undefined | unit 3 sustainability of entrepreneurship

ENP

Unit 3

Sustainability of Entrepreneurship

Q1) Discuss about the Public and private system of stimulation, support and sustainability of entrepreneurship.

A1) Entrepreneurship is a prominent and sustainable source of livelihood and self-employment in an economy. It also contributes to the society and economy with their innovative ideas. In order to build a favourable entrepreneurial ecosystem, entrepreneurs should be provided with a platform where they can :-

Come up with Innovative ideas ( i.e. get stimulated)

Get adequate assistance ( i.e. get support)

Ensure their survival in the long run (i.e. be sustainable)

These three elements are entrepreneurship life cycle depicted in Figure 1

Figure 1: Entrepreneurship life cycle

Stimulation:

It refers to the act of identifying & motivating individuals, to come up with innovative ideas and commercialise them to solve the problem of the society and economy and also create changes for the betterment of the society and economy as a whole. Different simulation system includes-

a) Public simulation system initiated by the government. It includes the approaches like tax holidays over income, reduction in interest rate on loan, abolition of monopoly from the market, financial assistance to their projects etc.

b) Private simulation system initiated by the business persons through crowd funding, angel investment, encouragement for intrapreneurship etc.

Figure 2: Simulation approaches

2. Support:

During the process of converting ideas into business ventures entrepreneurs need financial, marketing and technical support which may be provided by public system and private system. The figure 2 shows the different types of support system-

Figure 3: Support system

a) Financial Support :

An entrepreneur requires funds for stating a new venture & for sustaining it in the long run. Additional funds are required when an existing enterprise plans for expansion & / or diversification. Any organisation requires funds for 2 purposes

1) For procurement of Assets

2) For day to day running of the org

Funds are available from banks, financial investors, shareholders, angel investors, venture capitalist etc.

b) Marketing support:

New start-ups also look for marketing assistance to market and sell their products/ services. Initiatives are taken by both public and private system enhance marketing skills, improving marketing capabilities and for encouragement of MSMEs.

c) Technical support :

The entrepreneurs also need technical support like machines, devices, application software to manufacture products/provide services and marketing of their products and services.

3. Sustainability:

Sustainability refers to the act of continuous, efficient & profitable maintenance of the activities of a venture over the long period. Activities for sustaining Entrepreneurship are–

a) Helping in modernization or substitution of existing products

b) Facilitating quality testing & quality improvement mechanism at low cost.

c) Creating forums for entrepreneurs to share their mutual problems.

Q2) Discuss about the requirement, availability and access to finance to the entrepreneurs in India.

A2) An entrepreneur requires funds for stating a new venture & for sustaining it in the long run. Additional funds are required when an existing enterprise plans for expansion & / or diversification. Any organisation requires funds for 2 purposes-

1) For procurement of Assets.

2) For day to day running of the org.

Such funds are available from-

1) Institutional sources

a) Commercial banks

b) NBFIs

c) Angel investors

d) Shareholders

e) venture capitalist

f) Govt. & Govt. institutions

2) Non- institutional sources-

a) Relatives

b) Friends

c) Money landers

d) Indigenous bankers

The figure shows the requirement and availability of funds for entrepreneurs-

Figure: Requirement and sources of funds

Q3) Discuss about the requirement, availability and access to marketing assistance to entrepreneurs.

A3) There is requirement of marketing assistance for entrepreneur and new business venture because of lack of marketing knowledge and also to face competition in the market. Due to availability of similar products in the market it become very necessary for producers/service providers to position and promote their products among the target market through efficient marketing strategy. Some of the reasons for requirement of marketing assistance are-

a) Availability of similar products in the market

b) Survival in the long run

c) Attract the target market

d) Increase the market share

The measures taken for the availability and access to marketing assistance are-

a) Enhance marketing skills of entrepreneurs by imparting skills on packaging, trade mark, promotion etc.

b) Improving Marketing Capabilities

c) Updating Entrepreneurs about current scenario

d) Encourage MSME through implementation of entrepreneurship promotion schemes.

e) Conduct fairs and exhibitions for the products of entrepreneurs.

The figure shows the requirement and availability of market assistance-

Q4) Discuss about the requirement, availability and access to technology to the entrepreneurs.

A4) The entrepreneurs also need technical support like machines, devices, application software to manufacture products/provide services and marketing of their products and services. The figure shows the technical support for entrepreneurs

Q5) Discuss about the requirement, availability and access to industrial accommodation for entrepreneurs.

A5) Industrial accommodation is required to provide support to the small industries/entrepreneurs for their growth and development. It facilitates to small and local entrepreneurs through tax benefit, subsidised and concessional loan, export promotion measures, etc.

The figure shows industrial accommodation measures for entrepreneurs-

Q6. Discuss the role of industries/entrepreneur’s associations and self-help groups, the concept, role and functions of business incubators, angel investors, venture capital and private equity fund.

Q7. Discuss the role of different associations and groups in promotion of start-ups.

A) To Q6,7

Industry Association

An association that is formed to support & protect the rights of a particular Industry & the persons who are associated with that Industry. E.g. Bus owners association, Chamber of commerce etc.

Role and functions

It educates members to improve the efficiency.

It prevents cut throat and unfair competition

It promotes and extends trade through legislative work.

It provides market information to members with regard to customer preferences, expectations and market opportunities.

It provide advice on technical matters and legal issues.

Self – help groups

It is a voluntary association of people, preferably from the same socio – economic background. They come together for solving their common problems through self – help & mutual help.

Role and functions

All members of the group can collective generate an idea for production of products.

The group able to get formal loan from different sources.

It promotes entrepreneurship among females in the areas of food processing, handloom and handicraft.

It provides source livelihood to rural population and uplift economic situation of rural economy.

Business incubators

It is an organization, which is designed to stimulate, support & enhance the growth & success of Entrepreneurial ventures by providing resources & services.

It guides start-up/ventures on how to compete with established industrial players.

It helps start-ups to save operating costs.

It provides marketing assistance and helps to conduct market research.

It helps in accounting and financial management.

They provide access to banks, NBFIs and guarantee programmes.

Angel investors

Angel Investors are usually high net worth individuals who invest their personal wealth in small or medium scale business start- ups in exchange for an ownership stake in the organization.

It provides financial, recruiting and deciding the strategy to the new investors.

It helps in widening the network of new business houses among customers, traders and financial institutions.

They mentor the young and intellectual entrepreneurs to create a successful business environment.

Venture capital

Venture capital is an equity investment fund where the venture capitalists finance the highly risky and sophisticated technology projects through equity financing. It promotes and supports the projects until it started to earn profit.

Role and functions

It provide finance as well as new skills to new enterprises.

It develops business plan, conduct market research with the new business venture.

It helps the firm to launch the product in the market by providing sufficient market linkage.

It provides technical support to the new enterprises.

Private equity fund

It is a collective investment scheme used for making investment in different equities and debt instrument for 5-10 years. Such funds are not traded in stock market. Different types o are-

a) Venture capital

b) Buyout: It is designed to invest in a larger business to generate favourable and sizable returns.

c) Real estate: Such funds are invested in ownership of various real estate properties.

d) Growth funds: It invests in mature corporates with successful business.

Role and functions are same as venture capital functions.

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