation
• Merits
- Economy in cost.
- Democratic management.
- Service motive.
- Government Regulations.
• Demerits
- Limited Financial Resources.
- Political Interference.
- Lack of personal Interest.
 Family Business
Responsibilities
- Elect directors of the company’s board.
- Appoint auditors of the company.
- Amend in Memorandum of AOA.
- To have knowledge of basic operations.
- Attend shareholders meeting.
- To support decision making.
- Not to disclose confidential information.
- Succession planning
 International Entrepreneurship
 International entrepreneurship is the process of
an entrepreneur conducting business activity
across the national boundaries. It may consist of
exporting, licensing, opening sales office in
another country etc.
 International entrepreneurship is defined as
development of international new ventures or
start ups that from their inception engage in
international business, thus viewing their
operation domain as international from the
initial stages of international operations.
Importance of International Entrepreneurship

 International entrepreneurship is beneficial as if sales of

company is declining in domestic market, they can sell
products in international market considering demand for
product in other country market customers.
 Entrepreneur can sell their products in foreign market
which have reached the maturity stage of their life cycle
in domestic markets and earn profit by their sales.
 Companies which are incurring high level of fixed costs
can lower their manufacturing costs by spreading these
fixed costs over long number of units by selling their
products in global market.
Importance of International Entrepreneurship
 Entrepreneur can improve their entrepreneurial
competitiveness and enhance reputation.
 Entrepreneur in process of satisfying foreign
customers have to produce product as per their
quality expectation by which entrepreneur will
not only produce quality product in
international market but also in national market.

 Internationalization of business will teach

entrepreneurs how to cultivate habit of
customer relation management ( CRM )
Importance of International Entrepreneurship

 Being global will make the entrepreneur sensitive

towards their customers – domestic, adopt more
respectful attitude towards foreign habits and
customers.
 Entrepreneurs can hire motivated, multi lingual
employees, learn constantly about the foreign
markets. They will think globally and start
developing an outlook from a global prospective.
Importance of International Entrepreneurship To Firm

 Increased sales and profit : when the entrepreneurs are not

able to earn profit or demand for their product decreases in
local market they can sell their products in foreign market
where life cycle of product is in favourable condition. E.g.
Apple earned more profits from international business than
in local market US in the year 1994. ( $ 390 million foreign
market / $ 310 in Indian market .
 Lower manufacturing cost : if the company manufacturing
cost increases by manufacturing product in home country,
than company can opt in for production process in host
country, on the contrary if the company is in no profit or no
loss situation than company can choose in any option. E.g
Mc Donald's.
 Importance of International Entrepreneurship To Firm

 Advantage of cheap labour : quantity and quality of labour is one

of the major challenge for every business, if the labour is cheap in
foreign countries than company can outsource required labour if
organization is into foreign operations. E.g increasing cost of
labour in china has forced companies to search in for other
options for outsourcing company activity to other countries were
cost of labour is less.
 Utilization of talent and managerial competence : when business
are not able to get required talented work force in country, they
can get the activity outsourced or hire host country employee
which has given birth to concept of expatriation.
 Growth opportunity : entrepreneurs whose core business strategy
is expansion and diversification of business, international business
is one of the primary platform to achieve these objectives.
 Importance of International Entrepreneurship To Firm

 Expansion of domestic market : international business

causes domestic market to expand beyond national
boundaries. When the domestic market has bee fully
tapped than company can go in for expansion of
business to market their products in international
market. E.g Sony
 Globalization of customers : it refers to when customers
in country prefer purchasing foreign brand products than
domestic companies have to go in for
internationalization of business to keep in pace with
competition to attract customers. Tata international
begin to operate in international market after entry of
foreign competitors in Indian market like ford.
 Importance of International Entrepreneurship To Firm

 Globalization of competitors : international

business increases the opportunity not only for
the survival and growth but also motivates
companies to face competition from global
entrants in market, which in turn leads to growth
of market, pursuing global scale efficiencies etc.
 Pay offs of international business : international
business improves image of the company in
domestic market and attracts more customers in
domestic market due to internationalization of
business. E.g Ranbaxy
 DIFFERENCE BETWEEN INTERNATIONAL AND DOMESTIC
ENTREPRENEURSHIP
 Economic system : when an entrepreneur is operating in
national level he is required to understand economic
conditions with in country, but at international level he
should be having information about economic system of
countries he running business which includes currency
rate, phase of business cycle etc.
 Stage of economic development : when entrepreneur is
operating at domestic level he should focus on
development state of domestic country, on the contrary
when he is operating on international scale he has to
view country from developed, developing and
underdeveloped perspective and accordingly plan in
business strategies in economy.
 Cultural sensitivity : entrepreneur operating at
national level should understand cultural issues
persisting in home country and at international
level he has to understand and manage cultural
diversity of customers as well as employees in
company.
 Technological environment : even though
technology is advanced at larger scale , still there
are technological variations persisting in various
countries depending on time of implementation,
updation of technology etc which has to be
analyzed by entrepreneur and accordingly plan in
business operations.
 Government policy : entrepreneur going in for
internationalization of business have to study
domestic as well as international policy, as
restriction laid in home country for export of
goods affect trade of entrepreneur and
restriction in host country on entering of new
entrepreneurs in their company.
 Political and legal environment : politics and
laws play a critical role in international business
as well as domestic business. Entrepreneur
should be aware about political and legal
environment in the domestic as well as
international market.
 STAGES OF ECONOMIC DEVELOPMENT
1.TRADITIONAL SOCIETY : every economy begins with
traditional society which is characterised with low per
capita income and low degree of technical know how
 Features :
• Country is more or less dependent of agriculture for
development in country.
• People in country believe more in family and caste system
which leads to problem of lack of mobility of labour
which hinders employee growth in country.
• Political power in society remains concentrated with
dominant social groups in society.
• Science and technology develop at very slow phase in
economy.
2. PRE CONDITIONS OF TAKE OFF : in this stage of economy
conditions are created conductive of growth. In this stage
entrepreneurs start thinking in terms of modernization, capital
formation, and profit oriented ventures.
 Features :
• Less dependence on agriculture
• People start giving importance to national and international
developments then merely confining them to social issues.
• Part of government revenue is imparted towards infrastructure
development in country.
• Decline in birth rate
• Citizens of country give more importance on developing
personal skills in order to face competition in country.
• Focus towards foreign trade
3. TAKE OFF STAGE : in this stage economy is no more
dependent on other countries and is self sustaining in this
stage. Economy can progress without any external support
from other countries.
 Features :
• Development of various sectors like primary, secondary and
tertiary sector takes place in the country.
• Social framework improves as citizens than being bonded
with family focus on moving to places for career growth and
development.
• Political stability in country indirectly leads to growth in
industrial sector in country creating favourable condition for
trade in country.
• Reinvestment of profit
• Increase in demand for products by consumers in market.
• Technical development
4. SELF SUSTAINED STAGE : this stage can be defined as
stage in which an economy demonstrates the capacity to
move beyond the original industries which provides the
take off and to apply efficiency over its worldwide range
of resources.
 Features :
• rise in the rate of investment in the country
• Conditions of employment improve and reduces
dependency on agriculture.
• Modern techniques are used during the process of
production in country.
• New political as well as social institution are established in
country.
• Dependency on other countries are considerably reduced.
5. STAGE OF ECONOMIC AFFLUENCE : in this stage
there is considerable increase in production and
income. Consumption of comforts and luxuries
become a common feature.
 Features :
• More power : country in this stage starts spending
more on military forces.
• Welfare state : standard of living in country increases
as result of development of facilities in country.
• Increase in consumption : consumption level
increases in this stage as consumers other then daily
consumption products prefers purchasing durable
products.
 ENTREPRENEURIAL ENTRY INTO NEW BUSINESS
 Exporting : means selling goods made in one
country to another country. Exporting normally
involves the sale and shipping of products
manufactured in one country to the customer
located in another country.
• Direct exporting : implies where company takes
full responsibility for making its goods available
in the target market by selling directly to end
users normally through its own agents.
• Indirect exporting : when the exporting company
does not posses the necessary infrastructure to
involve itself in direct exporting, indirect
exporting takes place. It takes place when the
export company sells its to intermediaries who in
turn sell the same products to the end users in
foreign markets.
 Licensing : involves an entrepreneur who is a
manufacturer ( license ) giving a foreign
manufacturer ( licensor ) the right to use patent,
trade mark, technology, production process, or
product in return for the payment of loyalty.
 Turn key projects : Turnkey refers to
something that is ready for immediate use,
generally used in the sale or supply of goods
or services. It is a contract under which a firm
agrees to fully design, construct and equip a
manufacturing/ business/ service facility and
turn the project over to the purchaser when it
is ready for operation for a remuneration.
 Management contract is an arrangement under which
operational control of an enterprise is vested by
contract in a separate enterprise which performs the
necessary managerial functions in return for a fee.
Management contracts involve not just selling a method
of doing things (as with franchising or licensing) but also
doing them. A management contract involves a wide
range of functions, such as technical operation of a
production facility, management of personnel,
accounting, marketing services and training.
 Foreign direct investment (FDI) is direct investment into
one country by a company in production located in
another country either by buying a company in the
country or by expanding operations of an existing
business in the country
 Minority interest :a company having interest or ownership of less
then 50 percent in another company is known as minority
interest/ A significant but non-controlling ownership of less than
50% of a company's voting shares by either an investor or
another company.
 Majority interest : majority interest is an ownership interest
greater than fifty percent (50%) of the voting interest in a
business enterprise.
 joint venture (JV) is a business agreement in which parties agree
to develop, for a finite time, a new entity and new assets by
contributing equity. They exercise control over the enterprise and
consequently share revenues, expenses and assets. A joint
venture takes place when two parties come together to take on
one project. In a joint venture, both parties are equally invested
in the project in terms of money, time, and effort to build on the
original concept.
 Mergers : The combining of two or more companies, generally
by offering the stockholders of one company securities in the
acquiring company in exchange for the surrender of their stock /
Mergers and acquisitions refers to the aspect of corporate
strategy, corporate finance and management dealing with the
buying, selling, dividing and combining of
different companies and similar entities that can help an
enterprise grow rapidly in its sector.
 Horizontal merger : Horizontal merger occurs when a firm is
being taken over by, or merged with, another firm which is in
the same industry and in the same stage of production as the
merged firm, e.g. a car manufacturer merging with another car
manufacturer / A horizontal merger is when two companies
competing in the same market merge or join together. E.G
amalgamation of Daimler-Benz and Chrysler
 Vertical merger : is the combination of two or
more firms in successive stages of production
that often involve buyer and seller relationship.
This form of merger stabilize supply and
production and offer more control of these
critical areas. ( merger between Mc Donald's
and Philips petroleum )
 Product extension : merger occurs when
acquiring and acquired company have related
production or distribution activities but do not
have products that compete directly with each
other. ( merger between western publishing
( children's books) and Mattel ( toy company ) .
 Product extension merger is a combination of two
firms producing the same product but selling them in
different geographic market. Major advantage of
these mergers is that firms can economically
combine its management skills, production and
marketing with acquired firms. (The acquisition of
Mobilink Telecom Inc. by Broadcom is a example of
product extension merger ). ( Broadcom deals in the
manufacturing Bluetooth personal area network
hardware systems and chips for IEEE 802.11b
wireless LAN. Mobilink Telecom Inc. deals in the
manufacturing of product designs meant for
handsets that are equipped with the Global System
for Mobile Communications technology)
 Market extension merger : A market extension
merger takes place between two companies that
deal in the same products but in separate
markets. The main purpose of the market
extension merger is to make sure that the
merging companies can get access to a bigger
market and that ensures a bigger client base.
(Acquisition of Eagle Bancshares Inc by the RBC
Centura )
 Diversified activity merger : this is a
conglomerate merger involving consolidation of
two unrelated firms. (Philip Morris's acquisition
of Miller Brewing)
 BARRIERS TO INTERNATIONAL TRADE
 Attitude of entrepreneur : when an entrepreneur
has negative mindset that foreign market is
unknown to him and he might find it difficult to
set up his business in new country will prove to be
a major barrier for international trade.
 Lack of information : as entrepreneur is new
entrant in international market he is unaware
about the market conditions in host country and
taste and preference of customers which may
lead to issues in terms of acceptance and locating
product in market.
 Lack of network influences : network with
established business companies makes it easy for
the entrepreneur in new market but if the
entrepreneur has no contacts in foreign country
then it will be difficult for entrepreneur from
initial stage of getting required permission to
establishing business in country.
 Financing problems : as international business
involves huge risk financial institutions may be
reluctant in terms of providing required finance
to entrepreneurs.
 Tariff barriers : tariff means duty levied by the
government on imports. Imposing tariff raises
the price of imported goods making them less
attractive to consumers and protects makers of
comparable domestic products and services.
 Non tariff barriers : are the obstacles to imports
other than tariffs such as testing, certification, or
bureaucratic hurdles that have effect of
restricting imports. These are administrative
measures that are imposed by a domestic
government to discriminate against foreign
goods and in favour of home goods.
 Technical barriers : basically refers to before a
country's goods enters into foreign market it has to
go through certain test for authentication. In US
before food products from others is marketed in US
it will be tested for checking bacteria content in
food item for safety of general public, which is good
for safety of host country but may prove to be a
major barrier to home country exporting product.
 Political barrier : in few country their exist
abundant opportunity for business but political
scenario in country will be instable such as
kidnappings, bombings, violent against business
and employees which proves to be major question
mark in terms of future success of business.
 Human resource : presence of labour unions,
hostile management unions relations, strike,
increase coat of labour in foreign country may
prove it difficult for entrepreneur to establish
business in foreign market.
 Cultural barriers : as entrepreneur is new
entrant in host country he may not be aware
about language, education, tradition, religion,
values of citizens which will make it difficult for
the entrepreneur to understand mindset, taste
and preference of customer in market.
 Informal Risk Capital and Venture Capital
Stages of Business Development Funding
• Early stage financing
• Development financing
• Acquisition financing