Revision Questions and Answer for End Semester Examination

Trimester January 2011

Essentials of Entrepreneurship

1. What is entrepreneurship?

Entrepreneurship is a process of innovation and new venture creation through four major
dimensions, individual, organizational, environmental and process with aided by collaborative
networks in government , education and institutions.

2. Who is entrepreneur?

Entrepreneur is an innovator of business enterprise who recognizes opportunities to introduce a

new product, a new process or an improved organization, and who raises the necessary money,
assembles the factors for production and organizes an operation to exploit the opportunity. In
addition, the art or science of innovation and risk-taking for profit in business is the quality of
being an entrepreneur.

3. Who is an intrapreneur?

Intrapreneur is a person within a large corporation who takes direct responsibility for turning an
idea into a profitable finished product through assertive risk-taking and innovation.
Intrapreneurship now known as the practice of a corporate management style that integrates risk-
taking and innovation approaches, as well as the reward and motivational techniques that are
more traditionally thought of as being the province of entrepreneurship.

4. What is marketing planning?

Marketing planning is the process of developing and implementing a plan to identify,

anticipate, and satisfy consumer demand, in such a way as to make a profit. For
developing a marketing plan, the following elements are considering as the essential
elements: marketing research, sales research, marketing information system (MIS), sales
forecasting, marketing plans, and evaluation.
Or marketing planning is the process of determining a clear, comprehensive approach to
the creation of customers. For developing a marketing plan, the following elements are
considering as the essential elements: marketing research, sales research, marketing
information system (MIS), sales forecasting, marketing plans, and evaluation.
5. What is telemarketing?

Telemarketing (known as inside sales or telesales) is a method of direct marketing in

which a salesperson solicits to prospective customers to buy products or services, over
the phone or through a subsequent face to face or Web conferencing appointment
scheduled during the call. The purpose of telemarketing is to make a sale.
Telemarketing has come under fire in recent years, being view as an annoyance by many.

6. What is internet marketing?

Internet marketing, also known as digital marketing, web marketing, online marketing, or
e-marketing, is the marketing (generally promotion) of products or services over the
Internet.

Customer data and electronic customer relationship management (ECRM) systems are
also often group together under internet marketing. Internet marketing ties together the
creative and technical aspects of the Internet, including design, development, advertising,
and sales. Internet marketing also refers to the placement of media along many different
stages of the customer engagement cycle through search engine marketing (SEM), search
engine optimization (SEO), banner ads on specific websites, email marketing, and Web
2.0 strategies.

7. What is Leveraged Buyout (LBO)?

The acquisition of another company using a significant amount of borrowed money

(bonds or loans) to meet the cost of acquisition. Often, the assets of the company being
acquired are used as collateral for the loans in addition to the assets of the acquiring
company. The purpose of leveraged buyouts is to allow companies to make large
acquisitions without having to commit a lot of capital.

8. What is patent?

A government license that gives the holder exclusive rights to a process, design, or new
invention for a designated period. Allpications for patents are usually handled by a
government agency. Most patents are valid for 20 years. By granting the right to
produce a new product without fear of competition, patents provide incentive for
companies or individuals to continue developing innovative new products or services.
For example, pharmaceutical companies spend large sums on research and development
and patents are essential to earning a profit.
9. What is Copyright?

The ownership of intellectual property by the item's creator. Copyright law gives
creators of original ideas, art, etc. the exclusive right to further develop them for a given
amount of time, at which point the copyrighted item becomes public domain. Copyright
law states that a copyright stands for between 50 and 100 years from the creator's death if
the creator is an individual, and a shorter time if the creator is a corporation. Copyrights
can apply to many different products, including literary works, film, audio, drawings, and
software.

10. What is Trademark / Brand Name?

A distinguishing symbol, mark, logo, name, word, sentence or a combination of these

items that companies use to distinguish their product from others in the market.
Once a brand has created positive sentiment among its target audience, the firm is said to
have built brand equity. Some examples of firms with brand equity - possessing very
recognizable brands of products - are Microsoft, Coca-Cola, Ferrari, Sony, The Gap, and
Nokia. Before trademark registered lasted for 20 years, but the current registration are for
only 10 years with the possibility of continuous renewal every 10 years.

11. What is bankruptcy?

A legal proceeding involving a person or business that is unable to repay outstanding

debts. The bankruptcy process begins with a petition filed by the debtor (most common)
or on behalf of creditors (less common). All of the debtor's assets are measured and
evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon
the successful completion of bankruptcy proceedings, the debtor is relieved of the debt
obligations incurred prior to filing for bankruptcy.

12. Explain the system approaches to study of entrepreneurship?

Introduction of approaches to entrepreneurship

To understand the nature of entrepreneurship and better recognize its emerging
importance. It is important to consider some of its theory development. A theory of
entrepreneurship is a verifiable and logically coherent formulation of relationships, or
underlying principles, that explain entrepreneurship, predict entrepreneurial activities
Approaches to entrepreneurship broadly classified in four main categories.

a- School of thought approach,

b- Process approaches.
1. Integrative approach
2. Entrepreneurial assessment approach, and
3. Multidimentional approach.

One way of examine these theories is with a “school of thought approach”.

School of thought approach
It divides entrepreneurship into specific activities. These activities may be within a
macro view or micro view, but all address the conceptual nature of entrepreneurship.

Macro View

The macro view of entrepreneurship presents a broad array of factors that relate to
success or failure in contemporary entrepreneurial ventures. This array includes external
processes that are sometimes beyond the control of the individual entrepreneur, for they
exhibit a strong external locus of control point of view.
Three schools of entrepreneurial thought represent a breakdown of the macro view are,
a. Environmental school of thought,
b. Financial/ capital school of thought, and
c. Displacement school of thought
The first of these is the broadest and most pervasive school of thought.

The environmental school of thought

The environmental school of thought deals with the external factors that affect a potential
entrepreneur’s lifestyle. These can be either positive or negative forces in the molding of
entrepreneurial desires. The focus is on institutions, values and mores that grouped
together socio-political environmental framework that strongly influences the
development of entrepreneurs. Under this, the next school of thought is the financial/
capital school of thought.

The financial/ capital school of thought

The financial/ capital school of thought is based on the capital seeking process. The
search for seed and growth capital is the entire focus of this entrepreneurial emphasis. In
any case, the venture capital process is vital to an entrepreneur’s development. So, this
school of though views the entire entrepreneurial venture from financial management
standpoint. The last macro view school of thought is displacement school of thought.

The displacement school of thought

The displacement school of thought focuses on the negative side of group phenomena, in
which someone feels out of place or is literally “displaced” from group. It holds that the
group hinders a person from advancing or eliminating certain critical factors needed that
person to advance. As a result, the frustrated individual will be projected into an
entrepreneurial pursuit out of his or her own motivations to succeed. This school of
thought is divided into three major types of displacement. They are,
 a. Political displacement

Political displacement caused by factors ranging from an entire political regime that
rejects free enterprise (international environment) to governmental regulations and
policies that limit or redirect certain industries.

b. Cultural displacement

It deals with social groups excluded from professional fields. Ethnic background,
religion, race, and sex are the examples of factors that figure in the minority experience.
This experience increasingly turns various individuals away from standard business
professions and towards entrepreneurial ventures.
In addition, final displacement school of thought is,

c. Economical displacement

It concerned with the economic variations of recession and depression. Jobless, capital
shrinkage or simply bad times can create the foundation for entrepreneurial pursuits, just
as it can affect venture development and reduction.
These displacements illustrate the external forces that can influence the development of
entrepreneurship. Cultural awareness, knowledge of political and public policies and
economic instruction will aid and improve entrepreneurial understanding under this
school of thought.

The next school of thought approaches are micro view school of thought.

The micro view

The micro view of entrepreneurship examines the factors that are specific to
entrepreneurship and are part of the internal locus of control. The potential entrepreneur
has the ability, or control, to direct or adjust the outcome of each major influence in this
view. Sometimes this school of thought referred as the people school of thought. Unlike
the macro approach, which focuses, on events from the outside looking in, the micro
approaches concentrated on specifies from the inside looking out. The first of these
schools of thought is the most widely recognized.

The Entrepreneurial Trait School of Thought

The entrepreneurial trait school of thought is grounded in the study of successful people
who tend to exhibit similar characteristics that, if copied, would increase success
opportunities for the emulators. Achievement, creativity, determination, and technical
knowledge are four factors that are exhibit by success entrepreneurs.
 The venture opportunity school of thought

The venture opportunity school of thought focuses on the opportunity aspect of venture
development. The search for idea sources, the development of concepts, and the
implementation of venture opportunities are the important interest areas for this school.
Creativity and market awareness are viewed as essential and also developing the right
idea at the right time for the right market niche is the key to entrepreneurial success.

The strategic formulation school of thought

This approach to entrepreneurial theory emphasizes the planning process in successful

venture development. One way to view strategic formulation is as a leveraging of unique
elements. The interdisciplinary aspects of strategic adaptation are apparent in the
following characteristic elements.
 Unique markets, to identifying major market segments as well as interstice (in between)
markets that arise from larger markets.
 Unique people, refers to the skills or special talents of one or more individuals around
whom the venture is built.
 Unique products, refers to innovations that encompass new or existing markets.
 Unique resources, refers to the ability to gather or harness special resources (land,
labour, capital and raw materials) over the long term.

Although the knowledge and research available in entrepreneurship are in an emerging

stage, it is still possible to piece together and describe current school of thought in the
field. We can begin to develop an appreciation for the school of thought and view them
as a foundation for entrepreneurial theory.

Another way to examine the activities involved in entrepreneurship is through a process

approach. Process approaches mainly categorized under three-sub approach.

First, we discussed the integrative approach incorporates theoretical and practical

concepts as they affect entrepreneurship activities. Then we explore the assessment
approach. These methods attempt to describe the entrepreneurial process as a
consolidation of diverse factors. And at last we, discussed the multidimentional
approaches.

The Integrative Approach

This model is built around the concepts of inputs to the entrepreneurial process and
outcomes from the entrepreneurial process. The input component focuses on the
entrepreneurial process itself and identifies five key elements that contribute to the
process. The first element is environmental opportunities, such as a demographic change,
development of a new technology or a modification to current regulations. Next is the
individual entrepreneur, the person who assumes personal responsibility for
conceptualizing and implementing a new venture. The entrepreneur develops some type
of business concepts to capitalize on the opportunity (for example, a creative approach to
solving a particular customer need). Implementing this business concept typically
requires some type of organizational context, which could range from sole proprietorship
(sole trade) run out of the entrepreneur’s home or a franchise of some national chain to a
business unit within a large corporation. Finally, a wide variety of financial and non
financial resources are required on an ongoing basis. These key elements then are
combined throughout the stages of the entrepreneurial process. Stated differently, the
process provides a logical framework for organizing entrepreneurial inputs.
The process can result in any number of entrepreneurial events, and can produce events
that vary considerably in terms of how entrepreneurial they are. Based on this level of
entrepreneurial intensity final outcomes can include one or more going ventures, value
creation, new products and process, new technologies, profits, jobs and economic growth.
Moreover, the outcomes can certainly be failure and thereby include the corresponding
economic, psychic, and social costs.
Where in the input components focuses on the entrepreneurial process itself and
contribute to the process. The quality of the outcomes largely depends upon the
efficiency of processing and the entrepreneurial intensity.