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Entrepreneursh

ip
Development

Entrepreneursh
ip
Development
MBS / MBA

Prakash Shrestha
Lecturer
Tribhuvan University
Kathmandu

Publisher & Distributor

Samjhana Publication
Pvt. Ltd.
Title

Entrepreneurship Development
For MBS/MBA
Author

Prakash Shrestha
Copyright

Reserved by the Author


Publisher & Distributor

Samjhana Publication Pvt. Ltd.


Campus Road, Minbhawan
Kathmandu, Nepal
Ph. No. 01-6910929, 9851060773
Edition
2013

Computer Layout and Cover Designer


Pradip Kumar Shrestha (9841 502529)
Price: NRs.275/-

Published in Nepal

DEDICATION
To all those whose
efforts have made this
book what it is.
The Author

PREFACE
This book entitled "Entrepreneurship Development" is primarily
written according to new curriculum prescribed by Faculty of
Management, T.U., for the students of
MBS Second Year. It
covers the entire curriculum in a simple and understandable
language. Hence I am confident that this book will prove very
useful to the students who aspire to become entrepreneurs. I hope
this book will also be useful for the students of MBA and BBA of
different universities of Nepal.
The purpose of this book is to present the concepts, principles and
practices of entrepreneurship in such a way that they may be easily
intelligible not only to the students of management discipline but
also its practitioners.
I would like to acknowledge great inspiration of Prof. Dr. Dev Raj
Adhikari, Dean, Faculty of Management, T.U., who has obliged me
by writing enlightening foreword of this book. Prof. Adhikari, the
indomitable management guru of Nepal has always been a source
of inspiration to me.
I have taken considerable help from several well-known books,
articles of Nepalese and foreign writers and publications. I owe
great intellectual debt to all of them for using their materials
liberally. My sincere thanks go to the well-wishers, teachers,
friends and colleagues who helped directly and indirectly from
different angles for improving the book.
I am grateful to Mr. Hari Bhattarai of Samjhana Publication Pvt.
Ltd., for promptly publishing this book in an excellent form in time.
I am cordially thankful to
Mr. Pradip Kumar Shrestha for
his works in computer designing and typing this book in an
attractive form. I am particularly thankful to my beloved wife Binita
Shrestha for her patience and constantly inspiring me to write the
book.
I welcome suggestions for incorporation in the future editions of
this book to render it still more useful to students, entrepreneurs,
managers, businesspersons and industrialists in Nepal and abroad.
Thank you.

Prakash Shrestha
Email: mp_shrestha@hotmail.com

Table of Contents
Chapter 1
Overview of Entrepreneurship
1.

2.
3.

4.

5.
6.

7.

8.

Concept and Meaning of Entrepreneurship......................


1
1.1
Entrepreneurship Decision Process........................
6
Features/Characteristics of Entrepreneurship..................
7
Entrepreneurs.................................................................
9
3.1
Concept and Meaning of Entrepreneur..................
9
3.2
Functions of Entrepreneurs....................................
10
Types of Entrepreneurs....................................................
15
4.1
Innovative Entrepreneurs......................................
16
4.2
Behavioural Entrepreneurs....................................
17
4.3
Focus Group Entrepreneurs...................................
17
Role of Entrepreneurship in Economic Development.......
21
Women Entrepreneurship................................................
24
6.1
Concept and Meaning of Women Entrepreneurs....
24
6.2
Types of Women Entrepreneurs.............................
25
6.3
Concept of Women Entrepreneurship....................
25
6.4
Functions of Women Entrepreneurs.......................
26
6.4
Problems of Women Entrepreneurs........................
27
Emerging Trends in Entrepreneurship..............................
29
7.1
Internet Trends......................................................
29
7.2
E-Commerce Trends...............................................
30
Factors affecting Entrepreneurship Growth......................
36
8.1
Economic Factors affecting Entrepreneurship
Growth..................................................................
36

8.2

Non-Economic Factors affecting Entrepreneurship


Growth...................................................................
39
SELECTED NOTES AND REFERENCES.....................
46
REVIEW QUESTIONS.............................................
46
Chapter 2
Approaches to Entrepreneurship

1.
2.

3.

4.

1.
2.
3.

Overview of Entrepreneurial Thoughts............................


49
Macro View of Entrepreneurial Schools of Thought..........
50
2.1
Environmental School of Thought..........................
50
2.2
Financial/Capital School of Thought.......................
51
2.3
Displacement School of Thought...........................
52
Micro View of Entrepreneurial Schools of Thought...........
52
3.1
Entrepreneurial Trait School of Thought.................
53
3.2
Venture Opportunity School of Thought.................
54
3.3
Strategic Formulation School of Thought...............
54
Process Approaches to Entrepreneurship........................
55
4.1
Integrative Approach.............................................
55
4.2
Assessment Approach...........................................
57
4.3
Multidimensional Approach....................................
58
SELECTED NOTES AND REFERENCES.....................
62
REVIEW QUESTIONS.............................................
63
Chapter 3
Developing Creativity & Understanding Innovation
Concept of Creativity.......................................................
65
Creative Process..............................................................
67
Developing Creativity......................................................
70

4.

Concept of Innovation.....................................................
74
4.1
Types of Innovation................................................
75
4.2
Sources of Innovation............................................
76
SELECTED NOTES AND REFERENCES.....................
80
REVIEW QUESTIONS.............................................
80
Chapter 4
Entrepreneurial Risk & Stress

1.
2.
3.
4.
5.

Concept of Risk...............................................................
81
Types of Risk...................................................................
82
Concept of Stress............................................................
83
Sources of Stress.............................................................
84
Managing / Dealing with Stress.......................................
86
SELECTED NOTES AND REFERENCES.....................
90
REVIEW QUESTIONS.............................................
90
Chapter 5
Legal Environment for Entrepreneurship

1.
2.
3.

4.

Introduction to Legal Environment..................................


91
Legal Provisions for Establishment of New Venture.........
92
Registration of Intellectual Property Rights: Steps &
Factors............................................................................
92
3.1
Patents..................................................................
93
3.2
Trademarks............................................................
95
3.3
Copyrights.............................................................
96
3.4
Trade Secrets.........................................................
99
Licensing.........................................................................
100

5.
6.
7.

Product Safety and Liability.............................................


101
Insurance........................................................................
102
Contract..........................................................................
104
SELECTED NOTES AND REFERENCES.....................
105
REVIEW QUESTIONS.............................................
105
Chapter 6
New Venture Identification and Selection

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

Business Opportunity Identification.................................


107
Sources of Generating New Ideas....................................
108
Methods of Generating New Ideas...................................
114
Selection of Best Idea......................................................
117
Feasibility Study..............................................................
118
Site Selection..................................................................
119
Business Description.......................................................
122
Marketing Analysis/Components.....................................
123
Macro Environmental Influences......................................
124
Financial Analysis/Components.......................................
125
Development and Production Analysis............................
127
Organization and Management Analysis.........................
128
Critical Risks...................................................................
129
Contingencies.................................................................
130
Equity Position and Capital / Deal Structure....................
131
SELECTED NOTES AND REFERENCES.....................
159
REVIEW QUESTIONS.............................................
159

Chapter 7
Preparation of Business Plan
1.
2.
3.
4.
5.

6.

7.

Preparation of Business Plan...........................................


161
Benefits of Business Plan................................................
162
Elements of Business Plan...............................................
163
Preparation of the Business Plan.....................................
168
Scheme and Strategy of Venture Launching....................
172
5.1
The Four-Stage Growth Model of Entrepreneurship
172
5.2
Scheme of Venture Launching...............................
173
5.3
Strategies of Venture Launching............................
174
Internal Profile Analysis...................................................
177
6.1
Concept of Internal Profile Analysis........................
177
6.2
Variables for Internal Profile Analysis.....................
179
Practical Exercise............................................................
180
SELECTED NOTES AND REFERENCES.....................
200
REVIEW QUESTIONS.............................................
200
Chapter 8
Institutional Support to Entrepreneurship Development

1.

2.

Need for Institutional Support.........................................


203
1.1
Areas for Institutional Support to Entrepreneurs....
204
Institutional Support to Entrepreneurs in Nepal...............
207
2.1
Government Agencies...........................................
207
2.2
Specialized Agencies.............................................
211
2.3
Consultancy Services.............................................
216

2.4

3.

1.
2.
3.

4.

5.
6.
7.
8.
9.

Institutional Finance..............................................
217
2.5
Marketing Services................................................
220
2.6
Industrial Estates...................................................
222
Introduction to Entrepreneurship Development Projects..
223
3.1
Micro
Enterprise
Development
Programme
(MEDEP)................................................................
223
3.2
ELAM.....................................................................
226
SELECTED NOTES AND REFERENCES.....................
227
REVIEW QUESTIONS.............................................
227
Chapter 9
Managing Early Growth
Introduction.....................................................................
229
To Grow or Not to Grow...................................................
230
Strategies for Expansion and Growth..............................
231
3.1
Expansion.............................................................
231
3.2
Growth.................................................................
232
Challenges and Opportunities of Global Expansion.........
233
4.1
Challenges of Global Expansion............................
234
4.2
Opportunities of Global Expansion........................
235
Economic Implications of Growth....................................
236
Hitting the Growth Wall...................................................
236
Financial Strategies to Support Growth...........................
237
Organizational Changes During Growth...........................
238
Entrepreneurial Skills and Strategies...............................
238
SELECTED NOTES AND REFERENCES.....................
240

REVIEW QUESTIONS.............................................
241
Chapter 10
Case Studies

1.
2.
3.
4.
5.
6.
7.

Luck or Persistence?........................................................
243
Age & Capital will not restrict for Launching an
Enterprise.......................................................................
245
The Franchise Option......................................................
246
An Innovation Marketplace on the Internet......................
247
From a Pretzel Stand to a Franchise Business at Auntie
Annes.............................................................................
248
Running a Sole Proprietorship.........................................
249
How To Be a Billionaire?..................................................
250
Bibliography........................................................
253
Glossary..............................................................
257
Curriculum..........................................................
265