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Unit VAn Entrepreneurial Process Q1) What do you mean by Entrepreneur? What is Entrepreneurship?A1) The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake’. This refers to those who “undertake” the risk of new enterprises. An enterprise is created by an entrepreneur. The process of creation is called “entrepreneurship”. Entrepreneurship refers to the process of creating a new enterprise and bearing any of its risks, with the view of making the profit. It is an act of seeking investment and production opportunity, developing and managing a business venture, so as to undertake production function, arranging inputs like land, labour, material and capital, introducing new techniques and products, identifying new sources for the enterprise.The person who creates a new enterprise and embraces every challenge for its development and operation is known as an entrepreneur. And the undertaking or organisation, typically a startup company, set up by the entrepreneur is called enterprise. Q2) Describe the process of Entrepreneurship.A2) Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise. Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata and others all went through this process. To establish and run an enterprise it is divided into three parts – the entrepreneurial job, the promotion, and the operation. Entrepreneurial job is restricted to two steps, i.e., generation of an idea and preparation of feasibility report. Here, we shall restrict ourselves to only these two aspects of entrepreneurial process. 1. Idea Generation: To generate an idea, the entrepreneurial process has to pass through three stages:a. Germination: This is like seeding process, not like planting seed. It is more like the natural seeding. Most creative ideas can be linked to an individual’s interest or curiosity about a specific problem or area of study.b. Preparation: Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a search for answers to the problems. Inventors will go on for setting up laboratories; designers will think of engineering new product ideas and marketers will study consumer buying habits.c. Incubation: This is a stage where the entrepreneurial process enters the subconscious intellectualization. The sub-conscious mind joins the unrelated ideas so as to find a resolution. 2. Feasibility study: Feasibility study is done to see if the idea can be commercially viable. It passes through two steps:a. Illumination: After the generation of idea, this is the stage when the idea is thought of as a realistic creation. The stage of idea blossoming is critical because ideas by themselves have no meaning.b. Verification: This is the last thing to verify the idea as realistic and useful for application. Verification is concerned about practicality to implement an idea and explore its usefulness to the society and the entrepreneur. Q3) Write a note on Emerging Trends in Business.A3) Emerging Trends in BusinessLike in any other industry, business industries to witness various changes in the fashion of it’s working over the time. These changes are referred to as business trend. The emerging trends in business can be identified as depicted below:Network Marketing: Network marketing is basically a medium of marketing that manufacturers use to expand their sales. Manufacturers use them when they have to deal with several distributors to push out their products. Sometimes, these distributors might have sub-distributors. As a result, this leads to a “network” of distributors that operate at various levels of the distribution chain.Business Process Outsourcing: Business Process Outsourcing, popularly known as BPO, is the business strategy where one company hires another company to perform a certain task for them, i.e., they outsource a certain job.Say for example a manufacturing company will outsource their supply chain management to another company who specializes in supply chain management. So, it essentially entails outsourcing one or more non-core business activities or processes to an external service provider. So, there are two parties involved, the client company (the outsourced) and the external service provider or the vendor (the outsourcer)One point to be noted is that only non-core activities are usually outsourced. The companies do not part with their core competencies, they maintain all their focus on these like manufacturing, marketing etc.However non-core services like after sales service, customer relations, supply chain management, real-time accounting etc. can be outsourced to BPOs.Knowledge Process Outsourcing: Knowledge Process Outsourcing (KPO) means information related business task or knowledge-based processes such as research, analysis, consultancy or any other high-level task are outsourced i.e. done by the workers of another company or allocated to the subsidiary of the same organization.These subsidiaries can be in different countries or geographical location. This is done in order to save resources and costs. KPO firms can take decisions of businesses on the behalf of the parent companies. KPO is nothing but the subset of Business Process Outsourcing (BPO).E-Commerce: E-Commerce or Electronic Commerce means buying and selling of goods, products, or services over the internet. E-commerce is also known as electronic commerce or internet commerce. These services provided online over the internet network. Transaction of money, funds, and data are also considered as E-commerce. These business transactions can be done in four ways: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B). The standard definition of E-commerce is a commercial transaction which is happened over the internet. Online stores like Amazon, Flipkart, Shopify, Myntra, Ebay, Quikr, Olx are examples of E-commerce websites.M-Commerce: Mobile commerce popularly known as m-commerce is actually just a subset of e-commerce. The term itself was coined in 1997 by Kevin Duffy. It is essentially a way of carrying thousands and millions of retail shops in your pocket.Very simply put M-commerce entails the e-commerce transactions done with a mobile phone. So, M-commerce is the use of mobile phones to conduct any type of business transaction. It takes the help of the e-commerce background and WAP technology.The use of wireless technology (WAP) to conduct sales of goods, provide services, make payments and other financial transactions, the exchange of information etc. is the basis of mobile commerce.Franchising: Franchising is an arrangement where franchisor (one party) grants or licenses some rights and authorities to franchisee (another party). Franchising is a well-known marketing strategy for business expansion.A contractual agreement takes place between Franchisor and Franchisee. Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and brand name. And these franchisee acts like a dealer.In return, the franchisee pays a one-time fee or commission to franchisor and some share of revenue. Some advantages to franchisees are they do not have to spend money on training employees, they get to learn about business techniques.Aggregator: In this digital age, there are millions of websites and an unending flow of information on the internet. So, an aggregator provides the services of collecting and compiling similar and important information on one website. Accordingly, there are various types of aggregators – news aggregators, service aggregators, video aggregators etc. Q4) Write a note on Government’s support to BPO in India.A4) Government's Support to the BPO Sector in India Recognizing the growing importance of the business process outsourcing, the Government of India has introduced various policy concessions and initiatives to accelerate the growth of the IT-enabled outsourcing market. Spearheaded by associations such as National Association of Software and Service Companies (NASSCOM), the Indian software and services industry has also taken various steps to ensure that India becomes the global hub for IT-enabled outsourcing in the future. Some of the steps take by the Government and industry for the ITES/BPO sectors are as follows: # In May 2002, the Government of India has accepted the recommendations of NASSCOM and removed certain procedural bottlenecks that were hampering the growth of the Indian call center industry. # The Government of India (Central Board of Direct Taxes - CBDT) has allowed total income tax exemption on the export of IT enabled outsourcing services under Sections 10A/10B of the Income Tax Act, 1961. These IT enabled products or services are: Back-office Operations Call Centres Content Development or Animation iv. Data Processing v. Engineering & Design services vi. Geographic Information System Services vi. Human Resource Services vii. Insurance Claim Processing ix. Legal Database x. Medical Transcription xi. Payroll xii. Remote Maintenance xiii. Revenue Accounting xiv. Support Centres; and xv. Web-site services # Foreign Direct Investment (FDI) for 100 percent of the equity has been permitted in BPO companies.# Permission of duty-free imports of capital goods (under the Export Promotion of Capital Goods scheme) for BPO companies.# The Government has promoted several Software Technology Parks (STPs) which provide ready-to-plug IT and telecom infrastructure. STPs also allow single-window clearance for all regulatory compliance issues. Currently, several STPs have been established across India covering most of the major towns/cities. #The Narendra Modi government is contemplating to introduce a new policy that will help BPO (Business Process Outsourcing) units set up base in smaller towns, especially in the North-Eastern India #Govt. to offer subsidy of up to 50% of capital expenditure or Rs 1 lakh/seat, whichever is lower. Q5) What are the basic considerations in setting up a Business Enterprise?A5) Starting a business can be a motivating idea especially for first time entrepreneurs or employed individuals who are tired of the 8am-5pm job. It’s encouraging to start a business when you think about the freedom of not working 8-9 hours a day in a confined office, not having to report to a boss, and the possibility of endless profit.Starting a business is a good decision, however, it can also be stressful, challenging and not as simple as it looks like.The following are the things to consider before jumping in to the world of business.1. Nature of the businessThe first you need to think about is what will you offer. What are you going to sell in your business? In general, you can choose to provide the following: service, merchandising or manufacturing.Service – it can either be selling time and expertise, such as professionals, event organizers, IT, marketing, etc.; or it can also be restaurants, food kiosks, transportation, salon, spa, etc.Merchandising – also referred to as retail, wholesale, trading or distribution. Buy-and-sell of goods. Examples are grocery and department stores, retail outlets, online resellers, etc.Manufacturing – combining raw materials, labor and use of equipment, then turn it into a saleable product. Example are manufacturers of cars, gadgets, clothing, bags, daily essentials, etc.2. Target CustomerHaving a service or product to sell is not gonna make you profitable if you do not have customers who will buy it.If you plan to start a business and you know what to sell, before you begin, study if there is a market for it. Identify who your customers are. Remember the saying, a product or service for everybody is a product or service for nobody.3. LocationMake sure you identify or look for the best location for your business. Your business must be seen by your target customer or at least near them.4. FormationOnce you’ve identified what to sell, who to sell it to and where to sell it, now think about how you’ll form the business. You can choose on sole proprietorship, partnership or corporation.Single proprietorship – you’re the sole owner of the business.Partnership – you can divide the business with another person(s) which you will call partners. You need at least two people to form partnership.Corporation – you can divide the business with another person(s) which you will call stockholders. You need at least five people to form corporation.5. CapitalCapital is the amount or value you need to put in the business to get it started and operating. It can be cash or non-cash. To know how much capital you need, list down all the possible spending you need to make to start and operate, such as assets to purchase, renovation, lease payments, operating expenses etc.6. Asset RequirementsWhen starting a business, plan the assets that you’ll need to operate. This may include the following example: computers, equipment, furniture, vehicle, etc. List down not only the item but also the quantity and price.7. Lease, Renovation and ImprovementsNext item to consider is if you will rent out a space. When renting, normally lessors require advance rent and security deposits which is equal to three (3) to six (months) of monthly rent. Also, rental space are usually bare and requires renovation and improvements. Consider these costs in your business plan.8. SuppliersIdentity potential suppliers needed to produce the service or goods you will sell. Consider their price, location, reliability and operating hours.9. Operating ExpensesIdentify and list down all the expenses or spendings you need to operate the business such as salary, rent, office supplies, utilities, etc. Consider the monthly costs in your business plan. This step is also important in your capital requirement because normally you have to keep at least six (6) months to one (1) year of monthly spending as capital.10. Hire People or OutsourceIn my experience, people management is one of the toughest job of business owners. This may be the reason why outsourcing is in demand. If you plan to start a business, include in your consideration if you will hire people or just outsource it. If you decide to hire, consider the salary and other government regulations you need to comply with such as DOLE, SSS, PHILHEALTH and Pag-ibig. If you consider to outsource, consider the expertise and reliability of the company you will outsource to.11. RegistrationAfter considering all the capital and expense requirement, before you start operating, make sure you have the registrations needed to legalize your business. 12. Bank account for the businessConsider opening a bank account separate for your business. This is to simplify your record keeping and avoid mixing your personal to your business especially if you are a single proprietor. When choosing a bank, it must be accessible and available.13. MarketingRarely a business sell without a good marketing plan. Marketing is one of the key factor why businesses succeeds, and why it fails. Choose the right marketing platform for your business.14. Government ComplianceAnother important item to consider, but often neglected, is the government reporting you need to comply with every month, quarterly and annually. I’ve seen many business succeeds but later on faced with government penalties due to neglect on this important item. Government Compliances include at minimum filing and payment of taxes, SSS/Philhealth/Pag-ibig contributions. As well as yearly payment of Barangay and Mayor’s permit.15. Accounting and Financial AnalysisLast but not the least, when you start a business, ensure you have a reliable accounting and financial reporting process in place. Accounting is the language of business. To know what’s really happening in your business, you must have a reliable accounting and financial reporting system. Q6) Write a note on identification of business opportunities.A6) To be successful entrepreneurs, we need to be continually innovating and looking for opportunities to grow our startups.But how do you find new opportunities to take your startup to new markets and growth levels? Here are four ways to identify more business opportunities.1. Listen to your potential clients and past leadsWhen you’re targeting potential customers listen to their needs, wants, challenges and frustrations with your industry. Have they used similar products and services before? What did they like and dislike? Why did they come to you? What are their objections to your products or services?This will help you to find opportunities to develop more tailored products and services, hone your target market and identify and overcome common objections.2. Listen to your customersWhen you’re talking to your customers listen to what they saying about your industry, products and services. What are their frequently asked questions? Experiences? Frustrations? Feedback and complaints?This valuable customer information will help you identify key business opportunities to expand and develop your current products and services.3. Look at your competitorsDo a little competitive analysis (don’t let it lead to competitive paralysis though) to see what other startups are doing, and more importantly, not doing? Where are they falling down? What are they doing right? What makes customers go to them over you?Analysing your competitors will help you identify key business opportunities to expand your market reach and develop your products and services.4. Look at industry trends and insightsSubscribe to industry publications, join relevant associations, set Google alerts for key industry terms and news and follow other industry experts on social media.Absorb yourself in your industry and continually educate yourself on the latest techniques and trends. Q7) Discuss the entrepreneurial decisions.A7) One of the burdens of being an entrepreneur is having to make tough decisions. But since opportunities often come disguised as decisions, it’s something business owners have to get used to if they want to experience growth.Over the life of your business, you’ll be faced with many decisions. Many of these will have a relatively small impact on the success of your business. But some can have an enormous impact.Here are five big decisions every entrepreneur should be prepared to face head on if they want to keep moving forward.1. Whether to turn your idea into a reality. Of course, the decision upon which the rest of your decisions will rest is whether to start your business in the first place. This may involve sacrificing a dependable, full-time income, or it may mean scaling back at work to pursue your dream. Or, if you’re like many entrepreneurs, the toughest decision may be which idea to turn into a business.2. Whether to expand or keep the status quo. Keeping your business small may feel more manageable and less risky, as you can personally oversee most components of the day-to-day operations. However, the temptation to expand can be strong. Sometimes it’s the allure of new revenue, or sometimes it’s simply the potential for something new and exciting.3. Whether to give up. Starting a business is hard work (that’s putting it mildly), and much of the hard work you do now won’t pay off until far into the future. It may be that financial struggles make you want to give up, or simply a lack of motivation due to disappointing business results.Whatever the reason, thoughts of giving up cross every entrepreneur’s mind, usually more than once.4. Outsourcing or hiring in-house. There will come a time for every business, almost without exception, when the need for additional personnel or an influx of new skills becomes non-negotiable. And one of the biggest decisions a business owner must face at this juncture is whether to hire new staff or to outsource.Unfortunately, no one can tell you what’s right for your business in this regard. Some of the factors you’ll need to consider include:Payroll and benefit costs versus contractor costsType of job or role. For instance, functions such as online marketing, accounting and IT are often successfully outsourced, however, core areas such as PR and sales are often better kept in-house.Your company culture: If you have a strong culture that must be evident in all tasks and roles, in-house may be preferable.Your industry and the competitive environment: If you’re in a highly competitive industry, hiring in-house may reduce the risk of trade secrets being divulged.5. Product or service pricing. Determining your "sweet spot" in terms of pricing is an enormous decision that all entrepreneurs will be faced with throughout the life of their business. How you price your products or services will communicate the perceived value of your offering, and will position you against certain competitors in the marketplace. Q8) What are the factors to consider when determining the price of a product or service?A8) Some of the factors you are likely to consider when determining the price of a product or service include:Having a solid understanding of what your target market is willing to pay. Understanding what you can afford to charge, taking into consideration all of the hard and soft costs associated with producing the product. Knowing how your product compares to other, similar products, and whether you can legitimately charge a premium for additional features, higher quality, etc.
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