Managing Human Capital Entrepreneurship Assignment

MBA-S 2
Student

Name:

Biplob Saha

Student Id-L0279KHDKHD1114
Submission date- 23rd, February, 2015

Managing Human Capital Entrepreneurship

Assignment Task-1
Abstract:
The role of uncertainty and imperfect information is crucial for the view of the role of the
entrepreneur by Shackle (Deakins, D and Freel, M, 2012,p.11)
The main objective of this paper is critical analysis of the above statement investigating the
concept of entrepreneur on the basis of standard literatures and examples. Various novel economic
theories, journals and case studies are thoroughly investigated to justify the statement.
Introduction:
Entrepreneur is a common term in economy from earlier times. It has a great impact in world
economy. Various economist defines it in different ways. Economist describes it as a main driving
force of any economy. Many factors play role to become a successful entrepreneur. Deakins and
Freel (2012:11) states the above statement to highlight uncertainty and imperfect information as
important factors on the basis of economist Shackle entrepreneur definition.
The goal of this paper is critical cross examination of (interpretation) what is uncertainty and
imperfect information and how those affect entrepreneur role. To justify the above statement at
first we will determine the entrepreneur definition on the basis of scholar literature. Later we will try
to find out the challenges of an entrepreneur. After that we will investigate the effect of uncertainty
and imperfect information on entrepreneurship concept.
The methodology of this research is qualitative and purely depends on secondary data.
Standard literatures, journals and scholar text books are used to do the literature study.
Who is an Entrepreneur?
Entrepreneur is a French word. (R S. Sobell). French dictionary defines it as an individual who
organizes or operates a business or businesses. According to Oxford Dictionary entrepreneur
meaning is-A person who sets up a business or businesses, taking on financial risks in hope of profit.
The term entrepreneur to define the quality of a businessman first enlisted in the French dictionary
Dictionnaire Universel de Commerce edited by Jacques des Bruslons in 1723(Naval et. Al, 2013). In
1725 Irish-French economist Richard Cantillon first determined the entrepreneur definition.
According to him entrepreneur is a person who takes risk to make profit by buying a product in
certain price with the intention of selling in uncertain price.(B. Anthony,1992). Later in 1830 another
French economist Jean-Baptiste Say defined entrepreneur definition elaborately by adding
requirement of managerial skills. (Drucker.Peter F,1985). In 1934 Austrian-American economist
Joseph Schumpeter developed a well-defined theory of entrepreneur. He explained entrepreneur as
an innovator (Schumpeter, 1976).
Role of entrepreneurEconomist Du Toit (2009) explain entrepreneur as a factor who brings production into motion.
According to him entrepreneur is identified by confidence, creativity and individual skills. Economist
Jennings (1994) described entrepreneur role by six functional role. He derived these role from the
entrepreneur definition which is defined by many famous economist. According to Jennings Richard
Cantillon described entrepreneur as speculator. Jean-Baptiste say identified entrepreneur as a
coordinator and organizer. Famous Economist Frederick Hawler explained entrepreneur as product

owner. Jennings found entrepreneur as an innovator in the definition of Joseph Schumpeter.

Economist Frank knight described entrepreneur role as a decision maker. Israel kirzner explained
entrepreneur as arbitrator. Jennings defined this six role as functional role of entrepreneur.
What is uncertainty?
Uncertainty is an unavoidable phenomena in business world. In every business uncertainty exist.
Uncertainty is a state where possible outcome is impossible to measure or predict due to insufficient
knowledge or past experience. It is totally different from risk. In case of risk there is possible
outcome which can be predictable with the help of past experience or knowledge. In 1921 Frank
knight in his famous work Risk, Uncertainty and Profit clearly distinguished between uncertainty
and risk. According to him uncertainty is cases of unknown probabilities. We are aware of a fact that
technology changes day by day but we dont know how long the current technology will exist. In
earlier times cable telephone was a prime media which is now not too much in respect. Now a days
mobile technology is the main media of communication. We dont know when new technology will
come. It is uncertainty. Knight described risk as a known probabilities. We know that if we drive rush
accident can happen any time but we dont know the exact time. It is a risk.
Former USA defence secretary Donald Rumsfeld describes uncertainty as unknown unknowns and
risk as known unknown
Knight (1921) described the entrepreneur as a profit earner. He explained this profit as a reward for
taking risk. According to knight entrepreneur is person who takes risk to get the profit. He classified
probable outcomes in three types:
1. Risk-It is measurable by perfect calculation.
2. Ambiguity-it is very hard to measure or compute
3. True uncertainty- it is impossible to predict the probable outcomes.
According to Shackle uncertainty sometime creates scopes for entrepreneur opportunities.
According to Barreira et al.(2008) the development of an entrepreneur depends on market
uncertainty.
Uncertainty converts as risk after happening. Due to Tsunami in 2004 the atomic power plant of
Japan was highly affected. The Japanese Government never expected this type of situation. It was an
uncertain case. But, every organization will now count Tsunami before building Power plant near by
sea. It is now a part of risk optimization.
Uncertainty mainly arise due to macro and micro factors. Macro factors are mainly incontrollable
factors which actually comes from outer side of any organization or situation. Weather, government
policy, political policy are macro factors for any industry.
Micro factors are mainly the internal factors. As a business organization other market competitors
policy can create uncertainty to its business future. As an example- same type of product
manufactures to grow their market share sale the same quality product in cheaper price.
Continuous market study and environment study can minimize the risk of uncertainty though it is
not work all-time.

What is imperfect information?

Imperfect information is mainly the difference of information between to information sharer. It is a
gap of information quality among two information collector. According to neo classical economists it
is one of the cause of uncertainty.
An insurance consumer sometimes hide the information of his past heart attack for keeping his
premium low. As a result the insurance company can be looser by paying his medical bill or death
assurance amount. Actually insurance company share this risk as an uncertainty with other
customers.
If a flower farmer after going market see the market price is low what should he do? He can go to
nearest market to sale his flower at a good price. But, it is not confirm that after paying transport fair
or oil price he will get the correct price. It may happen that the price is lower than previous market.
So, to minimize this risk he needs an information about the market.
Actually availability of information only makes a difference between uncertainty and risk. If we can
get some past experience of probable outcomes then it will be counted as a risk not uncertainty.
Here the key player is information. More information means more competitive advantage.
Economists consider imperfect information as a major cause for market failure.( Stiglitz ,2000).
According to Frank Knight (1921) perfect knowledge and certainty only gives scope of purely routine
function. There is no challenging or creativity presence.

Conclusion:
This study examined various important journal which related to entrepreneurship. The entrepreneur
definition and role are discussed. The main findings of this research is dependency of uncertainty on
imperfect information. Uncertainty and imperfect information directly affect the role of an
entrepreneur. According to the study Imperfect information causes uncertainty. By definition
entrepreneur is a person who will overcome the uncertainty through creating new opportunities. An
entrepreneur should prepare for multiple outcomes or worst outcomes. Constant review of every
situation and quick decision on change can save an organization from uncertainty related damage.
Market uncertainty creates scope for new opportunities. It is very easy to make a conclusion that
Uncertainty is a prime cause of necessity to start entrepreneurship. Perfect information is very
necessary to sustain any kind of business. For this reason new and established entrepreneur both
are equally careful to get the perfect information.

Refrences:

Brewer, Anthony (1992). Richard Cantillon: Pioneer of Economic Theory. Routledge. ISBN-978-0-41507
Deakins, D.; Freel, M.S.(2009).ENTERPRENEURAL ACTIVITY, THE ECONOMY AND THE IMPORTANCE
OF SMALL FDIRMS. Entrepreneurship and small firms. McGraw-Hill Education. ISBN 978-0-07712162-5777-0.
Drucker,Peter F.(1985). Innovation and Entrepreneurship. Attributes the coining and defining of
entrepreneur to Jean-Baptiste Say in his A Treatise on political Economy;(1834)
Du Toit, G,S.,Erasmus, B.J and Strydom,J.W.2009. Introduction to Business Management. 7th Edition.
Oxford, Southern Africa.
Jennings,D.F.1994. Multiple perspectives of entrepreneurship. Cincinnati, Ohio: South Western
Publishing Company.
Knight, F.H. 1964. Risk, Uncertainty and Profit. New York.
Navale,, Ashok Bhanudas(October 2013).Developing Entrepreneur skills for Corporate Work.
Research Directions 1 (4). ISSN 2321-5488.
Russell S. Sobel, Concise Encyclopaedia of Economics
Schumpeter, Joseph Alois (1976). Capitalism, Socialism and Democracy. Routledge. ISBN 978-0-41510762-4.
Stiglitz,J (2000). The contributions of the economics of information to twentieth century economics.
The Quarterly Journal of Economics, 115(4), 1441-1478

Food24 business plan

Managing Human Capital Entrepreneurship- task 2

MBA-S 2
Student

Name:

Biplob Saha

Student Id-L0279KHDKHD1114
Submission date- 23rd, February, 2015

Table of contents
1.0. Executive summary
1.1 Objectives
1.2. Mission
1.3. Key to success
2.0. Company summary
2.1. Legal entity
2.2. Products and services
2.3. Location and facilities
2.4. Start-up summary
3.0. Market Analysis and summary:
3.1. Market size
3.2. Target market
3.3. Market trends
3.4. Market competitors
3.5. SWOT Analysis
4.0. Strategy and Implementation
4.1. Market philosophy
4.2. Market strategy
4.3. Sales strategy and forecast
4.4. Pricing strategy
4.5. Promotion and advertising
4, 6. Exit strategy
5.0. Organizational structure
5.1. Management Team
6.0. Financial Plan
6.1. Start-up cost
6.2. Key financial indicators
7. Important assumption
8. Conclusion

1.0. Executive summary

Food24 will be formed as a fast food company specializing in healthy fast food. This fast food chain
will serve multicusine food and authentic Indian fast food with quick home delivery facility.
Primarily Food24 start-up plan is to introduce its business with three branches which will be located
in high populated area of Kolkata, India. It will take lease of three business property each of around
1000 square foot.
Food24 will be sole trading company. The total start-up cost is RS. 7,320,000. The owner Biplob Saha
will contribute 70% of total start-up cost as RS. 5,124,000 and remaining 30% as RS. 2,196,000 will
be organized by proposed bank loan.
The owner possessed MBA in marketing. He has an experience working as a fast-food employee.
Together of study and experience has developed Food24 plan.
Sale projection is 500 customers per day and as average of 50 per customer sale. The total sale
estimation in 1st year is RS.9, 125,000 which will increase 20% in 2nd year and 10% in 3rd year
consecutively. The breakeven analysis will show that the invested money will incur within 2 years.
The total business plan is developed in Indian rupees as per business requirement as the prime
operation location of the business is India. According to the OANDA exchange the Indian Rupee to
GBP Conversion rate is 95.57 (on 18th Feb, 15).

1.1 Objectives
The primary objectives of the this company are bellows

to be the premier local fast- food chain in Kolkata

to provide quality and healthy meals at reasonable price
open first in this region as a 24 hour fast food chain

1.2. Mission
Our mission is to provide healthy fast food at reasonable price. People think fast food as an
unhealthy concept. But we want to change this concept serving freshly prepare healthy food. We
will achieve this goal by enlisting more healthy food in our menu and using organic product as our
raw materials.

1.3. Keys to success

making loyal customer by satisfying customer,

A variety of menu consist of many healthy food
24 hours open policy
convenient location
Customer service

a mix of global menu with the Indian traditional fast food

fast delivery process

minimize customer waiting time and serving time

2.0. Company summary

Primarily Food24 will open three branches in premium location of Kolkata, India. Food24 will open
to the customer for 24 hours.

2.1 Legal entity and ownership

Food24 will be operated as a sole proprietorship wholly owned by Biplob Saha. The company will be
registered as per company law.

2.2 product and services

Food24 all branches will be open 24 hours for serving various global healthy food. Home delivery
service will be available.
Every branch will serve healthy food like fresh salad, fruit salad, soup, flavoured organic yogurt and
fresh juice. Fresh handmade sandwich and baguettes are most concern in our menu.
Global food like Russian salad, tom yum soup, Chinese rice noodles, Mexican wrap, smashed
potatoes, boil garden peas, Tibetan thukpa, momo will be serve.
Every branch will serve a diabetic meal. Low calorie food will be served for the diet conscious
people. A special child menu will be implement with o spice. Oil free food will be serve. All branch
will serve hot and cold drinks. On top of this Food24 is determined to introduce traditional Indian
fast food

2.3. Location and facilities

Primarily three convenient location will be chosen for opening first three branches. Minimum
required space for every branch 1000 square foot. Every branch consist of 40 seating capacity.
Modern toilet facilities will be available. The ad-hoc requirement is carpark.
Every branch will have online order facilities for delivery. Phone order facility will be available.

2.4 start- up summary

Total start-up costs will be RS 7,320,000 which including all start-up expenses and start-up assets.
The owner will contribute 70% of the start-up cost and the remainder will be managed through a
proposed bank loan. The details are included in financial plan.

3.0. Market Analysis summary

According to the CRISIL Research fast-food market will more than double to Rs.70 billion over the
next three years from Rs.34 billion in 2012-13. (Crisil Research, 13)Fast food business is now most
growing business in India at an average annual growing rate of 27 percent (Crisil Rsearch, 13).

Growth in indian Fast-food market

100
90
80
70
60
50
40
30
20
10
0
2009-10

2012-13

2015-16

Data courtesy: CRISIL Research, 13 (in billion Rupees)

3.1. Target market

The main target is middle class and lower class customer as their main concern effective cost. So,
there is a huge chance of getting loyal customer providing quality food in cheaper price. By
introducing diabetic meal we can easily reach to the customers who are diabetic. According to the
International Diabetes Federation (IDF) 62 million of Indian people are diabetic. This is a big
percentage. Our low calorie meal and oil free meal easily can conquer the market as many people
are suffering for obesity problem. Our target is to implement gluten free and allergy conscious food.

3.2. Market size

The total market size of fast food industry of India will be Rs.70 billion by 2016. (CRISIL Research, 13)

3.3. Market trends

Pizza, burger and sandwiches together occupy about 83 percent of total fast food market. (Euro
monitor, 14). Maximum higher class people are regular consumer of global brand like Mc Donalds,
KFC etc. for hygienic and quality reason .They are not only concern with taste. Healthy and diet food
are in high demand.

3.4. Market competitors

Main market competitors are global brand. Maximum share of the market is occupied by
McDonalds, KFC, dominos, subway and pizza hut. Currently 63 percent of total fast food market is
occupied by these four companies. Only 37 percent of share is occupied by Indian brand. Among
them jumbo king and Goli vada pav successfully running their business.

Courtesy: CRISIL Research,13

Courtesy: Euromonitor,14

3.5. SWOT analysis

Strengths:

Local management so they know the taste of local demands. Normally foreign company do
some research work which is time consuming.

Market conditions are favourable as people already fond of fast food.

Can deliver good quality food in comparatively cheaper price as management running cost
and advertising cost low.
Wider menu so customer can return.
24 hour service so big operational time.
Serving local traditional fast food like samosa, Gulab jamun , chop-cutlet etc.

Weakness

New venture so inexperience can be a big factor.

huge multinational branded competitors
minimum advertise due to minimum fund

Opportunities

First growing market for fast food.

Quick business growth chance by opening new branch.

Threats

Local customers are interested in global brand.

Market entry of more global brand.
limitation of fund for business brunch opening

4.0 strategy and implementation summary

Our main target is become the largest local fast food chain. For this we will train our staff to satisfy
our customer. Regular review and customer feedback will be accepted. When brand image will build,
branch will be open in other cities. The management other strategy is to minimize the customer
waiting time and high quality customer service.

4.1. Marketing philosophy

The main philosophy of Food24 is serving customer better quality food at cheaper price. Menu will
be set with a range of price and variety to give customer flexibility.

4.2. Marketing strategy

Marketing strategy will be depends on product and price. Food24 will grab the market by his
cheaper price compare to the global company. A range of quality and fusion food will be one of its
strategy to get competitive advantage.

4.3 Sales strategy and forecast

Our main sales strategy is to make loyal customer and give 100% effort to retain customer.
Our sale forecast for first year is Rs.9, 125,000 as expected 500 customers per day on the average of
Rs.50 per customer sale. In 2nd year the expected sale increase is 20%. In 3rd year the sale will
increase 10% on top of 2nd year.
Table- 1
Sales forecast
Total sales

Annual sales forecast (Indian Rupees)

Year 1
9,125,000

year 2
10,950,000

Year 3
12,045,000

4.4. Pricing strategy

As it is a new brand so we will price our product little bit below the market price. Our strategy is
maximum sale with minimum profit. It can return us maximum profit end of the year.

4.5. Promotion and advertising:

Our budget in advertising is very low so we cannot afford digital ad. We will distribute product
leaflet in adjacent locality. Some promotional price will be offer to introduce customer. Every
customer will be serve carefully which can grow our business. Word-of-mouth will work for us. Social
media network like Facebook, twitter etc. will be used to promote sale. A well-focused website will
be built to meet current industry trends.

4.6. Exit strategy

By selling the assets like furniture and kitchen equipments we could clear debt. As bank loan is only
30% of total start up investment.

5.0. Organizational structure

Food24 is a sole trader company. Owner is the head of this company. Branch manager is responsible
for day to day operations.

5.1. Management team

Our owner self will be top of our management to organize every aspect of this new venture. He
studied MBA in Marketing. He has finished his study in London where he worked for a fast food
company along his education. So, this experience will help to grow Food24.
Skilled chefs, managers and workers will be hired to run this business smoothly.

6.0. Financial plan

Major financial plans are stated below:

6.1. Start -up costTotal start -up cost will be Rs.7, 320,000. 70% of start-up cost will be paid by owner and remaining
30% will be arranged by bank loan. Details are included below:

Table2 - Start up cost (Indian Rupees)

Start-up Expenses
Logo, website, brand creation, IT
Licence, Lease security deposit
interior
Working capital
Other expenses

Amount
20,000
1,500,000
3,000,000
500,000
500,000

Total start-up expenses

2,520,000

Start-up assets
Freezer
Ice maker
Kitchen instruments
Table, chair
Computer, billing machine, printer
Tv, Ac machine
others

300,000
100,000
400,000
200,000
300,000
400,000
100,000

Total start -up assets

1,800,000

Total required start-up costs

7,320,000

6.2. Key financial indicators

Break even analysisTotal fixed costs are Rs. 7,320,000. Expected Variable cost (overhead) is Rs. 20 per h customer when
per customer sale expected is Rs.50. So, break-even revenue is RS.15,275,000 which can be achieved
by serving 305,500 customers.

Table-3

Break-even Analysis (Indian Rupees)

Fixed costs-7,320,000
Variable costs-20 per customer
Number of customer-182500
Average price per customer-50
No of
customer
0
182,500
305,500
365,000
547,500

Net revenue

Fixed cost

Variable cost

Total cost

Total profit

0
9,125,000
15,275,000
18,250,000
27,375,000

7,320,000
7,320,000
7,320,000
7,320,000
7,320,000

0
3,650,000
6,110,000
7,300,000
10,950,000

7,320,000
10,970,000
13,430,000
14,620,000
18,270,000

-7,320,000
-1,845,000
0
3,630,000
9,105,000

Projected profit and loss

The profit and loss statement shows increases over the three expected years which demonstrates a
good financial health of the company.
Table -4

Profit and loss statement (Indian Rupees)

income
sales
Cost of goods sold
Gross profit
Expenses
rent
salaries
insurance
tax
Bank debt
Permit license
Other expenses
Total expenses
Net profit

Year 1

Year 2

Year 3

9,125,500
(3,650,200)
5,475,300

10,950,000
(4,380,000)
6,570,000

12,045,000
(4,818,000)
7,227,000

1,500,000
1,800,000
100,000
300,000
500,000
200,000
500,000
4,900,000
575,300

1,500,000
2,000,000
100,000
400,000
500,000
200,000
600,000
5,300,000
1,270,000

1,500,000
2,100,000
100,000
600,000
500,000
200,000
700,000
5,700,000
1,527,000

Projected cash flow

The projected cash flow is stated below:
Table- 5

Cash Flow (Indian Rupees)

Cash flow
Owner investment
Bank loan
Cash sales
Cash from operations
Total cash received

Year 1
5,124,000
2,196,000
9,125,000

Year 2

Year 3

16,445,000

10,950,000
574,800
11,524,800

12,045,000
1,744,800
13,789,800

Start-up expenses
salaries
rent
Bank instalments
Sale tax
insurance
Permit

7,320,000
1,800,000
1,500,000
500,000
300,000
100,000
200,000

2,000,000
1,500,000
500,000
400,000
100,000
200,000

2,100,000
1,500,000
500,000
600,000
100,000
200,000

Other expenses
Raw materials cost
Total expenses
Cash balance

500,000
3,650,200
15,870,200
574,800

600,000
4,380,000
9,680,000
1,744,800

700,000
4,818,000
10,518,000
3,271,800

7. Important assumption:
Meal price range from- Rupees 20 to 300
Average sale per customer-Rupees 50
Total customer per day-500 per day
Total Employee-15

Conclusion:
The business report is made for Food24 fast-food Company according to its market guidelines and
information. The report is solely depends on the market assumption matrix. Responsible and quality
third party data are used to make this report.

Bibliography:
1. Organised fast food in the fast lane, CRISIL Opinion, September 2013,CRISIL Rsearch,
(online)Available online at
http://www.crisil.com/pdf/research/CRISIL%20Research_Article_QSR_17Sep2013.pdf (Last accessed
on 19.02.15)
2. Fast Food in India, October 2014,Euromonitor International, (online)
Available at
http://www.euromonitor.com/fast-food-in-india/report (last accessed on 19.02.15)

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