ESBM

6. ENTREPRENEURSHIP
AND
SMALL BUSINESS
MANAGEMENT

7. Entrepreneur
Entrepreneur as an agent who buys factors as production at
certain prices in order to combine them into a product with a
view to selling it at uncertain prices in future.”
“Task of organizing and coordinating the factors of
production, i.e. land, labor capital and enterprises”
“ An entrepreneur Supervise Monitors and controls the
business activities”
• Risk Taker
• Organizer
• Innovator

8. • Entrepreneurs are people that notice
opportunities and take the initiative to
mobilize resources to make new goods and
services.
• A person who creates and manages change by
the recognition of opportunities (needs,
wants, opportunities, problems, and
challenges) and develops people and manages
resources to take advantage of the resources
to take the opportunity and creates a venture
(profitable business).

9. Risk
• Risk is the potential of gaining or losing something of value.
• Values (such as physical health, social status , emotional well-being, or
financial wealth) can be gained or lost when taking risk resulting from a
given action or inaction.
• Risk can also be defined as the intentional interaction with uncertainty.
• Uncertainty is a potential, unpredictable, and uncontrollable outcome; risk
is a consequence of action taken in spite of uncertainty.

10. RISKS
• Lack of adequate capital
• Low sales
• Higher than expected expenses
• Competitive pressure
• An owner unprepared to manage a growing
• business
• Operations requiring more time than the
owner is willing to commit

11. • An individual who, rather than working as an employee, runs a
small business and assumes all the risk and reward of a given
business venture, idea, or good or service offered for sale. The
entrepreneur is commonly seen as a business leader and innovator
of new ideas and business processes.
• Entrepreneurs
– Recognize opportunities where others see chaos or
confusion
– Are aggressive catalysts for change within the
marketplace
– Challenge the unknown and continuously create the
future

12. • Why become an entrepreneur?
1. Challenge
2. Profit potential
3. Enormous satisfaction
4. Better quality of life
5. Desire for independence
6. Satisfaction of building something from nothing
7. Watching the market embrace your ideas

13. • What does it take to succeed?
a. Innovation and creativity skills
b. General management skills
c. Business know-how
d. Social networks

14. Characteristics or Personal Competency of an Entrepreneur.
– Initiative
– Sees and Acts on Opportunities
– Persistence
– Information seeking
– Concern for High Quality Work and Output – Increased Productivity.
– Commitment to Work Contract
– Efficiency Orientation
– Risk taking
– Systematic and organized planning
– Problem Solving
– Self Confidence
– Inspirational - employees
– Effective Communicator – external & internal of organization

15. Rewards for an Entrepreneur
 Freedom to work
 Satisfaction of being own boss
 power to do things
 Respect of family and friends

16. Penalties for an Entrepreneur
Availability of limited capital and other
resources.
 Social and family life is affected.
 Risk of failure.
Constraints of financiers, laborers, customers,
and suppliers.

17. Functions of an Entrepreneur
 Idea generation
 Determination of business objectives
 Rising of funds
 Procurement of machines and materials
 Market research
 Determining form of enterprise
 Recruitment of manpower
 Implementation of the project

18. Qualities an entrepreneur
Motivation to achieve
The habit of hard work
Non-conformity (sense of independence and desire to set own goals)
Strong leadership
Good intuitive judgment, common sense and instinct
Risk takers
Objective approaches
Emotional stability
Comprehensive awareness

19. Rank order of entrepreneurial attitudes
1 Persistence
2 Vision
3 Respond quickly to problems
4 Desire to succeed
5 Working with people
6 Leadership
7 Clear goal
8 Solving problems
9 Motivating people
10 Working in a team
11 Feeling sure about yourself
12 Doing things own way
13 Total control
14 Being creative
15 Being curious
16 Being alone
17 Experiment with new ways
18 Gamble on a good idea
19 Take chances

20. Distinction Between Entrepreneur and Manager
Points Entrepreneur Manager
• Motive The main motive of an
entrepreneur is to Star a
venture for his personal
gratification
Render services in an
enterprise already set by
someone else.
• Status Owner servant
• Risk Assumes risk and
uncertainty
Does not bear any risk
involved in enterprise
• Rewards Profits Salary
• Innovation How to produce goods to
meet the changing needs
of the customers
Simply executes plans
prepared by the
entrepreneur
• Qualification Possess qualities and
qualifications
Possess distinct
qualifications

21. What is an Enterprise
• Enterprise is another word for a for-profit business or company, but it is most
often associated with entrepreneurial ventures. People who have entrepreneurial
success are often referred to as “enterprising.”
• There are many forms of legal enterprises
• Sole proprietorship – A company run by a single individual, typically for their
benefit, with unlimited liability for any damages that occur as a result of the
business’ operations.
• Partnership – A business run by two or more individuals or entities who share
ownership – not necessarily equal ownership, however.
• Corporation – A for-profit entity created to shield the owner(s) from liability
should the enterprise become subject to a lawsuit. There are different forms of
corporations, depending on how many owners there are.
• Limited Liability Company (LLC) – An LLC offers the legal protection of a
corporation and the tax treatment of a partnership.
• Professional Company/Professional Limited Liability Company (PC/PLLC) – PCs
and PLLCs are for licensed professional firms, such as accountants, architects,
engineers, doctors, and lawyers, and provide liability protection similar to a
corporation.

22. Intrapreneurs
someone in an existing organization who turns new ideas into profitable
realities
Intrapreneurs notice opportunities and take initiative to mobilize resources, however
they work in large companies and contribute to the innovation of the firm.
Not every employee has the ability to become a successful Intrapreneur. It takes well-
developed strategic action, teamwork and communication abilities.
an intrepreneur(also intrapreneur) is a person who possesses such skill but is
working within a company or organization.
• Intrepreneurs are usually encourages to develop their ideas into a
workable product by the companies they work for.
• Like an entrepreneur, an intrepreneur is motivated, creative, and able to
think outside of the box.

23. • Example of entrepreneurship: A classic case
of entrepreneur is that of the founders of
Adobe, John Warnock and Charles Geschke.
They both were employees of Xerox. As
employees of Xerox, they were frustrated
because their new product ideas were not
encouraged. They quit Xerox in the early
1980s to begin their own business. Currently,
Adobe has an annual turnover of over $3
billion.

24. • Features of Intrapreneurship:
Entrepreneurship involves innovation, the ability to
take risk and creativity. An entrepreneur will be able
to look at things in novel ways. He will have the
capacity to take calculated risk and to accept failure
as a learning point. An intrapreneur thinks like an
entrepreneur looking out for opportunities, which
profit the organization. Intrapreneurship is a novel
way of making organizations more profitable where
imaginative employees entertain entrepreneurial
thoughts. It is in the interest of an organization to
encourage intrapreneurs. Intrapreneurship is a
significant method for companies to reinvent
themselves and improve performance.

25. Difference between Entrepreneurs and Intrapreneurs
Entrepreneurs Intrapreneurs
1. Dependency Independent in his
operation
Dependent on the
entrepreneurs
2. Raising of funds Himself raises funds
required for the
organization
Does not raise fund for
the organization
3. Risk Bears the risk involved
in the business
Does not fully bear the
risk involved in the
organization
4. Operation Operates from outside Operates from inside
Convert the ideas into
viable opportunities
Takes the responsibility
of creating innovation
Takes the profit of the
business
Provided Varity of
perquisite for his
innovation

26. Concept of Entrepreneurship
“Entrepreneurship is the attempt to create value
through recognition of business opportunity, the
management of risk taking appropriate to the
opportunity and through the communicate and
management skills to mobilize human, financial
and material resources necessary to bring a
project to fruition”

27. • Entrepreneurship is the process of designing,
launching and running a new business, which
is often initially a small business, and the
people who create these businesses are called
entrepreneurs.

28. – Essential ingredients include:
• The willingness to take calculated risks—in terms of
time, equity, or career.
• The ability to formulate an effective venture team; the
creative skill to marshal needed resources.
• The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see
chaos, contradiction, and confusion.

29. The Entrepreneurial Process
– Identification and evaluation of the opportunity.
– Development of the Business Plan.
– Determination of the required resources
– Management of the resulting enterprise

30. • What are the different outcomes of engaging
in entrepreneurship?
– Innovation or newness – product or service.
– Organizing resources – finance, people, physical
and information resource.
– Creating new product or service.
– Generating wealth
– Taking risk in a business venture.
– Prepared to face uncertainty.
– Create job opportunity

31. Relationship between Entrepreneur
and Entrepreneurship
Entrepreneur Entrepreneurship
Person
Organizer
Innovator
Risk-bearer
Motivator
Creator
Visualizes
Leader
Imitator
Process
Organization
Innovation
Risk-bearing
Motivation
Creation
Vision
Leading
Imitation

32. Entrepreneurial Orientation
• The tendency of an organization to identify and
capitalize successfully on opportunities to launch
new ventures by entering new or established
markets with new or existing goods or services.
• Five Components of Entrepreneurial Orientation
• Independent action
• Innovativeness
• Risk taking
• Proactiveness
• Competitive agressiveness

33. Entrepreneurial process
Environnent
Political
Economic
Social
Technological
OPPORTUNITY
Evaluation of
opportunity
Market research
Gather resources
Decision Go ahead
or
Abandon
Entrepreneur
Skills
Personality
Aspirations
Experience

34. Barriers to Entrepreneurship
• Lack of a viable concept
• Lack of market knowledge
• Lack of seed capital
• Uncertainty of Income
• Lack of business know how
• Complacency- lack of motivation
• Risk of losing your entire Investment
• Legal constraints and regulations
• Lower Quality of Life until the business get established.
• Complete Responsibility

35. How to avoid failure in a Entrepreneurial business.
– Know your business in depth.
– Develop a good, effective and solid Business Plan.
– Manage your financial resources effectively.
– Have a thorough and complete financial statement.
– Learn hire and manage people effectively.
– Keep physically fit, consume healthy foods, and avoid
addictive consumption cigarettes and alcohol.

36. INNOVATION
• Innovation is the specific function of entrepreneurship. It is the means by
which the entrepreneur either creates new wealth-producing resources,
or endows existing resources with enhanced potential for creating wealth.
• “Innovation is the means by which the entrepreneur either creates new
wealth-producing resources or endows existing resources with enhanced
potential for creating wealth”
• Process of doing something new.
• Innovation is the ability to apply creative solutions to those problems and
opportunities to enrich people’s lives.

37. Characteristics of innovation
• Radical innovation
• Incremental innovation
Incremental Radical
• Uniform improvements • Novel improvements
• Uses existing technologies
and processes
• Uses new technologies and
processes
• Quick to implement • Extended periods of
piloting
• Quick to implement • Also exploits new markets

38. Innovation can occur through
• Introduction of new product in the market.
• Use of new method of production, which is not yet
tested.
• Opening of new market.
• Discovery of new source of raw materials.
• Bringing out of new form of organization.

39. CREATIVITY
• Creativity is the generation of ideas that result in the improved efficiency or
effectiveness of a system.
• Creativity is the ability to develop new ideas and to discover new ways of looking at
problems and opportunities
• Creativity is the process that can be developed and improved
• Creativity is related to ‘imagination’, but innovation is related to
‘implementation’.
• Creativity is the characteristic of a person to generate new ideas,
alternatives, solutions, and possibilities in a unique and different way

40. BASIS FOR COMPARISON CREATIVITY INNOVATION
Meaning Creativity is a act of creating new ideas,
imaginations and possibilities.
Innovation is the introduction of
something new and effective into the
market.
Process Imaginative Productive
Quantifiable No Yes
Related to Thinking something new Introducing something new
Money Consumption No Yes
Risk No Yes

41. • In simple terms, both are important for entrepreneurs but innovation is more
concerned with the logical steps involved in bringing a creative idea to market.
• In other words it is the process involved in actualizing creative ideas successfully
(economically). Therefore creativity becomes the antecedent of innovation.
• Creativity becomes the thinking part where as innovation is the doing or
undertaking of a creative idea.

42. Creativity
(New idea)
Innovation
Entrepreneurship.
A process model of creativity, innovation and entrepreneurship.

43. Four basic aspects of being an entrepreneur
Entrepreneurship involves creating something new value.
Entrepreneurship requires the devotion of the necessary time
and effort though only those going through the entrepreneurial
process appreciate the significant amount of time and effort it
takes to create something new and make it operational.
Entrepreneurship assumes risk in the form of financial lose,
psychological tension and social problems.
Entrepreneurship also involves rewards of independence, follow
ed by personal satisfaction and money.

44. ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
• Entrepreneurship promotes capital formation by mobilizing the idle saving of the
public.
• It provides immediate large-scale employment. Thus it helps to reduce
unemployment in the country.
• It provides balanced regional development.
• Generation of innovation that leads to the creation of new product and service.
• Improvisation and modification on existing product to better suit market and
customers’ needs.
• It stimulates the equitable redistribution of wealth, income and even political
power in the interest of the country.
• It encourages effective resources mobilization of capital and skill which might
otherwise remain unutilized and idle.
• It also induces backward and forward linkages which stimulated the process of
economic development in the country
• It promotes country’s export trade i.e. an important ingredient for economic
development.

45. Benefits of Entrepreneurship
• Opportunity of gain control over your own destiny
• Opportunity to reach your full potential
• Opportunity to reap unlimited profits
• Opportunity to contribute to society & be recognized
for your effort
• Opportunity to do what you enjoy

46. Limitations of Entrepreneurship
1) Uncertainty of income.
2) Risk.
Financial risk
Family and social risk
3) Long hours & hard work.
4) Lower quality of life until the business gets established.
5) High level of stress.

47. Differences between entrepreneurship and owner-
managers
Entrepreneurship Owner–management
Definition of the field Process where an individual discovers,
evaluates and exploits opportunities
independently
Administration of a small independent
business venture
Firm size Large, medium or small small
Degree of risk Variable Lower
Number of people involved in the
business
Small to large number small
Economic sector Private, government and not-for-profit Private sector
Growth focus High Variable
Key attributes of individual High need for: achievement; internal locus
of control; creativity and innovation;
growth
moderate need for Achievement; good
organizational skills to manage efficiently;
little innovation; moderate growth

48. Importance and Contribution of Entrepreneur
• Develop new markets
• Discover new sources of material
• Mobilize capital resources
• Introduce
– New technologies,
– New industries, and
– New product.
• Create employment

49. Entrepreneurial Background
• Childhood Family Environment
• Education
• Personal Values
• Age
• Work History

50. Serial entrepreneurs
• Serial entrepreneurs, those who create multiple companies,
often running more than one business simultaneously. These
entrepreneurs take multitasking to the extreme. Serial
entrepreneurs get a charge from taking an idea, transforming
it into a business, and repeating the process.
• A person who starts several different businesses with little int
ention of operating any of them for very long. That is, a
serial entrepreneur may start one business and work at it until
it becomes profitable, then sell it and start another
business. A serial entrepreneur is not interested in a career wi
th the individual companies he/she runs, but rather
enjoys the process of starting a business. Serial entrepreneurs
hip is risky, as is entrepreneurship in general.

51. • Entrepreneurs who have built and sold one
business for a substantial amount going onto
build other successful businesses. They never
lose the entrepreneurial buzz. Such people are
called "serial entrepreneurs".

52. Social Entrepreneurship
• Social entrepreneurship is the activity of establishing
new business ventures to achieve social change. The
business utilises creativity and innovation to bring
social, financial, service, educational or other
community benefits.
• social entrepreneur’s primary goal is to use their
companies to make a positive impact on the world.

53. Social enterprises
• Social enterprises are not charities or welfare agencies. They are
private businesses established by entrepreneurs with an emphasis on
human values rather than just profit.
• These businesses focus on working with and enhancing the social
capital within the community by encouraging participation, inclusion
and utilising a bottom-up approach to achieve social change.

54. • social entrepreneurship” is the dynamic process
through which specific types of individuals deserving
the name of “social entrepreneurs” create and
develop organizations that may be defined as “social
enterprises.

55. Who are most likely to become Social Entrepreneurs?
• Persons who value compassion, justice, equality, and liberty
• Innovators
• Achievement oriented
• Independent
• Inner-directed
• Tolerant of risk
• Tolerant of ambiguity

56. Entrepreneurship Social Entrepreneurship
• Represents the identification, evolution
of opportunities that result in Profit
• The identification, evolution, and of
opportunity that result in social value
Entrepreneur Social Entrepreneur
• May create change in the society, but
that is not the primary purpose of
starting the venture.
• May generate profit, but for them that is
not the primary reason for starting the
venture.

57. Social entrepreneurs play the role of change
agents in the social sector..
– Adopting a mission to create and sustain social value (not just
private value),
– Recognizing and pursuing new opportunities to serve that
mission,
– Engaging in a process of continuous innovation, adaptation,
and learning, – Acting boldly without being limited by resources
currently in hand.

58. Function of Social Entrepreneurship
• To create and maintain a stable level of employment.
• Create jobs and provide support to socially vulnerable
groups.
• Social Entrepreneurship promotes development of
entrepreneurial skills.
• Compensating countries narrow place.

59. Lifestyle and growth firms
growth firms
A growth business focuses on a marketplace with potential for rapid and robust growth
over the coming years. There may be technological innovations that spawn rapid
development of new products, or there may be changing customer dynamics that
create new market needs.
Lifestyle firms
The lifestyle business, on the other hand, is one that may or may not see significant
growth, but exists to fund the “lifestyle” of its owner(s). This company could be
profitable, but does not necessarily have aspirations of rapid revenue growth.
A lifestyle business is one where the owner can run his or her company without
sacrificing his or her personal life, such that he or she can live the way he or she wants
to. More than for financial gain, it is set up for personal and lifestyle reasons.

60. • A lifestyle business is one that is formed for the purpose of sustaining or
supporting the income and personal requirements of the owners. It is still,
to some extent, profit-oriented, but revenue maximization is not at the
top of its list of priorities.
• The ultimate goal of a lifestyle business is the creation and sustenance of a
pleasant and harmonious balance of life and work of the business owner.
It generates just enough revenue to let the owner enjoy his or her current
lifestyle.
• Enjoyment is usually a key point in a lifestyle business. Owners set up the
business based on their personal interest or passion – it could be a hobby
or simply something that entertains them. This ensures that they actually
love and enjoy their work on their business.

61. We can break down the features of a lifestyle business into the
following:
• The owner is the sole employee or, in the case of more than one owner,
the founders or owners are the business’s employees.
• The owner already makes a reasonable living, earning a respectable
income.
• The owner has the freedom to do whatever he wants with his time and
resources, so he can decide how much time is devoted to his work time
and his personal time.
• There are no intentions to exit the business or sell it off, so it is built with
plans to operate it for many more years to come.

62. WHY YOU SHOULD START A LIFESTYLE BUSINESS
• Your personal life will not be sacrificed
• There is no obligation to any investor or financing provider
• You get to enjoy the freedom of time and location
• You get to control most, if not all, aspects of the business
• You also enjoy financial freedom

63. Lifestyle growth firms
 Small company that provides its
owner independence, autonomy,
and control.
 Is often run out of household
 Provides flexibility (hours, meeting
places, attire)
 Aligns your personal interests and
hobbies with your desire to make
a profit.
 Goal is maximum profit and
growth.
 Concentrated on pushing
envelope and growing as large as
possible.
 Focus on innovation

64. Here are some of the most common examples of
thriving lifestyle businesses today
• Professional blogging. This is most probably the quintessential lifestyle business.
Many bloggers now make their living through blogging.
• Novelists, poets, journalists… These writers prefer to take the freelance route
instead of getting employment in established organizations or companies. They
travel, go places, experience things and write about them.
• Consultants and advisors. Services of consultants are sought after these days,
ranging from matters regarding finance, law, technology, health, travel, real estate,
and more.
• Online stores. E-commerce also falls under the lifestyle business category if they
meet the definition of one.

65. SMALL BUSINESS
Size of the Business
Size refers to the scale of operations. Size may be measured in
the following ways :
• Total capital investment
• The value of total assets or fixed assets.
• Total investment in plant and machinery
• The total number of persons employed
• Volume/value of production
• Volume/value of sales turnover
• A combination of above

66. • fewer than 100 employees, independently
owned and operated, not dominant in its field,
and not characterized by many innovative
practices
• Small Business
– A company that is independently owned and
operated, is not dominant in its field, and
employs fewer than 500 people (although this
number varies by industry)

67. Characteristics of Small Businesses
• Most small firms have a narrow focus.
• Small businesses have to get by with limited resources.
• Small businesses often have more freedom to innovate.
• It easier to make decisions quickly and react to changes in the
marketplace.
• One or two owners often family
• Financed by owners, relatives and friends
• Limited and uncertain markets Low levels of new profit
• Inability to influence prices
• Uncertain entrepreneurial aspirations and motives (lifestyle firm or growth firm)
• One location

68. Economic Roles of Small Business
• They provide jobs
• They introduce new products
• They meet the needs of larger organizations
• They inject a considerable amount of money into the
economy.
• GDP
• SMEs can play a role in mitigating the problem of imbalance in
the balance of payment accounts through its export
promotion.
• It can help to release scarce capital towards productive use.

69. Importance of small business
• To increase employment.
• To prevent unequal distribution of income.
• To develop capital investment.
• Determining a country’s competitiveness and
productivity

70. Factors Influencing Growth in Small Firms
• ENTREPRENEUR FIRM STRATEGY
• Motivation
• Unemployment
• Education
• Management experience
• Number of founders
• Prior self-employment
• Family history
• Social marginality
• Functional skills
• recruitment
• Age
• Prior business failure
• Prior sector experience
• Prior firm size experience
• Gender
• Age
• Sector Training
• Legal form
• Location
• Size Market
• Ownership
• Workforce
• Management Training
• External equity
• Technology
• Market positioning
• Market adjustments
• Planning
• New products
• Management recruitment
• State support
• Customer concentration
• Competition
• Information and advice
• Exporting

71. The Benefits of Owning a Small Business
• Opportunity to Gain Control over Your Own Destiny
• Opportunity to Make a Difference
• Opportunity to Reach Your Full Potential
• Opportunity to Reap Impressive Profits
• Opportunity to Contribute to Society and Be Recognized for
Your Efforts
• Opportunity to Do What You Enjoy Doing

72. Disadvantages of a Small Business
• Lower guaranteed pay
• Fewer benefits
• Expected to have many skills
• Too much cohesion
• Hard to move to a big company
• Large fluctuations in income possible
• Risk of Losing Your Entire Invested Capital
• Long Hours and Hard Work

73. Role Of Small Business In Economy
• Employment
• Optimization Of Capital
• Balanced Regional Development
• Mobilization Of Local Resources
• Export Promotion
• Consumer Surplus
• Feeder To Large Scale Industries
• Social Advantage
• Share In Industrial Production
• Development Of Entrepreneurship

74. Top Five Reasons Start-up Businesses Fail
• Insufficient start-up capital
• Lack of managerial experience
• Bad location
• Poor inventory control
• Lack of initial planning

75. COMMON REASONS FOR SMALL BUSINESS
FAILURE
• Not keeping adequate records
• Not having enough start-up money
• Lack of management experience
• Lack of experience with the type of business
• Not controlling operating expenses
• Poor location for the business
• Failure to manage credit offered to customers

77. Why People Start their Own Companies
• More control over their future
• Tired of working for someone else
• Passion for new product ideas
• Pursue business goals that are important to them on a
personal level
• Inability to find attractive employment anywhere else.

78. • Business plan
– A document that summarizes a proposed
business venture, goals, and plans for
achieving those goals

79. • Small Businesses Owners
– Manage their businesses by expecting stable sales,
profits, and growth
• Entrepreneurs
– Focus their efforts on innovation, profitability and
sustainable growth

80. Micro, small and medium-sized enterprise
What they actually are?
• The commonly used criteria at the international level to
define SMEs are the number of employees, total net assets,
sales and investment level.
• The European Union makes a general distinction between
self-employment, micro, small and medium sized businesses
based on the following criteria

81. 0 Self-employed
2-9 Micro business
10-49 Small business
50-249 Medium-size business

82. CHARACTERISTICS OF MSME’S
• Low cost of production
• High capacity to innovate exports
• High employment generation
• Reduction of regional imbalance
• Greater flexibility

83. ROLE OF MSME’S
• employment generation
• production
• export contribution
• utilizing resource optimally
• increase GDP

84. PROBLEMS OF MSME’s
• Financial Problem
• Raw material improper
• Technological problem – Less Advertisement
• Managerial problem
• Low productivity
• Lack of government support

85. Sources of Ideas
• Research and Development
• Distribution Channels
• Consumers
• Every day problems / needs / complaints
– E.g. Sports Division / Cisco / Netflix
• Personal experience
– Work, home, education, skills and talents
• Hobbies and interests
– Lifestyle entrepreneurs
• Newspapers, magazines, media
• Other countries
• Competitors
• Deliberate Search
– Business Opportunity Profiles
– On-line databases
– Patents and licensing

86. Methods of Generating New Ideas
• Focus Groups - group discussions
• Surveys
• Talking pictures
• Brainstorming
– Allows people to be stimulated to greater creativity.
– Good ideas emerge when the brainstorming effort focuses on a specific product or
market area.
• Brain writing
– A form of written brainstorming.
– Participants write their ideas on special forms or cards that circulate within the group.
• Problem Inventory Analysis
– Consumers are provided with a list of problems and are asked to identify products that
have those problems.
– Results must be carefully evaluated as they may not actually reflect a new business
opportunity.
– Structured brainstorming

87. Characteristic
• Realistic Outlook
• Conceptual Ability
• Attraction to challenges
• Its all about customers
• Need to control and direct
• Objective Approach
• Describing in numbers

88. Skill of successful entrepreneur
• Soft skill of successful Entrepreneur
1. Managing perceptions
2. Appreciating the role of other
3. Emotional and intelligence quotient
4. Integrity in speech and action
5. Strong believe in themselves
6. Motivated to achieve
7. Competitive by nature

89. • Hard skill of successful entrepreneur
• Leadership
• Sale and marketing
• Technical
• Administration
• Creative and innovative
• Risk taking
• Ability to change
• Focus
• Financial knowledge
• Time management
• Vision
• Passion
• Good communication skill
• Active listener

90. • Entrepreneurship Skill-Sets
Entrepreneurship Skills
•Inner Discipline
•Ability to Take Risk
•Innovative
•Change-Orientated
•Persistence
Management Skills
•Planning
•Decision-Making
•Motivating
•Marketing
•Finance
•Selling
Technical Skills
•Operations Specific to
Industry
•Communications
•Design
•Research and Development
•Environmental Observation

91. • Technical Skills - which are those skills
necessary to produce the business’s product
or service
• Managerial Skills, which are essential to the
day-to-day management and administration of
the company
• Entrepreneurial Skills - which involve
recognizing economic opportunities and acting
effectively on them
• Personal Maturity Skills - which include self-
awareness, accountability, emotional skills, and
creative skills.

92. • Behavioral characteristics of entrepreneurs
1. drive and energy
2. self-confidence
3. high initiative and personal responsibility
4. internal locus of control
5. tolerance of ambiguity
6. low fear of failure
7. moderate risk taking
8. long-term involvement
9. money as a measure not merely an end
10. use of feedback
11. continuous pragmatic problem solving
12. use of resources
13. self-imposed standards
14. clear goal setting.

93. Demographics
1. Gender
2. Age
3. c. Education level
4. d. Working experience
Personal Traits
1. Desire for independence
2. Need for achievement
3. Locus of control
4. Risk taking propensity
5. Recognition of opportunity
Environmental factors
1. Financial support
2. Government policy and programs
Education and training
3. Business and professional
infrastructure
4. Access to physical infrastructure
Cultural and social norms
Business start-ups

94. Risks
Inconsistent income (or none for months at a
time)
High health insurance costs
Large tax bills (if not paid quarterly)
Deadbeat clients
Little job security
Emotional stress
Isolation (if you work alone)
Long hours

95. Rewards
Experience
Independence
Excitement (I couldn’t wait to check my voicemail
for new jobs)
Creative freedom
Variety
High-paying accounts
Flexible schedule
Tax deductions
Networking
Personal satisfaction

96. The risks and uncertainties of business start-up and
how they can be mitigated
• Market risk
• Operational risk
• Financial risk
• Opportunity risk
• Management risk
• Competitive Risks
• Legal & Regulatory Risks
• Operational and environmental risks

97. • Ways of identifying risk
These methods will help you identify risks that are relevant to your
particular business:
• Thoroughly review your business plan and ask as many 'what if?'
questions as you can.
• Brainstorm with your accountant, financial adviser, staff and other
interested parties. Get as many different perspectives as you can.
• Analyze a wide range of possible future events and their outcomes
(scenario analysis). Analyze economic, political, legislative and
operating scenarios.
• Use flow charts, checklists and inspections to break down and analyze
your work procedures (systems analysis).
• For any method, always ask these questions:
1. When, where, why, and how are risks likely to occur in this business?
2. Are the risks internal, external or random?
3. Who might be involved or affected if this occurs?
4. Once you've identified risks, you'll need to analyze their likelihood
and consequences and then come up with options for managing
them.

98. • Before you decide which risks to treat, you
need to gather information about the:
1. method of treatment
2. people responsible for treatment
3. costs involved
4. benefits of treatment
5. likelihood of success
6. ways to measure and assess treatments.

99. • Avoid the risk
You may decide not to proceed with the activity likely to generate the risk,
where practical. Alternatively, you may think of another way to reach the
same outcome.
• Reduce the risk
You can control a risk by:
reducing the likelihood of the risk occurring - for example, through quality
control processes, managing debtors, auditing, compliance with
legislation, staff training, regular maintenance or a change in procedures
reducing the impact if the risk occurs - for example, through emergency
procedures, off-site data backup, minimizing exposure to sources of risk
or public relations.
• Transfer the risk
You may be able to shift some or all of the responsibility for the risk to
another party through insurance, outsourcing, joint ventures or
partnerships.
• Accept the risk
You may accept a risk if it cannot be avoided, reduced or transferred.
However, you will need to have plans for managing and funding the
consequences of the risk if it occurs.

100. • Developing and reviewing your risk management plan
• A risk management plan details your strategy for
treating risks. It details information about:
• identified risks
• the level of risks
• your planned strategy
• the time frame for implementing your strategy
• the resources required
• the individuals responsible for ensuring the strategy is
implemented.
• Your final plan should include appropriate objectives, a
budget and milestones on the way to achieving those
objectives.

101. Examine the different environments
that foster or hinder
entrepreneurship

102. • How Cultural Factors Influence Entrepreneurship
• Culture refers to the customary practices and beliefs that have a significant impact on the basic values, perceptions, preferences, and behaviors of people.
• Culture and entrepreneurship intervene in many ways.
– People traditionally engaged in businesses have a pro-business attitude and disdain
working as employees.
– Many people fall outside the establishment and remain unsuited for the traditional job
market due to a strong culture of independence or other reasons.
– Business school students come under the missionary zeal of teachers who exhort them to
become entrepreneurs even if the opportunity cost is very high.
– The culture of consumerism where people desire material goods encourages
entrepreneurship within the area as returns from a business become more than returns
from a job.
– People engaged in jobs and other services pressure their children to find secure jobs and
crush their entrepreneurship spirit at a very early age.
– A culture of thrift where people spend less and save for a rainy day discourages
entrepreneurship within the local community as the returns from a business become less
attractive compared to returns from a job.
– Cultures where people are risk averse and do not attach much importance to hard work
and persistence are not conducive to entrepreneurship.

103. • How Political Environments Support or Suppress Entrepreneurship
• The following are some of the ways in which the political environment
influences entrepreneurship:
– Unstable political conditions where government policies change frequently discourage
business, as investors fear for the safety of their investments.
– Government support to economic development through infrastructure development,
facilitation, industrial parks, and the like all encourage entrepreneurship.
– High taxes that cut into the returns usually discourage entrepreneurs. On the other hand,
tax holidays to encourage business attract start-ups.
– The availability of infrastructure and utilities such as good roads, power, communication
facilities, and lack of corruption and bureaucratic delays in obtaining such utilities
encourage entrepreneurship.
– Economic freedom in the form of favorable legislation and few hurdles to start and
operate businesses encourage entrepreneurship.
– While most businesses accept laws related to the safeguard of labor rights and the
environment, some countries have retrograde laws that make compliance very difficult
and time consuming. Such legal hurdles create a barrier to entrepreneurship.

104. • How Economic Factors Influence Entrepreneurship
• The nature of the economy is a major factor that
influences entrepreneurship.
– The general purchasing power of the people, manifested by
income levels and economic prosperity of the region, plays a
major role in the success of entrepreneurial ventures.
– During times of economic slowdown or recession, the
purchasing power declines and people remain reluctant to
invest, affecting entrepreneurship adversely.
– In a subsistence economy, most of the people are engaged in
agriculture, consuming most of their output and bartering
the rest for simple goods and services. Entrepreneurial
opportunities are few in such scenarios.

105. • How Entrepreneurial Skill Sets and Psychological Orientation
Affects Entrepreneurship
• All other factors notwithstanding, the success of an
entrepreneurial venture depends on the entrepreneur. The
entrepreneur is the leader and driver of the venture, and
requires the following skill-set and orientation for success:
– Hard work and persistence
– Ability to manage and minimize risk
– Ability to draw up a comprehensive business plan, and having a
contingency plan ready
– A strong need-orientation that provides the inclination to achieve
things
• With the collapsing trade barriers bringing in greater
opportunities, and job security passé, the conditions for
entrepreneurship are better than ever before.

106. Economic Factors
• 1. Capital
• Capital is one of the most important factors of production
for the establishment of an enterprise. Increase in capital
investment in viable projects results in increase in profits
which help in accelerating the process of capital formation.
Entrepreneurship activity too gets a boost with the easy
availability of funds for investment.
• Availability of capital facilitates for the entrepreneur to
bring together the land of one, machine of another and raw
material of yet another to combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of
production.

107. • 2. Labor
• Easy availability of right type of workers also effect
entrepreneurship. The quality rather than quantity of labor
influences the emergence and growth of entrepreneurship. The
problem of labor immobility can be solved by providing
infrastructural facilities including efficient transportation.
• The quality rather quantity of labor is another factor which
influences the emergence of entrepreneurship. Most less
developed countries are labor rich nations owing to a dense and
even increasing population. But entrepreneurship is encouraged
if there is a mobile and flexible labor force. And, the potential
advantages of low-cost labor are regulated by the deleterious
effects of labor immobility. The considerations of economic and
emotional security inhibit labor mobility. Entrepreneurs,
therefore, often find difficulty to secure sufficient labor.

108. • . Raw Materials
• The necessity of raw materials hardly needs any emphasis for
establishing any industrial activity and its influence in the emergence
of entrepreneurship. In the absence of raw materials, neither any
enterprise can be established nor can an entrepreneur be emerged
• It is one of the basic ingredients required for production. Shortage of
raw material can adversely affect entrepreneurial environment.
Without adequate supply of raw materials no industry can function
properly and emergence of entrepreneurship to is adversely affected.
• In fact, the supply of raw materials is not influenced by themselves but
becomes influential depending upon other opportunity conditions. The
more favorable these conditions are, the more likely is the raw material
to have its influence of entrepreneurial emergence.

109. • Market
• The role and importance of market and marketing is very important for
the growth of entrepreneurship. In modern competitive world no
entrepreneur can think of surviving in the absence of latest knowledge
about market and various marketing techniques.
• The fact remains that the potential of the market constitutes the major
determinant of probable rewards from entrepreneurial function.
Frankly speaking, if the proof of pudding lies in eating, the proof of all
production lies in consumption, i.e., marketing.
• The size and composition of market both influence entrepreneurship in
their own ways. Practically, monopoly in a particular product in a
market becomes more influential for entrepreneurship than a
competitive market. However, the disadvantage of a competitive
market can be cancelled to some extent by improvement in
transportation system facilitating the movement of raw material and
finished goods, and increasing the demand for producer goods.

110. • . Infrastructure
• Expansion of entrepreneurship presupposes properly developed
communication and transportation facilities. It not only helps to
enlarge the market, but expand the horizons of business too.
Take for instance, the establishment of post and telegraph
system and construction of roads and highways in India. It
helped considerable entrepreneurial activities which took place
in the 1850s.
• Apart from the above factors, institutions like trade/ business
associations, business schools, libraries, etc. also make valuable
contribution towards promoting and sustaining
entrepreneurship’ in the economy. You can gather all the
information you want from these bodies. They also act as a
forum for communication and joint action.

111. • 2. Family Background
• This factor includes size of family, type of family and economic
status of family. In a study by Hadimani, it has been revealed
that Zamindar family helped to gain access to political power and
exhibit higher level of entrepreneurship.
• Background of a family in manufacturing provided a source of
industrial entrepreneurship. Occupational and social status of
the family influenced mobility. There are certain circumstances
where very few people would have to be venturesome. For
example in a society where the joint family system is in vogue,
those members of joint family who gain wealth by their hard
work denied the opportunity to enjoy the fruits of their labor
because they have to share their wealth with the other
members of the family.

112. • 3. Education
• Education enables one to understand the outside world and equips
him with the basic knowledge and skills to deal with day-to-day
problems. In any society, the system of education has a significant role
to play in inculcating entrepreneurial values.
• In India, the system of education prior to the 20th century was based
on religion. In this rigid system, critical and questioning attitudes
towards society were discouraged. The caste system and the resultant
occupational structure were reinforced by such education. It promoted
the idea that business is not a respectable occupation. Later, when the
British came to our country, they introduced an education system, just
to produce clerks and accountants for the East India Company, The
base of such a system, as you can well see, is very anti-entrepreneurial.
• Our educational methods have not changed much even today. The
emphasis is till on preparing students for standard jobs, rather than
marking them capable enough to stand on their feet.

113. • . Cultural Value
• Motives impel men to action. Entrepreneurial growth requires
proper motives like profit-making, acquisition of prestige and
attainment of social status. Ambitious and talented men would
take risks and innovate if these motives are strong. The strength
of these motives depends upon the culture of the society. If the
culture is economically or monetarily oriented, entrepreneurship
would be applauded and praised; wealth accumulation as a way
of life would be appreciated. In the less developed countries,
people are not economically motivated. Monetary incentives
have relatively less attraction. People have ample opportunities
of attaining social distinction by non-economic pursuits. Men
with organizational abilities are, therefore, not dragged into
business. They use their talents for non-economic end.

114. Psychological Factors
• 1. Need Achievement
• The most important psychological theories of entrepreneurship were put forward in the early)
960s by David McClelland. According to McClelland ‘need achievement’ is social motive to
excel that tends to characterize successful entrepreneurs, especially when reinforced by
cultural factors. He found that certain kinds of people, especially those who became
entrepreneurs, had this characteristic. Moreover, some societies tend to reproduce a larger
percentage of people with high ‘need achievement’ than other societies. McClelland attributed
this to sociological factors. Differences among societies and individuals accounted for ‘need
achievement’ being greater in some societies and less in certain others.
• The theory states that people with high need-achievement are distinctive in several ways. They
like to take risks and these risks stimulate them to greater effort. The theory identifies the
factors that produce such people. Initially McClelland attributed the role of parents, specially
the mother, in mustering her son or daughter to be masterful and self-reliant. Later he put less
emphasis on the parent-child relationship and gave more importance to social and cultural
factors. He concluded that the ‘need achievement’ is conditioned more by social and cultural
reinforcement rather than by parental influence and such related factors.

115. • 2. Withdrawal of Status Respect
• There are several other researchers who have tried to understand the
psychological roots of entrepreneurship. One such individual is Everett
Hagen who stresses the-psychological consequences of social change.
Hagen says, at some point many social groups experience a radical loss
of status. Hagen attributed the withdrawal of status respect of a group
to the genesis of entrepreneurship.
• Hage believes that the initial condition leading to eventual
entrepreneurial behavior is the loss of status by a group. He postulates
that four types of events can produce status withdrawal:
• i. The group may be displaced by force;
• ii. It may have its valued symbols denigrated;
• iii. It may drift into a situation of status inconsistency; and
• iv. It may not be accepted the expected status on migration in a
new society.

116. • 3. Motives
• Other psychological theories of entrepreneurship stress the motives or
goals of the entrepreneur. Cole is of the opinion that besides wealth,
entrepreneurs seek power, prestige, security and service to society.
Stepanek points particularly to non-monetary aspects such as
independence, persons’ self-esteem, power and regard of the society.
• On the same subject, Evans distinguishes motive by three kinds of
entrepreneurs
• Managing entrepreneurs whose chief motive is security.
• Innovating entrepreneurs, who are interested only in excitement.
• Controlling entrepreneurs, who above all otter motives, want power
and authority.
• Finally, Rostow has examined inter gradational changes in the families
of entrepreneurs. He believes that the first generation seeks wealth,
the second prestige and the third art and beauty.

117. Overview of Intellectual Property
Rights

118. Introduction
• Intellectual property is the name given to legal
rights which protect creative works, inventions
and commercial goodwill.
• Basically intellectual property rights are designed
to provide remedies against those who steal the
fruits of another person’s ideas or work.
• For example if a person writes a computer
program, he will be able to take legal actions to
obtain an injunction against anyone who copies
the program without his permission.

119. • Intellectual property rights (IPRs) are the
rights granted to the creators of IP, and
include trademarks, copyright, patents, indu
strial design rights, and in some
jurisdictions trade secrets. Artistic works
including music and literature, as well as
discoveries, inventions, words, phrases,
symbols, and designs can all be protected as
intellectual property.

120. • Rights related to copyright include those of performing artists in their performances, producers
of phonograms in their recordings, and those of broadcasters in their radio and television
programs.
1. The term Intellectual Property (IP) reflects the idea that its subject matter is the product of the
mind or the intellect. These could be in the form of Patents; Trademarks; Geographical Indications;
Industrial Designs; Layout-Designs (Topographies) of Integrated Circuits; Plant Variety Protection
and Copyright.
2. IP, protected through law, like any other form of property can be a matter of trade, that is, it can
be owned, bequeathed, sold or bought. The major features that distinguish it from other forms are
their intangibility and non-exhaustion by consumption.
3. IP is the foundation of knowledge-based economy. It pervades all sectors of economy and is
increasingly becoming important for ensuring competitiveness of the enterprises.

121. • Intellectual property is divided into two
categories:
• Industrial property, which includes inventions
(patents), trademarks, industrial designs, and
geographic indications of source; and
• Copyright, which includes literary and artistic
works such as novels, poems and plays, films,
musical works, artistic works such as drawings,
paintings, photographs and sculptures, and
architectural designs.

122. • Intellectual Property (IP) refers to creations
of the mind: inventions, literary and artistic
works, and symbols, names, images, and
designs used in commerce.
• IP is the foundation of knowledge-based
economy. It pervades all sectors of economy
and is increasingly becoming important for
ensuring competitiveness of the enterprises.

123. The Convention establishing the World Intellectual Property
Organization (1967) gives the following list of the subject matter
protected by intellectual property rights:
• literary, artistic and scientific works;
• performances of performing artists, phonograms, and broadcasts;
• inventions in all fields of human endeavor;
• scientific discoveries;
• industrial designs;
• trademarks, service marks, and commercial names and
designations;
• protection against unfair competition; and
• “all other rights resulting from intellectual activity in the
industrial, scientific, literary or artistic fields.”

124. • In case of the large investment required to
finance research, design and development
in respect of computer hardware and
software, the intellectual property rights are
of crucial important as without such
protection there would be little incentive to
invest in the development of new products.

125. Intellectual property rights include:
• Copyright
• Patents
• Trade marks
• Law of confidence
• Design rights
• Passing off

126. • The scope of these rights differs but
sometimes overlaps and the infringement of
the intellectual property rights gives rise to
the criminal penalties.

127. Copyright Law
• Copyright protects works from being copied without
permission. Copyright goes beyond mere copying, however, and
extends to other activities such as making an adaptation of the
work in question, performing or showing the work in public,
broadcasting the work and dealing with infringing copies of the
work.
• The types of works protected by copyright are literary works
which includes (computer programs, preparatory design material
for computer programs and databases, dramatic, musical and
artistic works, sound recordings, films, broadcasts, cable
programmes and typographical arrangements of published
editions.
• Copyright does not cover ideas and information themselves, only
the form or manner in which they are expressed.

128. • The major attractions of copyright as a form of protection are
that it is free and that no formalities are required, it is automatic
upon the creation of the work in question.
• Copyright law is of vital importance to the Computer software
industry and to people who prepare, record or transmit all sorts
of works (for example, literary works such as books, reports,
letters or musical works) using computer technology.
• Copyright law is governed by the Copyright, Designs and
Patterns Act 1988, the main provisions of which came into force
on 1st August 1989, and subsequent amendments, together
with a wealth of case law.

129. • Patent Law
Patent Law is mainly concerned with new inventions such as a new
type of computer hardware, or a new process for use in
manufacture of Integrated circuits (ICs).
For an invention to be protected by a patent, an application must
be made to the Patent Office which is an expensive and lengthy
process but if granted, the patent can be renewed for a total period
of up to 20 years.
The relevant statute dealing with the patent law is the Patent Act
1977.
To be patentable, an invention must be novel (new), involve an
inventive step, be capable of industrial application and not be
excluded.

130. • A patent is a form of right granted by the
government to an inventor, giving the owner
the right to exclude others from making,
using, selling, offering to sell, and importing
an invention for a limited period of time, in
exchange for the public disclosure of the
invention

131. The law of Confidence
• The law of confidence protects information. The
difference with Copyright and patent law, is that
the law of confidence is not defined by statute
and derives almost entirely from case law.
• The scope of this branch of intellectual property
is considerable and protects trade secrets,
business know how, and information such as list
of clients and contracts, information of a personal
nature and even ideas which have not been yet
been expressed in a tangible form (e.g., an idea
for a new computer program).

132. • The contents of many databases are protected by the law of
confidence.
• However the major limitation is that the information concerned
must be of a confidential nature and the effective nature of the
law of confidence is largely or completely destroyed if the
information concerned fall into the public.
• The law of confidence can be a useful supplement to copyright
and patent law as it can protect ideas before they are sufficiently
developed to attract copyright protection or to enable an
application for a patent to be made.
• Law of confidence is very flexible and has proved capable of
taking new technological development in its stride.

133. The Law Relating to Designs
• In this case there are two types of right:
registered design and design right which is not
registrable.
• Registered is available for features of articles
which appeal to the eye while design right is
intended to protect any aspect of the shape or
configuration of articles without any
requirement for visual attractiveness.

134. • The durations of the rights are different, being
25 years for registered designs and a maximum
of 15 years for design right (but limited to 10
years of commercial exploitation).
• The appropriate statutes are the Registered
Design Act 1949 (as amended ) and Part III of
the Copyright, Design and Patents Act 1988.

135. Trade mark Law
• Trade marks are often in the form of a name or a symbol and
registration is provided for by the trade Marks Act 1994. Marks
may be registered in respect of goods or services.
• To be registrable, the mark must be distinctive and capable of
being represented graphically.
• Trade marks are very important as they become associated with
successful products and purchasers normally buy or order goods
or services by reference to the mark.
• A trademark is a recognizable sign, design or expression which
distinguishes products or services of a particular trader from the
similar products or services of other traders.

136. • The main purpose of trade mark law is to serve as an
indicator of trade origin. Thus business goodwill and
reputation is protected but this has a secondary effect of
also protecting the buying public from deceptive
practices.
• In computer technology the trade mark law also deals
with domain name disputes, and infringement or
dilution of trademarks on Internet.
• A trademark is a
recognizable sign, design or expression which
distinguishes products or services of a particular trader
from the similar products or services of other traders.

137. The Law of Passing off
• A related area of law to trade mark is passing off.
This derives from the common law and gives a right
of action against anyone who passes off his goods or
services as being those of someone else.
• If a trader uses a particular name or mark or has
particularly unusual method of doing business, he
can obtain legal redress against others who use
similar names or marks or business methods,
especially if there is a serious possibility that the
buying public will be deceived and the trader's
business goodwill damaged as a result.

138. • The law of passing off is independent of
trade mark law and will often be useful
where a mark has not been registered as a
trade mark.
• For the law of passing off to be effective,
the trader concerned must have established
a goodwill associated with the name or
mark or business method.

139. • A trade Secret is any formula, pattern, physical device, idea, process,
compilation of information or other information that: provides the owner of
the information with a competitive advantage in the market place. is treated
in a way that can reasonably be expected to prevent the public or competitors
from learning about it, except through improper acquisition or theft. Unlike
other forms of intellectual property, trade secrets are essentially internal
instruments. The responsibility for their protection is in the hands of the owner
of the trade secret. They are kept confidential.
• Trade Secrets, relate to different types of information
• Technical and Scientific information
• Commercial information
• Financial information
• Negative information

140. Objectives of intellectual
property law
• The stated objective of most intellectual property
law (with the exception of trademarks) is to
"Promote progress.
• By exchanging limited exclusive rights for
disclosure of inventions and creative works,
society and the patentee/copyright owner
mutually benefit, and an incentive is created for
inventors and authors to create and disclose their
work.

141. Legal Issues to Consider when Starting Your
Business
• There are a multitude of legal issues to think
about when it comes to starting your business.
Everything from your business name to its
structure to its operation has legal implications.
What follows is a sampling of some of the legal
concerns you may want to address with your
attorney before you start your business.

142. • Business Name
• You will need to make sure that the business name
you plan to use is not already being used by another
business. You can do this by doing a name search
with the appropriate state agency, which is usually
the office of the Secretary of State. If your chosen
name is not already in use, you can reserve it with
the Secretary of State’s office for a period of time,
about 120 days, while you prepare your articles of
incorporation, articles of organization, or a
partnership agreement.

143. • Business Structure
You will need to decide which business structure best suits
your business. Your business could be structured as a sole-
proprietorship, partnership, limited partnership,
corporation, S-corporation, or limited liability company. To
decide what form is best, you will need to consider liability
issues associated with your business and which form will
provide the best tax structure for your business.
• Business Licenses
Depending on what type of business you plan to engage in,
you may need a variety of licenses or permits.

144. International aspects of
entrepreneurship
How international differences
impact upon business start-up

145. • Introduction to Entrepreneurship Across the Border
 Internationalization of Entrepreneurship and Business
creates wealth and employment that benefits individuals
and nations throughout the world.
 In today's hypercompetitive world with rapidly changing
technology, it is essential for an entrepreneur to at least
consider entering the Global Market.
 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.

146. • 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.
• Since 1950, the Growth of international trade and
investment has been generally larger than the growth of
domestic economies – even in US and China. Using
today's rapidly changing technology, an entrepreneur
can increase the reach of his marketing effort's and have
an even brighter growth potential for the future.

147. • Entrepreneurship Across the Border
Definition:
“International Entrepreneurship is the process
of an entrepreneur conducting business
activities across the national border's”.

148. 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.

149. • 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 )

150. 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.

151. • 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.

152. • 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

153.  Aspects of Entrepreneurship Across the Border
• Type of System
• Political-Legal Environment
• Cultural Environment
• Technological Environment
• Social Structure
• Religion
• Education
• Manner's and Custom's
• Economic system & Development
• Available Distribution Channel

154. o Barrier's to Entrepreneurship Across the
Border
• Lack of Capital
• Country's Repute
• Lack of Knowledge and Experience
• Rule's and Regulation's
• No Government Incentives
• Market Differentiation
• Lack of information
• Human resource barrier
• Tariff barriers
• Lack of finance
• Attitude of entrepreneur
• Cultural barrier
• Lack of network

155. • 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.

156. • 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.

157. • 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.

158. • 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

159. • 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

160. Encouragement's to Entrepreneurship Across
the Border
• Government Incentive's
• Relaxation in Rule's and Regulation's
• Long Term Loans
• Healthy environment between countries
• Market Need's