Enterpernurship Notes

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ENTREPRENEURSHIP
Entrepreneurship for MBA-III University of the Punjab
Entrepreneurship ( entrepreneurship): In Urdu ( ) in Arabic Riadat

al'Aemal & & : The management guru Professor Peter F.
Drucker in his book Innovation and Entrepreneurship gives the basic details of
Entrepreneurship as:
The word entrepreneur originates from the French word,
Entreprendre, which means "to undertake." In a business context, it means to start a
business. The Merriam-Webster Dictionary presents the definition of an entrepreneur as one
who organizes, manages, and assumes the risks of a business or enterprise.
So Entrepreneurship is defined as the capacity and willingness to develop, organize and

manage a business venture along with any of its risks in order to make a profit. The most
obvious example of entrepreneurship is the starting of new businesses. In economics,
entrepreneurship combined with land, labor, natural resources and capital can be
produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an
essential part of a nation's ability to succeed in an ever changing and
increasingly competitive global marketplace.
The concept of entrepreneurship has a wide range of meanings. On the one extreme an
entrepreneur is a person of very high aptitude who pioneers change, possessing
Saaid Arif (aries.leaveme@gmail.com)
MBA 3.5 Years Specialization in Marketing
characteristics
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definitions, anyone who wants to work for him/her self is considered to be an entrepreneur.
Entrepreneurship is the makeup of an entrepreneur as follows:
Personality: in terms of possessing resilience, tenacity, opportunity spotting, and risk taking.
Attitude: having awareness of the importance of customer focus, the application of
creativity and imagination, defined personal standards and values, the perception of
enterprise as a positive activity.
Skills: such as the ability to network, to think strategically, to gain access to resources,
business knowledge and acumen, interpersonal skills and people management capabilities.
Motivation: personal drive and ambition, the desire to make an impact, the need for
achievement or self-satisfaction, a desire for status, to create and accumulate wealth, and
social responsibility.
Schumpeter's View of Entrepreneurship: Austrian economist Joseph Schumpeter's
definition of entrepreneurship placed an emphasis on innovation, such as:
new products
new production methods
new markets
new forms of organization
Wealth is created when such innovation results in new demand. From this viewpoint, one can
define the function of the entrepreneur as one of combining various input factors in an
innovative manner to generate value to the customer with the hope that this value will exceed
the cost of the input factors, thus generating superior returns that result in the creation of
wealth.
Entrepreneurship
vs. Small Business:
Many people use the terms
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"entrepreneur" and "small business owner" synonymously. While they
may have much in common, there are significant differences between the
entrepreneurial venture and the small business. Entrepreneurial ventures
differ from small businesses in these ways:
1. Amount of wealth creation - rather than simply generating an income stream that
replaces traditional employment, a successful entrepreneurial venture creates
substantial wealth, typically in excess of several million dollars of profit.
2. Speed of wealth creation - while a successful small business can generate several
million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid;
for example, within 5 years.
3. Risk - the risk of an entrepreneurial venture must be high; otherwise, with the
incentive of sure profits many entrepreneurs would be pursuing the idea and the
opportunity no longer would exist.
4. Innovation - entrepreneurship often involves substantial innovation beyond what a
small business might exhibit. This innovation gives the venture the competitive
advantage that results in wealth creation. The innovation may be in the product or
service itself, or in the business processes used to deliver it.
So the Entrepreneurship in today era is defined as: Entrepreneurships is the process of
creating something new with value by devoting the necessary time and effort, assuming the
accompanying financial, psychic and social risks, and receiving the resulting rewards of
monetary and personal satisfaction and independence.
THEORIES OF ENTREPRENEURSHIP: Entrepreneurship is an evolved thing. With the
advancement of science and technology it has undergone metamorphosis change and
emerged as a critical input for socio-economic development. Various writers have developed
various theories on entrepreneurship and popularized the concept among the common
people. The theories propounded by them can be categorized as underSociological Theory:
- Entrepreneurship is likely to get a boost in a particular social culture
- Societys values, religious beliefs, customs, taboos influence the behaviour of individuals
in a society
- The entrepreneur is a role performer according to the role expectations by the society
Psychological Theory:
- Entrepreneurship gets a boost when society has sufficient supply of individuals with
necessary psychological characteristics
- The
psychological
characteristics include need for high achievement, a vision or foresight,
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ability to face opposition
- These characteristics are formed during the individuals upbringing which stress on
standards of excellence, self reliance and low father dominance
Entrepreneurship Innovation theory:
- Theory by Joseph Schumpeter who believes that entrepreneur helps the process of
development in an economy
- He says that an entrepreneur is the one who is innovative, creative and has a foresight
- Ac c o r d i n g t o h i m , i n n o v a t i o n o c c u r s w h e n t h e e n t r e p r e n e u r
Introduces a new product
Introduces a new production method
Opens up a new market
Finds out a new source of raw material supply
Introduces new organization in any industry
- The theory emphasizes on innovation, ignoring the risk taking and organizing abilities of
an entrepreneur
- Schumpeters entrepreneur is a large scale businessman, who is rarely found in developing
countries, where entrepreneurs are small scale businessmen who need to imitate rather than
innovate
Theory of High Achievement/Theory of Achievement Motivation:
- McClelland identified 2 characteristics of entrepreneurship
Doing things in a new and better way
Decision making under uncertainty
- H e s t r e s s e d t h a t p e o p l e w i t h h i g h a c h i e v e m e n t o r i e n t a t i o n ( n e e d to
succeed) were more likely to become entrepreneurs
- Such people are not influenced by money or external incentives
- They consider profit to be a measure of success and competency
Motivation theory by McClelland (Acquired Needs theory):
According to McClelland, a person has three types of needs at any given time, which are:
Need for achievement (get success with ones own efforts.)
Need for power (to dominate, influence others)
Need for affiliation (maintain friendly relations with others.)
- The need for achievement is the highest for entrepreneurs
Theory of Religious Beliefs:
Max Weber has propounded the theory of religious belief. According to him, entrepreneurism
is a function of religious beliefs and impact of religion shapes the entrepreneurial culture. He
emphasized that entrepreneurial energies are exogenous supplied by means of religious
beliefs. the important elements of Webers theory are discussed further-
1- Spirit
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5 Capitalism: In the Webrian theory, spirit of capitalism is highlighted. We all
know that capitalism is an economic system in which economic freedom and private
enterprise are glorified, so also the entrepreneurial culture.
2- Adventurous Spirit: Weber also made a distinction between spirit of capitalism and
adventurous spirit. According to him, the former is influenced by the strict discipline
whereas the latter is affected by free force of impulse. Entrepreneurship culture is influenced
by both these factors.
3- Protestant ethic: According to Max Weber the spirit of capitalism can be grown only
when the mental attitude in the society is favorable to capitalism
4 -Inducement of profit: Weber introduced the new businessman into the picture of
tranquil routine. The spirit of capitalism intertwined with the motive of profit resulted in
creation of greater number of business enterprises.
Economic Theories: Entrepreneurship and economic development are interdependent.
Economic development takes place when a country' real rational income increases overall
period of time wherein the role of entrepreneurs is an integral part.
Thus, Peter F. Drucker has given his views that an entrepreneur need not be a capitalist or
an owner. A banker who mobilizes others money and allocates it in areas of higher yield is
very much an entrepreneur though he is not the owner of the money.
HISTORIAL BAKGROUND OF ENTREPRENEURSHIP:
The history of Entrepreneurship led to a barter system that allowed people exchanged things
to satisfy their own requirements. This further led to the development of the market place
where people gathered to barter or sell their excess production in order to profit themselves.
This came about with the realization that they could not wait indefinitely for a coincidence of
wants before they could barter their own products. So Entrepreneurship first took off when
production levels exceeded local consumption and people were left with surpluses of the
things they produced, whether in the form of agricultural produce, dairy products, livestock
and quite a few manufactured items.
However the history of Entrepreneurship is categorized as following:
Earliest Period
Middle Ages
17th Century
18th Century
19th Century &
20th Century
Earliest Period: Marco Polo, as a go-between was an Italian. He wants to trade routes to the
Far East. As a go-between, He had to sign a contract with a money person to sell his goods.
In the contract merchant-adventurer took a loan at 22.5% rate including insurance.
Capitalist was the passive risk bearer and merchant-adventurer took the
active role in trading, bearing all physical and emotional risks. When the merchantSaaid Arif (aries.leaveme@gmail.com)
adventurer
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the capitalist taking most of them (upto 75%), while the merchant-adventurer settled for the
remaining 25%.
Middle Ages: Entrepreneur used to describe both as an actor and a person who managed
large production projects. Individuals did not take any risks because all the resources used to
provide by the government of the country, all an entrepreneur should do is to manage it. A
typical entrepreneur in the middle age was the priest. The person in charge of great
architectural works used to build castles and fortifications, public buildings, abbeys, and
cathedrals.
17th Century: The connection of the risk with entrepreneurship developed in the 17 th century.
An entrepreneur was a person who entered into a contract with the government to perform a
service or to supply stipulated products. John law, a Frenchman was one of the entrepreneurs
in that period. The founder of the royal bank of France and the Mississippi Company, which
had an exclusive franchise to trade between France and the new world. Monopoly on French
trade eventually led to collapse of the company. Richard Cantillion, a well-known English
economist at the beginning of the 17th century, understood Laws mistake. He viewed the
entrepreneur as a risk taker, observing those merchants, farmers, craftsmen, and others sole
proprietors buy at a certain price and sell at an uncertain price, therefore operating at a
risk.
18th Century: In the 18th century, the person with capital was differentiated from the one who
needed capital. The entrepreneur was distinguished from the capital provider. One reason for
this differentiation was the industrialization occurring throughout the world. Eli Whitney was
an American inventor best known for inventing the cotton gin. This was one of the key
inventions of the industrial Revolution. Thomas Edison, the inventor of many inventions. He
was developing new technologies and was unable to finance his inventions himself. Edison
was a capital user an entrepreneur, not a provider a venture capitalist.
19th & 20th Centuries: In the late 19th and early 20th centuries, entrepreneurs were frequently
not distinguished from managers and were viewed mostly from an economic perspective.
The entrepreneur organizes and manages an enterprise for personal gain. The materials
consumed in the business, for the use of the land, for the services he employs, and for the
capital he requires. Andrew Carnegie is one of the best examples of this
definition. Carnegie, who descended from a poor scottish family, made the American Steel
Industry one of the wonders of the industrial world.
In the middle of the 20th Century: The function of the entrepreneurs is to recreate or
revolutionize the pattern of production by introducing an invention. Innovation, the act of
introducing some new ideas, is one of the most difficult tasks for the entrepreneur. Edward
Harriman, who reorganized the railroad in the United States. John Morgan, who developed
his large banking house by reorganizing and financing the nations industries. Traditional
technologies innovations translators, computers, lasers that are usually associated with the
word invention. The Egyptian who designed and built great pyramids out of stone blocks
weighing many tons each, to laser beams, supersonic planes and space stations.
Entrepreneurship
in Muslim Era: Entrepreneurship is continuing to grow as an academic
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discipline and career choice, continuous research to expand the knowledge conversation and
document the ongoing changes in the field are important for faculty, students and individuals
considering this field (Alstete, 2008). Studying this discipline may have been started now but
entrepreneurship is as old as the human is. In order to call something as Islamic it must be
derived from the basic sources; Quran and Sunnah. Same is the case of Islamic
Entrepreneurship that we need to look at the life of Prophet Muhammad himself and his
companions.
Most of the companions of Prophet Muhammad were entrepreneurs and their financial
contribution to strengthen Islam has always been acknowledged and revered. In most of the
cases the reason stated for the companions of Holy Prophet to adopt entrepreneurship was
the ease with which they could earn a livelihood without compromising on their religious
duties. Hazrat Abu Bakr1, Hazrat Usman Ghani2, Hazrat Talha and Hazrat Abdur Rehman bin
Aouf were traders of fabric. Hazrat Zubair and Umroo Bin Al Aas were involved in meat
processing. Hazrat Abu Bakr was the biggest businessman of Quraish 3 and he used to have
hand loop factory near Madina. Hazrat Usman bin Affan, before Islam and afterwards, was a
famous business man, he used to trade cloth and dates.
An event from the great history of Islam leaves a strong impression on everyones mind. This
is regarding one of the companions of Prophet Muhammad , Abdur Rehman bin Aouf, the
greatest entrepreneur and business man Muslim world has ever produced. When he arrived in
Madina after migrating from Makkah to escape wrath of enemies of Islam, he had nothing
with him. People of Madina greeted their brethren of Islam with open arms and one Ansari 4
companion of the Holy Prophet , Saad bin Rabee offered half of all his possessions to
Abdur Rehman bin Aouf to help him make a new beginning. In response, Abdur Rehman
respectfully thanked his generosity and asked for the market place where he could find some
work. His self- esteem did not allow him to be a burden on his Ansari brother. So it is
obvious that the Islam is and remained a greatest advocate of initiating and performing
entrepreneurial activities as entrepreneurship is the life blood of an economy. In other words
Entrepreneurship is in fact a part of Islamic culture and Prophet Muhammad ( peace be
upon him,) and his companions are examples of this," there are a lot of Muslims that are
1First Caliph of Islam and Companion of Prophet Muhammad in his journey of
migration from Makkah to Maina
2Third Caliph of Islam and Son in Law of Prophet Muhammad for marrying two of his
four daughters one by one.
3Tribe of Prophet Muhammad
4 Believers who were already living in Madina before arrival (migration from Makkah) of
Prophet and his Makki Companions
successful
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entrepreneur and active. (Vargas-Hernndez, Noruzi, & Sariolghalam, 2010)
TYPES OF ENTREPRENEURSHIP:
Government as an Innovator: One channel for commercializing the results of the synthesis
of social need and technology. Thats frequently called technology transfer. Relatively few
innovations reach commercial markets. Government and can easily manage business skills
necessary for successful commercialization.
Corporate Entrepreneurship: The concept of corporate entrepreneurship is generally
believed to refer to the development of new ideas and opportunities within large or
established businesses, directly leading to the improvement of organizational profitability
and an enhancement of competitive position or the strategic renewal of an existing business.
In the current era of hyper competition, strategic business units (SBUs) are emerging can be
considering the example.
Independent Entrepreneurship: Independent Intrapreneurship can also bridge the gap
between science and the marketplace. It is the practice of using entrepreneurial skills without
taking on the risks or accountability associated with entrepreneurial activities. It is practiced
by employees within an established organization using a systemized business model.
Employees, perhaps engaged in a special project within a larger firm are supposed to behave
as entrepreneurs, even though they have the resources and capabilities of the larger firm to
draw upon. So the main characteristics of an independent entrepreneur are the purpose of
making profit, the financial risks, the extent of the business activity and the generality
thereof, publicity, independence and risk of losing the invested capital.
Innovative Entrepreneurship: The definition of innovative entrepreneurship used here is not
synonymous with either small and medium-sized enterprises (SMEs) or business start-ups
but is derived from the intersection of three areas:
Innovative businesses
Young and high-growth businesses
SMES
Imitative Entrepreneurs: Imitative Entrepreneurs adopt victorious innovations launched by

the innovative entrepreneurs. They duplicate the technology and techniques innovated by
others and they are suitable for underdeveloped countries.
Fabian Entrepreneurs: Fabian entrepreneurs are exemplified by great caution and
skepticism in experimenting any change in the organization. They imitate only in situations
where it becomes necessary to do so.
Drone
Drone Entrepreneurs suffer losses, as they refuse to make any
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modifications in the existing production methods.
The Future of Entrepreneurship has gained mileage through a number of ways.
Entrepreneurship is currently being embraced by educational institutions, governments,
societies, and corporations. Schools are increasing their emphasis on entrepreneurship in
terms of courses and academic research.
Entrepreneurial education.
Increase in academic research.
Societal support (media coverage).
Corporate entrepreneurship.
TRAITS OF SUCCESSFUL ENTREPRENEURSHIP: Although there is no "one size, fits
all" theory for entrepreneurship, a few guidelines may help those with a good idea become
successful entrepreneurs. The following insights
can
help you embark on your next entrepreneurial
venture with due diligence and successful
entrepreneurs all possess the following traits.
1- Full of determination: The one word that
the basic requirement for an entrepreneurship venture is Passion.
describes
o Is there something that you can work on over and over again, without getting bored
change ?
o Is there something that keeps you awake because you have not finished it yet?
o Is there something that you have built and want to continue to improve upon, again
and again?
o Is there something that you enjoy the most and want to continue doing for the rest of
your life?
Your demonstration of passion and motivation will determine your success in any
entrepreneurial venture. From building and implementing a prototype, to pitching your idea
to venture capitalists, success is a function of passion and determination.
2. Not afraid to take risks: Entrepreneurs are risk takers ready to dive deep into a future of
uncertainty. But not all risk takers are successful entrepreneurs. What differentiates a
successful entrepreneur from the rest in terms of risk? Successful entrepreneurs are will to
riskPage
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10 money on unknowns, but they also keep resources, plans and bandwidth for
dealing with "unknown unknowns" in reserve. When evaluating risk, a successful
entrepreneur will ask herself, is this risk worth the cost of my career, time and money? And,
what will I do if this venture doesn't pay off?
3. High level of confidence: Entrepreneurs enjoy what they do. They believe in themselves
and are confident and dedicated to their project. Occasionally, they may show stubbornness (
)in their intense focus on and faith in their idea. But the flip side is their demonstrated
discipline and dedication.
4. Craves learning: Do a feasibility analysis; identify time and capital thresholds; take the
deep dive with your limited resources. If your thresholds are crossed, look for alternatives
and be prepared to take the next exit.
5. Understands failure is part of the game: Entrepreneurship is about building a business
from scratch while managing limited resources including time, money and personal
relationships. It is a long-term commitment, and attempting to plan as much as possible at
the beginning is a noble impulse. In reality, however, planning for everything and having a
ready solution for all possible risks may prevent you from even taking the first step.
Successful entrepreneurs do keep some dry powder in reserve, but more importantly they
maintain a mindset and temperament to capable of dealing with unforeseen possibilities.
6. Passionate about his or her business: Not every attempt will result in success. The failure
rate of entrepreneurial ventures is very high. At times, it is absolutely fine to take the
practical exit route and try something new, instead of continuing to make sunk
cost investments in the same venture. Many famous entrepreneurs weren't successful the first
time around. But they had the serenity and foresight to know when to cut their losses.
7. Highly adaptable: Its good to be passionate or even stubborn about what you do. But
being inflexible about client or market needs will lead to failure. Remember, an
entrepreneurial venture is not simply about doing what you believe is good, but also making
successful business out of it. Market needs are dynamic: changes are a recurring
phenomenon. Successful entrepreneurs welcome all suggestions for optimization or
customization that enhances their offering and satisfies client and market needs. A product
you develop for yourself alone may qualify as a hobby, but a product for the market should
satisfy market needs.
8. Good understanding of money management: It takes time to get to profitability for any
entrepreneurial venture. Till then, capital is limited and needs to be utilized wisely.
Successful entrepreneurs realize this mandatory money management requirement and plan
for present and future financial obligations (with some additional buffer). Even after securing
funding or going fully operational, a successful businessman keeps a complete handle on
cash flows, as it is the most important aspect of any business.
9. Expert
at networking: How do you tap your network for solutions? Many people seek
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comfort in commiseration: friends, colleagues and neighbors are happy to complain with you
about "the global slowdown, poor demand, or unfair competition; but that won't improve
the bottom line. What do successful entrepreneurs do? They reach out to mentors with more
experience and extensive networks to seek valuable advice.
10. Ability to sell and promote: Entrepreneurs know their product offering inside and out.
They also know the marketplace and its dynamics inside and out. Remaining unaware of
changing market needs, competitor moves and other external factors can bring even great
products to failure (for example, Blockbuster).
SPECIFIC ENTREPRENEURSHIP AREAS:
In establishing an Intrapreneurial environment, certain factors and leadership characteristics
need to be present.
First of these is that the organization operates on the frontiers of technology. Since research
and development are key sources for new product ideas, the firm must operate on the cutting
edge of technology and encourage and supporting new ideas instead of discouraging them.
Second is experimentation, or trial and error, is encouraged. Successful new products usually
do not appear fully developed; instead they evolve. A company wanting to establish an
entrepreneurial spirit has to establish an environment that allows mistakes and failures.
Without the opportunity to fail, few corporate entrepreneurial ventures will be developed.
Third an organization should make sure that there are no initial opportunity parameters, such
as turf protection, inhibiting creativity in new product development.
Fourth, the resources of the firm need to be available and easily accessible. Often,
insufficient funds are allocated not to creating something new but instead to solving a
problem that have an immediate effect on the bottom line. Some companies, such as Xerox,
3M, and AT&T have established separate venture capital areas for funding new internal
ventures.
Fifth a multidisciplinary team approach needs to be encouraged. One key to Entrepreneurial
success is the existence of "skunkworks" involving key people. Developing the needed team
work for a new venture is further complicated by the fact that a team members promotion
within the corporation is related to performance in the current position, not in the new
venture. The corporate environment must establish a long time horizon for evaluating the
success of the overall program.
Sixth the spirit of entrepreneurship cannot be forced on individuals; it must be
Voluntary. Most managers in a corporation are not capable of being successful entrepreneurs.
Those who do emerge from this self selection process must be allowed the latitude to carry a
project through to completion. An entrepreneur falls in love with the new venture and will do
almost anything to ensure its success.
Seventh characteristic is a reward system. The entrepreneur needs to be appropriately
rewarded for the energy and effort expended on the new venture. An equity position in the
new venture is one of the best motivational methods.
Eight a corporate environment favorable for entrepreneurship has sponsors and champions
throughout the organization that supports the creative activity and resulting failures.
Finally
entrepreneurial activity must be whole-heartedly supported by top management.
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BUSINESS DEVELOPMENT: Entrepreneurship provides the analytical tools and skills for
new business development and in establishing new organizations. The Entrepreneurship
programming provides both the scientific knowledge and the practical skills needed for the
identification and exploitation of new opportunities, while creating new value and well-being
for all stakeholders.
Concept and Scope of Business Development: Business development
activities extend across different departments, including sales,
marketing, project management, product management and vendor
management. Networking, negotiations, partnerships, and cost-savings
efforts are also involved. All these different departments and activities are
driven by and aligned to the business development goals.
For instance, a business has a product/service which is successful in one region (say, the
United States). The business development team assesses further expansion potential. After all
due diligence, research and studies, it finds that the product/service can be expanded to a
new region (like Brazil). Lets understand how this business development goal can be tied to
the various functions and departments:
Sales: Sales personnel focus on a particular market or a particular (set of) client(s), often
for a targeted revenue number. In this case, business development assesses the Brazilian
markets and concludes that sales worth $1.5 billion can be achieved in three years. With
such set goals, the sales department targets the customer base in the new market with
their sales strategies.
Marketing: Marketing involves promotion and advertising aimed towards the successful
sale of products to the end-customers. Marketing plays a complementary role in
achieving the sales targets. Business development initiatives may allocate an estimated
marketing budget. Higher budgets allow aggressive marketing strategies like cold-calling,
personal visits, road shows, and free sample distribution. Lower budgets tend to result in
passive marketing strategies, such as limited print and media ads, and billboards.
Strategic Initiatives or Partnerships: To enter a new market, will it be worth going solo
by clearing all required formalities, or will it be more pragmatic to strategically partner
with local firms already operating in the region? Assisted by legal and finance teams, the
business development team weighs all the pros and cons of the available options, and
selects which one best serves the business.
Project Management/Business Planning: Does the business expansion require a new
facility in the new market, or will all the products be manufactured in the base country
and then imported into the targeted market? Will the latter option require an additional
facility in the base country? Such decisions are finalized by the business development
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based
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on their cost-, time- and related assessments. Then project

management/implementation team swings into action to work towards the desired goal.
Product Management: Regulatory standards and market requirements vary across

countries. A medicine of a certain composition may be allowed in India but not in the
U.K., for example. Does the new market require any customized version of the product?
These requirements drive the work of product management and manufacturing
departments, as decided by the business strategy. Cost consideration, legal approvals and
regulatory adherence are all assessed as a part of a business development plan.
Vendor Management: Will the new business need external vendors? For example, will
shipping of product need a dedicated courier service? Or will the firm partner with any
established retail chain for retail sales? What are the costs associated with these
engagements? The business development team works through these questions.
Negotiations, Networking and Lobbying: A few business initiatives may need expertise
in soft skills. For example, lobbying is legal in some locales, and may become necessary
for penetrating the market. Other soft-skills like networking and negotiating may be
needed with different third-parties such as vendors, agencies, government authorities, and
regulators. All such initiatives are part of business development.
Cost Savings: Business development is not just about increasing sales, products and
market reach. Strategic decisions are also needed to improve the bottom line, which
include cost-cutting measures. An internal assessment revealing high spending on travel,
for instance, may lead to travel policy changes, such as hosting video conference calls
instead of on-site meetings, or opting for less expensive transportation modes. Similar
cost-saving initiatives can be implemented by outsourcing non-core work like billing and
accounting, financials, IT operations and customer service. Strategic partnerships needed
for these initiatives are a part of business development.
PRODUCTS & SERVICES: To succeed as an entrepreneur, you must develop the ability to
select and offer the right products or services to your customers in a competitive market.
More than any other factor, your ability to make this choice will determine your success or
failure. Product (or service) management includes a wide range of management activities,
ranging from the time that there's a new idea for a product to eventually providing ongoing
support to customers who have purchased the new product. Every organization conducts
product development, whether it's done intentionally or unintentionally. This module
provides a wide overview of considerations in developing and managing a product. How a
product is developed or managed is depends very much on the nature of the organization and
its products, for example, retail, manufacturing, wholesale, etc. Note that different people
might even have different categorizations for the activities described below.
So new products and services are the life and blood of all types of businesses. Investing in
their development isn't an optional extra - it is crucial to business growth and profitability.
There
are| five
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14 key stages in the lifecycle of any product or service.
Development - at this point your product or service is only an idea. You're investing heavily
in research and development.
Introduction - you launch your product or service. You're spending heavily on marketing.
Growth - your product or service is establishing itself. You have few competitors, sales are
growing and profit margins are good. Now's the time to work out how you can reduce the
costs of delivering the new product.
Maturity - sales growth is slowing or has even stopped. You've been able to reduce
production and marketing costs, but increased competition has driven down prices. Now is
likely to be the best time to invest in a new product.
Decline - new and improved products or services are on the market and competition is high.
Sales fall and profit margins decline. Increased marketing will have little impact on sales and
won't be cost-effective unless new markets are identified.
Manage the lifecycle
Identifying where products or services are in their lifecycle is central to your profitability.
Effective research into your markets and competitors will help you do this. See our guide on
how to understand your competitors.
ENTERPRISES: The term "enterprise" has two common meanings.
Firstly, an enterprise is simply another name for a business. You will often come across the
use of the word when reading about start-ups and other businesses"Simon Cowell's
enterprise" or "Michelle set up her successful enterprise after leaving teaching".
Secondly, and perhaps more importantly, the word enterprise describes the actions of
someone who shows some initiative by taking a risk by setting up, investing in and running
a business.
Look again at two key words above initiative and risk.
A person who takes the initiative is someone who "makes things happen". He or she tends
to be decisive. A business opportunity is identified and the person does something about it.
Showing initiative is about taking decisions and being bold not everyone is like that!
Risk-taking is slightly different. In business there is no such thing as a "sure fire bet". All
business investments carry an element of risk which is the chance or probability that
things
will
go wrong. At the worst, the risk of an enterprise might mean the person making
Page
| 15
the investment loses all his/her money or becomes personally liable for the debts of the
business.
The trick is to take calculated risks, and to ensure that the likely returns from taking a risk
are enough to make the gamble worthwhile. Someone who shows enterprise is
an "entrepreneur".
MARKETING: Marketing is an important element in a successful of entrepreneurship
development. Elements of the marketing mix can influence decision making in purchasing
by consumers. Marketing should not be seen only as the commercial channel of the company
that is just there to sell a product. Marketing is an important piece for the management of
internal and external communications, for supporting the creation of tools to improve
customer satisfaction, to create/maintain the company's image and its brands in channels
such as social networks, blogs, and more in order to ensure a good reputation and recognition
to avoid losing current and potential customers.
Another very important task in marketing is its alliance with the commercial department,
because it is through marketing that we define actions to generate new sales, leads or
contracts for a company. People working in the marketing department of a company needs
access to important information - the profit margin of the products, clear definition of the
advantages and features of the product, resources that can be reallocated in monthly
campaigns in order to develop a long term planning, know where competitors are and where
they go, understand how it is done after-sales service, in addition to at least some monthly
resource for developing communication actions. And all this is communicated in the simplest
way possible for all companys stakeholders.
The role of marketing in Entrepreneurships:
1. Manager and changes architect: Supporting in the redefinition of the strategic guidelines
of the company according to market changes over time, always thinking of the internal and
external customers;
2. Communication facilitator: Set an example; Provide the right tools at the right time;
Explain the company for those that are not familiar with it, be clear! Why? Often, and
especially in more "technical" companies, people tend to explain everything in a very
extensively, and very complicated way, not helping the general public to understand what
they want to communicate; Defend the quality of the companys products/services (how to
improve a product, how to improve customer service, how to give more support to strategic
partners, among others);
3. Companys image administrator: The Companys image is very important! It is the soul
of the business. The transmission of trust that is generated is given by the brand. The
company's image is very important for its survival, so all that is passed out have to be very
well defined and felt by everyone within the company.
OPERATIONA:
Activities involved in the day to day functions of the business conducted
Page | 16
for the purpose of generating profits.
Business operations encompass three fundamental management imperatives that collectively
aim to maximize value harvested from business assets (this has often been referred to as
"sweating the assets"):
1. Generate recurring income
2. Increase the value of the business assets
3. Secure the income and value of the business
The three imperatives are interdependent. The following basic tenets illustrate this
interdependency:
The more recurring income an asset generates, the more valuable it becomes. For
example, the products that sell at the highest volumes and prices are usually considered
to be the most valuable products in a business's product portfolio.
The more valuable a product becomes the more recurring income it generates. For
example, a luxury car can be leased out at a higher rate than a normal car.
The intrinsic value and income-generating potential of an asset cannot be realized

without a way to secure it. For example, petroleum deposits are worthless unless
processes and equipment are developed and employed to extract, refine, and distribute
it profitably.
The business model of a business describes the means by which the three management
imperatives are achieved. In this sense, business operations is the execution of the business
model.
MANAGEMENT: Entrepreneurial Organization can be referred to the concepts, skills, and
mindset associated with operating large corporations with greater flexibility, innovation, and
responsiveness. Advances in business knowledge and technology have radically changed
business systems, organization structures and processes. As a result, critical to today's
businesses is the ability to get the right information to the right people at the right time, so
that both strategic and operational decisions are made properly and quickly. Students
majoring in Management and Entrepreneurship will learn to recognize the pivotal role that
information plays in the business world and to use their knowledge to increase business
competitiveness. Successful entrepreneurs are usually modeled as combinations of
innovators
with creative and innovative flair and managers with strong general management
Page | 17
skills, business know-how, and sufficient contacts.
Frank Knight established a boundary between management and entrepreneurship. He sees
entrepreneurs in the strict sense as producers; while the great mass of population furnish
them with productive services, placing their persons and property at the disposal of
entrepreneurs who guarantee to them a fixed remuneration. Entrepreneurial profit depends on
whether an entrepreneur can make productive services yield more than the price fixed upon
them by those who furnish productive services think they can make them yield. Therefore, its
magnitude is based on a margin of error in calculation by entrepreneurs and nonentrepreneurs who do not force the entrepreneurs to pay as much for productive services as
they could be forced to pay. It is this margin of error in judgment that constitutes true
uncertainty that is borne by the true entrepreneur and which results in his profit. In Knights
view, the function of manager thus does not itself imply entrepreneurship
FINANCIAL MANAGEMENT: Financial management of your small business
encompasses more than keeping an accurate set of books and balancing your business
checking account. You must manage your finances so you dont overspend and so you
remain prepared for all expenditures, as well as profit distributions. Your financial
management responsibilities affect all aspects of your business. A company that sells well
but has poor financial management can fail. So a good financial management system enables
you to accomplish important big picture and daily financial objectives.
Capital Expenditures: You purchase assets to create income. All your financial
considerations of capital expenditures must balance the amount of income the asset will
produce with the amount it will cost. If you manage your capital expenditures effectively,
you will not overextend your company by borrowing too much for assets that dont provide
enough income to justify the expense.
Operating Cash: You must manage your cash flow so you always have enough on hand to
pay for rent, utilities, telephone, insurance, payroll and supplies. This means you must look
ahead and see when your accounts receivable are due and compare that to the due dates for
your outstanding bills. You can manage your cash flow by shortening the amount of time you
give customers to pay and by renegotiating due dates with vendors. If you fail to manage
cash flow effectively, you may not be able to pay expenses and keep your company
operating.
Lowering Expenses: One of your financial management responsibilities is to keep costs as
low as possible. You can ask vendors for lower prices, reduce the number of employees you
use, reduce energy use and purchase supplies in bulk. If you do not monitor and manage
costs, your company will always have to increase sales dramatically to pay rising expenses.
Tax Planning: Your financial management duties include planning for taxes. This involves
making sure you have cash on hand to pay estimated tax payments each quarter and also
timing your purchases of major assets to get the maximum benefit. For example, if you know
yourPage
current
| 18 tax year will not require a heavy tax payment but next year will, you can
postpone buying major assets until next year when you will need the tax write-off more.
Failure to plan for taxes and maximize deductions can cause your company to spend more
than it has to on taxes.
The following is a summary of the economists' interesting discourse that, aspiring
entrepreneurs may, hopefully, find useful.
Entrepreneur as Risk-Taker: Richard Cantillon (1680-1734) suggested that an entrepreneur
is someone who has the foresight and willingness to assume risk and take the requisite action
to make a profit or loss. Cantillons entrepreneur is forward-looking, risk-taking, alert though
need not be innovative in the strict sense.
Two different kinds of risk were distinguished by Frank Knight (1885-1972): one is capable
of being measured i.e., objective probability that an event will happen and shifted from the
entrepreneur to another party by insurance; the other is un-measurable i.e., no objective
measure of probability of gain or loss, e.g., the inability to predict consumer demand.
According to Knight, the entrepreneur takes the latter risk: true uncertainty found in
situations, which do not repeat themselves with sufficient conformity to make possible a
computation of probability what we nowadays term as "unknown and unknowable".
Entrepreneur as Business Manager: Frank Knight established a boundary between
management and entrepreneurship. He sees entrepreneurs in the strict sense as producers;
while the great mass of population furnish them with productive services, placing their
persons and property at the disposal of entrepreneurs who guarantee to them a fixed
remuneration. Entrepreneurial profit depends on whether an entrepreneur can make
productive services yield more than the price fixed upon them by those who furnish
productive services think they can make them yield. Therefore, its magnitude is based on a
margin of error in calculation by entrepreneurs and non-entrepreneurs who do not force the
entrepreneurs to pay as much for productive services as they could be forced to pay. It is this
margin of error in judgment that constitutes true uncertainty that is borne by the true
entrepreneur and which results in his profit. In Knights view, the function of manager thus
does not itself imply entrepreneurship.
Entrepreneur as Exceptional Leader: Hans Karl Emil von Mangoldt (1824-1868)
developed the notion that entrepreneurial profit is the rent of ability. He divided
entrepreneurial income into three parts: (1) a premium on uninsured risks; (2) entrepreneur
interest and wages, including only payments for special forms of capital or productive effort
that did not admit of exploitation by anyone other than the owner; and (3) entrepreneurial
rents or payments for differential abilities or assets not held by anyone else. The first part is a
return on risk taking; the second part from capital use and production effort, and the third
part from ability or asset specificity. Alfred Marshall (1842-1924) carried forward
Mangoldts notion of rent-of-ability by adding the element of leadership to entrepreneurial
responsibilities. Marshalls entrepreneurs must be a natural leader of men who can choose
assistants wisely but also exercise a general control over everything and preserve order and
unity in the main plan of business. In fulfilling this organizational function, the entrepreneur
must
always
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| 19be on the lookout for methods that promise to be more effective in proportion
to their cost than methods currently in use. Marshall noted that not everyone had the innate
ability to perform this entrepreneurial role as these abilities are so great that very few persons
can exhibit all of them in a very high degree. Accordingly, he termed the entrepreneurial
rents specifically as a quasi-rent, which is a return for exceptional natural abilities, which
are not made by human effort, and enable the entrepreneur to obtain a surplus income over
what ordinary persons could expect for similar exertions following similar investments of
capital and labour in their education and start in life.
Entrepreneur as Perceiver/Restorer: John Bates Clark (1847-1938) noted that as static
conditions change over time: population grow, wants change, and improved production
technologies are discovered and implemented, the mobility of capital and labour is necessary
to restore new equilibrium. He sees the entrepreneur as the human agent responsible for the
coordination that restores the economy to an equilibrium position. For Israel Kirzner
(1930- ), knowledge is never complete or perfect in a dynamic economy; markets are
constantly in states of disequilibrium and it is disequilibrium that bars the return to
equilibrium. Kirzner focused on the discovery process by which entrepreneurs discover
error and new profitable opportunities, and thus move the market toward equilibrium.
Therefore, the role of the entrepreneur is to achieve the kind of adjustment necessary to
move economic markets toward the equilibrium state. According to Kirzner, the essence of
entrepreneurship consists of the alertness to profit opportunities. By stressing alertness,
Kirzner emphasizes the quality of perception, perceiving an opportunity that is a sure thing.
Entrepreneur as Innovator: Joseph Schumpeter (1883-1950), Austrian-born professor, is
famous for focusing on the entrepreneur as the central figure in advancing the wealth of
nations and creating dynamic disequilibrium in the global economy. In the process of
creative destruction (of the market system), entrepreneurs plays a central role by
constantly assimilating knowledge not yet in current use and setting up new production
forms and functions to produce and market new products. He pointed out that knowledge
underlying the innovation need not be newly discovered and may be existing knowledge that
has never been utilized in production. Therefore, the entrepreneur need not be an inventor
and vice versa. He is the one who turns an invention into commercial exploitation. For
Schumpeter, successful innovation requires an act of will, not of intellect. It therefore
depends on economic leadership and not mere intelligence. He felt that such a hazardous
activity would not be undertaken by ordinary economic agents but only by entrepreneurs
with the vision, drive and commitment to survive the uncertainty and turbulence involved.
When he succeeds, the entrepreneur will realize exceptional (be it temporary monopoly)
profits and he may be able to fundamentally change existing or introduce new market and
industry structures. Therefore, Schumpeters theory of creative destruction has sometimes
also been known as heroic entrepreneurship.
While Schumpeter emphasizes technological innovation and improvement, Ludwig von
Mises (1881-1973) declared that changes in consumer demand may require adjustments,
which have no reference at all to technological innovations and improvements. He thought
that the business of the entrepreneur is not merely to experiment with new technological
methods,
Page |but
20 to select those, which are best, fit to supply the public in the cheapest way with
the things they are asking for most urgently. Whether a new technological procedure is or is
not fit for this purpose is provisionally decided by the entrepreneur and finally decided by
the conduct of the buying public. For Mises, the activities of the entrepreneur consist in
making decisions and while decisions regarding innovation and technological improvement
come under his purview, such decisions alone do not constitute an exhaustive set. This
echoed the viewpoint of American economist, F.W.Taussig (1859-1940) that although
innovation is one of the activities performed by the entrepreneur, it is not the only one, and
perhaps not even the most important one.
Peter Drucker (1909-2005) notes that entrepreneurship can be defined as changing the yield
of resources (seen in supply or production terms) or as changing the value and satisfaction
obtained from resources by the consumer (defined in demand terms) and innovation to be the
specific instrument of entrepreneurship. Like Taussig and Mises, Drucker asserts that
innovation does not have to be technical and are often social as well. He argued that
management (as a useful knowledge) is an innovation of the 20th century as it has made
possible the emergence of the entrepreneurial economy in America and converted modern
society into something brand new: a society of organizations. He therefore prescribed a
systematic form of entrepreneurship management, based on systematic innovation:
Systematic innovation consists in the purposeful and organized search for changes and in
the systematic analysis of the opportunities such changes might offer for economic or social
innovations.
CHARACTERISTICS OF ENTERPRENURESHIP: Entrepreneurship is the act of

setting out on your own and starting a business instead of working for someone else in his
business. While entrepreneurs must deal with a larger number of obstacles and fears than
hourly or salaried employees, the payoff may be far greater as well.
Interest and Vision: The first factor for entrepreneurial success is interest.
Since entrepreneurship pays off according to performance rather than
time spent on a particular effort, an entrepreneur must work in an area
that interests her. Otherwise, she will not be able to maintain a high level
of Page
work| 21ethic, and she will most likely fail. This interest must also
translate into a vision for the company's growth. Even if the day-to-day
activities of a business are interesting to an entrepreneur, this is not
enough for success unless she can turn this interest into a vision of
growth and expansion. This vision must be strong enough that she can
communicate it to investors and employees.
Skill : All of the interest and vision cannot make up for a total lack of
applicable skill. As the head of a company, whether he has employees or
not, an entrepreneur must be able to wear many hats and do so
effectively. For instance, if he wants to start a business that creates
mobile games, he should have specialized knowledge in mobile
technology, the gaming industry, game design, mobile app marketing or
programming.
Investment:
An entrepreneur must invest in her company. This
investment may be something less tangible, such as the time she spends
or the skills or reputation she brings with her, but it also tends to involve
a significant investment of assets with a clear value, whether they be
cash, real estate or intellectual property. An entrepreneur who will not or
cannot invest in her company cannot expect others to do so and cannot
expect it to succeed.
Organization and Delegation: While many new businesses start as a oneman show, successful entrepreneurship is characterized by quick and
stable growth. This means hiring other people to do specialized jobs. For
this reason, entrepreneurship requires extensive organization and
delegation of tasks. It is important for entrepreneurs to pay close
attention to everything that goes on in their companies, but if they want
their companies to succeed, they must learn to hire the right people for
the right jobs and let them do their jobs with minimal interference from
management.
Risk and Rewards: Entrepreneurship requires risk. The measurement of
this risk equates to the amount of time and money you invest into your
business. However, this risk also tends to relate directly to the rewards
involved. An entrepreneur who invests in a franchise pays for someone
else's business plan and receives a respectable income, while an
entrepreneur who undertakes groundbreaking innovations risks
everything
Page | 22 on an assumption that something revolutionary will work in
the market. If such a revolutionary is wrong, she can lose everything.
However, if she is right, she can suddenly become extremely wealthy.
CHARACTERISTICS OF ENTREPRENEURS: Starting a business requires the ability to

constantly deal with new problems and challenges; without the traits necessary to withstand
this, "your business could implode on you faster than it started," states start-up business
expert Jason Bowser in his article, "8 Traits of Successful Entrepreneurs," for the U.S.
Department of Commerce. Entrepreneurs who meet and exceed their goals share a few
typical traits and characteristics.
Social vs Solo: The idea of an entrepreneur starting his own business
might imply an individual who prefers to work alone; however, research
indicates that entrepreneurs are often social people, according to
Stanford University. Starting a business requires contacting people to
generate funds, purchasing materials from suppliers, hiring employees
and developing social networks in which to promote the business.
Motivated: Entrepreneurs not only must be self-motivated, but they must
possess the ability to motivate others, even in times of stress and
potential failure. There is frequently very little, if any, financial payoff in
the initial stages of starting a business, and an entrepreneur must have
passion for his idea and a strong desire to see the project through. He
should also be goal-oriented, able to set goals and to encourage his team
to constantly strive to meet them.
Integrity: An intrinsic understanding and adherence to strong ethics is a
vital characteristic of an entrepreneur. While an unethical business owner
sometimes experiences immediate success through deception, such as
selling a poor quality product, he will lose clients and employees in the
long run.
Creative: Entrepreneurs are naturally creative individuals who are
constantly coming up with new ideas. This is a never-ending process;
once the business is up and running and products or services are being
sold, an entrepreneur studies consumer reaction, conducts market
research and works to improve what his business is offering to stay
successful.
Inquisitive:
Page | 23 Staying on top of the competition and constantly innovating
requires asking questions, participating in continuing education
workshops, attending conferences and learning from mistakes. An
entrepreneur must be confident and have the ability to recognize when
and where he can make improvements to his company, and then take
action.
Willing to Fail: There is no such thing as a risk-free start-up business.
Entrepreneurs must be willing to take those risks and deal with failure
when it happens. If he fails, rather than giving up, a true entrepreneur will
evaluate his actions, determine where he can make improvements and
make a fresh attempt.
Entrepreneurship Ideas: Entrepreneurs are those rare breed of individuals who, just dreams
about working for themselves, they actually go out and start their own businesses. Often an
entrepreneur may be involved in more than one business venture, either hoping one will
become the cash cow or diversifying revenues among several business concepts. Success
starts with a great concept that is followed by superb business execution .
ENTREPRENEURSHIP VS MANAGEMENT: Managers and entrepreneurs both play an
important role in the business community. Many of them share some of the same
characteristics, but some differences exist when it comes to the basic traits of each. Managers
play an entirely different role than an entrepreneur unless, of course, an entrepreneur is
managing his own business. In that case, the entrepreneur takes on some the traits of a
manager out of necessity.
Focus: The focus of an entrepreneur and a manager tend to be different
when it comes their overall purpose in a business. An entrepreneur is
someone who is concerned primarily with the necessary components to
start up a business. A manager is typically concerned with sustainability,
and has to focus on what can be done within the framework of what he
has been given to work with in an existing enterprise.
Growth: Both managers and entrepreneurs are concerned with business
growth. An entrepreneur begins with the idea of the business from its
inception and its potential for growth in the long run. An analysis of the
market and available resources in relation to the original idea plays a
primary role in his business decisions. A business manager is focused on
engendering growth based on available resources. A manager must get
employees
Page | 24 to perform at optimal levels, and must make use of nonhuman resources to create additional growth beyond basic sustainability.
Innovation: Entrepreneurs tend to be visionaries. They see a trend or a
potential market for a product and turn their vision into a reality. A
manager has to concern himself with the vision of someone else.
Entrepreneurs are often innovators in the industry into which they delve,
whereas managers will typically rely upon tried and true methods for
running a business. Managers can be innovators, but they do not start
new business or open new markets. They innovate in terms of the ways
that they handle their employees and inspire them to do better, or in the
ways that they increase efficiency with the use of resources, but they do
not typically start something new.
Risk: Entrepreneurs are inherent risk-takers whereas managers are not.
This is not to say that an entrepreneur just takes blind risks; the risks are
often calculated, but he does have to pull the trigger and give the go
ahead from time to time. An entrepreneur operates in an atmosphere of
uncertainty, whereas a business manager can only take risks within
parameters established by the employer. A manager has to be more
conservative in this sense, because he is concerned with someone else's
business other than his own. Managers are risk management specialists
who assess probability for an entrepreneur or business owner. They make
calculated risks also, but have the assurance, in most cases, that their job
will be there the next day. An entrepreneur doesn't know if his business
will succeed or if he will make any income from his venture.
MARKETING EXAMPLES IN ENTREPRENEURSHIP: Recently that entrepreneurship
has been studied as its own distinct category of business. The amazing success of companies
like Microsoft, Virgin, and Dell has revealed that entrepreneurship is its own class of
business with many unique challenges and opportunities. As the field has received more and
more focus, specific strategies for successful entrepreneurship have begun to emerge. The
primary challenge facing the entrepreneur is competing against larger, better known, and
more resourceful companies. How can a start up with a small staff, limited budget, and
miniscule customer base hope to compete against the giants in their industry? They do this
by turning their weaknesses into their strengths. By their very nature, start-up companies can
be more flexible and unorthodox than their major competitors.
Marketing is one area where entrepreneurs can actually define a unique identity for
themselves. Think of all the clever ads that came out of the first wave of Internet start-ups.
Pets.com, for example, was able to turn a simple sock puppet into a nationally recognized
spokesperson.
Page | 25 Since marketing is a tool that is available to any business willing to invest in
it, it is one of the best ways for emerging companies to define their image in the minds of
consumers.
Many entrepreneurial marketing strategies are born out of necessity. New businesses might
have five or just one person working on their marketing efforts. They work within limited
budgets and have access to a fraction of the resources that their major competitors have.
Luxuries like graphic design teams and advertising consultants are often outside the means
of start-ups, requiring them to find ways to make the maximum impact with limited
resources.
The most common features of entrepreneurial marketing include innovation, risk taking, and
being proactive. Entrepreneurial marketing campaigns try to highlight the company's greatest
strengths while emphasizing their value to the customer. Focusing on innovative products or
exemplary customer service is a way to stand out from competitors. They make this pitch
using cheap and accessible tools including viral videos, Tweets, Facebook pages, and email
marketing. Any and all marketing strategies can be considered as long as they produce
results.
WHAT CAN WE DO IN ENTREPRENEURSHIP: What makes someone a successful
entrepreneur? It certainly helps to have strong technology skills or expertise in a key area,
but these are not defining characteristics of entrepreneurship. Following are additional
requirements that which has contribution under the title of What can we do.
Focus on doing just one thing: Initially they focus on demonstrating a concept. Then they
move on to developing a product, followed by getting initial customer traction, then phased
production. A laser focus on one phase at a time enables the highest probability of success at
the lowest burn rate.
Raise capital all the time: Most companies that contact me for advice have no chance of
making it because they tried to bootstrap it, are already short on cash and have no time to
raise capital. Businesses have to grow and that cant happen unless youre constantly raising
capital for the next phase.
Solve a big customer problem: One of the biggest mistakes entrepreneurs make is that they
come up with something they want to do that doesnt solve a big customer problem better
than anyone else. If you cant come up with that, keep looking. Thats the key to making it.
First figure out the problem. Then solve it.
Come up with a differentiated strategy: You probably wont nail it right out of the gate
few startups do but sooner or later youll have to come up with a unique strategy that
nobodys thought of and customers cant resist. Every startup either figures it out eventually
or fails along the way. Its one or the other
Know their market: Most entrepreneurs are good at something and they want to turn it into a
business. Unfortunately, they dont know the business side. They just think that, if they do it,
it will
sell.
Unfortunately, thats not how competitive markets work. You have to understand
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| 26
your market, your competitors and your unique customer value proposition.
Have a strong leader with a solid team: There are basics of project management and
building and motivating a team that every founder has to learn to successfully run a venture.
I see startups with founders that have no idea how to manage and enormous gaping holes
where key capabilities need to be all the time. Sad but true.
Work 24x7 and wear lots of hats:If you think you have what it takes to run a startup, get
ready to work 24x7 and wear all sorts of hats. And everyone you hire should be motivated to
do the same. It comes with the territory. If that workaholic energy level isnt there, chances
are youre not going to make it.
WHY HAVE TO DO A ENTREPRENEURIAL MANAGER:
The Entrepreneurial Management Unit strives to raise the level of academic work in the field
of entrepreneurship, in methodological rigor, conceptual depth, and managerial applicability.
1. Absorb uncertainty: Shoulder the burden of responsibility for the uncertain outcome of a
new project. As MacMillan explains, "Its saying to your people, ' If I' m wrong, its my
problem, not yours. Therefore you can behave as if the world is going to be the way I have
set it up.' "
2. Frame the challenge: Set forth a project that pushes employees up to, but not beyond, the
limits of their ability.
3. Underwriting/Path-clearing: Create a conducive environment for the entrepreneurial
transformation, negotiating support from key stakeholders inside and outside the firm.
To perform cast enactment, the entrepreneurial leader must fulfill two charges:
1. Build commitment: Promote a willingness among employees to work toward a common
goal, in the sense of traditional, motivating team-building.
2. "Define gravity:" Break down team members' self-imposed perceptual barriers and
stereotypes about what can and cant be done, in order to produce integrative and decisive
actions. An entrepreneurial leader will have a sense of the degree to which people resources
have been undervalued.
Fulfilling these five roles is the key to the kind of leadership that todays businesses need to
thrive.
THE BUSINESS PLANING: A business plan is a written description of your business's
future. That's all there is to it--a document that describes what you plan to do and how you
planPage
to do| 27
it. So Business plans can help perform a number of tasks for those who write and
read them. They're used by investment-seeking entrepreneurs to convey their vision to
potential investors. They may also be used by firms that are trying to attract key employees,
prospect for new business, deal with suppliers or simply to understand how to manage their
companies better.
A good business plan follows generally accepted guidelines for both form and content. There
are three primary parts to a business plan:
The first is the business concept, where you discuss the industry, your business
structure, your particular product or service, and how you plan to make your business a
success.
The second is the marketplace section, in which you describe and analyze potential
customers: who and where they are, what makes them buy and so on. Here, you also
describe the competition and how you'll position yourself to beat it.
Finally, the financial section contains your income and cash flow statement, balance
sheet and other financial ratios, such as break-even analyses. This part may require help
from your accountant and a good spreadsheet software program.
The planning process helps an entrepreneur identify exactly what needs to be accomplished
to build the venture, and what human and financial resources are required to implement the
plan. The forecast profit and loss statement provides a means to compare actual results to
what had been forecast, and make corrections to business strategy if shortfalls in revenue
occur.
QUESTIONS EVERY BUSINESS PLAN SHOULD ANSWER: Starting and building
your own business can be overwhelming, while many business owners cringe at the mere
mention of drafting a business plan, it is a great exercise to get your business back on track
and to plan for future growth. More specifically, it forces you to map out where you are now,
where you need to go and most importantly how you plan to get there. If you are a first time
business owner, or have never written a business plan, you may not know where to start.
Below is the list of Questions that Every Business Plan Should Answer:
1) What is the need that your business exists to satisfy?
Every business exists because of some noticeable opportunity that you have
discovered within the market. So you must clearly define the need and/or problem you
are solving with this business.
2) How will your business satisfy the need?
Introduce and describe the business itself. Consider including a mission or vision
statement with objectives detailing how the business satisfies the need in the market.
3) How
Pagedoes
| 28 your company differentiate itself?
Describe your business model and competitive advantage. This will help you to
outline how the business will sustain its position within the market.
4) Who will be the key players in the business?
Name the management team, board and advisers to the business. Highlight their
expertise and experiences.
5) How big is the market you are entering?
Only after understanding the industry you are entering its size, attractiveness and
profit potential can you truly justify the opportunity.
6) Who will you be targeting as customers?
Narrowing down your target customer will help enhance and define your marketing
strategy.
7) What will be your most effective marketing and promotional strategies?
Once youve identified your target client, youll need to develop and implement a
strategy on how best to reach them (e.g. PPC, television, radio, social, etc). And this in
large part will be influenced by where your target client consumes information.
8) What are the economics of your business?
Define your revenue streams including pricing structure, costs, margins and expenses.
9) How much money is required to get your business started and generating revenue?
Identify needed capital requirements by determining where your business stands

today, and what is needed in order to move forward. Also, if you are in need of outside
funding, what will be the sources and uses of funds requested.
10) What needs to happen to break-even?
Play around with financial projections and forecasts to determine the volume of sales
needed to cover your expenses and to become profitable. Include monthly breakdowns
for the first two years.
Addressing these questions will help you build a roadmap for your business and of course
the better the map, the greater the likelihood that youll reach your destination!
The People in Business Planning:
( Its not just the products that makes special, its the
People. Marc Bolland)
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people
| 29 have the key significance in any business planning and its successful
implementation in accordance. The personnel section will normally include information on
the skills and experience of your management team, and cover your estimated personnel
costs.
Make sure you cover the basic information first. That would include how many employees
the company has, how many managers, and how many of the managers are founders. Is your
organizational structure sound, with job descriptions and logical responsibilities for all the
key members? Is your team complete, or are there gaps still to be filled? Particularly with
start-up companies, you may not have the complete team as you write the plan. In that case,
be sure to point out the gaps and weaknesses and how you intend to fill them. The
organizational structure of a company is what you frequently see as an organizational chart,
also known as an org chart. If you have access to a graphic of an organizational chart
(from a drawing program, or one of the specialized organizational charting software
packages available), that works really well at this point. If not, you can just use the text to
describe the organizational structure in words, without a chart.
List the most important members of the management team. Include summaries of their
backgrounds and experience, using them like brief resumes. Describe their functions with the
company. Resumes should be appended to the plan.
Almost all the Business Planes have obvious gaps in the management, especially in start-up
companies, but even in ongoing companies. For example, the manufacturing company
without a production manager has some explaining to do, and the computer company without
service has some problems. It is far better to define and identify a weakness than to pretend it
doesnt exist. Specify where the team is weak because of gaps in coverage of key
management functions. How will these weaknesses be corrected? How will the more
important gaps be filled?
The Opportunities in Business Planning: A business opportunity is a packaged business
investment that allows the buyer to begin a business. Listing opportunities, consider
emerging
availability of new materials, new customer categories, changing
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30
customer tastes, market growth, new uses for old products (think about how mobile phones
and even eyeglasses now double as cameras and computers), new distribution or location
opportunities, positive changes in your competitive environment, and other forces that can
affect your success. Market research is critical to business success. A good business plan
analyzes and evaluates customer demographics, purchasing habits, buying cycles, and
willingness to adopt new products and services.
The process starts with understanding your market--and the opportunities inherent in that
market. And that means you'll need to do a little research. Before you start a business you
must be sure there is a viable market for what you plan to offer.
That process requires asking--and more importantly answering--a number of questions. The
more thoroughly you answer the following questions, the better you will understand your
market.
Start by evaluating the market at a relatively high level, answering some high-level questions
about your market and your industry:
What is the size of the market? Is it growing, stable, or in decline?
Is the overall industry growing, stable, or in decline?
What segment of the market do I plan to target? What demographics and behaviors
make up the market I plan to target?
Is demand for my specific products and services rising or falling?
Can I differentiate myself from the competition in a way customers will find
meaningful? If so, can I differentiate myself in a cost-effective manner?
What do customers expect to pay for my products and services? Are they considered
to be a commodity or to be custom and individualized?
The Market Opportunities section provides a sense-check of that analysis, which is
particularly important since choosing the right products and services, is such a critical factor
in business success. Business opportunities offer tools or training to help you start your own
business, but usually at a lower cost and with fewer restrictions than a franchise. Youll find
business opportunities in a variety of industries listed here, divided into three main
categories: Dealerships and Licensing Opportunities, Network Marketing/Direct Sales, and
Vending Machines.
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Great
Entrepreneurial
Success Stories: (success does not follow a time clock) The world is full of infinite
possibilities and countless opportunities, but your life and career are finite, meaning you have
limited time to find what youre searching for and make your mark on the world. This is your time.
Its limited so dont waste it. Find something you like to do and just do it. Thats how real
entrepreneurs always start.
The Pierre Omidyar way. In 1995, a computer programmer started auctioning off stuff on his personal
website. AuctionWeb, as it was then known, was really just a personal project, but, when the amount of web
traffic made it necessary to upgrade to a business Internet account, Omidyar had to start charging people fees.
He actually hired his first employee to handle all the payment checks. The site is now known as eBay.
The John Ferolito and Don Vultaggio way. Back in the 70s, a couple of Brooklyn friends started a beer
distributor out of the back of an old VW bus. Two decades later, after seeing how well Snapple was doing
they decided to try their hand at soft drinks and launched AriZona Green Tea. Today, AriZona teas are #1 in
America and distributed worldwide. The friends still own the company.
The Matt Maloney and Mike Evans way. When a couple of Chicago software developers working on
lookup searches for Apartments.com got sick of calling restaurants in search of takeout food for dinner, the
light bulb went off: Why isnt there a one-stop shop for food delivery? Thats when the pair decided to start
GrubHub, which went public last April and is now valued at more than $3 billion.
The Joe Coulombe way. After operating a small chain of convenience stores in southern California, Joe
Coulombe had an idea: that upwardly mobile college grads might want something better than 7-11. So he
opened a tropical-themed market in Pasadena, stocked it with good wine and booze, hired good people, and
paid them well. He added more locations near universities, then healthy foods, and thats how Trader Joes got
started.
The Howard Schultz way. A trip to Milan gave a young marketer working for a Seattle coffee bean roaster
an idea for upscale espresso cafes like they have all over Italy. His employer had no interest in owning coffee
shops but agreed to finance Schultzs endeavor. They even sold him their brand name, Starbucks.
The Phil Robertson way. There was a guy who so loved duck hunting that he chose that over playing pro
football for the NFL. He invented a duck call, started a company called Duck Commander, eventually put his
son Willy in charge, and that spawned a media and merchandising empire for a family of rednecks known as
Duck Dynasty.
The Konosuke Matsushita way. In Japan in 1917, a 23-year-old apprentice at the Osaka Electric Light
Company with no formal education came up with an improved light socket. His boss wasnt interested so
young Matsushita started making samples in his basement. He later expanded with battery-powered bicycle
lamps and other electronic products. Matsushita Electric, as it was known until 2008 when the company
officially changed its name to Panasonic, is now worth $66 billion.
The Steve Wozniak and Steve Jobs way. While they had been friends since high school, the two college
dropouts gained considerable exposure to the computer world while working on game software together on
the night shift at Atari. The third Apple founder, Ron Wayne, was also an Atari alumnus.
The Context in Entrepreneurship: The Entrepreneur mind sets out to explore contexts
for entrepreneurship, illustrating how a contextualized view of entrepreneurship contributes
to our understanding of the phenomenon . There is growing recognition in entrepreneurship
research that economic behavior can be better understood within its historical, temporal,
institutional, spatial, and social contexts, as these contexts provide individuals with
opportunities and set boundaries for their actions. Context can be an asset and a liability for
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and extent of entrepreneurship, but entrepreneurship can also impact contexts. The
Entrepreneurial Intentions and Corporate Entrepreneurship argues that context is important
for understanding when, how, and why entrepreneurship happens and who becomes
involved. Exploring the multiplicity of contexts and their impact on entrepreneurship, it
identifies challenges researchers face in contextualizing entrepreneurship theory and offers
possible ways forward.
So a contextualized view on entrepreneurship can add to our knowledge of when, how, and
why entrepreneurship happens. Conceptually, context is a multiplex phenomenon, which cuts
across levels of analysis and influences entrepreneurship directly or indirectly, but which
also is influenced by entrepreneurial activities.
Regulatory Management: Governments and regulatory bodies can play an important role in
accelerating or inhibiting the growth of many companies.
Regulatory management is the process of effectively overseeing the implementation of
standards and regulations for operations that are put in place by government agencies,
allowing a business entity to remain in compliance with those regulations. The scope of this
type of management process will often require that regulatory managers are knowledgeable
in the nature and application of all regulations that have to do with a specific industry. With
the aid of these managers, it is possible to develop various internal policies and procedures
that allow the company to remain in compliance and avoid any type of censure from
government agencies.
The exact nature of regulatory management in Entrepreneurship will vary somewhat, based
on the industry involved. With manufacturing facilities, regulations that have to do with the
handling and disposal of hazardous materials will be a primary concern of the
regulatory manager. Safety measures taken in the workplace will also receive a great deal of
attention, with the manager making sure those measures at least meet with current standards
set by a governmental agency. Compliance with federal and state laws regarding wages and
salaries will also often come under the jurisdiction of a regulatory manager.
The complexity of the business and regulatory landscape is increasing dramatically.
Companies are navigating a proliferation of new regulatory requirements and stakeholder
expectations, and are challenged to do so in a way that supports performance objectives,
sustains value and protects the brand. Critical compliance and regulatory issues include:
Protecting brand reputation and value
Meeting the demands and expectations of investors, legislators, regulators, customers,
employees, analysts, consumers and other key stakeholders
Driving value and managing performance expectations for governance, ethics, risk
management and compliance
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Managing
| 33 crisis and remediation while defending the organization and its executives /
board members against legal enforcement and the rising impact of fines, penalties and
business disruption
Other industries and professionals will also incorporate regulatory management into their
overall operational strategy. Banks and other financial institutions will include personnel
who can aid in drafting internal policies and procedures that help the operation to be in
compliance with current federal and state regulations. Even major industries such as retail
stores must usually observe a number of governmental regulations in order to avoid incurring
fines and possibly be subject to a temporary closing until the business operation is brought
back into compliance.
So regulatory management is all about making sure
that a company is operating within the boundaries
established by a government entity. Typically, those
regulations have to do with protecting the rights of
consumers, and making sure the work environment is
relatively safe and that specified codes of conduct are
followed when it comes to financial transactions. By
choosing to engage in effective regulatory
management, businesses are able to operate with the
support of the government, sometimes even being able
to receive additional benefits as a result of that compliance. Consumers also benefit, as that
the stores they shop in are relatively safe, the goods they buy meet certain standards, and the
money they place in banks and other financial institutions has a certain amount of protection.
Interest Rates:
In the Context of Entrepreneurship Interest rates are an everyday part of business.

Companies pay interest on money they borrow, and when they have extra cash, they receive
interest when they place that cash in a safe investment. Companies also charge interest when
their customers buy goods and services on credit. A rise or fall in interest rates affects these
business activities as well as the buying habits of the company's customers.
High
Interest
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| 34 Rates: Interest rates are related to the amount of money floating through the
economic system, such as cash in banks, cash loaned to consumers via credit cards, car and
home loans, cash paid by businesses to their employees and cash that moves throughout the
business and investment sector. When there is more buying demand relative to the amount of
cash in circulation, that cash is worth more. When banks lend it out, they charge a high rate
of interest that reflects its scarcity value. Investors receive a high rate of interest, because the
financial system needs money to lend out, so financial institutions are willing to pay high
interest rates to attract investor money. High interest rates make it more expensive for
companies to borrow money to finance their operations, payroll and purchases. High rates
also eventually discourage consumers from buying because of the expense involved, which
chokes off economic activity.
Low Interest Rates: Low interest rates represent the presence of plenty of money in the
system. When banks have a lot of cash on hand, they are anxious to lend it out, so they lower
the interest rate they charge on loans. Low interest rates are also reflected in the price of
goods and services, because low rates make the financing of operations, manufacture and
distribution less expensive for companies. Low interest rates also drive investment into the
stock market by investors seeking higher returns on their money than is available in bank
certificates of deposit and bonds. Low rates encourage the pay-down of credit card debt,
because it represents an expensive form of money relative to other loans. Consumers have
few other places for their money to earn high returns on investment, so their extra money
goes into paying down their credit cards.
Fed Monetary Policy: Interest rates are, for the most part, controlled by
Federal Reserve monetary policy. Congress created the Federal Reserve
with the mandate to maintain maximum employment, stable prices and
moderate long-term interest rates. To do this, the Fed must control
inflation and deflation. Inflation refers to the presence of too much money
in the system, which raises the prices paid for goods and services,
because too much money lowers the purchasing power of that money.
Deflation represents an increase in the purchasing power of cash because
of its scarcity in the hands of consumers and businesses. It results in a
drop in prices, salaries and a slowing of business activity. The Fed
removes money from the system and raises interest rates to discourage
inflation, thereby making credit too expensive for consumers and
businesses. This dampens economic activity and moves the economy into
recession. When the economy has slowed enough, the Fed adds money to
the system and lowers interest rates, making it less expensive for
business to finance operations, so they buy plants and equipment, hire
more people and economic activity expands because consumers have
more money to buy things.
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Business Planning: Companies watch the cycles in interest rates just like consumers watch
for sales in stores. Companies plan for expansion during periods of low interest rates,
because the expense of that expansion is lower than during high-interest rate periods. When
companies expand, they hire more people and pay higher salaries. This puts money into the
consumer sector and results in an increase in consumer purchases. As consumers buy more,
companies raise prices, make more profits and produce more goods and services to meet
growing consumer demand. The increase in business activity and prices offsets the gradual
rise in interest rates as the demand for money increases its value. Eventually, this trend in
rising prices and rising interest rates prompts the Fed to remove money from the system and
raise interest rates so borrowing becomes too expensive, which eventually drives the
economy into recession again.
Interest is charged by lenders as compensation for the loss of the asset's use. In the case of
lending money, the lender could have invested the funds instead of lending them out. With
lending a large asset, the lender may have been able to generate income from the asset should
they have decided to use it themselves.
Simple Interest = P (principal) x I (annual interest rate) x N (years)
Borrowing $1,000 at a 6% annual interest rate for 8 months means that you would owe $40
in interest (1000 x 6% x 8/12).
Compound Interest = P (principal) x [(1 + I (interest rate) N (months)) - 1]
Borrowing $1,000 at a 6% annual interest rate for 8 months means that you would owe
$40.70.
So in Entrepreneurship once you understand the context for running your business, you can
adjust to interest rate moves to protect yourself from negative effects and take advantage of
positive ones. Interest rates can be a signal to either expand your business or pull it back.
Similarly when banks don't see an opportunity to make a reasonably-high interest rate on
their money, they become less likely to take risks on loans. Businesses therefore can't borrow
money for start-up and expansion expenses. Business can slow down to a crawl because
there's no way to fund innovation. In addition, short-term loans to cover cash-flow problems
can be hard to come by. This could cause businesses to be unable to deliver goods and
services to their customers because they don't have the cash to continue operating.
Demographic Trends: Demographic trends reveal developments and changes in human
population. More specifically, demographic trends relate to changes in a populations age,
gender, geographical location, marital status, educational attainment, employment status,
household income, race, religion, and health.
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significance
of Demographic Trends in The Context of Entrepreneurship is illustrated in
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details as following:
The Value of Demographic Trends: Staying up to date on the latest demographic trends
enables organizations to identify existing and emerging markets for their products and
services. By evaluating customers and prospects demographic trends, business decisionmakers can identify changing needs in the marketplace and adjust to them. Demographic
trends can also help organizations spot future spending trends.
When combined with behavioral and attitudinal data, demographics can be used to improve
marketing effectiveness by helping businesses target new customer segments with the right
messages at the right time. When done well, businesses can increase consumer awareness,
improve customer acquisition efforts, and bolster customer retention rates.
Business leaders, marketers, and advertisers can glean valuable insight from demographic
trends. For example, a geographical location might experience a shift in migration patterns.
Without understanding demographic trends for the area, businesses could make decisions on
a customer segment based on conjecture. Evaluating demographic trends for the area,
however, might reveal that theres a change in the populations average age, employment
status, income, or wealthall of which would help businesses better target its customers and
prospects. The more information about a population that business decision-makers can
appropriately group together, the more valuable the data will be to them. This can yield
additional insight such as trends in a populations socioeconomic status, life stage, and
lifestyle. Socioeconomic status is determined by measuring income, education, occupation,
and wealth of an individual or a family. Life stage is based on an individuals age, family
status, and relationships. Lifestyle is determined by education, location, activities, interests,
opinions, socioeconomic status, and life stage. All of these characteristics are helpful to
businesses as they are valuable predictors of consumer spending trends.
Demographic trends are also important, as the size of different demographic groups will
change over time as a result of economic, cultural and political circumstances. Segmenting a
population into demographics allows companies to assess the size of a potential market and
also to see whether its products and services are reaching that company's most important
consumers.
The Demographic Trends in The Context of Entrepreneurship is fast emerging as a
transformational megatrend of the 21st century given its capacity to reshape economies and
industries throughout the world. As key drivers of economic growth, entrepreneurs are the
lifeblood of any expanding economy, generating jobs, introducing new products and
services, and promoting greater upstream and downstream value-chain activities. In recent
years, the global entrepreneurial landscape has witnessed a paradigm shift in terms of trends,
with SMEs playing a pivotal role in social and economic advancement.
Inflation
in the Context of Entrepreneurship: The cost of goods and services in the
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economy tend to increase gradually, which a phenomenon is called inflation. Inflation causes
the purchasing power of currency to decline: When prices are rising, a dollar buys more
today than it does tomorrow. Inflation makes it costly to keep a lot of cash on hand, as it
causes the value of that cash to erode over time. Putting cash to work by saving it in an
interest-bearing account or investing it can mitigate the negative effects of inflation.
Entrepreneurs face a variety of financial hurdles when starting businesses, from coming up
with funds necessary to launch new ventures to making sure they have enough cash on hand
to cover immediate expenses. Small businesses may turn to loans and credit lines to secure
the financing they need, but taking on debt can be expensive. The cost of borrowing depends,
in part, on the rate at which prices in the economy are increasing.
Inflation and Borrowing: Although inflation is bad for those with cash on hand, it can be a
good thing for borrowers. When a business borrows money, it gets cash it can use
now that it can pay back later. Since inflation causes the value of currency
to decline over time, cash now is worth more than cash in the future. In
other words, inflation lets debtors pay lenders back with money that is
worth less than it was when they originally borrowed it.
Real Interest Rates: Because inflation reduces the true cost of
borrowing, the interest rates lenders charge doesnt tell the whole story.
Economists sometimes use "real" interest rates to account for the effects of inflation: A real
interest rate is the stated or nominal interest rate minus the inflation rate. For example, if a
business takes out a loan with a 5 percent annual interest rate but the inflation rate is 3
percent, the real interest rate is only 2 percent.
Inflation and Entrepreneurship Researchers Opinion:
Inflation: Larry Meyer(2013) says the Fed is right to focus on core inflation excluding
food and energy. There is very little that the Fed can do to control todays inflation, whether
core or headline. What the Fed does influence is inflation a year or two down the road, which
is why it needs to look to the future, not overreact to the present. The most significant
question for the Fed, then, is whether overall or core inflation right now is a more reliable
gauge of where headline inflation will be next year. And the data unequivocally tell us that
core inflation better predicts overall inflation tomorrow. Given that core inflation is close to
1 percent, overall inflation next year will likely also end up at about 1 percent, well below
the Feds almost explicit objective of 2 percent.
Entrepreneurship: Scott-Shane(2010) writes that the recession didnt increase
entrepreneurship. Though the recent recession was the worst downturn since the Great
Depression, some observers argue that one silver lining is an upswing in entrepreneurship.
Recessions, they claim, provide laid-off workers with the motivation to start their own
businesses, and a recent study suggests that in 2009 the number people becoming self
employed
spiked to its highest level in more than a decade. Unfortunately, a careful look at
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multiple sources of data shows that the Great Recession was actually a time of considerable
decline in entrepreneurial activity in the United States.
MARKET DEVELOPMENT:
Market development is a growth strategy that identifies and develops new market segments
for current products. A market development strategy targets non-buying customers in
currently targeted segments. It also targets new customers in new segments. A market
development strategy entails expanding the potential market through new users or new uses.
New users can be defined as: new geographic segments, new demographic segments, new
institutional segments or new psychographic segments. Another way is to expand sales
through new uses for the product.
A marketing manager has to think about the following questions before implementing a
market development strategy: Is it profitable? Will it require the introduction of new or
modified products? Is the customer and channel well enough researched and understood?
The marketing manager uses these four groups to give more focus to the market segment
decision: existing customers, competitor customers, non-buying in current segments, new
segments.
Market Penetration: This strategy involves selling current products or services into the
existing market in order to obtain a higher market share. This could involve persuading
current customers to buy more and new customers to start buying or even converting
customers from their competitors. This could be implemented using methods such as
competitive pricing, increase in marketing communications or utilizing reward systems such
as loyalty points/discounts. New Strategies involve utilizing pathways and finding new ways
to improve profits, increase sales and productivity, in order to stay relevant and competitive
in the long run.
Product Development: In business and engineering, new product development (NPD) is the
complete process of bringing a new product to market. New product development is
described in the literature as the transformation of a market opportunity into a product
available for sale and it can be tangible (that is, something physical you can touch) or
intangible (like a service, experience, or belief). A good understanding of customer needs and
wants, the competitive environment and the nature of the market represent the top required
factors for the success of a new product. Cost, time and quality are the main variables that
drive the customer needs. Aimed at these three variables, companies develop continuous
practices
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39 strategies to better satisfy the customer requirements and increase their market
share by a regular development of new products. There are many uncertainties and
challenges throughout the process which companies must face. The use of best practices and
the elimination of barriers to communication are the main concerns for the management of
NPD process.
Product Diversifications: Diversification is a corporate strategy to enter into a new market
or industry which the business is not currently in, whilst also creating a new product for that
new market. This is most risky section of the Ansoff Matrix, as the business has no
experience in the new market and does not know if the product is going to be successful.
Diversification is part of the four main growth strategies defined by Igor Ansoff's
Product/Market matrix.
Ansoff pointed out that a
diversification
strategy
stands apart from the other
three strategies. The first
three strategies are usually
pursued with the same
technical, financial, and
merchandising
resources
used for the original
product
line,
whereas
diversification usually requires a company to acquire new skills, new techniques and new
facilities. The notion of diversification depends on the subjective interpretation of new
market and new product, which should reflect the perceptions of customers rather than
managers. Indeed, products tend to create or stimulate new markets; new markets
promote product innovation.
Market development strategy examples: 1-Pakistan State Oil (PSO) developing new
market by exporting/exploring oil to Afghanistan.
What is marketing in Entrepreneurship: Marketing is a form of communication between
you and your customers with the goal of selling your product or service to them.
Communicating the value of your product or service is a key aspect of marketing.
The Four P's of marketing include identifying and developing your product, determining its
price, figuring out placement in order to reach customers, and developing a promotional
strategy.
a marketing plan is an important way to begin forming this strategy for
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40
reaching customers and encouraging them to buy.
It is hypothesized that more entrepreneurial firms will also be more marketing oriented. Both
orientations represent strategic responses to the turbulent environments faced by firms today.
Further, marketing provides an effective vehicle for achieving entrepreneurship within the
corporation. As some have argued, marketing is the home for the entrepreneurial process. As
a process, a firm's entrepreneurial orientation has three key dimensions: innovativeness, risk
taking, and proactiveness. As such, it does not just apply to start-up ventures, but is an
orientation that is applicable to organizations of any size. A firm's marketing orientation, on
the other hand, refers to the size and consistency of its investment in marketing activities and
people, and includes the firm's adoption of the marketing concept. Entrepreneurial marketing
is a term which is receiving increasing use. It essentially encompasses two very distinct areas
of management: marketing and entrepreneurship. Several overlaps between these two
disciplines have recently become obvious. Empirical evidence suggests that a significant
relationship exists between an enterprises marketing and entrepreneurial orientations exists,
both widely being responsible for corporate success.
Marketing on Shoe String: Shoe String is a slang term used to describe a small amount of
money that is considered to be inadequate for its intended purpose. A shoestring can be used
in a number of idioms, such as: "The Company financed that last project on a shoestring," or
"Jim is living off of a shoestring budget." Although a shoestring budget is considered
inadequate, it may just be enough for an individual to live on or for a company to profit from
a project. For companies, a particular project's return on investment
would be much greater, due to the lower initial cost.
The prospect of marketing your business can be
overwhelming, especially when you are a small business with an
even smaller budget. The good news is that marketing doesnt have
to cost thousands or even hundreds of dollars.
Investing in Shoestring Marketing has been the best thing whatve done for my business in a
long time. There are so many ideas to harvest. The classes are priceless, and the whole
approach is can do, get it done, and very simple. In todays internet and social media age,
there are now more low-cost marketing options than ever before. Not only is it possible, but
absolutely doable to substantially grow your small business on a shoestring budget.
So, lets get in the right frame of mind so that you can begin the process of building a
thriving small business without spending a dime on marketing.
Here
are|some
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41 Shoestring Marketing tips that will change your small business:
Identify your Competitors: No matter what small business youre operating, you need to
know who you are competing against. You cant just hide your head in the sand and pretend
that they dont exist. They do. And theyre everywhere. Your prospects are certainly
searching for your competitors, so you might as well know who they are as well. But most
importantly, its virtually impossible to offer a unique solution to your prospects if you dont
know exactly what your competitors are offering them.
Uncover a Problem: Once you identify your top competitors, you can figure out what
problems they arent addressing. No matter how competitive the industry, companies cant be
all things to all people. Even Fortune 500 Companies need to pick and choose what problems
they will address. Theres always a gap. Its your job to find that gap. Luckily, its a pretty
simple task that just takes some time. But, its one of those non-negotiable.
Pinpoint the Solution: Once youve uncovered a problem that needs fixing, then you need
to offer the perfect solution. Ideally the solution should be simple, straight-forward, and
improve your prospects lives. It should make things easier, faster, or better for them.
If the solution doesnt make their lives better, then you need to find a different solution.
People purchase products and services because it improves their lives.
Identify Your Ideal Customer: Even if youve created the most mind-blowing incredible
product or service, everyone will not be interested. Lets imagine that you hold the patent on
a formula that stops male pattern baldness. Children wont be interested. Women wont be
interested. And many bald men wont be interested because they either love the bald look
or are super secure with their baldness. So, you need to figure out exactly who is interested
in what you are selling. And then, everything that you do should be personalized for them.
Mass marketing doesnt work in todays business environment.
Not only does it force you to water down your marketing message to please the masses, but
its much too expensive for the shoestring marketer. Discover What Makes You Shine:
Youve identified your competitors, uncovered a problem, found the solution, and pinpointed
your ideal customer. But it cant stop there. Take some time to create your Unique Selling
Proposition (USP) a statement that communicates to your prospects why you are different
and why they should do business with you. Your unique difference should be everywhere. It
should be on your website, business cards, invoices, and social media accounts. No matter
where your prospects go, your solution should be front and center.
Put Together a Simple Marketing Process: Whether you call it a marketing funnel,
marketing system, or inbound marketing, its all the same idea. There should be a simple
process that your prospects go through as they move from a prospect, to a lead, and finally a
customer. This usually includes bringing them back to your website where they can learn
more about you. If they like what they see, there should be a simple way for them to give
you their information in exchange for a free offer. Finally, you should continue to send them
valuable
until they just cant live without you. Thats when they become a happy
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client or customer.
Communicate More: Believe it or not, you really cant over-communicate with your
prospects. In fact, research suggests that its better not to communicate at all, then to send out
a once a year newsletter or a Tweet once a month. So, communicate often with your
prospects and customer through email, social media, and even the phone.
Flaunt Your Expertise: Of course, theres a fine line between an expert and a loudmouth
braggart. Braggarts just tell everyone that they are experts. Theres really no substance
behind their claims. On the other hand, experts offer proof. They create educational content,
they offer helpful advice, and theyre always knowledgeable about the latest trends in their
industry. So, share your expert tips and tricks with your audience.
Create Awesome Content: Youve certainly heard that content is king. Fair enough. But,
you cant just create subpar content and put it out there for the world to see. It will just float
around forever on the internet unnoticed. The phrase should be, great content is king. It
doesnt matter if the content is a blog post, article, podcast, video, or quiz. All that matters is
that it is good. Really, really good.
Get Visible: Since your prospects are exposed to over 4,000 ads every single day, you need
to ensure that your small business is utilizing as many marketing platforms as possible.
Research suggests that prospects need to encounter your small business between seven and
twelve times before they are ready to purchase. So, put yourself in front of your target
market over and over again.
Create a Marketing Calendar: Marketing is much like breathing. Its the life of your small
business and should be a regular part of your daily business activities. Dont just do
marketing when you feel like it. Chances are that youll never feel like it.
Be Patient: If your marketing is going to eventually take hold, then you need to make a
strong commitment to see it through until it sticks. Dont give up in the early stages. The
fruits of your marketing labors dont happen overnight. You need to plant your marketing
seeds and tend to them regularly before your marketing garden blooms.
Genius is nothing but a great aptitude for patience. George-Louis de Buffon
Get Creative: You need to think outside of that small little box and shake things up. You
cant be like everyone else. You cant do things like everyone else. Even though blending in
with the crowd is safe and simple, its not going to work in the business world. If youre
going to make it, then youre going to have to do things differently. And, sure, its scary to
take the opposite path. And sometimes that path wont lead you anywhere. If you dont have
money to pay someone else to do your marketing, then you need to be resourceful and
innovative.
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Keep Things Simple: If youre sales process, marketing materials or any other part of your
business is too complicated; your customers will become confused. Everything should be as
simple as possible. Not simplistic, but simple. Confused customers dont buy.
Everything should be made as simple as possible, but not simpler. Albert Einstein
Create Relationships: Create real relationships with your prospects and customers. Answer
their questions, solve their problems, and help them if theyre stuck. Your prospects want to
know that theres a real person in front of your small business. When you invest in people,
you also create trust. And at the end of the day, people buy from those whom they like and
trust.
Love Your Customers: How many times have you
purchased a product or service and never heard from the
company again? Its such a common mistake, but so simple
to solve!
Your current customers are why you are in business. If they
werent paying you, you wouldnt exist. So, go out of your
way for them. Send them a welcome email. Give them a
call. Write them a thank you note. The crazy thing is that it
doesnt take much for a customer to feel loved. And best of
all, if you love your customers, they will love you right
back.
Increase the Lifetime Value of Your Customers: If you treat your customers well, your
business will flourish. Did you know that over 20% of your existing customers will purchase
from you again?
So, create additional ways for them to make purchases. You can let them know about other
products or services, or enroll them in a monthly membership program.
Ask your Customers for Referrals and Testimonials: Sure, you can always talk about why
your company is the best thing since sliced bread, but of course youre going to think that
way. But if your customers talk about your merits, well thats a whole different ball game.
However, no matter how much your customers love and adore you, theyre probably not
going to just send you an unsolicited testimonial or refer you to their best friend.
If you want extra business a lot of extra business then youre going to need to ask. And
theres no need to worry. Youre satisfied customers are happy to send business your way.
Once you master the art of asking for referrals and testimonials, youll wonder why you
waited so long.
Track Your Results: Its essential to your overall survival that you have a clear
understanding about what works and what doesnt work when it comes to your marketing.
And, unfortunately, some of what you do will not work, you need to get rid of it fast.
Be Page
Flexible:
| 44 Things change quickly and you must be willing to adapt. When the next great
marketing platform emerges, be willing to jump on board and embrace it with excitement. If
you are a flexible marketer, youre always miles ahead of your competition.
In Conclusion: So, these are the effective Shoestring Marketing Tips that will literally
transform your small business from just getting by to flourishing. And, the best part of
all is that you can do it all on a shoestring marketing budget.
MERCHANDISING DISPLAY AND STOREFRONT: Merchandising Display is

purely aesthetics of science and it is the backbone of retail industry. Visual Merchandising
plays a highly major role in retail industry. However the merchandise hardly sells in retails
where identical merchandise is flooded in the market. Visual merchandising is a silent selling
technique that helps to reduce the employee mix and increase per square feet returns and can
further helps in reducing marketing budgets. The activity and profession consists of
developing the floor plans and three-dimensional displays in order to maximize sales.
Merchandising principles operate under the assumptions that the more effectively you
display and present your merchandise, the more likely consumers are to buy it.
Merchandising theories target signage, packaging, promotions, advertising, location of
displays and the physical characteristics of your presentation. The factors that go into your
merchandising decisions should be based on your market analysis.
Placement by Pricing: One merchandising theory holds that when consumers are drawn to a
product in a retail environment based on its price, they are more likely to see -- and buy -nearby items. For example, if you run a sale on a staple such as bread, you could place
pastries and cakes nearby that carry a higher margin, reducing your loss on the breads price
reduction and increasing overall profits. Pricing also is used in advertising when a popular
item is used as a loss leader. Youre willing to take the hit on losing profit on one item, in
the hopes that you can upgrade the customers once they enter the store.
Cross Merchandising: Cross merchandising is similar to pricing placement, but it doesnt
rely on using sales or low prices to increase profits. Instead, the theory is that when you
place like items together, customers are more likely to pick up additional, related items to go
with their original purchase. According to Reference for Business, for example, you might
locate a selection of wine near a cheese display and provide consumers with information
about which wine goes best with which cheese. Consumers are intrigued with the
information and may increase their total ticket price, putting your merchandising theory into
action.
Line of Sight: A traditional theory of merchandising is that customers buy what they can see
and they tend to follow similar patterns in how they approach a store and its products. If you
watch your customers enter your store, for example, they typically will turn in the same
direction
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45 follow the same line of sight throughout the establishment. Its in that line of
sight that you want to place your most pleasing, and higher-priced items. Seasonal products
typically are placed within the first opening line of sight because they are popular. The same
merchandising theory applies to online shoppers who tend to read a page from upper left to
lower right. Popular, higher-priced items should be placed within the top left banner of a
page to get the most traction.
Themed Environments: Modern merchandising theory embraces a more total store concept
and relies heavily on company themes and customer experiences as much, if not more, than
single displays and attractive windows. Instead, the theory holds that when customers are
involved with the theme in the store, whether it offers a childs wonderland or an antique
atmosphere, they will buy more. The attraction to the store and its merchandise is the
experience as much as it is carrying out the purchased items. Consumers drawn to an inviting
environment are tempted to spend. Instead of relying on a strong window, stores embracing
the overall merchandising theme use open entryways to lure traffic into their places of
business and captivate customers with displays that enrich the themed concept. A few
examples of popular themed stores that paved the way are Disney stores, Hard Rock Cafe
shops and Ralph Lauren boutiques.
STOREFRONT: Visual merchandising and displays are important promotional strategies to

sell products and services, attract potential customers, and create a desired business image.
Visual merchandising encompasses all the visual elements of the selling environment.
Display relates only to those visual and artistic elements that present the product to a target
group of customers. Retail storefronts give you access to consumers, and can convey what
your brand and products are all about to the general public. While there is no "right" or
"wrong" type of storefront, what could work best for you may vary depending on how much
you want to spend, what type of customer you're targeting and how collaborative you want
the selling process to be.
A retail storefront can be a valuable tool for marketing your business because customers are
able to see and handle your inventory in person, which can lead to higher sales. Also, for
many businesses, a storefront can be the first impression that new customers have of a brand.
Poor strategy behind a storefront may result in decreased sales due to customers who may
choose to shop at other, competing stores. For example, ill-planned decorating such as poor
lighting, haphazard inventory or product placement on your sales floor, or foul smells may
turn potential customers away from your store. First impressions can also extend to digital
storefronts.
BUSINESS PLAN DEVELOPMENT: A business plan is an essential road map for

business success, but few small businesses ever complete a plan due to over-complicated
approaches that entail too much theory, writing and detail. The importance and advantages of
a business plan are rarely recognized and the strategic relevance such documents can play in
directing a business is very much undervalued. A good business plan should be an honest and
extraordinary document, specific to the business that can be used as a living action plan.
If planned,
Page | 46approached and executed correctly, it can serve as a vehicle to success. In a
business plan the definition of success is of course open to anything at all! Any time is the
right time to prepare a business plan. It is most effective at the innovation stage of a business,
but can be used throughout the life cycle of a business. A business has different needs, risks,
rewards, possibilities and challenges at
each stage of the lifecycle; hence the
business plan should accommodate all
of these and be used as a dynamic
document that should be regularly
maintained, updated and developed.
Its always necessary to objectively
evaluate your business this is
daunting to even the most profitable
and successful of business owners.
Generating a business plan would
assist to determine the feasibility of a
business, or at innovation stage, a
business idea. A business plan will
give a new business the best possible
chance of survival. In most instances,
financial institutions or investors will
insist on seeing a business plan.
Therefore, it becomes a requirement in
order to secure external funding. Key employees can be measured according to the outcomes
and achievements in terms of the business plan in order to ensure movement and to ensure
that the strategic vision of the business is being achieved.
The business plan should be well drafted, dynamic, realistic, specific and measurable. It
should clarify the mission and vision of the business; it will also facilitate growth,
development of products, identification and mitigation of risks and many other factors that
can benefit the business. Communication and involvement are key to receiving commitment
from key employees and vital to ensuring that the strategic direction of the business is
maintained.
The Organization Plan: (Operating Plan) The organizational and operating
plan describes how you will structure your company and how you will
actually carry out everything you present elsewhere in your business
plan. Without an execution strategy, the rest of your plan is meaningless.
Like the marketing plan, your operations plan is essential to the success
of your business, and will be important not just to financiers, but also to
you, to management and to your employees. You can't take for granted
that anyone, including you, understands exactly how to run your business
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a day-to-day
basis unless you've thought it through and made your
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expectations clear.
The organization plan must include location of your organization, describe
the area in which it works - is it just your country
territory or maybe its reach is beyond borders.
In the plan, introduce an organizational
structure of your organization, present
professional experience and achievements
of people who are to manage the project;
this will authenticate your intentions.
Present the employment plan for the next
few years. How many people you are going to
hire and with what skills. Try to answer more
general, but extremely important questions:
Where had the members of the team worked previously? How much
experience in this or other industry do your colleagues have? Is their
previous experience relevant to the type of the venture you want to
undertake? What has been achieved? What are the achievements of the
team? What is the opinion of the members of the team in the industry?
Are they capable of accurately assessing the chances of the success of
the whole project? What knowledge, skills or special qualifications are
they able to provide? How much are they willing to devote to this project?
What is the motivation to act for the individual team members? So all
these and such questions should be answered to have a effective
organizational business operational plan.
The Management Plan: Management planning is the process of

assessing an organization's goals and creating a realistic, detailed plan of
action for meeting those goals. Much like writing a business plan, a
management plan takes into consideration short- and long-term corporate
strategies. The basic steps in the management planning process involve
creating a road map that outlines each task the company must
accomplish to meet its overall objectives. An effective management planning
process includes evaluating long-term corporate objectives. In Entrepreneurial perspective
following are the Basic Steps in the Management Planning Process
Establish
Goals: The first step of the management planning process is to
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identify specific company goals. This portion of the planning process
should include a detailed overview of each goal, including the reason for
its selection and the anticipated outcomes of goal-related projects. Where
possible, objectives should be described in quantitative or qualitative
terms. An example of a goal is to raise profits by 25 percent over a 12month period.
Identify Resources: Each goal should have financial and human resources
projections associated with its completion. For example, a management
plan may identify how many sales people it will require and how much it
will cost to meet the goal of increasing sales by 25 percent.
Establish Goal-Related Tasks: Each goal should have tasks or projects

associated with its achievement. For example, if a goal is to raise profits
by 25 percent, a manager will need to outline the tasks required to meet
that objective. Examples of tasks might include increasing the sales staff
or developing advanced sales training techniques.
Prioritize Goals and Tasks: Prioritizing goals and tasks is about ordering
objectives in terms of their importance. The tasks deemed most
important will theoretically be approached and completed first. The
prioritizing process may also reflect steps necessary in completing a task
or achieving a goal. For example, if a goal is to increase sales by 25
percent and an associated task is to increase sales staff, the company will
need to complete the steps toward achieving that objective in
chronological order.
Create Assignments and Timelines: As the company prioritizes projects, it

must establish timelines for completing associated tasks and assign
individuals to complete them. This portion of the management planning
process should consider the abilities of staff members and the time
necessary to realistically complete assignments. For example, the sales
manager
in this scenario may be given monthly earning quotas to stay on
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track for the goal of increasing sales by 25 percent.
Establish Evaluation Methods: A management planning process should

include a strategy for evaluating the progress toward goal completion
throughout an established time period. One way to do this is through
requesting a monthly progress report from department heads.
Identify Alternative Courses of Action: Even the best-laid plans can

sometimes be thrown off track by unanticipated events. A management
plan should include a contingency plan if certain aspects of the master
plan prove to be unattainable. Alternative courses of action can be
incorporated into each segment of the planning process, or for the plan in
its entirety.
Many entrepreneurs are intimidated by the idea of writing a business plan. The
idea of writing such a detailed document may remind you of the dreaded days
of school, or may just feel that you can better utilize your time elsewhere. But,
the business plan is a strong business tool, especially for the small business
owner. It provides you with every detail about your business and allows you to
review the hard, clear facts that are needed to make strong and successful
business decisions, even if it means starting the business over.
Marketing Plan: A marketing plan is a part of an overall business plan.

Solid marketing strategy is the foundation of a well-written marketing
plan.
A marketing plan is a comprehensive document or blueprint that outlines
a company's advertising and marketing efforts for the coming year. It
describes business activities involved in accomplishing specific marketing
objectives within a set time frame. A marketing plan also includes a
description of the current marketing position of a business, a discussion of
the target market and a description of the marketing mix that a business
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to achieve their marketing goals. A marketing plan has a formal
structure, but can be used as a formal or informal document which makes
it very flexible. It contains some historical data, future predictions, and
methods or strategies to achieve the marketing objectives. Marketing
plans start with the identification of customer needs through a market
research and how the business can satisfy these needs while generating
an acceptable level of return. This includes processes such as market
situation analysis, action programs, budgets, sales forecasts, strategies
and projected financial statements. A marketing plan can also be
described as a technique that helps a business to decide on the best use
of its resources to achieve corporate objectives. It can also contain a full
analysis of the strengths and weaknesses of a company, its organization
and its products.
Operation and production Plan:

An Operational Plan is a detailed plan used to provide a clear picture of
how a team, section or department will contribute to the achievement of
the organisation's strategic goals. Operational planning is the process of
planning strategic goals and objectives to tactical goals and objectives. It
describes milestones, conditions for success and explains how, or what
portion of, a strategic plan will be put into operation during a given
operational period, in the case of commercial application, a fiscal year or
another given budgetary term. An operational plan is the basis for, and
justification of an annual operating budget request. Therefore, a five-year
strategic plan would typically require five operational plans funded by five
operating budgets.
Operational plans should establish the activities and budgets for each
part of the organization for the next 1 3 years. They link the strategic
plan with the activities the organization will deliver and the resources
required to deliver them.
An operational plan draws directly from agency and program strategic
plans to describe agency and program missions and goals, program
objectives, and program activities. Like a strategic plan, an operational
plan addresses four questions:
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Where
| 51 are we now?
Where do we want to be?
How do we get there?
How do we measure our progress?
The operations plan is both the first and the last step in preparing an
operating budget request. As the first step, the operations plan provides a
plan for resource allocation; as the last step, the OP may be modified to
reflect policy decisions or financial changes made during the budget
development process.
Operational plans should be prepared by the people who will be involved
in implementation. There is often a need for significant crossdepartmental dialogue as plans created by one part of the organization
inevitably have implications for other parts.
Operational plans should contain:
clear objectives
activities to be delivered
quality standards
desired outcomes
staffing and resource requirements
implementation timetables
a process for monitoring progress
Production Plan: The administrative process that takes place within a

manufacturing business and which involves making sure that sufficient
raw materials, staff and other necessary items are procured and ready to
create finished products according to the schedule specified. A typical
large
manufacturing
business engaging in production planning will aim to
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maximize profitability while maintaining a satisfied consumer base. While
the production is defined as the processes and methods used to
transform tangible inputs (raw materials, semi-finished goods,
subassemblies) and intangible inputs (ideas, information, knowledge) into
goods or services. Resources are used in this process to create an output
that is suitable for use or has exchange value.
So
Production
planning is
the planning of production and manufacturing modules in a company or
industry. It utilizes the resource of activities of employees,
materials and production capacity, in order to serve different customers.
Different types of production methods, such as single item
manufacturing, batch
production, mass
production, continuous
production etc. have their own type of production planning. Production
planning can be combined with production control into production
planning and control, or it can be combined and or integrated
into enterprise resource planning. Production planning is used in
companies in several different industries, including agriculture, industry,
amusement industry, etc.
Production planning is a plan for the future production, in which the
facilities needed are determined and arranged. A production planning is
made periodically for a specific time period, called the planning horizon. It
can comprise the following activities:
Determination of the required product mix and factory load to

satisfy customers needs.
Matching the required level of production to the existing resources.
Scheduling and choosing the actual work to be started in the

manufacturing facility"
Setting up and delivering production orders to production facilities.
In order to develop production plans, the production planner or production

planning department needs to work closely together with the marketing
department and sales department. They can provide sales forecasts, or a
listing of customer orders."[6] The "work is usually selected from a variety
of product
Page | 53 types which may require different resources and serve different
customers. Therefore, the selection must optimize customer-independent
performance measures such as cycle time and customer-dependent
performance measures such as on-time delivery.
FINANCIAL PLAN: A financial plan is a comprehensive evaluation of an

individual's current pay and future financial state by using current known
variables to predict future income, asset values and withdrawal
plans. This often includes a budget which organizes an individual's
finances and sometimes includes a series of steps or specific goals for
spending and saving in the future. This plan allocates future income to
various types of expenses, such as rent or utilities, and also reserves
some income for short-term and long-term savings. A financial plan is
sometimes referred to as an investment plan, but in personal finance a
financial plan can focus on other specific areas such as risk management,
estates, college, or retirement.
In business, a financial plan can refer to the three primary financial
statements (balance sheet, income statement, and cash flow statement)
created within a business plan. Financial forecast or financial plan can
also refer to an annual projection of income and expenses for a company,
division or department. A financial plan can also be an estimation of cash
needs and a decision on how to raise the cash, such as through borrowing
or issuing additional shares in a company.
Completing a financial plan is the last step in writing a business plan. The
plan includes a projected profit-and-loss statement for the next three to
five years and a cash flow statement. A balance sheet is sometimes
included as well as a break-even analysis. The financial plan is important,
because it establishes the financial goals of the company. That is not the
only reason it's important.
Determine the Feasibility of the Company: When you begin to
contemplate starting a business, you assume it will be successful, but
many entrepreneurs find out after launching the company that success
can be elusive. Creating a business plan with the accompanying financial
plan is really a feasibility study of what it takes to be successful. If the
resources
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market is too unstable at the moment, the financial plan will make that
clear. You may find that the price you plan on charging for your products
or services is materially higher than what your competitors are charging.
Or perhaps the price is fine, but your manufacturing costs are too high
and it will be difficult to earn a profit.
Variance Analysis: Monitoring the actual results against the line-item
budget in the financial plan gives you the opportunity to take whatever
steps are necessary to get back on track. For example, if you're not
reaching the projected revenue, either the projections are wrong or the
marketing program is not as effective as you thought. Knowing the
assumptions behind the projections is important to find out why the
projections have been missed. In other words, you need to know what you
did right and what went wrong.
Forecast Financing Requirements: Starting a business requires money.
The forecast financial plan demonstrates how much money is required
and when. If you don't have the required amount of funding to start the
business, you may have to begin on the smaller scale your funding
allows. The financial plan also shows you where a shortfall will occur.
Adjust the revenue and expense projections to avoid the shortfall or make
sure you have other funds available, such as your own savings or a loan
to cover any cash deficit.
Obtain Funding: Investors and lenders request to see the entrepreneur's
business plan, including the financial plan with projections and
assumptions behind the forecast. If the financial plan is unrealistic, a
common mistake with entrepreneurs, the loan or investment will not be
forthcoming. Another reason the financial plan is important is because it
lets you know what type of financing would be more appropriate.
OVERALL GROWTH: Most small companies have plans to grow their

business and increase sales and profits. However, there are certain
methods companies must use for implementing a growth strategy. The
method a company uses to expand its business is largely contingent upon
its financial situation, the competition and even government regulation.
Some
growth strategies in business include market penetration,
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market expansion, product expansion, diversification and acquisition.
Market Penetration: One growth strategy in business is market
penetration. A small company uses a market penetration strategy when it
decides to market existing products within the same market it has been
using. The only way to grow using existing products and markets is to
increase market share, according to the article "Growth Strategies" at
gaebler.com. Market share is the percent of unit and dollar sales a
company holds within a certain market vs. all other competitors. One way
to increase market share is by lowering prices. For example, in markets
where there is little differentiation among products, a lower price may
help a company increase its share of the market.
Market Expansion: A market expansion growth strategy, often called
market development, entails selling current products in a new market.
There several reasons why a company may consider a market expansion
strategy. First, the competition may be such that there is no room for
growth within the current market. If a business does not find new markets
for its products, it cannot increase sales or profits. A small company may
also use a market expansion strategy if it finds new uses for its product.
For example, a small soap distributor that sells to retail stores may
discover that factory workers also use its product.
Product Expansion: A small company may also expand its product line or
add new features to increase its sales and profits. When small companies
employ a product expansion strategy, also known as product
development, they continue selling within the existing market. A product
expansion growth strategy often works well when technology starts to
change. A small company may also be forced to add new products as
older ones become outmoded.
Diversification: Growth strategies in business also include diversification,
where a small company will sell new products to new markets. This type
of strategy can be very risky, according to gaebler.com. A small company
will need to plan carefully when using a diversification growth strategy.
Marketing research is essential because a company will need to
determine if consumers in the new market will potentially like the new
products.
Acquisition: Growth strategies in business can also include an acquisition.
In acquisition, a company purchases another company to expand its
operations. A small company may use this type of strategy to expand its
product line and enter new markets. An acquisition growth strategy can
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risky,
but not as risky as a diversification strategy. One reason is that
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the products and market are already established. A company must know
exactly what it wants to achieve when using an acquisition strategy,
mainly because of the significant investment required to implement it.
LABOUR:
Factors of production is an economic term that describes the inputs that
are used in the production of goods or services in order to make an
economic profit. The factors of production include land, labor, capital and
entrepreneurship. These production factors are also known as
management, machines, materials and labor, and knowledge has recently
been talked about as a potential new factor of production.
Human efforts done mentally or physically with the aim of earning income
is known as labour. Thus, labour is a physical or mental effort of human
being in the process of production. The compensation given to labourers
in return for their productive work is called wages. Land is a passive
factor whereas labour is an active factor of production. Actually, it is
labour which in cooperation with land makes production possible. Land
and labour are also known as primary factors of production as their
supplies are determined more or less outside the economic system itself.
Skills Requirements: Skilled labor is the specialized part of the labor force
with advanced education. Examples of skilled labor include physicians,
plumbers, attorneys, engineers, scientists, builders, architects and
professors. Skilled labor is a segment of the work force with a high skill
level that creates significant economic value through the work performed
human capital. Skilled labor is generally characterized by high education
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expertise
levels and high wages. Skilled labor involves complicated
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tasks that require specific skill sets, education, training and experience,
and may involve abstract thinking. Access to skilled labour is key for
innovation in firms: skilled labour can contribute to innovation and growth
by generating new knowledge, developing incremental innovations,
supporting firms in the identification of business opportunities, helping
companies adapt to changing environments, generating spillovers within
the organization and adding to social capital.
Skilled Labour Affect Innovation in Firms:
Skilled labour can contribute to innovation and growth in firms by:

Generating new knowledge that can be used to create and
introduce innovations. This also includes adopting and adapting
existing ideas to develop incremental innovations based on modifications
and improvements to existing products or services. Highly skilled labour
has greater absorptive capacities as well as a greater ability to
understand how things work and how ideas or technologies can be
improved or applied to other areas.
Helping
firms
in
the
identification
of
business
opportunities. Skilled labour can efficiently capture, process and
synthesize disparate information, playing a key role in identifying new
business opportunities.
Helping organizations adapt to changing environments through a
capacity to learn. Skilled workers have a greater ability to learn new
skills and adapt to changing circumstances. This ability can be
particularly beneficial to innovative companies, which typically face rapid
changes in technologies and competition.
Generating spillovers within the company. Skilled workers diffuse
their knowledge throughout the workplace. Through their explicit or
implicit actions as role models, they can spur innovation by spreading
ideas and raising the competencies of co-workers. Also, by interacting
with other aspects of the innovation process, such as capital investment,
highly
workers can spur innovation and contribute significantly to
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competitiveness and expansion in firms.
Adding to social capital. Higher skill levels within a company may
contribute to building trust with potential partners, such as venture
capital firms, business angels and customers. Such skill levels can signal
the quality of a business project, an important consideration when
innovative products or services are still under development.
SKILLED LABOUR HIRE CAN BENEFIT YOUR BUSINESS: Among the four
factors of production, labour is arguably the most important and the
hardest resource to acquire. A quality workforce can ensure a business
succeeds even with a limited number of resources, while a mediocre
workforce can make even the most resource-endowed company fail.
Your business will benefit in the following ways from using skilled labour
hire:
Reduced costs. Labour hire will effectively eliminate most of the stages
in the hiring process. Your company will not need to worry about
advertising for positions, CV evaluation, interviewing candidates or the
other things an internal recruiter would have to do when looking for a new
hire. All these will be covered by the labour agency, leaving your internal
departments with only the job of identifying the vacant positions and
preparing the job description. Additionally, labour hire will even-out labour
supply to match fluctuating workloads. This means that you dont have to
keep extra permanent employees on your payroll to help out when
workloads increase which would cost your business a lot of money. With
the simplified hiring process and quick worker placement, you can
maintain a lean workforce and have extra hands come in as temps when
needed.
Reduced downtime. A single case of employee absence can wreak
havoc in a companys day-to-day operations, greatly affecting business
efficiency. Employee absences due to illness, leave or unexpected
departures can be quickly covered by skilled labour hire to reduce the
impact the situation would have on production. Employees provided have
already worked similar jobs at similar organisations and have the
necessary know-how to hit the ground running.
Expertise
Page | 59 and experience. Because workers provided by the labour
hire firm have generally already worked for several companies within your
industry, theyll bring the wealth of knowledge they have gained from
previous assignments to your business, providing a fresh eye that could
help improve operations. For one-off projects that you lack the in-house
skills and expertise to perform, skilled labour hire can be utilised to bring
in the skill set required without having to train your staff on a skill set that
will not be utilised again in the future. The large skill pool of a labour hire
firm will also ensure that you can get a large number of employees with
different skills provided at a moments notice.
Specialised recruitment. Since sourcing for labour is what labour hire
firms are specialised in, their labour recruitment process is well developed
with a deep understanding of the labour market within various fields and
industries. This ensures that workers provided are competent and will
successfully add value to your operations with significantly reduced
chances of a mismatch. With their large networks and worker database,
you can rest assured that your skill requirements will be catered for
regardless of the industrial niche you occupy.
Flexibility. The happiness of your employees directly affects their
productivity. Helping them maintain a good work-life balance is, therefore,
important. Temps from a labour hire company can be used to relieve
permanent employees so that they can get the rest they need and attend
to other personal matters.
COMPENSATION PLAN: The term compensation refers to the
combination of wages, salaries and benefits an employee receives in
exchange for work. Compensation may include hourly wages or an annual
salary, plus bonus payments, incentives and benefits, such as group
health care coverage, short-term disability insurance and contributions to
a retirement savings account. A total compensation package can have
several components. An employee compensation plan collectively refers
to all the components in addition to the manner in which the
compensation is paid and for what purpose employees receive case
bonuses, salary increases and incentives. Workers' compensation is a
form of insurance providing wage replacement and medical benefits to
employees injured in the course of employment in exchange for
mandatory
Page | 60 relinquishment of the employee's right to sue his or her
employer for the tort of negligence.
Hourly Wage: Employees classified as non-exempt receive what
employers usually call wages, which are calculated on an hourly basis and
require overtime payment for work in excess of 40 hours per week.
Overtime is one and a half times the hourly rate. Employees who have a
collective bargaining agreement with management -- often called a labor
union contract -- have wages set by contract terms for a certain period.
For example, a sample labor union contract may require employers to pay
master plumbers, licensed plumbers and apprentice plumbers hourly
wages of $19.75, $17.95 and $15.50, respectively, pursuant to the terms
of a collective bargaining agreement.
Annual Salary: Although there are salaried employees who are classified
as non-exempt and, therefore, entitled to overtime pay, the term salary
generally refers to an annual salary the employee receives or a method of
employee compensation that does not require overtime pay. For instance,
the reference to a salaried employee is generally used to describe a
worker who does not receive overtime pay. An example of an employee
compensation plan for salary levels is one based on a salary scale that
considers education, years of professional experience, credentials and
qualifications such as job competency and functional expertise. Salary
levels such as the wage tables published annually by the U.S. Office of
Personnel Management contain annual wages, as well as increases based
on step and grade promotions for federal government employees paid
according the General Services and Senior Executive Service wage scales.
Retirement Savings: A sample compensation scenario gives employees
the opportunity to participate in the employer-sponsored 401k plan.
Employees designate pre-tax contributions to be deducted from each
paycheck. For employees who contribute 5 percent of their gross salary or
wages, the company matches 50 percent of the employees contribution.
In other words, the employers matching contributions equal 2.5 percent
of the employees gross salary. Vesting refers to the amount of time
before which the employers contribution is fully available to the
employee. Vesting periods range anywhere from one to five years. A fiveyear vesting period means that for the first year after the employer
makes its contribution to the employees 401k plan, 20 percent of the
money actually belongs to the employee. In the second year, 40 percent
belongs to the employee, and in subsequent years, 60, 80 and 100
percent of the employers contributions become vested and available to
the employee. If the employee leaves his job before completing five
years,
Page he
| 61 forfeits the appropriate portion of the non-vested employers
contributions.
Raises, Bonuses and Incentives: The employer's performance
management system is usually what drives a compensation plan's salary
increases. Employees receive annual raises based on performance
ranking and ratings. For example, an outstanding performance appraisal
could result in a 5 percent salary increase. Sample employee bonus and
incentive plans include cash incentives based on a percentage of the
employee's gross salary or an employee's share based on a discretionary
pool of funds designated for distribution to employees whose
performance contributed to business success. Many executive bonuses
and incentives are tied to improvement of the bottom line or even
increases in the value of shares for publicly held companies.
Group Health Benefits: A total compensation plan may include group
health-care benefits. Many employers pay a sizeable portion of the total
monthly premium, leaving a portion of the premium to be deducted from
the employees pay. Premiums for employer-sponsored health care plans
are deducted from pre-tax income, which are gross earnings. Group
health coverage may include supplemental coverage for dental and vision
care as well. Some employers pay the total cost for short-term disability
insurance and offer coverage for long-term disability insurance as part of
an employees total compensation.
Importance of Compensation in the Workplace: Compensation can

include monetary and non-monetary components. Compensation often
includes an employees base salary and additional benefits, such as
health insurance, retirement plans and performance bonuses. The
compensation packages a business offers to employees affects the
companys recruitment rate, retention rate and employee satisfaction.
Several federal laws affect the compensation that businesses offer. A
business owner should understand the importance of compensation and
the prevailing laws to remain competitive in the market.
Recruitment: The compensation packages that businesses offer to
employees play an important role in the companys ability to attract top
talent as job candidates. Top-performing employees greatly impact the
competitiveness and productivity of a small business. The specific
components of an attractive compensation package vary per employee. A
high base salary may attract a top job candidate that is 20-something and
single, while a job candidate with a family may consider a flexible work
schedule
Page | 62 extremely important. According to John Rossheim of
Monster.com, recruiters should research a job candidate's current or prior
salary and benefits to get an idea of what is important to the candidate.
Motivation: Compensation often impacts an employees motivation and
job satisfaction, although it is not the only factor. According to an article
written by Mae Lon Ding of Personnel Systems Associates, compensation
systems positively impact a large percentage of workers' performances.
Many employees feel motivated to help their companies succeed if the
employer shares its profits with employees, such as with bonuses or
profit-sharing plans. The greatest impact of money on productivity and
performance is in jobs where performance is directly related to
compensation. For example, the knowledge of receiving a bonus after
achieving a certain sales quota will likely motivate a salesperson to
increase productivity.
Retention: Retaining productive employees is critical to running a
successful business. Retaining employees saves companies money in
training costs and helps maintain an efficient and knowledgeable
workforce. Health insurance and retirement packages are benefits that
many employees desire from their employers. Companies that offer these
benefits have a much better chance of retaining workers than businesses
that fail to offer benefit packages. Other ways to retain employees is
through regular promotions, which not only provide an employee with a
higher base salary, but also the ability to take on more responsibility in
the workplace.
Compensation Laws: Certain laws regulate the compensation and wages
small businesses must offer employees. The Fair Labor Standards Act
regulates the federal minimum wage, child labor, overtime wages and
equal pay. The Equal Pay Act prohibits employers from basing
compensation on an employees gender. Under the Equal Pay Act, a
company may still base compensation on seniority or merit. Managers of
small businesses must keep their companies in compliance with all laws.
Failing to comply with compensation laws can result in a company facing
penalties.
Performance Compensation Plan: An incentive-based form of

compensation
that
is
reserved
for hedge
fund
managers or
elite portfolio managers. The compensation will almost always be based
on Page
a percentage
of total assets managed, and will be paid out if
| 63
the portfolio manager delivers returns above a pre-specified level.
Compensation used to mean a fixed salary with annual increases. This
model rested upon employee demands to be paid based on the number of
hours worked and years of service. Today's compensation needs to reflect
the new contract between employers and employees where
performance is rewarded regardless of effort or tenure.
Pay-for-Performance ("PFP") systems tie compensation directly to specific
business goals and management objectives. To do this, companies must
deliver competitive pay for competitive levels of performance, pay above
market for exceptional performance, and reduced pay for poor
performance. To achieve this, companies must match measurable and
controllable performance targets to company objectives.
In PFP systems, employees compensation is composed of a fixed base
salary and a variable component. The most commonly used variable
components are:
Company equity (Phantom or actual) - the quantity and price to be
paid are typically based on a percentage of value added as
determined by the performance measurement system;
Bonuses - cash awards for extraordinary accomplishments or other
activity-related distributions;
Gain sharing - distribution of a portion of results realized, based on
performance versus plan.
These systems are designed to retain top-performing employees,
motivate the desired performance, and control costs. If a company wants
to pay for performance, it must define performance in very specific,
objective, quantifiable terms, measure it and track it.
So whether you are implementing a pay-for-performance plan for the first
time, or trying to improve the effectiveness of an existing plan, consider
these nine critical steps for a successful pay for performance plan:
1) Understand the companys overall business strategy. You must
gain a deep understanding of the strategic context that the plan is
intended to support. Review the companys mission, business goals and
objectives, the HR strategy, and the compensation philosophy. They are
thePage
foundation
of the companys management framework that the
| 64
incentive compensation plan will need to align with and reinforce.
2) Identify root causes of poor performance. What is driving the
need for improved performance, teamwork, or employee engagement?
Challenge whether you only have a pay problem, or are there other
factors that need to be addressed?
3) Identify the companys key strategic objectives. Specifically,
what do you want to improve: customer satisfaction, productivity, quality,
new products or process improvement? Assign different weights to these
objectives based on impact, importance, and your degree of confidence in
your ability to measure results.
4) Create an integrated set of financial and strategic
objectives. The goals must reflect a balance of financial results and the
key business drivers. Set a range of financial and strategic performance
levels and commensurate reward levels. Provide payout opportunities
that are consistent with the value of the performance and meaningful to
employees.
5) Define clear objectives for employees. Participants must have a
clear line of sight to the goal. They must understand the actionable
measures that they can impact that determine revenues, costs,
productivity, or profits.
6) Communicate the objectives. Notify employees of expectations
early in your goal-setting process. Allow time for managers and
employees to align business unit, team, and individual objectives with
company objectives.
7) Prepare to remain engaged. Expect this to be an ongoing and
iterative process. Refresh your plan each year based on business
conditions and updated goals and objectives. If this is your first pay-forperformance plan, start out by piloting a plan in a segment of your
business.
8)
Communicate
with
employees
on
all
aspects
of
performance. Use the pay-for-performance plan as one component of
your ongoing communications with employees. Provide ongoing feedback
to Page
all participants.
Use progress updates, recognition for both small and
| 65
large wins, and other reinforcements for results achieved.
9) Finally, remember the plan is not an end unto itself. A pay-forperformance plan is just one part of a companys management
framework. The more these programs and systems are synchronized and
integrated, the greater the likelihood that the companys overall vision
and business goals will be achieved. Consequently the more closely
aligned a pay-for-performance plan is with the management framework,
the more successful it can be in providing strategic support for achieving
your companys synchronized goals and objectives.
OPERATION AND PRODUCTION MANAGEMENT: The very essence

of any business is to cater needs of customer by providing services and
goods, and in process create value for customers and solve their
problems. Production and operations management talks about applying
business organization and management concepts in creation of goods and
services.
Production: Production is a scientific process which involves
transformation of raw material (input) into desired product or service
(output) by adding economic value. Production can broadly categorize
into following based on technique: Production through separation: It
involves desired output is achieved through separation or extraction from
raw materials. A classic example of separation or extraction is Oil into
various fuel products.
Production by modification or improvement: It involves change in
chemical and mechanical parameters of the raw material without altering
physical attributes of the raw material. Annealing process (heating at high
temperatures and then cooling), is example of production by modification
or improvement.
Production by assembly: Car production and computer are example of
production by assembly.
Page | 66
Importance of Production Function and Production Management:

Successful organizations have well defined and efficient line function and
support function. Production comes under the category of line function
which directly affects customer experience and there by future of
organization itself. Aim of production function is to add value to product or
service which will create a strong and long lasting customer relationship
or association. And this can be achieved by healthy and productive
association between Marketing and Production people. Marketing function
people are frontline representative of the company and provide insights
to real product needs of customers.
An effective planning and control on production parameters to achieve or
create value for customers is called production management.
Operations Management
As to deliver value for customers in products and services, it is essential
for the company to do the following:
1. Identify the customer needs and convert that into a specific product
or service (numbers of products required for specific period of time)
2. Based on product requirement do back-ward working to identify raw
material requirements
3. Engage internal and external vendors to create supply chain for raw
material and finished goods between vendor production facility
customers.
Operations management captures above identified 3 points.
Production Management v/s Operations Management: A high level
comparison which distinct production and operations management can be
done on following characteristics:
Output: Production management deals with manufacturing of
products like (computer, car, etc) while operations management
cover both products and services.
Usage
of Output: Products like computer/car are utilized over a
Page
| 67
period of time whereas services need to be consumed immediately
Classification of work: To produce products like computer/car

more of capital equipment and less labour are required while
services require more labour and lesser capital equipment.
Customer Contact: There is no participation of customer during
production whereas for services a constant contact with customer is
required.
Production management and operations management both are very
essential in meeting objective of an organization.
What to Produce, How to Produce: The Central problems of

what and how much to produce; how to produce and for whom to
produce are determined by the free price mechanism.
(i) What to Produce: Let us consider the first question: which
commodities are to be produced and in what quantities? The commodities
which do not command positive prices in the market would not be
produced. Therefore only those commodities with positive prices are to be
produced and in such a way that would clear the markets.
The quantity in which a commodity is to be produced is set at that level
where demand equals supply. If quality produced is more or less, then
there will be dis equilibrium in the market and price will fluctuate. Hence,
to maintain stable equilibrium price it becomes necessary to make
demand and supply equal. This rule is applicable for each commodity. In
this way, first central problem is solved.
(ii) How to Produce: In context of this it is: which techniques are to be
adopted? Technology means the correct proportion in which the different
factors of production are to be employed. There are two types of
techniques. A labour-intensive technique would employ relatively more
labour and less capital. On the other hand, capital- intensive technique
means more capital and less labour.
The choice of technique depends on the prices of the factors of
production. That is, if labour is cheap and capital is expensive, a labourintensive technique would be considered and vice-versa. The prices of
labour and capital are determined by the demand for and supply of labour
and capital respectively .In this way, the second problem will be solved.
(iii)
For| 68
Whom to Produce: The solution of this problem is very simple
Page
commodity can be consumed only by people who have more purchasing
power. Price mechanism determines the income of the workers, i.e.;
purchasing power. The purchasing power of the owner of capital is
determined in the same way. Thus, when the price of every commodity
and every factor of production are determined, the third problem will be
solved.
Quality Control Standards: Quality control standards is a process
through which a business seeks to ensure that product quality is
maintained or improved and manufacturing errors are reduced or
eliminated. Quality control requires the business to create an
environment in which both management and employees strive for
perfection. This is done by training personnel, creating benchmarks for
product quality, and testing products to check for statistically
significant variations. A major aspect of quality control is the
establishment of well-defined controls. These controls help standardize
both production and reactions to quality issues. Limiting room for error by
specifying which production activities are to be completed by which
personnel reduces the chance that employees will be involved in tasks for
which they do not have adequate training.
Quality control involves testing of units and determining if they are within
the specifications for the final product. The purpose of the testing is to
determine any needs for corrective actions in the manufacturing process.
Good quality control helps companies meet consumer demands for better
products. Quality testing involves each step of the manufacturing
process. Employees often begin with the testing of raw materials, pull
samples from along the manufacturing line and test the finished product.
Testing at the various stages of manufacturing helps identify where a
production problem is occurring and the remedial steps it requires to
prevent it in the future.
Quality Control Measures Depend on the Product: The quality control a
business uses is highly dependent on the product. In food and drug
manufacturing, quality control includes ensuring the product does not
make a consumer sick, so the company performs chemical and
microbiological testing of samples from the production line. Because the
appearance of prepared food affects consumer perception, the
manufacturers may prepare the product according to its package
directions for visual inspection. In the automobile manufacturing, quality
control
on the way that parts fit together and interact and
Page | focuses
69
ensuring engines operate smoothly and efficiently. In electronics, testing
might involve using meters that measure the flow of electricity.
The Role of Quality Control Inspectors: Quality control inspectors protect
the consumer from defective products and the company from damage to
its reputation due to inferior manufacturing processes. If the testing
process reveals issues with the product, the inspector has the option of
fixing the problem himself, returning the product for repairs or tagging
the product for rejection. When issues arise, the inspector notifies
supervisors and works with them to correct the problem.
Transportation Packaging and Shipping:

Transport or transportation is the movement of people, animals
and goods from one location to another. Modes of transport include air,
rail, road, water, cable, pipeline and space. The field can be divided
into infrastructure, vehicles and operations.
Transport
is
important
because it enables trade between persons, which is essential for the
development of civilizations.
Transport infrastructure consists of the fixed installations including roads,
railways, airways, waterways, canals and pipelines and terminals such
as airports, railway
stations,
bus
stations, warehouses,
trucking
terminals, refueling depots (including fueling docks and fuel stations)
and seaports. Terminals may be used both for interchange of passengers
and cargo and for maintenance.
Vehicles traveling on these networks may include automobiles, bicycles,
buses, trains,
trucks,
people, helicopters,
watercraft, spacecraft
and aircraft. Operations deal with the way the vehicles are operated, and
the procedures set for this purpose including financing, legalities and
policies. In the transport industry, operations and ownership of
infrastructure can be either public or private, depending on the country
and mode.
Packaging is a Processes (such as cleaning, drying, preserving)
and materials (such
as
glass,
metal,
paper
or paperboard, plastic) employed to contain, handle, protect, and/ or
transport an article. Role of
packaging
is
broadening
and
may
include functions such
as
to
attract
attention,
assist
in promotion,
provide machine identification (barcodes, etc.), impart
Page | 70
essential or additional information, and help in utilization. Packaging is
the technology of enclosing or protecting products for distribution,
storage, sale, and use. Packaging also refers to the process of designing,
evaluating, and producing packages. Packaging can be described as a
coordinated system of preparing goods for transport, warehousing,
logistics, sale, and end use. Packaging contains, protects, preserves,
transports, informs, and sells. In many countries it is fully integrated into
government, business, and institutional, industrial, and personal use.
Shipping is the process of transporting an item, usually through
the mail. Shipping is a very basic, common way of getting an item from
one place to another, or from one person to another.
Risk and Reward:

Risk in any endeavor is inevitable and before you decide to become an
entrepreneur, you fully need to understand the risks associated with
entrepreneurship and ensure that you are ready to handle them;
otherwise, it would be a waste of time to start something only to realize
later-on that you are not cutout for it. The risks associated with
entrepreneurship are discussed in this article to help you gain better
knowledge and understanding of what are at stake. This should facilitate
readiness on your part, and aid you in deciding whether you would really
want to become an entrepreneur or not.
Business Risks in Entrepreneurship: Among the many aspects of
entrepreneurship that are considered risky is the business itself. The
following are some of risk related to business:
Heavy losses: Entrepreneurs could suffer from heavy losses especially
today when the economic downpour is still evident. When there is a lack
of market demand or when competition is very high, your business could
suffer setbacks and at times, these losses could be too big that the
entrepreneur may not be able to keep going with the business.
Debt payments: Usually, when one starts a business, he may not have
sufficient funds to cover all the necessary costs. To counter this, the
entrepreneur seeks a loan from a bank or financial institution. There is
nothing wrong with it really but the problem lies in the fact that there are
always financial setbacks along the way which may hinder us to pay our
debts on time and as a result, we have to deal with penalties and late
charges
which could compound our debts to amounts that we find very
Page | 71
difficult to pay.
Employee issues: Employee dissatisfaction could end up in strikes and
demands for higher pay. This is certainly going to affect productivity and
profit loss on the part of the entrepreneur.
Stiff competition: Competition could make or break a business. If you
cannot keep up and stay ahead of your competitors, you run the risk of
getting left behind. You must have strategies to effectively manage
competition.
Market instability: Due to the fact that the market is never stable, this
means your profits will also be unstable. You have to be ready for the
highs and lows and must have the means to keep your business going,
regardless.
Reward is to give money or another kind of payment to (someone or
something) for something good that has been done or a a financial
benefit that is realized when the amount of revenue gained from a
business activity exceeds the expenses, costs and taxes needed to
sustain the activity. Any profit that is gained goes to the business's
owners, who may or may not decide to spend it on the business. The
modern business opens up innumerable opportunities for the discerning
entrepreneur; one such opportunity could be the franchise model. A
successful business with established brand equity may offer franchise in
selected areas and in your location. Here, the business model built is
preconceived and meditated to generate business from day one of
operations. All that one has to do is to strictly follow the defined
disciplines and comply with internal and external mechanisms. There will
be a detailed franchise orientation and product or service trainings, and
one must learn it from the roots.
A risk/reward ratio is a ratio used by many investors to compare the
expected returns of an investment to the amount of risk undertaken to
capture these returns. This ratio is calculated mathematically by dividing
the amount he or she stands to lose if the price moves in the unexpected
direction (i.e. the risk) by the amount of profit the trader expects to have
made when the position is closed (i.e. the reward).
The risk-return tradeoff is the principle that potential return rises with an
increase in risk. Low levels of uncertainty or risk are associated with low
potential returns, whereas high levels of uncertainty or risk are associated
with high potential returns. According to the risk-return tradeoff, invested
money
Page |can
72 render higher profits only if the investor is willing to accept
the possibility of losses.
Any individual, who possesses a business, firm, or venture, is known as an
entrepreneur. He or she is accountable for its development, the inherent
risks and returns associated with it. Entrepreneurship is defined as the
practice of beginning a new trade or reviving an existing business, for
capitalizing on fresh opportunities. Normally, entrepreneurship is a
difficult proposition as many new businesses fail to survive in their initial
periods and never take off. The entrepreneurial activities for a particular
kind of business depends upon various factors and is quite specific on the
kind of business or firm being run. Whatever may be the course of action,
entrepreneurship has a lot of benefits both for the entrepreneurs and the
society in which these businesses are carried out.
What will Management Do if the Context Grows Unfavorable:
Technological and social changes require changes in business and in
management. It is
Generally agreed that the rate of external change is increasing. The
change impacts on surveying businesses as much as it does on other
businesses. The education and training of
surveyors (of every discipline), however, continues to give a good deal of
time to
technological developments and their impacts, but less time to the
changing challenges of
management. The need for all-round skills in management and business
is brought into
stark relief for surveyors running small companies, where they will often
be unsupported
by experts and where advice from professional consultants may be
beyond
budgetary
reach.
Following suggestions are made for Management Do if the Context Grows
Unfavorable:
1. In general, surveyors:
exercise unbiased independent professional judgement;
act competently and do not accept assignments that are outside the
scope of their
professional competence;
advance their knowledge and skills by participating in relevant
programmes of
continuing professional development;
ensure
that they understand the fundamental principles involved when
Page | 73
working in
new areas of expertise, conducting thorough research and consulting with
other
experts as appropriate; and
do not accept assignments that are beyond their resources to complete
in a
reasonable time and in a professional manner.
2. As employers, surveyors:
assume responsibility for all work carried out by their professional and
nonprofessional
staff;
assist their employees to achieve their optimum levels of technical or
professional
advancement;
ensure that their employees have proper working conditions and
equitable
remuneration; and
cultivate in their employees integrity and an understanding of the
professional
obligations of surveyors to society.
3. When dealing with clients, surveyors:
avoid any appearance of professional impropriety;
disclose any potential conflicts of interest, affiliations or prior
involvement that
could affect the quality of service to be provided;
avoid associating with any persons or enterprises of doubtful character;
do not receive remuneration for one project from multiple sources
without the
knowledge of the parties involved;
preserve the confidences and regard as privileged all information about
their
clients affairs; and
maintain confidentiality during as well as after the completion of their
service.
4. When providing professional services, surveyors:
seek remuneration commensurate with the technical complexity, level
of
responsibility and liability for the services rendered;
make no fraudulent charges for services rendered;
provide details on the determination of remuneration at the request of
their clients;
and
do
not| 74
sign certificates, reports or plans unless these were prepared and
Page
completed
under their personal supervision.
48
5. As members of a professional association, surveyors:
do not enter into arrangements that would enable unqualified persons
to practise
as if they were professionally qualified;
report any unauthorised practice to the governing body of the
profession;
refuse to advance the application for professional status of any person
known to be
unqualified by education, experience or character; and
promote the surveying profession to clients and the public.
6. As business practitioners, surveyors:
do not make false or misleading statements in advertising or other
marketing
media;
do not, either directly or indirectly, act to undermine the reputation or
business
prospects of other surveyors;
do not supplant other surveyors under agreement with their clients; and
do not establish branch offices that purport to be under the direction
and
management of a responsible professional surveyor unless this is actually
the case.
7. As resource managers, surveyors:
approach environmental concerns with perception, diligence and
integrity;
develop and maintain a reasonable level of understanding of
environmental issues
and the principles of sustainable development;
bring any matter of concern relating to the physical environment and
sustainable
development to the attention of their clients or employers;
employ the expertise of others when their knowledge and ability are
inadequate
for addressing specific environmental issues;
include the costs of environmental protection and remediation among
the essential
factors used for project evaluation;
ensure that environmental assessment, planning and management are
integrated
into projects that are likely to impact on the environment; and
encourage
additional environmental protection when the benefits to
Page | 75
society justify the costs.
Small and Medium Enterprises Development Authority

(SMEDA): SMEDA is an autonomous institution of the Government of
Pakistan under Ministry of Industries and Production. SMEDA was
established in October 1998 for encouraging and facilitating the
development and growth of small and medium enterprises in the country.
SMEDA is not only an SME policy-advisory body for the government of
Pakistan but also facilitates other stakeholders in addressing their SME
development agendas.
Being the Premier institution of the Government of Pakistan under
Ministry of Industries & Production. SMEDA was established to take on the
challenge of developing Small & Medium Enterprises (SMEs) in
Pakistan. With a futuristic approach and professional management
structure it has focus on providing an enabling environment and business
development services to small and medium enterprises. SMEDA is not
only an SME policy-advisory body for the government of Pakistan but also
facilitates other stakeholders in addressing their SME development
agendas.
SMEDA Objectives:
Formulate Policy to encourage the growth of SMEs in the country

and to advise the Government on fiscal and monetary issues related to
SMEs.
Facilitation of Business Development Services to SMEs.
Facilitate the development and strengthening of SME representative

bodies associations/chambers.
Set up and manage a service

machinery and supplier for SMEs.
Conducting sector studies and analysis for sector development

strategies.
providers
database including
Facilitation of SMEs in securing financing.
Strengthening of SMEs by conducting and facilitating seminars,

workshops and training programs.
Donor assistances for SME development of SMEs through programs

and projects.
Assist SMEs in getting international certifications for their products

and processes.
Identification
of service opportunities on the basis of supply/demand
Page
| 76
gap.
Modes of entry into an International Business: There are some basic

decisions that the firm must take before foreign expansion like: which
markets to enter, when to enter those markets, and on what scale.
Which foreign markets: - The choice based on nations long run profit
potential.-Look in detail at economic and political factors which influence
foreign markets.-Long run benefits of doing business in a country depends
on following factors: - Size of market (in terms of demographics) - The
present wealth of consumer markets (purchasing power) - Nature of
competition By considering such factors firm can rank countries in terms
of their attractiveness and long-run profit.
Timing of entry: - It is important to consider the timing of entry. Entry is
early when an international business enters a foreign market before other
foreign firms and late when it enters after other international businesses.
The advantage is when firms enters early in the foreign market commonly
known as first-mover advantages
First mover advantage;1. its the ability to prevent rivals and capture demand by establishing a
strong brand name. 2. Ability to build sales volume in that country.so that
they can drive them out of market.
3. Ability to create customer
relationship.
Disadvantage: 1.Firm has to devote effort, time and expense to learning the rules
of the country.
2. Risk is high for business failure (probability increases if business enters a national
market after several other firms they can learn from other early firms mistakes)
Modes of entry: -- 1. Exporting 2. Licensing

Turnkey Project
5. Mergers & Acquisitions
& Mergers 8. Wholly Owned Subsidiary
3. Franchising
4.
6. Joint Venture
7. Acquisitions
1. Exporting: It means the sale abroad of an item produced, stored or

processed in the supplying firms home country. It is a convenient
method to increase the sales. Passive exporting occurs when a firm
receives canvassed them. Active exporting conversely results from a
strategic decision to establish proper systems for organizing the export
functions and for procuring foreign sales.
Advantages of Exporting:
Need for limited finance: If the company selects a company in the host
country to distribute the company can enter international market with no
or less financial resources but this amount would be quite less compared
to that would be necessary under other modes.
Less
Risk:
Page
| 77 Exporting involves less risk as the company understands the
culture, customer and the market of the host country gradually. Later
after understanding the host country the company can enter on a full
scale.
Motivation for Exporting: Motivation for exporting is proactive and
reactive. Proactive motivations are opportunities available in the host
country. Reactive motivators are those efforts taken by the company to
export the product to a foreign country due to the decline in demand for
its product in the home country.
2. Licensing: In this mode of entry, the domestic manufacturer leases

the right to use its intellectual property i.e. technology, copy rights, brand
name etc. to a manufacturer in a foreign country for a fee. Here the
manufacturer in the domestic country is called licensor and
the manufacturer in the foreign is called licensee. The cost of entering
market through this mode is less costly. The domestic company can
choose any international location and enjoy the advantages without
incurring any obligations and responsibilities of ownership, managerial,
investment etc.
Advantages: 1. Low investment on the part of licensor. 2. Low financial
risk to the licensor
3. Licensor can investigate the foreign market
without many efforts on his part. 4. Licensee gets the benefits with less
investment on research and development 5. Licensee escapes himself
from the risk of product failure.
Disadvantages: 1. It reduces market opportunities for both 2. Both
parties have to maintain the product quality and promote the product.
Therefore one party can affect the other through their improper acts. 3.
Chance for misunderstanding between the parties. 4. Chance for
leakages of the trade secrets of the licensor. 5. Licensee may develop his
reputation
6. Licensee may sell the product outside
the agreed territory and after the expiry of the contract.
3. Franchising:
Under franchising an independent organization called

the franchisee operates the business under the name of another company
called the franchisor under this agreement the franchisee pays a fee to
the franchisor. The franchisor provides the following services to the
franchisee. 1-Trademarks 2-Operating System 3-Product rotation 4Continuous support system like advertising , employee training
,reservation services quality assurances program etc.
Advantages: 1-Low investment and low risk 2-Franchisor can get
the information regarding the market culture, customs and environment
of the host country. 3-Franchisor learns more from the experience of the
franchisees.
4-Franchisee gets the benefits of R& D with low cost. 5Page | 78
Franchisee escapes from the risk of product failure.
Disadvantages: 1-It may be more complicating than domestic
franchising.2. It is difficult to control the international franchisee.3. It
reduces the market opportunities for both4. Both the parties have the
responsibilities to maintain product quality and product promotion.5.
There is a problem of leakage of trade secrets.
4. Turnkey Project: :A turnkey project is a contract under which a firm
agrees to fully design , construct and equip a manufacturing/
business/services facility and turn the project over to the purchase when
it is ready for operation for a remuneration like a fixed price , payment on
cost plus basis. This form of pricing allows the company to shift the risk of
inflation enhanced costs to the purchaser. i.e. nuclear power plants ,
airports, oil refinery , national highways , railway line etc. Hence they are
multiyear project.
5. Mergers & Acquisitions:
A domestic company selects a foreign

company and merger itself with foreign company in order to enter
international business. Alternatively the domestic company may purchase
the foreign company and acquires it ownership and control. It provides
immediate access to international manufacturing facilities and marketing
network.
Advantages: 1. The Company immediately gets the ownership and control over the acquired
firms factories, employee, technology, brand name and distribution networks. 2.The
company can formulate international strategy and generate more revenues. 3.If the industry
already reached the stage of optimum capacity level or overcapacity level in the host country.
This strategy helps the host country.
Disadvantages: 1.Acquiring a firm in a foreign country is a complex task involving bankers,
lawyers regulation, mergers and acquisition specialists from the two countries. 2.This
strategy adds no capacity to the industry. 3. Sometimes host countries imposed restrictions
on acquisition of local companies by the foreign companies. 4. Labour problem of the host
countrys companies are also transferred to the acquired company.
6. Joint Venture: Two or more firm join together to create a new business entity that islegally
separate and distinct from its parents. It involves shared ownership. Various environmental
factors like social , technological economic and political encourage the formation of joint
ventures. It provides strength in terms of required capital. Latest technology required human
talent etc. and enable the companies to share the risk in the foreign markets. This act
improves the local image in the host country and also satisfies the governmental joint
venture.
Advantages 1. Joint venture provides large capital funds suitable for major projects.2. It
spread the risk between or among partners.3. It provides skills like technical skills,
technology,
Page | 79human skills, expertise, and marketing skills.4. It makes large projects and turn
key projects feasible and possible. 5. It synergy due to combined efforts of varied parties.
Disadvantages: 1.Conflict may arise 2.Partner delay the decision making once the dispute
arises. Then the operations become unresponsive and inefficient. 3.Life cycle of a joint
venture is hindered by many causes of collapse. 4. Scope for collapse of a joint venture is
more due to entry of competitors changes in the partners strength. 5. The decision making
is slowed down in joint ventures due to the involvement of a number of parties
7. Wholly Owned Subsidiary: Subsidiary means individual body

under parent body. This Subsidiary or individual body as per their own
generates revenue. They give their own rent, salary to employees, etc.
But policies and trademark will be implemented from the Parent body.
There are no branches here. Only the certain percentage of the profit will
be given to the parent body. A subsidiary, in business matters, is an entity
that is controlled by a bigger and more powerful entity. The controlled
entity is called a company, corporation, or limited liability company, and
the controlling entity is called its parent (or the parent company). The
reason for this distinction is that alone company cannot be a subsidiary
of any organization; only an entity representing a fiction as a separate
entity can be a subsidiary. While individuals have the capacity to act on
their own initiative, a business entity can only act through its directors,
officers and employees. The most common way that control of a
subsidiary is achieved is through the ownership of shares in the
subsidiary by the parent. These shares give the parent the necessary
votes to determine the composition of the board of the subsidiary and so
exercise control.
Globalization
and
Entrepreneurship:
The importance of
Entrepreneurship and Globalization is two-fold. Firstly, it draws together
earlier literature on SME export development and internationalization
from disparate sources into a cohesive body of work, which traces the
evolution of our understanding of the topic. Secondly, in the context of
the emergence of academic and policy interest in international new
ventures, it provides a useful context and backdrop to new theories that
are emerging to challenge conventional wisdom. The impact of increased
level of globalization on entrepreneurship remains unexplored area within
the domain of international business.
So in perspective of Globalization Entrepreneurs have to think globally to
survive locally. Even the smallest "Mom-and-Pop" shop might sell products
made overseas, and that shop can also sell to customers in other
countries
Page | 80 through the Internet. All this interconnectedness creates a
domino effect when one country's economy suffers. Exports might drop in
that country, leaving entrepreneurs without products and raw materials
they were used to buying. Entrepreneurship today means staying abreast
of worldwide trends.
Nature and Scope International Business:

Definition: International Business is the process of focusing on the
resources of the globe and objectives of the organizations on global
business
opportunities
and
threats.
International business defined as global trade of goods/services or
investment. More comprehensive view does not focus on the firm but
on
the
exchange
process
Free Trade occurs when a government does not attempt to influence,
through quotas or duties, what its citizens can buy from another country
or what they can produce and sell to another country. The Benefits of
Trade allow a country to specialize in the manufacture and export of
products that can be produced most efficiently in that country. The
Pattern of International Trade displays patterns that are easy to
understand (Saudi Arabia/oil or Mexico/labor intensive goods). Others are
not
so
easy
to
understand
(Japan
and
cars).
Nature of International Business:
a.
b.
c.
d.
e.
Accurate Information
Information not only accurate but should be timely
The size of the international business should be large
Market segmentation based on geographic segmentation
International markets have more potential than domestic markets
Scope of International Business:
1.
2.
3.
4.
International Marketing
International Finance and Investments
Global HR
Foreign Exchange
Need for International Business:

1. To achieve higher rate of profits
2. Expanding the production capacity beyond the demand of the
domestic country
3. Severe competition in the home country
4. Limited home market
5.Page
Political
| 81 conditions
6. Availability of technology and managerial competence
7. Cost of manpower, transportation
8. Nearness to raw material
9. Liberalization, Privatization and Globalization (LPG)
10. To increase market share
11. Increase in cross border business is due to falling trade barriers
(WTO), decreasing
Multinationals (MNCs) in International Business:

An enterprise operating in
(home) country.
several countries but
managed
from
one
Generally, any company or group that derives a quarter of its revenue

from operations
outside of its home country is considered a
multinational corporation. There are four categories of multinational
corporations:
(1)-A multinational, decentralized corporation with strong home country
presence,
(2)-A global, centralized corporation that acquires cost advantage through
centralized production wherever cheaper resources are available,
(3)An
international
company
that builds on
the parent
corporation's technology or R&D, or (4) - A transnational enterprise that
combines the previous three approaches.
A multinational corporation (MNC) has facilities and other assets in at
least one country other than its home country. Such companies have
offices and/or factories in different countries and usually have a
centralized head office where they coordinate global management. Very
large multinationals have budgets that exceed those of many small
countries.
Multinational corporations are sometimes referred to as transnational
corporations. Nearly all major multinationals are American, Japanese or
Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba,
Honda and BMW. Advocates of multinationals say they create high-paying
jobs and technologically advanced goods in countries that otherwise
would not have access to such opportunities or goods. On the other hand,
critics
say multinationals have undue political influence over
Page | 82
governments, exploit developing nations and create job losses in their
own home countries. Wal-Mart has operations in 28 countries, including
over 11,500 retail stores that employ over 2.3 million people
internationally. There are a number of advantages to establishing
international operations. Having a presence in a foreign country such as
India allows a corporation to meet Indian demand for its product without
the transaction costs associated with long-distance shipping. Corporations
tend to establish operations in markets where their capital is most
efficient or wages are lowest. By producing the same quality of goods at
lower costs, multinationals reduce prices and increase the purchasing
power of consumers worldwide.
Issues in International Business:
When markets in foreign

countries offer a higher profit potential than your home market, it makes
sense to expand internationally. As you prepare your expansion and
research target markets in other countries, you will often find that the
legal structures and ethical frameworks differ substantially from those in
the United States. You have to address the legal and ethical issues of your
entering these markets to make your expansion a success.
Employment: Wages and the working environment in overseas locations
are often inferior to those in the United States, even when you fulfill all
local legal requirements. If you hire workers there, you face the issue of
what pay levels and working conditions are acceptable. Applying U.S.
standards is usually not realistic and often simply disrupts the established
market. An effective approach is to develop company standards which
protect workers while fitting into the local economy. Your standards have
to guarantee a living wage, protect the safety of your workers and
establish a reasonable number of hours for the work week.
Corruption: Companies making payments to secure business that they
would not otherwise obtain are guilty of illegal actions under the U.S.
Foreign Corrupt Practices Act. The payments, even if they seem to be
customary, are usually illegal under local laws as well. When your
company makes such payments, it is encouraging a local system of
corruption through unethical behavior. Smaller gifts, of a size that would
not normally influence a major decision, are considered ethical in some
societies and may be legal under local and U.S. laws. If you find that large
sums are routinely required to do any business in a country, you may
want to reevaluate your decision to enter that market.
Entrepreneurship
and Economic Growth: Entrepreneurship is
Page | 83
basically the practice of starting a business in order to earn profit on new

found opportunities. Entrepreneurships a challenging task as many
businesses which start fail to take off . Throughout the South-East
Asian region entrepreneur creation has almost unquestionably been seen
as a viable policy instrument for promoting economic growth.
Entrepreneurship has been glorified by media stories, biographies of
successful entrepreneurs, and events like entrepreneurship week,
business plan competitions, and entrepreneurship awards. Business
schools have developed inspiring spiels about becoming an entrepreneur
and many governments have made entrepreneurship the centerpiece of
regional development policy.
Entrepreneurship and Regional Development: Entrepreneurship

and Regional Development is unique in that it addresses the central
factors in economic development - entrepreneurial vitality and innovation
- as local and regional phenomena. It provides a multi-disciplinary forum
for researchers and practitioners in the field of entrepreneurship and
small firm development and for those studying and developing the local
and regional context in which entrepreneurs emerge, innovate and
establish the new economic activities which drive economic growth and
create new economic wealth and employment. The journal focuses on the
diverse and complex characteristics of local and regional economies
which lead to entrepreneurial vitality and endow the large and small firms
within them with international competitiveness.
Entrepreneurship and Intrapreneurship: According to Gifford Pinchot
(1985), Intrapreneur is an entrepreneur within an already established
organization. In big organisations, the top executives are encouraged to
catch hold of new ideas and then convert these into products through
research and development activities within the framework of
organisation. The concept of Intrapreneurship has become very popular in
developed countries like America.
Difference between Entrepreneur and Intrapreneur: Having understood the meanings of
entrepreneur and intrapreneur, now the two can easily be distinguished from each other on
the following bases:
1.
Dependency
2. Raising of
But, an intrapreneur is
An
entrepreneur
is dependent on the
independent
in
his entrepreneur, i.e., the owner.
operations
An entrepreneur himself
Funds are not raised by the
Funds
Page | 84
3. Risk
4. Operation
raises funds required for

the enterprise.
Entrepreneur bears the
risk involved in the
business.
An entrepreneur operates
from out-side.
intrapreneur.
An intrapreneur does not fully
bear the risk involved in the
enterprise.
On the contrary, an
intrapreneur operates from
within the organization itself.
7 Habits of Remarkably Successful Startup Entrepreneurs : All

successful entrepreneurs may be different from one another--but not in
certain key ways. On the surface, successful entrepreneurs seem to be
the same as everyone else. But look closely and you'll see that in a few
ways they are very, very different--and so is how they start and run their
businesses.
1. They always prefer action to thinking: A detailed plan is great, but stuff
happens, and most entrepreneurs don't make it past the first three action
items before adapting to reality. Spend some time planning and a lot
more time doing. If you're unsure, do something, and then react
appropriately. It's easy to ponder and evaluate and analyze yourself out of
business.
2. They see money as the root of all failure: A capital-intensive venture can
require significant sums. But most businesses require little funding to get
started. And often limited capital is a blessing in disguise; a venture
capital friend strongly believes there's an inverse relationship between
the level of funding and the long-term success of startups. Short-term
success is easy when you have money to burn. Without tons of cash,
you'll work through and benefit from a problem instead of just throwing
money at it.
3. They spend only on what touches the customer: Before you spend, always
ask, "Does this touch the customer?" If it doesn't, don't buy it. If you're a
lawyer, your office reinforces your professionalism; if you run a retail
business, no customer should know your office even exists. Remember,
success is never defined by a fancy office and amenities; success is
defined solely by profits.
4. They
never
Page
| 85 compromise on location: Classic example: restaurants. Short
on cash, the budding restaurateur (love that word) chooses an
inexpensive (meaning terrible) location in the hope that great food and
impeccable service will create destination dining. Typically, only creditors
view the restaurant as a destination. If you truly have no competition-which in reality is almost never the case--and there truly is a market,
maybe customers will come to you. Otherwise, they won't.
5. They spend most of their time chasing what they can actually catch:
Almost every startup dreams of finding an enabling customer, but those
are tough to land. Focus on prospecting where you have a reasonable
chance of success. Later, you can leverage your customer base--and what
you've learned along the way--to successfully hunt bigger game.
6. They never see making a living as a right: No matter how hard you work,
no one has to buy what you sell. "Fair" applies to how you deal with
customers, suppliers, vendors, etc. Fairness in no way applies to whether
you deserve success or failure. If you catch yourself thinking, "It's just not
fair. I should be able to make a decent living at this," stop. You earn the
right to make a profit. No one is responsible for making sure you can earn
a living--except you.
7. They don't do anything that doesn't generate revenue: Everything you do
should generate revenue. Stop creating esoteric spreadsheets. Quit
printing fancy reports only you will review. Stop spending time on the golf
course in hopes that networking will result in customers. Minimize
administrative tasks, and focus your efforts on generating revenue.
Sure, you can do what you love and the money will follow, but only if what you love doing
is generating revenue. If it doesn't pay, for now at least, put it away.

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Entrepreneurship ( entrepreneur- ship): In Urdu ( ) in Arabic Riadat

So Entrepreneurship is defined as the capacity and willingness to develop, organize and

MBA 3.5 Years Specialization in Marketing

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Young and high-growth businesses

Imitative Entrepreneurs: Imitative Entrepreneurs adopt victorious innovations launched by

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on their cost-, time- and related assessments. Then project

Product Management: Regulatory standards and market requirements vary across

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The intrinsic value and income-generating potential of an asset cannot be realized

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CHARACTERISTICS OF ENTERPRENURESHIP: Entrepreneurship is the act of

MBA 3.5 Years Specialization in Marketing

MBA 3.5 Years Specialization in Marketing

CHARACTERISTICS OF ENTREPRENEURS: Starting a business requires the ability to

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MBA 3.5 Years Specialization in Marketing

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2) How will your business satisfy the need?

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4) Who will be the key players in the business?

5) How big is the market you are entering?

6) Who will you be targeting as customers?

7) What will be your most effective marketing and promotional strategies?

8) What are the economics of your business?

Identify needed capital requirements by determining where your business stands

10) What needs to happen to break-even?

People. Marc Bolland)

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What is the size of the market? Is it growing, stable, or in decline?

Is the overall industry growing, stable, or in decline?

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In the Context of Entrepreneurship Interest rates are an everyday part of business.