Revision Questions chapter 1

1. Who is an entrepreneur?Basically an entrepreneur is an innovator, job and wealth generator.In addition
to the above he is also
 Change agent
 Problem solver
 Pace setter
 Excellence seeker
 Marketing executive
 Concept promoter
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2. List the key functions of an entrepreneur.
In order to be an entrepreneur, the individual performs various functions. Among the various functions
performed, the following functions, also known as entrepreneurial functions, are specifically considered as
the characteristics of an entrepreneur.

1. Sensing an entrepreneurial opportunity.

2. Converting ideas into Reality.
3. Developing the business plan.
4. Resourcing
5. Establishing an enterprise.
6. Managing the enterprise
7. Growth and development.
All these functions are known as entrepreneurial functions. The success and the quality of the output of the
performance of the entrepreneur depends on how well he performs these functions. Therefore these
functions performed describe the intensity fo the relationship fo the entrepreneur with the enterprise. For
this reason, we can say that the relationship between the entrepreneur and entrepreneurship can be
described as that between the body and the soul.

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3. What are the unique characteristics of an entrepreneur?
4. Why is entrepreneurship important for a country?
Entrepreneurship is important for a country because entrepreneurship facilitates the rate of development of
a country by significantly contributing to the following factors.

 By increasing the rate of growth in GDP of a country

 Increasing productivity.
 Growing employment opportunity.
 Increasing economic diversification.
 Optimum use of local resources
 Continued innovation in techno – managerial practices
 Improving in international competitiveness.
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5. List the stages of growth and development of entrepreneurship.
The process of entrepreneurial development consists of creating an entrepreneurial person by

i. Imbibing entrepreneurial quality and motivation.

ii. Developing capacity of sensing, selecting, planning and establishing an enterprise.
iii. Acquiring ability to successfully manage the set enterprise.
The main methodology can be best classified into simulatory, support services and sustaining. This is best
explained through the following diagram.

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6. What is the relationship between human activities and entrepreneurship?
Human needs represent a wide range.

 Economical
 Physical
 Political
 Psychological
 Spiritual
 Social
To satisfy these needs, every human being is continuously engaged in a variety of activities. For
performing these activities, people need

 Certain tools and techniques

 Means and methods
 Products and services
 Facilities and environment.
This creates perpetual entrepreneurial opportunity in the society for

 continuous innovation
 Production
 Distribution
 Maintenance
 Modification
 Improvement
in such and services to enable people to perform the required human activities. Thus the entrepreneurial
opportunities and human activities are positively associated in terms of nature, growth and continuity. In
other words, entrepreneurial opportunity lies in meeting human.
7. What are the social motives in entrepreneurial motivation?

Definition: Motivation is regarded “as the inner state that energizes activities and directs or channels
behavior towards the goal”. It can also be seen as a process that arouses action, sustains the activity in
progress and that regulates the pattern of activity.
The motives can be categorizes as social and psychological motives.

Few of the social motives are

 Self esteem
 Social acceptability
 Competence building
 Wealth generation
 Self actualization
Motives are not necessarily the gifts of heredity but are the outcome of the individual’s interactions with
others or the society.
8. Why are entrepreneurs moderate risk takers?
9. Mention a few rules for effective communication.
10. Name any three central level financing institutions supporting entrepreneurs.

II. Answer the following questions in a sentence each:

1. How do people generally earn their living?
According to the famous quote by Rober Louis Stevenson (R.L.Stevenson), “Every one lives by selling
something”.
This quote proves out to be true with any person. If we carefully observe the society, we can notice that
people will either
 Sell goods : people selling clothes, electronic goods, food items, industrial goods, automobiles
etc come under this class.
 Sell services : people who provide engineering services, medical services, legal services,
educational services etc come under this class.
2. How do entrepreneurs differ from employers?
Employee: Employed under some one and works for them to earn their income, for living.
Entrepreneur: Work for themselves and own their business/venture. They take complete accountability of
the business and consider themselves responsible for the success or failure of their enterprise.
3. When does a problem become an opportunity?
A problem becomes an opportunity when it is considered as a challenge to solve leading to an
economically viable solution.

4. How are entrepreneurs different from others in perceiving an opportunity?

Entrepreneurs are different from other in perceiving an opportunity in the following ways:

 They are quick in perceiving the opportunity.

 They will be able to collate the available information.
 They will be able to analyze the patterns which are not usually ignored by others.
5. What are the two basic roles of an entrepreneur?
The two basic roles of an entrepreneur are:

 Opportunity spotter
 Project champion

III. Answer the following questions in about 200 words each :

1. What is meant by ‘Sensing Entrepreneurial Opportunities’? Explain the important factors
involved with suitable examples.
Sensing entrepreneurial opportunities: It is a process of
 1. perceiving the opportunities from the problems and needs of people and society (quickly)
2. or create or craft business opportunities (by innovating new products/services that are not
already in existence)
3. synthesize the available information
4. analyze the pattern emerging out of this information
5. arrive at creative solutions to meet the needs or resolve the problems.

The following factors play a key role in sensing of entrepreneurial opportunities.

a. Ability to perceive and preserve basic ideas.

The following are the various sources which lead to the emergence of basic ideas.
 Problems: When a problem exists and an idea leads to a solution to resolve that
problem, it emerges as a business opportunity.
 Change: A change in social, legal, technological aspects etc. leads to new
opportunities to start a business.
 Inventions: Invention of new products or services leads to new business
opportunities.
 Competition: Competetion often results in emergence of new and better ideas
that result in new business opportunities.
Various sources like magazines, journals, books, seminars, trade shows, family members,
customers, friends etc help in getting information that helps in evolution of basic ideas.

b. Bring together various sources of information and knowledge, and analyze it to the best
possible extent. The analysis helps in the identification of the right opportunity to start a new
business.
c. Creativity in innovating a solution and vision. The entrepreneur should be able to creatively
identify an idea to generate a valuable solution to a problem. Once the solution is identified
their vision to convert the solution into business opportunity help them to move forward,
overcoming all the obstacles. They constantly
 overcome the adversity
 will be able to exercise control over the business
 will be capable of making significant difference.
2. What are the major categories of entrepreneurial ideas? Discuss them with an example each from
your observations and reading.
The (sources of) entrepreneurial ideas can be majorly classified under the following four categories.

1. Problems: Most often an innovative solution to a problem leads to an entrepreneurial

business opportunity. Cable telephones were a major limitation interms of mobility. They were
always confined to a limited area and communication was very limited. This lead to the
research for mobile and wireless technology that lead to the emergence of cell phones.
 2. Change: A change in either
 Social
 Legal or
 Technological
will lead to new business opportunities.
The social change has lead to a change in the fashion technologies. For example
the evolution of the Jeans and T-Shirt market to dominate conventional formal
dresses is best example. Another major example is a development in cooking
technology that is slowly replacing the cooking gas stoves with induction cooking
devices.
3. Inventions: Creation of new products or services that have values falls under this category. It
can also be innovative improvements to an existng product or service. A change from
conventional key pad operated mobile phones to the modern smart phones is an example of
invention.
4. Competition: To dominate the market and to overcome the competition from the competitors,
entrepreneurs rely on new and improved ideas. Inclusion of the smart technology in the
television where in the hand movements are recognized by television to operate it and to play
games is a best example. The 3D television market emerging is also an example where in
new and improved ideas are included into the products to beat the competition.

. Answer the following questions in a sentence each :

1. From what do entrepreneurs spot opportunities.
Entrepreneurs spot opportunities from various ideas generated by analyzing the various sources of
information.

2. What are the two ways in which entrepreneurs receive opportunities?

The two ways in which entrepreneurs receive opportunities are by scanning the environment and

 generating innovative ideas to the needs and

 inventing solutions to problems.
3. What is the crucial requirement for a successful venture?
The crucial requirements for a successful venture are

1. Sensing of existing opportunities.

2. Innovate new ideas and there by creating opportunities
and more essentially interacting with the environment.

4. What is the interface between ‘spotting’ and ‘product-identification’?

The interface between ‘spotting’ and ‘product-identification’ is the evaluation of various crucial environment
parameters.

5. What does the word ‘scan’ mean?

Literally, scan means to examine closely. It is especially used in the context of searching for something.

II. Answer the following in 50-60 words each.

1. What are the three steps involved in the process of sensing entrepreneurial opportunities.
The three steps involved in the process of sensing entrepreneurial opportunities are

1. Scanning of the environment: To be of economic value, the entrepreneurial oppportunity

identified should be compatible with the following environmental factors:
 Cultural
 Developmental
 Economic
 Financial
  Government and non-governmental institutional support
 Legal
 Political
 Social
 and other developmental factors
This requires a thorough scanning of the environment to understand these factors.

2. Generation of ideas: The scanning of the environment help in collecting different ideas. This
leads to an innovative product or service. This entire process is called ‘Generation of ideas’.
3. Identification of product or service: After generating the idea for an innovative product or
service, the entrepreneur should evaluate the product or service. If the product or service
exists in the current market, there should identify strong reason to introduce the product into
the market. If the product or service is entirely new, they should take necessary steps to
introduce it into the market.
2. What do you understand by ‘Scanning of Environment’?
‘Scanning of environment’ is the first step in the sensing of entrepreneurial opportunity. It is required to
ensure that the identified entrepreneurial opportunity is compatible with various environmental factors as
described below.

 Developmental and institutional factors: The encouragement and guidance of various

governmental and non-governmental institutions plays a vital role in the setting up of an
enterprise.
 Economic Factors: The vital economic factors like demand and supply will determine the
size of the enterprize. The health of the economy will also determine the various means of
financing the business.
 Financial Factors: The fnnds required for starting up an enterprise requires a close
examination of the available financial institutions and other sources of funding.
 Social and cultural factors: Evaluating the social and cultural factors is essential before
implementing a business concept. This will ensure that the product or service is compatible
with the needs of the population living in a specific region.
 Legal factors: Starting an enterprise involves fulfilment of various legal requirements. Thus
the environment has to closely scanned for legal factors.
 Political Factors: Various govermental policies prevailing in the society will affect the setting
up of the enterprise. Thus a thorough scanning of the political factors is required.

3. Why is environment an important factor for entrepreneurship?
Environment plays a crucial role in setting up of an enterprise because of the influence of various
environmental factors as described below.

 Developmental and institutional factors: The encouragement and guidance of various

governmental and non-governmental institutions plays a vital role in the setting up of an
enterprise.
 Economic Factors: The vital economic factors like demand and supply will determine the
size of the enterprize. The health of the economy will also determine the various means of
financing the business.
 Financial Factors: The fnnds required for starting up an enterprise depends on the
availability financial institutions and other sources of funding and the policies followed by
them.
 Social and cultural factors: Evaluating the social and cultural factors plays a vital role and
requires that the enterprise is compatible with the needs of the population living in a specific
region.
 Legal factors: Starting an enterprise involves fulfilment of various legal requirements. Thus
these factors have a crucial role in setting up of an enterprise.
 Political Factors: Various govermental policies prevailing in the society will affect the setting
up of the enterprise. Thus political factors needs consideration for setting up of an enterprise.

III. Answer the following in about 200 words each.
1. ‘Sensitivity to environmental factors is crucial for an entrepreneur’. Discuss with suitable
examples.
Sensitivity to environmental factors is crucial for an entrepreneur because of the following reasons.

a. A major portion of the opportunities are from the environment. A close examination of the
surroundings may help a person about the lack of facilities that the people are suffering from.
For instance, a person might notice that there is scarcity of cooking gas supply and the power
supply and starts a business to sell solar operated cooking equipment and heating equipment
thus capitalizing the opportunity. Capitalizing opportunities like this will not be possible if the
entrepreneurs are not sensitive to the surrounding environment.
A similar example will be that of an entrepreneur who senses that the demand for a seasonal
events like those of marriages, national or religious celebrations can be capitalized.
b. The nature of the enterprise is solely dependent on the environment. A person can not start a
business to sell modern wear like Jeans and T-Shirts in a village environment where in the
demand for traditional wear is more and vice versa. Similarly a person can not start non-
vegetarian food supply in the geographical regions where in the majority of the population is
vegetarian. Such mistakes won’t happen if the entrepreneur has a greater sensitivity to the
conditions prevailing in the surrounding environment.
c. The success of the enterprise depends on its ability to meet the consumer needs.
Usually in winter there is demand for heating equipment or woolen clothes. Cotton clothes
have less demand. It is the opposite in summer. An entrepreneur should have greater
sensitivity to such facts and should be able to meet the demand from the consumers.
3. Why is scanning of environment considered as an interface between spotting and product
identification? Support your answer with at-least one example.

I. Answer the following questions in a sentence each :

1. What is the basic function of the process of environment scanning?
The basic function of Scanning of environment is Detailed Investigation of the environment with respect to
a. Developmental factors
b. Economic factors
c. Social and cultural factors
d. Political factors
to confirm that the entrepreneur’s innovation is compatible with these factors.
2. What is a ‘field of ideas’?
Field of ideas is a convenient frames of reference which will help and entrepreneur in streamlining the
‘process of generation of ideas’.
3. What do you understand by the term ‘generation of ideas’?
Generation of ideas refer to conscious endeavor to innovate a solution to a problem or need by collecting
ideas from different sources.
4. What is ‘brainstorming’?
Brainstorming refers to an unstructured productive discussion where in a group of persons gather together
to generate a number of innovative business ideas to meet the needs or solving problems.
5. Name one source of internal opportunities.
An Internal Opportunity (as opposed to external opportunity) is something that comes from inside an
entrepreneur – as a result of a hobby or passion or interest. A person fond of smart phones might develop
a smart phone application (something like whatsapp) and introduces to the world. A person interested in
acting can introduce new innovation in the style of acting. A person fond of gardening might introduce
hybrid flowers/fruits/vegetables. Similar innovation can be introduced in areas like photography, painting,
magic-illusion etc.
6. Why should an entrepreneur be keen and alert?
a. An entrepreneur should be keen listener to what others say, inquisitively (having or showing
an interest in learning things; curious) to get a good understanding of peoples’
i. tastes
ii. problems
iii. wants
 iv. and preferences.
b. They should be alert and open so as not to miss an opportunity to grab a new idea.
Thus by being keen and alert entrepreneurs gather information which will help them to innovate better
products or services by meeting the customer demands.
7. How are idea fields useful in generation of ideas?
Idea fields are useful in the generation of ideas in the following ways
a. They increase the awareness of the entrepreneur about various fields
b. They streamline the process of idea generation
c. They broaden the scope of thinking
d. They form convenient frames of reference to simplify the process of idea generation.
.
8. What is trading? What advantage does it possess over manufacturing?
Purchasing goods and services and then selling them to consumer for a profit is called as trading. It has the
advantage of
a. easiness to launch
b. less amount of risk
9. Give two examples of service sector ideas.
Service sector ideas can be classified as
a. Those that are linked with existing industrial enterprises like
i. Gardening
ii. Painting
iii. Transport
iv. Workshop
v. Maintenance
vi. Security
vii. Catering
viii. Cleaning
b. Those that are linked with commercial establishments like
i. Advertisement
ii. Book-keeping
iii. Computer center
iv. Courier service
v. Photocopy
vi. Printing
vii. Stationary supply
viii. Telecom center
b. Those that are help the commercial establishments to cater to their regular day to day
requirements like
i. Bill Collection
ii. Repairs
iii. Maintenance
iv. Pest Control
v. Water Supply
vi. Water tank cleaning
vii. Travel arrangements
10. What are the three important issues to be considered for sustainable development?
The three important issues that should be considered for sustainable development by the entrepreneurs
are

1. Consonance  with values

2. Environmental protection

3. Judicious  management of natural resources

II. Answer the following in about 50 words each.

1. Briefly outline the process of sensing entrepreneurial opportunities, describing each stage with
an example.
The process of sensing entrepreneurial opportunities has three basic steps
1. Spotting ideas: In this step certain basic ideas are received. The entrepreneur then uses this
creative process of spotting of ideas. At the end, the ideas will be harnessed and acquire
much better shape. For instance, when someone wants to bring an innovative education
system, he might end up with a an idea to start a school where the lessons are taught to kinds
through 3D hologram technology, to imbibe the concepts much better into their minds and
also to give a feeling of interactive learning.
2. Scanning of the environment: The entrepreneur then scans the environment. In this step
the ideas are evaluated against the prevailing environment. At the end of the process, the
potential and viability of the idea will be determined. In this step, for the above example, the
entrepreneur will evaluate the interest of parents, the availability of the supporting technology,
the willingness to pay the huge tuition fees by the parents.
3. Selecting the product or service: At end, an innovative product or a service is identified and
the entrepreneur is ready to establish and enterprise. The entrepreneur is now ready to
proceed with the starting of this school.
2. What is the difference between basic ideas and post-scanning
Basic Ideas Post Scanning Ideas
Basic ideas refer to the randomly spotted ideas Post scanning ideas emerge with a
during the initial phase. purpose to fulfil.
This process is experiencial in nature. This process is more strategic in nature.
To become potential opportunities, the basic The post scanning ideas are emerged by
ideas have to go through the process of strategically positioning the
a. Analysis a. skill
b. Evaluation b. knowledge
c. Close examination c. creative thinking and
d. Synthesis d. competency
against the prevailing environment in the
market.

3. How is market survey useful to an entrepreneur?

Market dynamics play a critical role and have a great influence on all the enterprises. Market survey helps
entrepreneurs to
1. Generate new ideas
2. Keep their products/services competent and take actions depending on the demand in the
market.
Market surveys help the entrepreneur to get valuable information about

1. demand
2. supply
 3. changes in consumer behavior
The information gathered by the marketing agencies also comes in handy in this regard.
The marketing survey analysis provides us valuable information on various factors like
1. Gap between demand and supply ex: Demand for LPG gas is more and supply is less. Ideas
for alternative sources of energy like solar.
2. Scope for manufacturing a product indigenous, if it is being imported. Currently various
electronic components are imported. Or for treatment of certain diseases, people visit foreign
countries.
3. Scope for improving various services. Food deliver system or bill collection system requires
an improvement.
4. Scope for the production of products with lower/cheaper cost. Solar panels are very
expensive.

III. Answer the following in about 200 words each.

1. Describe the different methods adopted by entrepreneurs to generate ideas with at least one
example for each.
I’m still in the process of preparing an answer for this
2. Comment on the following diagram.

Product Identification
What is the first sign that specifies that a person possesses entrepreneurial talent?
The first sign that specifies that a person possesses entrepreneurial talent is the ability to spot or identify an
entrepreneurial opportunity or idea.
Which qualities set an entrepreneur much ahead of others?
While most of the persons are good at just perceiving the ideas, the entrepreneur is good at perceiving the
ideas backed by appropriate action to convert those ideas into potential business opportunities. This sets
the entrepreneur way ahead of others.
Which personality traits drive an entrepreneur to convert spotted opportunities into commercially
feasible opportunities?
The following personality traits drive an entrepreneur to convert spotted opportunities into profitable
business ventures.
1. Talent: He/She should have minimum levels of innovative and creative skills and should be
able to perceive a long term futuristic vision which help him to gauge future prospects of the
idea.
2. Temperament: Temperament helps the entrepreneur to implement the identified idea into a
profitable project. Temperament is exhibited through
a. determination
b. boldness to take action
c. enthusiasm
d. zeal to carry out the proposed mission
 e. Any other qualities that put him into action to convert the idea into venture.
3. Technique: He/She should have/know various techniques to manage various resources like
money, men, material, machines and more importantly time
Why should the entrepreneur be very careful while generating the ideas?
The entrepreneur should be very careful while generating the ideas because the implementation of the idea
without a detailed investigation, without consulting the experts, could result in losses.
What is investigation of ideas?
Investigation of ideas is a series of activities performed to gauge the potential of the idea to convert it into
economically viable opportunity.
Why should an entrepreneur consider the investigation of the idea?
After idea generation it is essential for the entrepreneur to consider the investigation of the idea to gauge its
economic viability. Directly jumping into implementation after generating the idea could result in a failed
venture. So investigation of the idea is critical.
Which factors play a key role in deciding the price of a product or service?
Unit cost of a product for a particular operation and whether this cost is comparable with similar unit cost of
the product for this operation will determine the sales price of the product.
Define annual turnover.
The total sales of a product or service in a year is defined as the annual turnover of the company.
Define market assessment.
The study of various critical aspects like quality of the product, supply sources and delivery mechanism is
considered as the market assessment.
Define feasibility report.
Feasilbility report is the report prepared considering all the key factors that contribute to the entrepreneurial
success of the product or service under consideration.
Give an account of talent, temparament and technique contribute to the entrepreneurial process.
1. Talent: He/She should have minimum levels of innovative and creative skills and should be
able to perceive a long term futuristic vision which help him to gauge future prospects of the
idea.
2. Temperament: Temperament helps the entrepreneur to implement the identified idea into a
profitable project. Temperament is exhibited through
a. determination
b. boldness to take action
c. enthusiasm
d. zeal to carry out the proposed mission
e. Any other qualities that put him into action to convert the idea into venture.
3. Technique: He/She should have/know various techniques to manage various resources like
money, men, material, machines and more importantly time
What are all the factors that play key role in testing an idea.
The following are the factors that play a key role in the testing of an idea.
1. Product or service identification.
2. Application and usages
3. Scale of operation
4. Cost involved
5. Level of competition
6. Technological challenges
7. Profitability and annual turnover.
What role does the market supply play on the business idea?
Market supply refers to the comprehensive details of the total quantity of the product made available in the
market by all existing competitors. Along with the current players, we should take into account the future
players that are likely to etner the market. If the product or service is seasonal, it is usual practice that the
supply will increase during the season. These kind of fluctuations should also be taken into consideration.
All these existing players are competitors to the entrepreneur. So, the entrepreneur should pay special and
deep attention to their current manufacturing capacity, fluctuation in the supply from them, the financial
standing, the good will of their product or service.
For example, when an entrepreneur wants to start a garment industry, they should thoroughly investigate
all the existing brands available in the market, the manufacturing capacity, their popularity in the market,
the increase in the demand during the festive season, holidays, seasonal changes etc.
What is the impact of market on the entrepreneurship business idea?
The market will influence the business idea in the following ways:
a. Demand: There should be demand for the product. The demand usually depends on the size
of the market in which the product is being launched. Demand assessment also requires the
study of the target consumers of the product or service, their preferences and any other
parameters that are likely to impact the demand for the product.
b. Market supply and nature of competition: The entrepreneur should calculate the total
supply of the product, the current competitors, future competitors, fluctuations in the supply to
meet the corresponding fluctuations in demand, financial standard of the competitors, their
goodwill in the market etc. All these factors should be deeply studied.
c. Cost and Price: Unit cost of the product for a given operation play a critical role while
identifying the product and also in determining the price. The cost born by the competitors
interms of transportation delays, wastage, maintenance of inventory should be studied to take
advantage of these factors and present a competitive price.
d. Product Innovation and changes: The entrepreneur should study the innovations and
changes being introduced in the same sector by the other entrepreneurs who are already int
eh market or about to enter the market. Changes in the technology should be closely
monitored as these changes are likely to reduce the cost in improve the quality there by
bringing competitive advantage.