NCERT Solutions For Class 11 Entrepreneurship Chapter 3 Enterpreneurship as Innovation and Problem Solving

Dr. Abraham M George

• He is the founder of The George Foundation established in January 1995 in Bangalore, India.
• Mission is to work towards poverty eradication, promote environmental health and strengthen democratic institutions and values in developing countries.

An entrepreneur requires factors of production i.e. land, labour, capital, material, etc., for conducting business operations.

If these are available easily and in abundance, then its easy for entrepreneur, but in case there is scarcity of resources, unavailability of funds, etc. then it becomes an economic barrier for entrepreneurs.

Non-insurable risks are risks whose burden fall on the entrepreneur himself as its probability cannot be determined and these cannot be insured like changes in prices due to interest rates, etc.

Insurable risks are risks which can be anticipated and their probability can be known. These are insured and burden of these risks is passed onto insurance companies like damage to property due to theft, fire, etc.

According to Martin and Osberg, the social entrepreneur aims for value in the form of large-scale transformational benefit that accrues either to a significant segment of society or to society at large."

1. Indian Institute of Entrepreneurship (IIE)

2. National Small Industries Corporation (NSIC)

Two innovations are:

1. Penicillin

• It was invented by a scientist, Sir Alexander Fleming
• He was searching for a 'wonder drug' that could cure diseases but the experiments failed
• One day he noticed that a contaminated petri dish contained a mould that was dissolving all the bacteria around it.
• He grew the mould and then he learned that it contained a powerful antibiotic, penicillin.

2. Inkjet Printers

• It was invented by a canon engineer
• Accidently his pen got in contact with the hot iron,
• He noticed that ink was ejected from the pens point a few moments later
• This led to the creation of the inkjet printers

Incubation centres in India:

• Indian Angel Network (IAN)
• Startup Village

Business Intelligence includes technologies and applications for collection, analysis, and presentation of business information in a way that yields information that a business can act on.

It helps in enhancing strategic decision-making capabilities, improve their performance, mitigate risk and create new business models.

Business incubation is defined as process that is developed for growth of entrepreneurial ventures with the help of support, technical and financial services provided by individuals operating such incubators.

It involves business development, people and infrastructure that helps in growth of entrepreneurs starting a business. These are sponsored by private investors or even government.

Lijjat Papad was the idea of seven Gujarati women from Mumbai who wanted to start a venture to create a venture using their skill of cooking.

The women borrowed Rs 80 from Chhaganlal Karamsi Parekh, a member of the Servants of India Society and a social worker.

They bought the necessary ingredients and the basic infrastructure required to manufacture papads and took over a loss-making papad making venture

Lijjat expanded as a cooperative system. Within three months there were about 25 women making papads. For four months during rainy season the women had to stop production.

But then this problem was solved by buying a cot and a stove. The group got considerable publicity through word of mouth and articles in vernacular newspapers.

Incubators help start-up in following ways:

• Helps companies in contacting with angel investors
• Helps firms to prepare for venture capital presentations and connect with venture capitalists
• Mentors and guides companies for applying loan

External factors leading to business risk are:

1. Economic factors: These result from the change in the prevailing market conditions in the form of:

• Change in demand for the product.
• Price fluctuations.
• Change in tastes, preferences or income of the consumers.
• Change in the output of competing firms or change in trade cycle
• Increase in competition for the product.
• Inflationary tendency or fluctuations in the economy.

2. Natural factors: These include natural calamities such as earthquakes, floods, famines, cyclones, lightening, tornadoes, etc. that are unforeseen and over which an entrepreneur has no control.
3. Political factors: These include factors resulting from political changes in a country, such as fall or change in the government, communal violence or riots in the country, civil war., etc.

KFC was founded by Colonel Sanders.

He was an entrepreneur who started selling chicken dishes in a service station in Corby, US.

He saw that travelers who stopped at station were hungry which Sanders identified as an opportunity for his business.

His spicy chicken recipe was loved by the people and became a success. He then opened a restaurant which has now become a fast-food chain known as ‘Kentucky Fried Chicken (KFC)’.

Cloud Computing:

• It involves storing and accessing data and programs over the internet instead of computer’s hard drive.
• This helps an organization to upload all its data on a cloud and access it even from remote areas, when required.
• Widespread cloud computing transforms businesses and business models and reduces both initial and recurring costs.

a) Smart Mobility

• There has been sharp increase in the use of smart devices and portable tools for interacting with each other.
• It refers to mobile devices helping in the growth of business.
• New emerging market companies will be significant competitors, as the lack of legacy systems will enable them to earn profit more quickly with new technology as it becomes available.

b) Information Collection as new business

• Entrepreneur requires information regarding customers such as his age, regularity of visit to the shop, preferences of his purchases, etc.
• It helps him to understand taste and preference of customer, so as to serve him better and ensure his loyalty.
• Generating huge amount of information can be attributed to growing number of embedded sensors collecting information about the world, rise of social networks that store the data which people share, etc.

Personal barriers are:

1. Perceptual barriers:

• Lack of a clear vision, misunderstanding a situation, preconceived notions and prejudices are some of the perceptual barriers.
• These arise because an entrepreneur fails to understand and assess a situation correctly.
• These perceptions limits an entrepreneur’s outlook and choices.

2. Motivational barriers:

• Consistent motivation is required for any entrepreneurial venture
• Entrepreneurs start with enthusiasm, but they lose motivation when they face some difficulties in the execution of their plans

Internal factors leading to business risk are:

1. Human factors: includes factors such as

• Strikes, lock-out by trade unions, negligence and dishonesty of an employee
• Accident or death of a key person in company
• Incompetence of managers or of other key persons in organization
• Failure of suppliers to supply materials or goods on time
• Default in payment by debtors, etc.

2. Technological factors

• These can be because of unforeseen changes in the techniques of production or distribution that lead to technological obsolescence.

3. Physical factors

• These include failure of machine and equipment used in business, fire, theft in the industry, damages in transit of goods, etc. that result in loss or damage to the property of firm.

There are two type of barriers to entrepreneurship:

1. Environmental barriers: these include:

• Economic barriers: An environment, where the factors of production i.e., land, labor, capital, material, market, etc. are easily available is conducive to the growth of an entrepreneur. Unavailability of these prevents an entrepreneur from starting a new venture and thus, act as barrier
• Social barriers: includes factors like caste structure, mobility of labour, customer needs, cultural heritage, respect for senior citizens, values of an individual, etc. which have great impact on enterprise.
• Cultural barriers: Every society has its own cultural values, beliefs and norms. An entrepreneur considers the cultural reference of the region that he/she is going to cater to, as this will enable him/her to get a quicker acceptance in that region. If, however, he/she fails to do so, then it will definitely act as a cultural barrier.
• Political barriers: these provides the legal framework within which business shall operate. There is the influenced of political organisations, stability at the center, government’s intervention in business, constitutional provisions, etc.

2. Personal barriers: these include:

• Perceptual barriers: it involves lack of a clear vision, misunderstanding a situation, preconceived notions and prejudices are some of the perceptual barriers. These arise because an entrepreneur fails to understand and assess a situation correctly.
• Motivational barriers: Consistent motivation is required for any entrepreneurial venture. Entrepreneurs start with enthusiasm, but they lose motivation when they face some difficulties in the execution of their plans.

New forms of business which is created because of technological changes are:

1. Business Intelligence

• It includes technologies and applications for collection, analysis, and presentation of business information in a way that yields information that a business can act on.
• It helps in enhancing strategic decision-making capabilities, improve their performance, mitigate risk and create new business models.
• Large amount of information generated can also help a business in identifying new opportunities and implementing an effective strategy for gaining a competitive market advantage and long-term stability.

2. Cloud Computing

• It involves storing and accessing data and programs over the internet instead of computer’s hard drive.
• It helps an organization to upload all its data on a cloud and access it even from remote areas, when required.
• Widespread cloud computing transforms businesses and business models and reduces both initial and recurring costs

3. Power of social media

• Google, Facebook, Twitter, smart phones, tablets and e-readers are reshaping the way companies interact and collaborate with employees, partners and customers.
• Social listening enables businesses to understand the needs and wants of consumers.
• More changes that are expected with new technologies and instant information gratification will definitely lead to the creation of new forms of business enterprises.

Characteristics of social entrepreneurs are:

• Catalyst: Social entrepreneurs are instrumental in introducing changes by reforming social systems and creating sustainable improvements
• Aware: Social entrepreneurs work towards solving the problems that are faced by the society. Success of their venture is measured in terms of the impact that they are able to create.
• Seek opportunity: These entrepreneurs pursue their goals relentlessly. They see every obstacle as an opportunity to develop and shape their business models.
• Innovative: Social entrepreneurs are creative, innovative and ready to apply ideas to new situations. They see failures as lesson or learning opportunities.
• Optimum use of resources: Social entrepreneurs are resourceful. They actively expand their resource pool through collaboration with others along with optimising the use of existing resources.
• Accountability: Social entrepreneurs want to know how they are actually making an impact and so they focus on value addition for people. They are accountable to their beneficiaries and their investors who want to know whether their contributions are used in the way as committed.