Assignment

1. Discuss how entrepreneurship assists in an economic development of the nation?

Ans:

Entrepreneurship is the process of creating a new venture which begins with an innovative idea.
In other words, It is a process of innovation that reallocates resources to new opportunities
through unusual combinations of resources and skills of risk taking.

Entrepreneurship lies at the centre of economic development. The relationship between

entrepreneurship and economic development is similar to the relationship between cause and
effect. Entrepreneurship is directly and indirectly responsible for overall development of the
country.There is a direct correlation between the level of economic development and the level of
entrepreneurship. An entrepreneur is a creator of wealth which is key to economic development.

Entrepreneurship plays a vital role in economic development of the nation as it involves

innovation and assumes risk to grow and much more. So the following are the points to show how
entrepreneurship is assisting in an economic development of the nation.

● Innovation

Business enterprises need to be innovative for survival and better performance. And an
entrepreneur is someone who has new ideas, who creates and innovates to solve a
problem. An entrepreneur always tries to maximize profits while innovating. Innovation
is the core reason for modern existence. When a company approaches business driven by
the evolution of technology, it encourages the economic development of the country.

● Balanced regional development

Entrepreneurs help to remove disparities among different regions by setting up industries

in less developed or backward areas. The growth of industries and business in those areas
lead to a large number of public benefits. The setting up of more industries lead to more
development of backward regions and therefore it promotes balanced regional
development. This encourages economic development of the nation.

● ​Capital formation

Entrepreneurs promote capital formation by mobilising the savings of the public. They
employ their own as well as the borrowed resources for setting up their enterprise. This
type of entrepreneurial activities lead to add value and create wealth. This helps in
enhancing the industrial as well as economic development of the country.
● Employment generation

Entrepreneurs provide an immediate employment to the unemployed which is a problem

of underdeveloped nations. Entrepreneurs setups more and more units both on small and
large scale numerous jobs are created. As time passes, these enterprises grows and
provides direct and indirect employment opportunities to many peoples. In this way,
entrepreneurs play an effective role in reducing the problem of unemployment in the
country which in turn clears the path towards assisting in economic development of the
nation.

● Better standard of living

Entrepreneurs play a vital role in achieving a higher rate of economic growth and
development.. Entrepreneurs are able to produce goods at lower cost and supply quality
goods at lower price to the community according to their requirements. When the price of
the commodity decreases the consumers get the power to buy more goods for their
satisfaction. In this way, they can increase the standard of living of the people.

● Country’s Export Trade

Entrepreneurs help in promoting a country’s export-trade, which is an important

ingredient of economic development. They produce goods and services on a large scale
for the purpose of earning huge amounts out of foreign exchange from export in order to
combat the import dues requirement. Therefore, import substitution and export promotion
ensures economic independence and development.

● GDP and Per capita income

Entrepreneurs are always there to look out for opportunities. They explore and exploit
opportunities, encourage effective resource mobilisation of capital and skill, bring in new
products and services and develop markets for growth of the economy. In this way, they
help increase gross national product as well as per capita income of the people in a
country. Increase in gross national product and per capita income of the people in a
country, is a sign of economic growth and development.

● Increase in purchasing power

Entrepreneurship directly increases the production of goods and services. At the same
time it provides employment which leads to increase in industrial income and therefore
increases purchasing power of the people. This also results in increasing the pace of
industrialisation and economic development.
 ● Contribution to tax

Contribution to tax leads to economic development of the nation. Government provides

more and more incentives to the entrepreneurs to have their own units, then they have to
pay taxes if they earn profit. They have to pay sales tax, income tax, etc. which are the
sources of income to the government. Then the government spends it for the welfare of
the country and balance of payment.

From all the above explained, we can see that economic development is supported by
entrepreneurs. These are the people that make an economy function. Entrepreneurship plays a
great role for economic development of the nation.

2. Creativity and Innovation are the mantra of entrepreneurship. Entrepreneurs who

want to start a business are often unable to come up with new ideas.

a) What is the process that you need to feel as an entrepreneur to stimulate your creative
sources and talents? Explain this process with the help of an example.
Ans:

Creativity is creating something out of nothing. There are no limits or requirements. It’s a mental
or intellectual exercise of imagination. And entrepreneurship is a way to make creativity
sustainable in a financial sense.
Entrepreneurship is the setting up, launching and making real the business or enterprise that will
bring an idea into being. It is important to recognize that the jump from creative thinking and
putting them to work is tough. It requires efforts.
Creativity is a must for Entrepreneurship.With the change in time, If an entrepreneur doesn't have
a creative mind then they cannot stay in the long run. Entrepreneurs must bring their creative
thinking into reality for the prosperity of their business enterprise.
The entrepreneurial process:

Entrepreneurial process is itself a creative thing as it involves finding, evaluating and developing
an opportunity by overcoming the strong forces that resist the creation of something new. It is the
process to bring imagination into reality.

❖ Identify and evaluate the opportunity

This is the first step to identify the opportunities. Each opportunity must be carefully
identified. An entrepreneur has to detect a problem in society and sense out some
opportunities along with visualizing the market. Their creativity and innovation also
bring challenges. Entrepreneurs should look always for the scope to find an alternative
efficient solution for needs, wants, problems and effective solutions. Opportunities must
be carefully evaluated for better solutions. For example: An entrepreneur wants to bring
out electric cars, for this entrepreneur should first think of solving the electric problem
then after solving it and finding gaps in the marketplace they can launch electric cars.
❖ Develop a business plan

This step includes a detailed proposal which describes the business idea. It includes
objectives, product, marketing plan, getting knowledge about competitions that are going
on and others. Developing a business plan helps to get ready to survive risk. This step is
important for how to capitalize on opportunities. A plan begins as a fairly set of ideas,
and then becomes more complex as the business takes shape. It's important to create a
strategy and operating plan for successful entrepreneurship. Without developing a certain
business plan, it's very difficult for the entrepreneurs to survive in the competition. They
must develop a plan and must be clear about their objectives.

❖ Determine the resource required

After planning, an entrepreneur must be ready to determine the resources which are
required for their business. Any resources that are critical should be differentiated from
those that are helpful. The amount and the variety of resources needed must not be
underestimated. Just going through opportunities or making business plans is not going to
help, resources are required to make a product. For example: to make an electric car,
human resources are required, machinery and equipment are required and others. So,
what resources are required to change the plan into reality must be determined by the
entrepreneurs.

❖ Manage the enterprise

After all the resources are in the proper place and arranged, it is the time to develop the
venture or enterprise and manage it successfully. This step requires most of the skills that
an entrepreneur should possess. In this stage, it is essential to monitor and realize when
the up-gradation is necessary for the organization. This is the creative thing as it is the
entrepreneur only who has to think out of the box and manage the enterprise with the
changing market condition. For example, Mark Zuckerberg's vision of connecting every
individual socially through digital medium didn't end up by just creating facebook. He
and his team kept creating new features according to the requirements of people.
b) What is the different types of innovations that entrepreneurs use to convert ideas into
marketable solutions? Explain these types with the help of examples.
Ans:

Innovation is the introduction of new things, new services or new processes. It is the product of
conceptualisation and is a creative process.
Some companies like google or Amazon, innovation is everything. They rely on innovation to
thrive the next year because they always run to stay ahead. Amazon worked over 10 years to fight
against retail stores who deliver at the moment.

At large, innovation is any improvement of the business model, either it is incremental or

disruptive that helps an organization to deliver better outputs, or solve a problem in a better way.
For example at lower cost or better quality or better in any kind of nature or utilization.

So, the following are different types of innovations that help entrepreneurs use to convert ideas
into marketable solutions.
● Incremental Innovation

Incremental Innovation is the most common form of innovation. It utilizes the existing
technology and increases value to the customer i.e. features, design changes and others
within the existing market. The purpose and benefits are optimization of customer
benefit, cost reduction, repositioning, adaptation for introduction into new markets or
adaptation to new circumstances such as new laws and standards. Almost all companies
engage in incremental innovation in one form or another. Incremental innovations are just
a little better than the previous version of the product or service and have only slight
variations on an existing product formulation or service delivery method.

For example: Cadbury has innovated through introducing line extensions. As well as
developing new flavours, the brand has also created new formats. By using this
incremental approach to innovation, Cadbury has been able to open up additional sources
of revenue.

● Disruptive Innovation

Disruptive innovation is a theory that refers to a concept, product, or a service that creates
a new value network either by entering an existing market or by creating a completely
new market. It involves applying new technology or processes to your company’s current
market. In other words, it refers to a new development that dramatically changes the way
a structure or industry functions.

An example of modern disruptive innovation is the Internet, which significantly altered

the way companies did business and which negatively impacted companies that were
unwilling to adapt to it. Personal computers are also disrupted by smartphones. Likewise
light bulbs are disrupted by the innovation of LEDs and CFL

● Architectural Innovation

Architectural innovation refers to the innovation of an architecture of any product that

changes or modifies the way various components of the systems link or relate to each
other. In other words, Architectural innovation is simply taking the lessons, skills and
overall technology and applying them within a different market. This innovation is
amazing at increasing new customers as long as the new market is dynamic.
 For example: Many years ago, gears did not exist in the bicycle but when gears were
invented, the bicycle took a whole new design. Examples also include networked
computer systems and flexible manufacturing systems.

● Radical Innovation

Radical innovation is what we think of mostly when considering innovation. It gives birth
to new industries and involves creating revolutionary technology. Radical innovation
solves the global problems and addresses the needs in completely new ways than what we
are used to. Also provides solutions to needs and problems we didn’t know that we had.
It completely transforms the market or even the entire economy.

For example, Apple transformed the digital communications industry by applying its core
competencies i.e. technology to a future goal i.e. hand-held computers. Apple achieved a
radical innovation whose impact is felt worldwide.

3) ​ ​Feasibility study is the platform for new venture creation. How can you broken
down and define feasibility study?
​Ans:

The word ‘feasibility‘ means the degree or state of being easily, conveniently or reasonably done.
If something is ‘feasible,’ it means that we can do it, make it or achieve it. A Feasibility Study is
the most important step in new venture development. It reduces startup risk by testing the
viability of the business concept before significant resources are committed.

A feasibility study is an evaluation and analysis of a project or system that somebody has
proposed. We also call it a feasibility analysis. The study tries to determine whether the project is
technically and financially feasible i.e. if it is technically or financially viable or not? Financially
feasible, in this context, means whether the project is feasible within the estimated cost.

Feasibility study is very important for the starting of the new venture and success of the business.
The importance of a feasibility study is based on organizational desire to “get it right” before
committing resources, time, or budget. A feasibility study might uncover new ideas that could
completely change a project’s scope. It’s best to make these determinations in advance, rather
than to jump in and to learn that the project won’t work. Conducting a feasibility study is always
beneficial for starting a new venture as it gives a clear picture of the proposed project.

● It serves as a filter,screening out ideas that lack potential for building a successful
business before an entrepreneur commits the required resources for capital.
● It also assists the entrepreneur with information gathering to assess the business concept,
including legal and compliance requirements,cot and marketing.
● It helps to narrow the business alternative.
● It opens an entrepreneur’s eye to new opportunities for ideas that could change the scope
of the project.

Also some of the importance of feasibility study are explained below:

a) For exploring reality

Feasibility study helps entrepreneurs to direct the business idea towards reality which
they are currently imagining. In this, they have to find answers to many questions in the
starting stage. And answering these questions makes focus on further specific questions
which finally takes you to an ultimate answer whether you can implement it or not.

b) Possibilities of alternative ways

Feasibility study helps to find alternative ways of developing the business idea. Possible
alternatives could reduce your time, efforts, expenses and others. Hence, this could
increase your work efficiency, profitability, scalability, etc.

c) Knowledge of financial risks

Feasibility study helps to determine how much you are putting your money on risk. After
converting your idea into business, it involves finding answers to various other questions.
Like ‘How much repeating expenses are there in the project?’, ‘How long can you afford
the expenses?’, ‘What more equipment, tools will you require for developing or
manufacturing?’.

d) Understanding possibility of business operation

Feasibility study helps to find out whether an entrepreneur can operate business or not.
This involves finding answers to questions like ‘Is There any possibility to find an area
for manufacturing the product?’, ‘Are there possible transportation facilities like road
connectivity, transportation vehicles?’, ‘Is it possible to find people who can run and
maintain the equipment?’ and others.
A feasibility analysis evaluates the project’s potential for success. Therefore, perceived
objectivity is an essential factor in the credibility of the study for potential investors and lending
institutions. There are four types of feasibility study separate areas that defines feasibility study
examination, described as below:

a) Technical feasibility

Technical feasibility focuses on the technical resources available to the organization. It

helps organizations determine whether the technical resources meet capacity and whether
the technical team is capable of converting the ideas into working systems. Technical
feasibility also involves the evaluation of the hardware, software, and other technical
requirements of the proposed system.

b) Economic feasibility

This assessment typically involves a cost/ benefits analysis of the project which is also
called financial feasibility. It helps to determine the viability, cost, and benefits of an
organization associated with a project before financial resources are allocated. It also
serves as an independent project assessment and enhances project credibility which helps
in decision-making and determine the positive economic benefits to the organization that
the proposed project will provide.

c) Operational feasibility

Operational feasibility involves undertaking a study to analyze and determine whether

and how well the organization’s needs can be met by completing the project. Operational
feasibility studies also examine how a project plan satisfies the requirements identified in
the requirements analysis phase of system development.

d) Schedule feasibility

This assessment is the most important for project success. After all, a project will fail if
not completed on time. In scheduling feasibility, an organization estimates how much
time the project will take to complete.
e) Legal feasibility

Legal feasibility is checked to make sure that the project which is taken, fulfills the
requirements of law at domestic and international level. Some team members need to
study carefully and consistently about the laws applicable on the project to avoid any
violations.

In total, entrepreneurs should be objective and realistic throughout the process. Feasibility
study will always help in starting a new business by determining how successful the
proposed action will be. It makes us learn more about the customer's current and future
needs. Feasibility study also examines the strength and weakness position in the
marketplace.It determines cost efficiency. So overall we can see that feasibility study is a
must and is the platform for the new venture creation.