Quiz 1

Define meaning and concept of Enterprise.

An economic system where few restrictions are placed on business activities and ownership. In
this system, governments generally have minimal ownership of enterprises in the market place.
This system aims for limited restrictions on trade and minimal government intervention.

Describe the roles of an Entrepreneur.

Entrepreneurship requires the following characteristics for success:

1. The creativity to innovate new product and ideas.

2. The drive and determination to be successful.
3. The ability to take calculated risks.
4. The flexibility to adapt to changes in the market and industry.
5. Very goal- oriented to purposely and aggressively accomplish task and meet objectives.
 Quiz 2

Explain theories of entrepreneurship.

Economic entrepreneurship theories date back to the first half of the 1700s with the work of
Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic,
neoclassical and Austrian Market process schools of thought all pose explanations for
entrepreneurship that focus, for the most part, on economic conditions and the opportunities they
create. Economic theories of entrepreneurship tend to receive significant criticism for failing to
recognize the dynamic, open nature of market systems, ignoring the unique nature of
entrepreneurial activity and downplaying the diverse contexts in which entrepreneurship occurs.

Resource-Based Theories

Resource-based theories focus on the way individuals leverage different types of resources to get
entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new
venture off the ground, but entrepreneurs often start ventures with little ready capital. Other types
of resources entrepreneurs might leverage include social networks and the information they
provide, as well as human resources, such as education. In some cases, the intangible elements of
leadership the entrepreneur adds to the mix operate as resource that a business cannot replace.

Psychological Theories

Psychological theories of entrepreneurship focus on the individual and the mental or emotional
elements that drive entrepreneurial individuals. A theory put forward by psychologist David
McCLelland, a Harvard emeritus professor, offers that entrepreneurs possess a need for
achievement that drives their activity. Julian Rotter, professor emeritus at the University of
Connecticut, put forward a locus of control theory. Rotter’s theory holds that people with a
strong internal locus of control believe their actions can influence the external world and
research suggests most entrepreneurs possess trait. A final approach, though unsupported by
research, suggests personality traits ranging from creativity and resilience to optimism drive
entrepreneurial behavior.

Sociological/Anthropological Theories

The sociological theory centers its explanation for entrepreneurship on the various social
contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George
Washington University research professor, singles out four such contexts: social networks, a
desire for a meaningful life, ethnic identification and social-political environment factors. The
anthropological model approaches the question of entrepreneurship by placing it within the
context of culture and examining how cultural forces, such as social attitudes, shape both the
perception of entrepreneurship and the behaviors of entrepreneurs.

Opportunity-Based Theory

Prolific business management author, professor and corporate consultant, Peter Drucker put
forward an opportunity-based theory. Drucker contends that entrepreneurs excel at seeing and
taking advantage of possibilities created by social, technological and cultural changes. For
example, where a business that caters to senior citizens might view a sudden influx of younger
residents to a neighborhood as a potential death stroke, an entrepreneur might see it as a chance
to open a new club.
 Quiz 3

Explain Entrepreneurship Discuss its functions. Also explain the problems faced by them.

1. Risk-bearing function
2. Organizational function,
3. Innovative function
4. Managerial function, and
5. Decision making function.

What is entrepreneurship Development .Explain Entrepreneur v/s Manager?

"An entrepreneur is not a manager. An entrepreneur is someone who is great at conceiving ideas,
starting ideas, building ideas...and then handing them over to really good managers to run the
business."

“ A manager is a person who does nothing, but leaves nothing undone.”

Quiz 4

What do you understand by the Entrepreneurial competency?

Conclusions suggest that although the concept of entrepreneurial competencies is used widely by
government agencies and others in their drive for economic development and business success,
the core concept of entrepreneurial competencies, its measurement and its relationship to
entrepreneurial performance and business success is in need of further rigorous research and
development in practice.

Define Entrepreneurial culture.

We have learned significant lessons about how to foster an entrepreneurial culture globally that
encourages and supports people, particularly young women and men, in the context of creating
decent work for all. Five of these lessons stand out with a particular emphasis on the fifth. First,
we must shift how we see work and people's relationship to it throughout their life cycle. This
new architecture of work also has profound implications for social and economic policy. Second,
we must shift the focus of today's dominant neo-liberal macroeconomic policies from primarily
fighting inflation and protecting investors to promoting decent work and employment-intensive,
environmentally sustainable growth. Third, we should remove all barriers, particularly those
created by government or within its power to change, that block or discourage people's
entrepreneurship. Fourth, ensuring access to credit without collateral for the poorest, and other
productive resources, are essential ingredients to embed entrepreneurship and self-employment
throughout every strata of society, including women and men of all ages; new financial services
are also needed for the growth of the citizen sector. Fifth, we must promote, cultivate, and value
social entrepreneurship as a profession. The key challenge in cultivating an entrepreneurial
culture globally is figuring out the best ways to unleash the potential of all people to innovate,
create, catalyze, be resourceful, solve problems and take advantage of opportunities while being
ethical.
 Quiz 5

What is industry analysis? Why is it important for a new venture to complete a thorough
analysis of the industry it is entering?

Answer: Industry analysis is business research that focuses on the potential of an industry. An
industry is a group of firms producing a similar product, such as MP3 players, fitness drinks, or
electronic games. Once it is determined that a new venture is feasible in regard to the industry
and market in which it will compete, a more in-depth analysis is needed to learn the ins and outs
of the industry the firm plans to enter. This analysis helps a firm determine if the target market(s)
it identified during its feasibility analysis are accessible and which ones represent the best point
of entry for a new firm.

Identify the five competitive forces that determine industry profitably. Explain the purpose
of analyzing these forces?

Answer: The five competitive forces that determine industry profitability are the threat of
substitutes, the threat of new entrants, rivalry among existing firms, bargaining power of
suppliers, and bargaining power of buyers. The five competitive forces model is a framework for
understanding the structure of an industry and was developed by Harvard professor Michael
Porter. Each of Porter's five forces impacts the average rate of return for the firms in an industry
by applying pressure on industry profitability. Companies analyze the five forces to try to
position their firms in a way that avoids or diminishes the negative impacts of these forces.
 Quiz 6

Describe the two potential fatal flaws of business models.

Answer: Two fatal flaws can render a business model untenable from the beginning: a complete
misread of the customer and utterly unsound economics. Business models that fall victim to one
of these two flaws have lost the race before leaving the starting gate.

What is a strategic asset? Provide an example of a strategic asset that is utilized by an

entrepreneurial firm.

Answer: Strategic assets are anything rare and valuable that a firm owns. They include plant and
equipment, location, brands, patents, customer data, a highly qualified staff, and distinctive
partnerships. A particularly valuable strategic asset is a company's brand. Starbucks, for
example, has worked hard to build the image of its brand, and it would take an enormous effort
for another coffee retailer to achieve this same level of brand recognition.
 Quiz 7

What is a founder's agreement? Describe the purpose of a buyback clause and why it's
important?

Answer: A founders' agreement (or shareholders' agreement) is a written document that deals
with issues such as the relative split of the equity among the founders of the firm, how individual
founders will be compensated for the cash or the "sweat equity" they put into the firm, and how
long the founders will have to remain with the firm for their shares to fully vest. An important
issue addressed by most founders' agreements is what happens to the equity of a founder if the
founder dies or decides to leave the firm. Most founders' agreements include a buyback clause,
which legally obligates the departing founders to sell to the remaining founders their interest in
the firm if the remaining founders are interested. In most cases, the agreement also specifies the
formula for computing the dollar value to be paid. The presence of a buyback agreement is
important for at least two reasons. First, if a founder leaves the firm, the remaining founders may
need the shares to offer to a replacement person. Second, if founders leave because they are
disgruntled, the buyback clause provides the remaining founders a mechanism to keep the shares
of the firm in the hands of people who are fully committed to a positive future for the venture.
 Quiz 8

What is ratio analysis? Why is it important?

Answer: The most practical way to interpret or make sense of a firm's historical and pro forma
financial statements is through ratio analysis. The ratios described in the textbook are divided
into profitability ratios, liquidity ratios, and overall financially stability ratios. These ratios
provide a means of interpreting the historical and pro forma financial ratios for a firm.

What are forecasts? What role do they play in the preparation of pro form financial
statements?

Answer: Forecasts are projections of a firm's future sales, expenses, income, and capital
expenditures. A firm's forecasts provide the basis for its pro forma financial statements. A well-
developed set of pro forma financial statements helps a firm create accurate budgets, build
financial plans, and manage its finances in a proactive rather than a reactive manner.