INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

[ASSIGNMENT]
Entrepreneurship

SUBMITTED BY:

GAURAV SHARMA

BATCH: FW/2013-2016

SECTION: FWUG

ID NO: DL1316FWCHE-UGPC15025(GGN-2-GA-59447)
 Entrepreneurship
Question No 1

(a) Why do entrepreneurs need to know about barriers to entry as they research feasibility of
their

(b) Draw the entrepreneurial process model and explain it

Question No 2

(a) . Describe the entrepreneurship external environment forces.

(b) Discuss the snares of innovation.

Question No 3

(a) Discuss the role that social responsibility and ethics play in the context of
entrepreneurship.

(b) What is competitive advantage, and why do entrepreneurs need to care about it.

Question No 4

(a) Developing rural entrepreneurship is highly important for India." Comment and suggest
measures to improve this sector.

(b) List and explain the various financial options from which entrepreneurs may choose.

Ans 1(B):
A model, The entrepreneurial process

Here, I am discussing the process of development of the firm in interaction

with its institutional environment. Figure 1 illustrates the interaction between
the individual entrepreneur/ entrepreneurship and informal/cultural and
structural/formal institutions, i.e., the corporate development process.
The model (Figure 1) illustrates how companies are affected in their
development process by informal and formal institutions, respectively, in
three development phases. In general, the entrepreneurial perspective can
be divided into two: a focus on the individual (the entrepreneur in focus) and
a focus on the corporate development process, i.e., the entrepreneurial
process. I view entrepreneurship as a process where companies develop in
interaction with the institutional environment. This involves the role that
institutions play in the corporate development process. The entrepreneurial
process is the process of interaction between informal and formal institutions
and entrepreneurship and it is the corporate development process. In line
with the above model, this process is studied in three periods or phases:

- The initiation phase;

- The establishment phase; and

- The operational/growth phase.

Initiation
The factor that contributed to K conceiving the idea of starting his own
business was that his own father had been a businessman and he was
familiar with (working life and) entrepreneurship in general and for him it
was not virgin territory. He had travelled and lived abroad, had high social
competence, spoke several languages and had academic education,
ambitions and dreams.

The alternative was unemployment, low-paid jobs or extended studies. K

had several family members and relatives (his own network) in Sweden and
elsewhere, who could contribute with advice, knowledge, capital and labor.
During the recession and restructuring of the Eighties and Nineties many
Swedes sold their businesses because of poor profitability, while immigrant
unemployment was high, which guaranteed the supply of labour.

Establishment

Establishment proceeded rapidly bought a sausage stand and got started.

The family backed him with capital, labour, knowledge and advice and there
were plenty of unemployed 17 immigrants who could work as trainees, the
establishment proceeded smoothly and had ideas and saw the opportunities
and future potential of this trade. He was active and received help from
different quarters.

Growth

At the end of the Nineties business was doing well. The boom resulted in the
restaurant trade flourishing and K started to buy his first, second and third
restaurants. He sold off the less profitable operations and retained three
profitable ones that he believed to have a future and development potential.
A sausage stand at the start of the Nineties had grown into three well-run
and well-patronised bars/restaurants. The MK companies have had stable
growth of some 600-1000% in the past eight years.
Ans 2(A):
Some things just aren't in our control. Though business owners can
profoundly shape the internal environment of their companies, the external
environment is a different matter. To avoid being at the mercy of external
forces, wise business owners stay alert to environmental changes in order to
best position their companies. Some general environmental conditions only
indirectly touch a company, but five external conditions specifically affect an
organization's well-being. By staying alert to these, managers can avoid
being blind-sided by adverse events, and can take advantage of
opportunities the environment could provide.

Customers

Customers buy products or use services. They may be individuals,

but also may be manufacturers, wholesalers or corporate
clients. To compete, a business must deeply understand its
customer's needs and desires. Analyzing this environmental
component allows a business to make sound strategic decisions
that affect operations. Customer-oriented changes such as extra
services, new products, or expanded hours of operations might
sharpen a company's competitive edge.

Competitors

A business occupying the same marketplace as another company

that provides similar products or services has a competitor. A
rival company may vie for the same customers through some
mix of service, product features, quality, convenience, selection
and price. To enhance customer service, the competition may
choose to provide delivery options, good warranties and
generous financing. To compensate for this external force, a
company must keep abreast of the means the competition uses
to lure customers, and objectively analyze the competitor's
strengths and weaknesses. An existing business must also know
when new competition enters their market.

Labor Environment
Labor as a factor of the external environment refers to the people a
company hires to fill its positions. A company rises and falls on the
competence and expertise of its workforce, so finding qualified candidates in
the community is crucial. In assessing the labor
environment, companies should look to characteristics that include the
average educational level of the community, training programs available,
technical know-how, and diversity, which is increasingly necessary in a
globally connected world. Changing population patterns such as changes in
the community's average age should also be assessed.

Owners

For a business run by hired managers, the owners of the business

become a part of the company's external rather than internal
environment. Owners might not only be those who started the
business, but may also include stockholders. Owners expect
returns on their investment, and management must pay
attention to their concerns, since from owners comes a
manager's formal authority.

Suppliers and Partners

Suppliers provide a company with needed resources. Some

companies have deep alliances with their suppliers, increasing
supply reliability, but also increasing a company's dependence.
Partners are those organizations a business teams up with to
accomplish some mutually beneficial goal. Naturally, forces
affecting suppliers and partners may end up also impacting the
companies working with them. For instance, a scarcity of
resources will impact the supplier and, therefore, the company,
perhaps in the form of price increases or supply availability.

Ans 2(B):
Through his entire career Fred Hinger was never satisfied with commercially
produced percussion products and spent much time creating his own
drumsticks and tympani mallets while he was in the Philadelphia Orchestra.
He found that tympani handles made of bamboo produced a much larger
sound than the traditional wood handles found on virtually all commercially
produced tympani mallets. People started asking him to make the same
mallets for them, and as time went on he started selling these hand sewn

tympani mallets to students and other professionals. In the early 1960s,

he began to experiment with other handle materials and found that an
aluminum tubular handle would produce the same sound characteristics of
the bamboo, but were much more consistent and could be duplicated much
more easily. He also found that by gluing the felt on the tympani mallets
instead of sewing, the usable life of the stick became greater, and the sound
of what we called slap, or the loosening of the felt around the core, was
eliminated. As business picked up in the early 1960s he registered the
trademarks Hinger and Touch-Tone, which eventually became the company
name.
When Bill Hinger joined the United States Army Band in Washington, D.C. in
1967, all tympani mallet production was moved to Alexandria, Virginia. Bill
became responsible for production of tympani mallets for the next three
years. During this time period, Fred Hinger became more interested in
developing a snare drum with the idea of using an extremely rigid material.
He began experimenting with using a quarter inch steel pipe as a drum shell.
He made several of these drums, between 1967 and 1970, completely by
hand in his apartment in Fort Lee, New Jersey. The drums, painted black
with a red stippled finish, became known as pipe drums. In 1969 Fred
Hinger visited Bill in Alexandria and gave Bill one of the pipe drums he had
made and personalized. At that time Bill Hinger broached the idea of starting
a company to make sticks, snare drums and tympani. In May 1970, Bill left
the Army Band and moved back to New Jersey.
From that point forward, Bill was responsible for the design and production
of all innovations and ideas generated by himself and his dad. Bill became a
highly skilled machinist and inventor as he developed the tools and jigs
needed for the machining operations to produce timpani and snare drums
more efficiently and more cost effectively. There were literally hundreds of
special tools machined by Bill for specific operations.

The list of design features and sound concepts brought to the stage through
their instrument development is quite astonishing. Many individuals and
producers of percussion instruments today incorporate features and
principles originated by Fred and Bill HInger for the Hinger Touch-Tone
Corporation. These innovations include:
 Sliding weights on tympani sticks and snare drum sticks, which
allow the player to change the color of sound produced with the
same mallet or stick.
Design of the Hinger Tympani, putting the fine-tuning handle next
to the player rather than the opposite side of the drum.

The rotating tympani bowl, so the player can change beating spots
without disturbing the head especially critical with the use of calf
heads, which Fred Hinger always used.

Cable snares, going through general material and design changes

until the perfect combination was found clear coated cable, blue
aircraft cable, then their own specially designed cable (a highly
guarded secret of the Hinger Company), clamps to injection molded
ends, to the final envelope-style clamping system. This final
version of snares was produced until the company ceased
operations in 1986.

A special drum head with a double layer of Mylar at the edge,

eliminating the undesirable ring sound, but leaving enough for good
sound projection, and increasing sensitivity at the edge. Masking
tape around the edge was the first implementation of this idea.
This also alleviated the need for any internal mufflers being
attached to the drum.

The pipe drum, and the special shell material drum, both great
sounding snare drums with proper snare beds and bearing edges.

A simple but effective throw-off first machined from a solid piece

of aluminum then machined from cast aluminum molds.

And then the big one the Space-Tone snare drum which remains
one of the most unique and best sounding drums ever made and
still sought-after today. See the blog post on the Space-Tone snare
drum to read the story about the discovery of this unique drum.

Ans 3(A):
Entrepreneurship in the Social Sector
There has been a worldwide explosion of entrepreneurial activities by
organizations whose primary focus is on improving the health, education,
and well being of individuals and communities. Most of this activity has been
undertaken by nonprofit organizations, which, in the U. S., generate
revenues greater than the gross domestic products of Brazil, Russia, or
Australia. Some entrepreneurs working in the social sector chose to
incorporate as for-profit organizations. Both models will be considered in this
course though the vast majority of cases will be about nonprofit
organizations like Habitat for Humanity and City Year. This course will focus
on the tools and skills required to launch or grow a successful enterprise in
the organizations rely on an entrepreneurial style of management. During
this course students will meet outstanding social entrepreneurs who have
succeeded in creating sustainable enterprises that combat important social
problems.

Business and Climate Change

Dealing with the likely impacts of climate change has become one of the
momentous societal and economic concerns of our time. Forward-thinking
companies worldwide are aggressively addressing it, since they are the
constituency with the largest cause/effect relationship to climate change.
Through their resource use and emissions, companies are a cause; the effect
of mitigating and adapting to it will be a source of costs (for some) and
benefits (for others). Looking ahead, sizeable public and private resources,
perhaps trillions of dollars, will be devoted to addressing climate change. The
focus of this minicourse is to examine the links between climate change and
the firm as viewed through an economics/finance/public policy lens.

Corporate Responsibility
This mini course starts with the premise that corporate social responsibility is
good for business and focuses on how leaders can balance the needs of their
organizations with responsibilities to key constituencies. Through cases
focusing on the social, reputational, and environmental consequences of
corporate activities, students will learn how to make difficult choices,
promote responsible behavior within their organizations, and understand the
role personal values play in developing effective leadership skills.

Ethical Decision-Making (EDM)

Are ethical judgments influenced more by emotion or by reason? Is ethical
behavior a product more of the environment or of the individual? How does
acquiring power affect peoples moral choices? Why do people resent
whistleblowers who uncover wrongdoing in organizations? What leads people
to discriminate unfairly? Do integrity tests for employee screening work?
Would including an ethical oath in the MBA curriculum increase moral
behavior among tomorrows business leaders? These and other questions will
be investigated in this discussion-based mini course. Recent behavioral
research has had much to say about the determinants of peoples moral
judgments and actions. A primary goal of this course is to familiarize
students with this research and to thus increase their awareness of the
psychological dynamics governing everyday morality and immorality.
Students will learn to identify, analyze, and respond thoughtfully to ethical
challenges in professional life, and, through dialogue with their classmates,
will learn to recognize moral differences and articulate their own positions
coherently and persuasively. Readings will include empirical research in
addition to traditional business cases.

Business & Ethics at the Base of the Pyramid (BOP)

The condition of the worlds poor is the subject of growing international
attention. As we move into the 21st century, the markets at the base of the
global income pyramid (BOP), where consumers earn about $2.00 a day,
have become a meeting place of global corporations and development
advocates alike. Pulled by the promise of new markets, and pushed by the
demands of corporate responsibility, business leaders are today grappling
with unforeseen opportunities, challenges, and dilemmas that come with the
territory of working in BOP markets. The relationship between profits and
poverty alleviation in pursuit of mutual value creation is the focal point of
investigation of this course. In keeping with the aims of the Social and Ethics
Responsibility core requirement, this course aims to create an opportunity
for students to discuss and weigh the opportunities, challenges and
dilemmas that come with the territory of working in very low income
markets, including the challenges that come with institutional failure. How
such business models take shape may test traditional assumptions that MBA
students make about how society intersects with markets, and raise
questions not only of business aims, but also broader questions of risk and
responsibility. Through case-based discussion, we will explore how market-
based ventures seek to overcome challenges in a broad range of working
contexts, from health care delivery, to infrastructure services, humanitarian
and disaster relief, social safety nets, and environmental conservation.

Ans 3(B):

Competitive advantage is a business concept describing attributes that

allow an organization to outperform its competitors. These attributes may
include access to natural resources, such as high grade ores or inexpensive
power, highly skilled personnel, geographic location, high entry barriers, etc.
New technologies, such as robotics and information technology, can also
provide competitive advantage, whether as a part of the product itself, as an
advantage to the making of the product, or as a competitive aid in the
business process (for example, better identification and understanding of
customers).

In this challenging new economy you need every advantage you can get,
especially in entrepreneurship and business. Gaining the competitive
advantage isnt easy and chaos is almost guaranteed, but the upside
outweighs the tough times. Here are five fail-proof ways to gain a
competitive advantage as an entrepreneur:

1. Positioning is better than prospecting

Everybody is looking for prospects, clients and customers. This

never-ending process will eventually burn you out, and is tough
to scale. An easier way to approach your business is to position
yourself as the leading authority, expert, specialist or trusted
advisor on your subject. This takes strategic and intentional
action, but the rewards are exponential.

When youre perceived as the expert, people will start coming to you vs. you
chasing them. Be more elite and exclusive, and make it an honor to work
with you.

2. Plans fail, movements dont

Reposition your business and make it about something. Think

about Disney. Its not about movies, amusement parks or
cruises, the company is where Dreams come true. Think about
how Subway went from being a fast-food chain to being a
weight loss program.
The entrepreneurs on a mission bigger than themselves are always
attracting top tier talent. Life becomes much more fulfilling when you
become involved in a movement or a cause greater than yourself.

3. Stand on the shoulders of giants

You dont need to reinvent the wheel, and you sure as hell dont
need to figure everything out yourself. Find something that is
already working and make it better. In an interview I did with
Gary Vaynerchuk, he said:

A penguin cannot become a giraffe, so just be the best penguin you can be.

A smart person learns from their mistakes, as all successful people do, but

those wanting world-class results learn from other people's mistakes so they

can shorten their learning curve, and not waste as much time.

4. Become a people developer

One of the biggest learning curves I had to go through as a young

entrepreneur was realizing I couldnt do it all by myself. You not
only need a solid team around you, but you need to know how to
develop and lead that team.

When you watch sports, youll find the most successful teams play well
together, compliment each other and have one single focus: winning. The
same goes for business and life. The people you have in your inner circle,
and those you associate with the most are your team.

Who needs to be on your team to make sure you have a dream team"? All
successful people have mastered building teams, and have supportive people
around them that compliment their strengths and make up for their
weaknesses.

5. Create raving fans and advocates

The likelihood of the marketplace responding because you want

something is non-existent! Business is the management of
promises and if you can consistently deliver and exceed
promises for all your customers, youre ahead of the game. Its
much more expensive to get a new customer than it is to take
care of the ones you have.

The purpose of business is to create raving fans and advocates, who will go
out of their way to promote what you do. Not because you asked them, but
because they want to. Outstanding client support and service is affected by
every person in your organization -- from reception to the mail room to the
CEO. You must create a culture where people are passionate about meeting
the clients needs.

Ans 4(A):
Many examples of successful rural entrepreneurship can already be found in
literature. Diversification into non-agricultural uses of available resources
such as catering for tourists, blacksmithing, carpentry, spinning, etc. as well
as diversification into activities other than those solely related to agricultural
usage, for example, the use of resources other than land such as water,
woodlands, buildings, available skills and local features, all fit into rural
entrepreneurship. The entrepreneurial combinations of these resources are,
for example: tourism, sport and recreation facilities, professional and
technical training, retailing and wholesaling, industrial applications
(engineering, crafts), servicing (consultancy), value added (products from
meat, milk, wood, etc.) and the possibility of off-farm work. Equally
entrepreneurial, are new uses of land that enable a reduction in the intensity
of agricultural production, for example, organic production.

Dynamic rural entrepreneurs can also be found. They are expanding their
activities and markets and they find new markets for their products and
services beyond the local boundaries.

To leave general examples of rural entrepreneurship behind, let us look at

the real cases. Here only a few will be mentioned, all illustrating
entrepreneurial initiatives, individuals and local communities from Great
Britain. The names of entrepreneurs I have chosen to present here are not
globally known but are no less important because of that. They are very well
known to the communities to which they belong and their initiatives are
highly appreciated by the community members. One of them is Graham-
Probin (Johnstone et al., 1990, p. 9), owner of a 110 acre farm in Malpas,
Cheshire, England. By converting a two-storey building into four workshop
units, he created employment opportunities within the community. Another
one is John Anderson from Kirkwhelpington, who created employment
opportunities in the local area by restoring traditional stables into business
premises and renting them out to a blacksmith who shoes horses and does
light engineering work for farmers (Johnstone et al., 1990, p. 9-10). Another
is the McNamara family from Canaston Bridge. They responded to the dairy
quotas imposed by the Government by diversification of their land for non-
agricultural usage. The family converted 80 acres of land into an adventure
and leisure complex. After three years of investment, amounting to 800
000, the adventure and leisure facilities were opened in 1987, boasting a
range of attractions entirely unconnected with agriculture, such as: a
bobsleigh run, a miniature railway, a pitch and putt golf course, a natural
history centre, go-kart tracks, assault courses, a restaurant and various
shops (Johnstone et al., 1990, p. 18). This entrepreneurial venture is an
example of a straightforward entrepreneurship and not so much an example
of on-farm diversification. It is an example of how seeing and seizing the
opportunity are vital ingredients of entrepreneurial success.

Let me turn now to illustrations related to social entrepreneurship, to

examples of when people have changed things, acting in the interest of their
communities while playing the same role as an individual entrepreneur. East
Cleveland Training and Enterprise Group from Loftus, Small Industries
Groups in Somerset and Antur Teifi from West Wales, are all real examples of
social entrepreneurship. The East Cleveland Training and Enterprise Group
began as a group of four people in Loftus who were angry and frustrated at
the lack of action by statutory bodies to tackle the area's unemployment
(Johnstone et al., 1990, p. 107). The Group developed a large programme of
activities, such as employment training, youth training, initiating the
establishment of a training and enterprise centre, improving environmental
and property acquisition to benefit the community. The Small Industries
Group Somerset, West Somerset, started with the objective of helping to
create local jobs. The founding group consisted of a dairy farmer, a sub-
postmaster, an insurance broker, a lecturer, a youth worker and the manager
of a field studies centre (Johnstone et al., 1990, p. 109). For ten years the
Group greatly fostered the development of the community and contributed
to the change of attitudes of farmers as well as local communities, to favour
self employment and business expansion. Antur Teifi, from the Teifi Valley,
the enterprise agency, was started by a group of local volunteers who were
concerned with the high level of unemployment and unbalanced structure of
the local population (Johnstone, et al., 1990, p. 109). The group set the
objectives as follows: to identify and support community initiatives, to
establish new permanent jobs and to initiate activities to prevent the area's
economic and cultural decline. The group has more than achieved these
objectives.

Among the case studies presented here, there is no woman's name. Too
often their names are not specifically mentioned, although the evidence
shows that there are many activities in rural areas pursued by female
entrepreneurs such as: trade, food processing, handicrafts, production of
basic consumer articles, catering, running tourist establishments, and bed
and breakfast arrangements. However, compared to male entrepreneurs,
female entrepreneurs in rural areas still tend to be limited to what have
traditionally been viewed as women's activities. Also the scale of their
entrepreneurial operation tends to be smaller when compared with male
entrepreneurs.

Although agriculture today still provides income to rural communities, rural

development is increasingly linked to enterprise development. Since national
economies are more and more globalized and competition is intensifying at
an unprecedented pace, affecting not only industry but any economic activity
including agriculture, it is not surprising that rural entrepreneurship is
gaining in its importance as a force of economic change that must take place
if many rural communities are to survive. However, entrepreneurship
demands an enabling environment in order to flourish.
Ans 4(B):
FINANCING OPTIONS FOR ENTREPRENEURS BUSINESS
BOOTSTRAPPING

The first and my favorite financing option is bootstrapping. When

bootstrapping you finance your business based on internal
sources: your personal assets, other parallel businesses, or the
revenue of the business itself. The idea of bootstrapping is to
cover the cost with the revenues of the business as fast as
possible in order to achieve a continuously self-supporting
business.
This option can be used generally in every stage of your
company, but it suits best for the idea stage and concept stage.

When to choose: I will boostrapp my company when the capital and

network requirements are very low (e.g. less than $10k) to achieve break
even.
Examples of companies which grew by bootstrapping: 37signals
FAMILY & FRIENDS

The second option is using assets of your family and friends for
growing your business. When you have tested your business
model under market conditions and only need a little more
resources (aka cash) for optimizing your business or for
reaching break even, then asking your family and friends might
be a good financing option for you. But be aware that
investments from your closest friends and family might worsen
if your business fails. Therefore, we recommend asking for a
loan under friendly conditions which you will pay back to your
friends and family.

When to choose: When you only need little financial resources for reaching
break even and you are quite damn sure about that, then asking your family
and friends might be a good financing option for your business.
Examples of companies which grew based on assets of family and friends:
TBD

CROWD FUNDING

The third financing option is to get funded by people via crowd

funding. You just register at a crowd funding website, upload
your project description and why people should finance your
project, and then hope for the best. There are different
website specific types of crowd funding:

Thank you-funding, if the people provide their money for a specific

start-up project with no return promised (donation-like)
Product-Return-funding, if the people get some product from the
start-up project in return for their financing
 Equity/Debt-funding, if the people gets either equity stake or debt
obligation from the startup company in return for their investment

When to choose: If your business has a medium need for financing (e.g.
$50k to $200k) and you run a B2C business model, then crowd funding
might be a good financing option; especially if you go for the Thank you-
funding.
Examples of companies which grew based on crowd funding: Oculus

ACCELERATOR

The fourth financing option is getting funded by an accelerator such

as Ycombinator. A good accelerator provides funding for you to
build a minimum viable product, test product market fit, get
some media traction and make relevant contacts with potential
partners. Ycombinator is a good example for this and giving
you advice on how to iterate your business model.

After you leave the accelerator program you will either have to break even or
in most cases you will have to look for follow up financing by venture
capitalists.

When to choose: If you have a rough idea or concept for a business and
love to build your product together with serial entrepreneurs for less than
$20k, then using an accelarator program is a good financing choice.
Examples of companies funded by an accelerator: Firebase

BUSINESS ANGEL

The fifth financing option is to find a business angel. A business

angel is a wealthy individual who likes being involved and
invested in startups. Many business angels are corporate
executives or entrepreneurs, so you can learn from them while
 using their network. Business angels typically invest between
$50k and $250k.

When to choose: If you need a substantial amount for testing your

business model assumptions or for reaching break even while having a close
exchange with some experienced business angel, then this financing option
should be considered.

Examples for business angel financed companies: Google

VENTURE CAPITAL

The sixth financing option is to fund your business via venture

capital. Venture capitalist look for highly disruptive and
hockey-stick like growing companies that they can invest in
$500k to $$20m in equity.

When to choose: If your company is growing quickly and is serving an

innovative solution while not being profitable yet, then venture capitalist
might be a good financing solution as they will provide you with capital and
contacts.

Examples of companies financed by venture capitalists: Twitter

PRIVATE EQUITY

The seventh financing option is to get bought out by private equity.

Private equity investors buy your company, takeover
management control and try to increase the value of your
company.

When to choose: If you would like to retire from business, dont find a
successor or just want to cash in, then selling your company to a private
equity investor might be a good option. This is only applicable to mature
companies. Examples of private equity financed companies: Dell