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End Term Examination

Entrepreneurship and New Ventures


Total Marks- 50
Time: 120 minutes
Answer all the five questions in brief
OPEN BOOK EXAMINATION
Name:No:- D14013
Date:- 05/08/2016

Roll

1. What is your understanding of a business model?


2. What are the different aspects one needs to take into account in the
growth of the firm?
3. Discuss the challenges in human resources management in an
entrepreneurial venture. Why does this become more complicated if
the firm continues as a family business?
4. How is business strategy relevant in entrepreneurship?
5. Discuss the issues in evaluating the feasibility of a new venture.

Q1 What is your understanding of a business model?


A business plan is a formal statement of business goals, reasons they are
attainable, and plans for reaching them. It may also contain background
information about the organization or team attempting to reach those goals.
A business plan is a written document that describes in detail how a business,
usually a new one, is going to achieve its goals. A business plan lays out a
written plan from a marketing, financial and operational viewpoint.
Sometimes, a business plan is prepared for an established business that is
moving in a new direction.
Breaking down Business Plan
A strategy for success is a major apparatus that any new company needs set
up preceding starting its operations. Ordinarily, banks and investment firms
make the presence of a suitable marketable strategy an essential to the
venture of assets in a business. A decent strategy for success begins with an
official synopsis of the business; incorporates a nitty gritty depiction of the
business, its administrations and/or items; and states how the business plans
to accomplish its objectives. It ought to likewise give no less than an outline
of the business of which the business will be a section, and how it will
separate itself from its potential rivals.
Financial Projections
A complete marketable strategy should likewise incorporate an arrangement
of monetary projections for the business. These forward-looking anticipated
money related explanations are frequently called master forma budgetary
proclamations or essentially the "professional proformas." They incorporate
the general spending plan, present and anticipated financing, a business
sector investigation, and its promoting methodology approach. In a strategy
for success, an entrepreneur ventures incomes and costs for a specific
timeframe, and portrays operational movement and costs identified with the
business.
Practical Considerations
The thought behind assembling a strategy for success is to empower
proprietors to have a more characterized picture of potential expenses and
downsides to certain business choices and to help them adjust their
structures as needs be before executing these thoughts. It additionally
permits proprietors to venture what kind of financing will be required to get
the organizations up and running.

Q2 What are the different aspects one needs to take into account in
the growth of the firm?
Extreme or inadequate stock.
On the off chance that the business depends on an item as opposed to an
administration, take watchful supply of its stock. First-time business
purchasers are regularly allured by stock, yet it can be a trap. Intemperate
stock might be out of date or may soon turn out to be so; it likewise costs
cash to store and guarantee. Overabundance stock can likewise mean there
are a great deal of disappointed clients who are encountering slacks between
their requests and last conveyance or are returning things they aren't glad
with. The most reduced level of stock the business can convey. Decide this,
then have the merchant consent to diminish stock to that level by the date
you assume control over the organization. Likewise add a provision to the buy
understanding indicating that you're purchasing just the stock that is present
and saleable.
Accounts Receivable Uncollected receivables stunt a business' development and could require
unexpected bank advances. Take a gander at pointers, for example, records
of sales turnover, credit strategies, money gathering plans and the maturing
of receivables.
Net Income
Utilize a progression of net salary proportions to pick up a superior take a
gander at a business' main concern. Case in point, the proportion of gross
benefit to net deals can be utilized to figure out if the organization's overall
revenue is in accordance with that of comparative organizations. In like
manner, the proportion of net wage to total assets, when considered together
with anticipated increments in premium costs, absolute price tag and
comparable variables, can demonstrate whether you would acquire a sensible
return. At long last, the proportion of net pay to aggregate resources is a solid
marker of whether the organization is getting a positive rate of profit for
resources. Your bookkeeper can help you evaluate every one of these
proportions. As they do as such, make sure to figure out if the benefit figures
have been uncovered before or after assessments and the measure of profits
the present proprietor is getting from the business. Likewise evaluate the
amount of the costs would keep with it, increment, or decline under your
administration.
Working capital
Working capital is characterized as present resources less present liabilities.
Without adequate working capital, a business can't stay above waterso one
key calculation is the proportion of net deals to net working capital. This

gauges how effectively the functioning capital is being utilized to accomplish


business destinations.
Sales Activity
Deals figures may seem rosier than they truly are. At the point when
contemplating the rate of development in deals and income, read between
the lines to tell if the development rate is because of expanded deals volume
or higher costs. Additionally inspect the general commercial center. On the off
chance that the business sector is by all accounts experienced, deals might
be staticand that may be the reason the merchant's attempting to empty
the organization.
Fixed Assets
On the off chance that your investigation recommends the business has put
an excess of cash in settled resources, for example, the plant property and
gear, ensure you know why. Unused gear could demonstrate that interest is
declining or that the entrepreneur misjudged producing necessities.
Operating environment
Require some serious energy to comprehend the business' working
surroundings and corporate society. In the event that the business relies on
upon abroad customers or suppliers, for instance, inspect the short-and long
haul political environment of the nations included. Take a gander at the
business in light of customer or monetary patterns; for instance, in case
you're thinking about a store that offers items taking into account a
prevailing fashion like Crocs, will that customer base still be in place five or
after 10 years? Then again if the organization depends on only a couple
significant customers, would you be able to make certain they'll stay with you
after the arrangement is shut?
Q3 - Discuss the challenges in human resources management in an
entrepreneurial venture. Why does this become more complicated if
the firm continues as a family business?
Individuals matter, so Human Resource Management matters. This is
positively valid in all organizations, yet HR is significantly more critical in
family firms for the accompanying reasons:
Family businesses often treat employees whether family or nonfamily
as family, thus putting more attention and pressure on the need to
handle HR issues with great care and respect.
Family dynamics complicate the emotional environment of a family
business.
Family relationships and the familys reputation are at stake.

The livelihoods and fortunes of business families are often tied up in


the enterprises they run, so they need to maximize the value of the
business.
Double Standards
Although the companies have formal policies & procedures, but they does not
apply to family members. For e.g. the family members and their
acquaintances have more shares in benefits & perks and the top managerial
positions are generally reserved for the family members. This is evident from
the comment of one of the HR managers, who quoted, You might as well
throw salary structure out of the window. There are people in the company
whose pay is based on the fact that they knew the owners before, and it has
nothing to do with their skills."
Lack Of Professionalism
The family business is based on informal premises. Any of the family
members can promise the job to any relative or neighbor, irrespective of the
qualification and potential.
a. Family Lingo
In order to give the warmth & to increase the inclusion, the non-family
members are given signals that they are considered family and hence assure
them of their job security.
While well-intended and sincere, these statements may come back to bite the
employer. A terminated employee may argue that he or she relied to his or
her detriment on these assurances by staying with the company and may
bring a claim for promissory estoppels or detrimental reliance.
b. Informality
There is absence of clear policies and business norms for family members.
There is no
policy followed for promotion, transfer or compensation of the family
members.
c. Problems in communication
If the members share amicable relations, their communication does not follow
any formal
Communication and the tea-time talks are the mode of communication and if
difference in level of seniority and emotions like envy, fear, anger invoke
there is zero communication in members.
Religion
The religion of the family represents an important cultural aspect of some
family businesses and it is obvious too because family members cannot leave
their faith at home. But the problem arises when they try to run their
businesses in accordance with their faith. Those who have a faith-based
business need to practice and discuss their faith in ways that do not exclude
others. They must acknowledge that others have different faiths but are
equally valued remains essential.
Dispute Resolution

The disputes are common in the family business. The disputes range from
succession to
difference in vision of the son & father. The history has witnessed many such
feuds. Some families could survive the disputes some other had succumbed
to them. Addidas & Puma are the example of the survivors of feuds, although
it had to bear the brunt of split.
Restricted vision
As the family members are reluctant to allow the outsiders to the top
managerial positions, there is a lack of outside opinions and diversity on how
to operate the business.
Family member compensation
Dividends, salaries, benefits and compensation for non-participating family
members are not clearly defined and justified. There is an example of a
Family- Business, which has all the members of the family as the Director of
the organization, whether active in business or not, and are fetching benefits
and perks. These people are interested only in dividends and earnings.
Confused roles
Roles and responsibilities must be clearly defined. But in the family business
the role
ambiguity & role conflict is common. The roles are not clear. It is very difficult
in family
Businesses to define authority. If a younger member is made CEO he/she may
find it very
difficult to tell the elder members of the family to change their style of
functioning. Many
Members in the family also tend to overlook decisions taken by younger
members even if they are at positions of authority.

Q 4. How is business strategy relevant in entrepreneurship?


Entrepreneurs and strategists excel at the single most challenging problem in
business--creating value by aligning internal strengths and weaknesses with
external opportunities and threats. Sometimes that involves creating entirely
new companies, even entirely new industries. Often it involves leading
innovation or technology commercialization in existing businesses.
Business Strategy develops tools and models which are useful to for
entrepreneurs in order to
Assess competition.
Identify strengths and weaknesses of the organization in relation to its
competitors.
Define current and prospective positioning of the business.
Devise and implement a successful strategic plan.

Develop a business plan.


Enter a new market.
Manage a multi-business enterprise.
Implement governance that favors company growth.

Creating Value through Strategy in Entrepreneurship.


Balance between gaining competitive advantage and identifying
entrepreneurial opportunities Importance of human and social capital
Importance of a global perspective for innovation strategies Advantage of
setting technology standards. Contribution that strategic entrepreneurship
makes to nations' economic development.
Importance of Strategy in Entrepreneurship.
Entrepreneurial activity is increasing across the globe. Women and seniors
are among the fastest-growing groups of entrepreneurs. Entrepreneurial
activity contributes to national wealth. Strategic entrepreneurship is a
winning strategy for the current competitive landscape.
Q5 - Discuss the issues in evaluating the feasibility of a new venture.
Projects come and projects go. Some succeed and some fail. Some result in
lucrative windfalls for the organization. Others languish in purgatory for years
or decades producing little to no value add over the long-term.
There are several key questions that should be addressed .Some of those key
factors are:

Business Alignment
Technology and System Assessment
Economic Viability
Operational Considerations
Legal Ramifications
Schedule and Resource Concerns
Market Dynamics
Company Cultural & Political Concerns

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