Entrepreneurship

Development in Emerging
Markets

[Type the company name]

[Pick the date]
 Project of entrepreneurship

“Entrepreneurship Development in Emerging Markets”

Group no 1

Group members

Hafiz Muhammad Junaid 03

Muhammad Umer 09

Sameer Ahmed 36

Iqra Saud 41

Amna Siddique 57

Sabeerah Farah 69

Assessment by Mam Urooj Qamar

Dated: 9th, February, 2017

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 Topics Page no
1. Entrepreneurship Development 3
Emerging Markets

2. Types of startups
3-4

3. Intrapreneurship 5
4. Why does one become an 6-7
Entrepreneur?

5. Entrepreneurship as career option 8

6. Why Youth is Suited for 9-11

Entrepreneurship?
11-13
7. FEMALE ENTREPRENEURSHIP
8. Small and medium business 13-14
enterprises

9. International Entrepreneurship 14-15

10. Entrepreneurship development- 16-18

role of educational institutions

11. Entrepreneurship and strategic 17-20

management

12.Mistakes start-ups make 20-21

13.Managing start-up during downturn 22

14. Entrepreneurship- Emerging 23-25

Trends in the Global Knowledge
Economy

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 1. Entrepreneurship Development in Emerging Markets

Entrepreneurship is becoming a buzzword in different parts of the world, in particular amongst

emerging economies. It has been identified as key input that can help in transforming the
economic well-being of people.

Entrepreneurship Development: It means to develop entrepreneurial abilities among the

people. In other words, it refers to inculcation, development, and polishing
of entrepreneurial skills into a person needed to establish and successfully run his / her
enterprise.

Entrepreneurship development addresses the following fundamental questions:

 How to inculcate the spirit of entrepreneurship in the youth?

 What is the role of institutions in promoting the entrepreneurship?
 Are entrepreneurs born or made?
 Why is youth suited for entrepreneurship?

Start-ups
Start-ups are companies in their first stage of operations. These companies are rolled out
through promoters and friends funding or through seed fund support from government
organizations or through banks. These companies face great challenges for their sustainable
growth due to limited funds.

High-tech Start-up Company

It is a start-up venture that specializes in technology-driven solutions to address the pain points
of customers. Normally, the term is associated with high technology and high growth ventures.
These start-ups normally produce high returns to investors and their promoters. For instance,
Google and Apple. For these startups, it is important that owners get intellectual property
rights in their favour to drive full advantage from the technological innovation. In contrast the
failure rate of startup companies is also very high.

2. Types of startups
1. Lifestyle firms
2. Foundation companies
3. Gazelles

Life style firms

“It is a business set up and run by its founders primarily with the aim of sustaining a particular
level of income and no more; or to provide a foundation from which to enjoy a
particular lifestyle.”

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Lifestyle firms spend limited funds on research and development. They achieve modest growth
mainly because of their nature of business and market potential. Their employee strengths
grow to 30-40 after several years of operations. They have great opportunity to grow and
expand. These ventures normally have growth rates below 20% per anum and are mainly
funded through internal funds and rarely with outside equity funds. This category comprises
around 90% of startups.

Foundation companies
“It is a legal category of nonprofit organization that will typically either donate funds and
support to other organizations, or provide the source of funding for its own charitable
purposes.”

Foundation companies have a backbone of investment on research and development, which

acts as a foundation for new business this category of firm may grow to an employee strength
of 300-400 within a period of 10 years. These companies usually do not go public and therefore
attract the interest of private investors but not of venture capitalists.

Gazelles
“Gazelles are startups having high potential for growth therefore are also called high potential
companies.”

These ventures attracts a lot of interest from investors, including venture capitalist. Their
growth trajectory is unassuming, although they start as a foundation company. These
companies are major job providers and are able to provide jobs to more than 500 people after
8-10 years of operation, which keeps expanding. These are typically companies that contribute
a great deal to the economic development of an area in which they operate. These companies
have at least 20% sale growth every year. Gazelles grow on the strength of their innovation
which is a whole mark of their growth.

3. Intrapreneurship
“Entrepreneurship is the practice of entrepreneurship by employees within an organization.”
“An intrapreneur is a person within a company who promotes innovative product development
and marketing.”

Intrapreneurs usually possess most of the traits as entrepreneurs such as commitment,

conviction, zeal, initiative and insight. An intrapreneur acts like an entrepreneur and always
eagerly looks for worthwhile opportunities, which yields benefit in various ways including profit
to the organizations. Intrapreneurship is a novel way of tapping individual innovative potential
for making organizations competitive and profitable therefore it is basically important to
encourage intrapreneurs of an organization.

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Carolyn Davis suggested four points for creating an intrapreneurial culture in an organization.

Empower people to make decisions---even if people commit mistakes initially, encourage them
to take decisions and implement them by appropriately empowering them.

Reward the kind of behavior you want to see---innovators should be appropriately rewarded,
monetarily and non-monetarily.

Create a learning culture where it is ok to make mistakes--- there is a saying that success
breeds success. Intrapreneurs are charged and motivated by their confidence in success, not a
fear of failure. Encourage employees to learn from their mistakes, which are part of the
learning process.

Give people ownership of their ideas and the opportunity to try them out--- a mechanism
should be set in place to encourage employee teams to own an idea that they think will be for
the good of the organization and allow them to work on it without interference.

Difference between Intrapreneurship and Entrepreneurship

Entrepreneurship
Hierarchical organization structure
Reward system that encourages conservative
decision making
Avoiding employee risk taking
Employees should adhere instructions and
directions given
Failure is not tolerated
Mistakes are not tolerated
Employees are not encouraged to take
initiatives
Employees are expected to work within their
boundaries
Intrapreneurship
Flat organization structure with networking
Work and task viewed as fun
Encouraging employee risk taking
Employees are given Freedom in their work
Failure is taken in the right spirit
Genuine mistakes are tolerated
Employees are encouraged to take initiatives
Employee can work beyond defined
boundaries
Employees work beyond office hours to
complete tasks

4. Why does one become an Entrepreneur?

▪ There are several reasons for one becoming entrepreneur , which ranges from conscious
decision of becoming an entrepreneur

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 Or

Accidentally becoming an entrepreneur as one doesn’t have any other alternative in hand.

▪ Some of the major reasons are :-

▪ WHY ENTREPRENEUR?

▪ To have freedom and independence

▪ To earn lots of money

▪ To use creativity and personal skills

▪ To Become a job provider

▪ To overcome challenges

▪ To strengthen the resume

▪ To be a Network builder

▪ To Create wealth for society and Family

▪ To be an Inspiration for others

▪ To have freedom and independence

The desire to become one’s own boss is most important reason for turning out to be an
entrepreneur.

▪ Around 40% of individuals looks for entrepreneur

▪ Lack of financing – poor planning and lack of uniqueness – Death Valley

▪ To earn more money

Greatest challenge lies before successful entrepreneur is respond the growth phase.

▪ Successful entrepreneurs keep reinvesting their profits and tries to get more
opportunities to pump more money through banks and angle funders for growth
and make more and more money.

▪ To use creativity and personal skills

Entrepreneurial venture provide more opportunities to individuals to be

▪ Innovative in establishing , strengthening and to use unique skill sets for building
their own business

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▪ To become community booster/ job provider

Entrepreneur usually more concerned about well-being of society by

▪ Providing jobs for local community to prosper their economy

▪ To strengthen resume

Entrepreneur acquire indispensable knowledge and understanding of different facets

of business (cost of operations, govt regulations ... Etc.) to strengthen their career
resumes.

▪ To Become Network Builder

Networking with a diverse set of people not only helps in supporting and growing
business but also helps in their personal lives with friendship and good will

▪ To be inspiration for others

Successful entrepreneur acts as a role model and motivational factor for youth.

▪ To Create wealth for family and society

Entrepreneurship becomes an instrument for creating wealth for their society at large .
This provide them opportunity to contribute directly in the process of growth and
development.

5. Entrepreneurship as career option

 Difference between working for others and working for oneself

Working for others Working for oneself

▪ Dependent on others ▪ Independent

▪ Following boss ▪ Following self

 Fixed and secure earnings  Variable earnings that is not

assured
▪ Has a choice for job in government ▪ Has a choice of alternative self-
or private sector owned business – industry or
trade

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 ▪ Risk in boom for organization not ▪ Risk to be faced by self
self

▪ Job seeker ▪ Job provider

▪ Contributes indirectly to wealth ▪ Contributes directly to the

creation wealth

Facts that attract towards Entrepreneurship

• High need for independence

Those who would like to have freedom such as for whom , at what terms and when to
works . There intrinsic pushes them to start own business

• To satisfy the dream of high financial Rewards

Financial rewards for the efforts put in to achieve organizational goal is also a major
factor.

• Opportunity to deal with all aspects of Business

No job can provide the wide spectrum of business insight but own venture. Such as Org
design , conceptualization , marketing , customer satisfaction … etc.

• Vision to leave a long lasting Mark

Entrepreneurship can make definite contribution by lifting the people and urge to start a
business.

Knowledge driven Entrepreneurship

▪ Entrepreneurship is defined by Timmons is the ‘Ability to create and build something

from practically nothing . Its initiating doing ,achieving and building an organization
▪ It is the Knack of sensing the opportunity where's other see chaos , contradiction and
confusion.

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 ▪ The management practices to bring enterprise into the new millennium must be
knowledge base.

Entrepreneurs – Born or Made?

▪ Until recently very few people believe that entrepreneurs can be made through
education or training
▪ Then ‘David McClelland’ build the argument that entrepreneurs can be created through
counselling, training and interventions as well, and this become movement.
▪ For this purpose, basically strategic interventions – as follows :-

1. Developing personal and behavioral traits and competencies amongst perceptive

entrepreneurs
2. Create the eco system that motivates and inspire them

▪ He also introduce many traits of an entrepreneur such as leadership, vision, decision

making , risk – taking , confidence etc.
▪ On the other hand , theory suggests that something inherent and innate that drives
people to become entrepreneur .
▪ Children born in business families most probably launch their own business.
▪ Research conducted by professor ‘ Scott Shane ‘ – WRU has compared the
entrepreneurial activity of 870 pairs of identical twins and 857 pairs of same-sex twins
to see how much of entrepreneurial behavior is genetic and environmental.
▪ He conclude about 40% are born and 60 % are made

6. Why Youth is Suited for Entrepreneurship?

Age is not a bar to initiation of an entrepreneurial venture. However, it is said that youth is
more suitable for taking up an entrepreneurial activity. In the present era, youth are found to
be getting attracted towards entrepreneurship after some experience in corporate world &
after getting exposure in and outside the class. Factors that increase chances of Youth
succeeding are:

Fearless of Failure Fear of failure is one of the major reasons for not taking up an
entrepreneurial venture. But youth mostly seems to be free of that fear & they are open to take
risk. Even, youth generally learn from their failure & know how to convert bad luck into good
luck for getting success. This acts as a great strength in their favour. Youth know to get
maximum out of minimum resources as well.

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Passionate and Challenging The environment-social, economic, technological, legal and cultural
is changing fast. This changing environment provide great opportunities & need of the hour is
to unfold innovative & novel ideas. It is observed that youth have the drive to think
passionately follow their ideas and take them to logical ends. PICASSO once said, ‘Every child is
an artist’. The problem is how to remain an artist as we grow.

Think Differently This is something which gives them ultimate edge over others. Youth have
great potential in terms of thinking & seeing things differently. Due to this very thing, they
continuously turn out to be on the innovative path

Technological Comfort In the present era youth is technologically precocious. At very early
stage of growth they understand that how much technology is crucial and realize the potential
of technology to respond to pain points. They develop greater maturity and in particular mental
attitude towards technology driven solutions.

Street Smart Youth seems to be more street smart as they have an instinct to know customers
and how to excite them. They are sharp in their observation & sense competitors’ weaknesses.
They smell opportunities which have not been responded & then they respond to those needs.

Independent One of the major edges which youth have is their independence in terms of social
responsibilities. They like to work for themselves to achieve their goals and dislike to be
conform to someone else orders.

The Power of Ideas Launched in India showed that 48 percent of business ideas had come from
people below the age of 30 years. Although age is not a bar but still some inherent qualities of
young age facilitates promotion of entrepreneurship.

EXAMPLES OF YOUNG SUCCESSFUL ENTREPRENEURS

1. Mark Zuckerberg (Facebook Founder)

2. Bill Gates (Microsoft)

3. Steve jobs (Apple computer)

Pakistan Youngest Social Entrepreneur Zymal has been a recipient of the Prince Abdul Aziz
Award for Children Pioneer/Ecopreneur Award in Saudi Arabia.

Express Tribune:

Nine-year-old Zymal Umar is the founder of an inspiring social project called Zee Bags — an
endeavor that not only aims to help the underprivileged but also the environment .In an
attempt to clear the streets of her beautiful city Sargodha of plastic bags, Zymal decided to start

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making reusable bags using newspaper .Zymal recalled a shopping trip with her parents three
years ago that first planted the idea in her head. Distracted by the sight of plastic bags on the
streets, she was taken over by feelings of disappointment and thoughts about the harmful
repercussions of plastic pollution .Then all of a sudden her attention was caught by a
shopkeeper handing out newspaper bags to his customers. Deeply inspired by the idea, Zymal
decided to take action and make a desired change .Since then, Zymal has managed to sell
hundreds of bags, use her profits to buy essential items for underprivileged children belonging
to SOS village, and make contributions to other charitable foundations.

7. FEMALE ENTREPRENEURSHIP
Entrepreneurship is clearly a meaningful option that can offer greater income as well as more
varied lifestyle choices. In lower-level GDP countries, entrepreneurship can provide a way out
of poverty for women faced with few other opportunities. It may also lead to greater personal
autonomy and a route around discriminatory practices. In fact, some experts believe that
greater female economic independence promotes geopolitical stability and world peace.

Rationale for female entrepreneurship: There are two crucial arguments

Economic Argument: Utilization of human resources forming around 50 percent of the

population, without overburdening the employment market.

Social Argument: Development of self esteem and a sense of ‘self’ for creation of an
entrepreneurial society transcending the gender divide.

In general the characteristics of male and female entrepreneurs are more or less similar.
However different studies show that female entrepreneurs differ in some of the key aspects
such as motivation level, business skills and occupational background. Some of the Key
differences are:

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 Male Entrepreneurs Female Entrepreneurs

1.Achievement Motivation
 Drive to control their own future  Frustration in present job
 Differences with bosses  Family Circumstances

2. Funding Sources
 Bank loans, funds from venture  Personal saving & assets
capitalists, loans from friends &
relatives.
3. Personality Traits
 Less flexible & balanced as compared  Soft spoken, firm, balanced, flexible.
to their female counterpart.

4. Strength of the Business

 Business in which they are the central  Business that is self-propelling
element.

5. Professional Experience
 Broad experience in industries such as
manufacturing, banking and technical.
6. Scalability and Wealth Creation
 Scale greater height, primary objective
is wealth.
 Broad Experience in service industry
such as hotels, education, hospitals &
research driven industries
 Wealth is not the primary objective,
balance between family lives &
business

7. Ego and its implications

 Strong ego coupled with pride; get less  Less ego; comfortable to accept help
help for business solutions. from the right source.

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8. Tendency towards Risk & profit
 Higher risk opportunities, higher return  Lower risk opportunities, lower return
usually.

MESSAGE FOR WOMEN IN THE LIGHT OF ISLAM

Footsteps of Khadijah bint Khuwaylid (RA)

She was a women inherited her father’s skills at a time in history when society was male-
dominated and dangerous. Upon her father’s death, she took over the business and traded
goods through the primary commerce centers at that time, hiring the most trustworthy men of
character to brave the dangerous trade routes.

Her business was larger than all of the Quraysh trades combined, and it was the most acclaimed
with a reputation of fair-dealing and high-quality goods. She had a keen eye and was highly
intuitive & had stellar reputation. Khadija knew what she was doing business-wise, never
compromising her modesty or integrity to succeed in the male-dominated trades hiring only
those that could meet these standards

“Khadijah (RA) was truly visionary ~ she did not follow the ways of the majority, but instead
carved her own path and remained steadfast on it”

Personal Takeaway: After reading her entrepreneurial story, I find great motivation; learn
about how such a wealthy & dignified personality with a high social standing could combine
deep faith with exemplary character and a brilliant business reputation. It is actually rare &
remarkable, yet a level to aspire towards.

8. Small and medium business enterprises

The European definition of SME follows: "The category of micro, small and medium-
sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and
which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet
total not exceeding 43 million euro."

Out of Pakistan's 3.2 million enterprises 95% are those who possess 99 employees in private
industrial sector and employ about 78% of non-agriculture labor force. SME contributes 25%
export of manufacturing goods and 30% of GDP is the outcome of business efforts of SMEs.

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Small and medium business enterprises occupy a pivotal role in the growth of an economy by
contributing in multifarious ways towards income generation, employment generation and
balanced regional development. Some of the key advantages that small and medium
enterprises provide for fuelling the growth of the economy are as follows:

 Provide increased employment opportunities per unit of investment.

 Contribute substantially to export promotion.
 Easy to be spread in rural and semi-urban areas, which results in balanced regional
development.
 Contribute to promotion of entrepreneurship culture at local levels.
 Cater to local consumer needs in a more cost-effective manner.
 Help in improving the well-being and the standard of living of local people.

Small and medium enterprises have been classified into two broad categories:

Manufacturing Enterprises:

These enterprises engaged in the manufacture or production of goods pertaining to any

industry specified in the first schedule to the industries Act, 1951. The manufacturing enterprise
is defined in terms of investment in plant and machinery.

Services Enterprises:

These are enterprises engaged in providing or rendering services and are defined in
terms of investment in equipment.

Some of the specific promotional measures can take government to encourage small and
medium enterprises which are following:

 Credit facilities at concessional rates from banks and financial institutions

 incentives to set up units in backward areas
 technical consultancy services
 Export promotion programs and measures such as participation in international
exhibitions and fairs, training programs on packaging of exports and awards for
quality products.

Some of the key reasons for greater opportunities in the SME (small and medium enterprises)
sector for start-up ventures in particular are as follows:

 Low capital requirements to enter into entrepreneurial venture

 Favorable government policies that provide support system
 Easy availability of funds at concessional rates coupled with availability of subsidies

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  Favorable policies for procurement of raw material and machinery
 Export promotion incentives
 Increasing in demand for exports

9. International Entrepreneurship
International entrepreneurship involves carrying out business activities across national border
to respond to consumer needs outside the country by availing opportunities outside the
country. International business is becoming more and more important for ventures of all sizes,
particularly in the present highly competitive global economy, wherein more and more
countries are opening up their economies for international trade.

The key to entering into foreign markets is to understand the customer in detail first
with due emphasis on issues related to language, social norms and culture. Entering into
international markets mainly involves extending business internationally by adding customers,
distribution channels and production facilities internationally.

After having analyzed the business environment to identify business opportunities

abroad, an entrepreneur needs to respond to the following challenges before deciding to
operate abroad:

 Management practices and style

 Strategic issues that need to be appropriately responded to
 Alternative strategies and their implications to enter into other countries
 Country-specific risk associated with change in government regulations

Entering into international markets requires greater risk and also reward, and therefore, an
entrepreneur needs to be highly vigilant to changes in consumer’s preferences, competitions
and government regulations, so as to be ready with contingency plans to adjust swiftly and
quickly to such changes. Before entering into business abroad, one should carefully analyze the
entrepreneurial culture in different countries to find out the one that reflects the ease to
launch a new enterprise and associated structural factors such as bankruptcy laws to tax
policies and employment regulations that contribute to promotion of businesses, in general,
and start-up, in particular.

The mode and method of entry into international markets depends largely upon the goals of
the entrepreneur and the competitive advantage that they have compared to others for
entering into specific markets. There broad strategies to enter into markets abroad are
exporting, non-equity arrangement and direct investment. The term export means shipping in
the goods and services out of the jurisdiction of a country. The seller of such goods and services
is referred to as an "exporter" and is based in the country of export whereas the overseas
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based buyer is referred to as an "importer". In international trade, "exports" refers to selling
goods and services produced in the home country to other markets. In a non-equity mode,
exporting and contractual agreement are the two routes to choose from. Contractual
agreements are another way to expand into a foreign market without a large commitment.
There are four main agreement types; Licensing/Franchising, Turnkey Projects, Research &
Development Contracts, Co-marketing.
In licensing/franchising, the organization sells the rights to intellectual property to an entity
within a foreign market for a royalty fee. Low development cost and low risk in overseas
expansion are advantages of this entry mode. But, the organization has little control over
technology and marketing. Licensing/franchising also opens the doors for competition. Foreign
direct investment (FDI) is an investment made by a company or individual in one country in business
interests in another country, in the form of either establishing business operations or acquiring business
assets in the other country, such as ownership or controlling interest in a foreign company.

10. Entrepreneurship development-role of educational institutions

Entrepreneurship is set of activities undertaken by an individual in order to bring together
various resources and ideas and combine them to process a commercially acceptable product.
In simple words entrepreneurship is the process of changing ones idea into a successful
business venture.

Education is of paramount for an individual who wants to bring his idea successfully into the
market. And educational institutes can help these individual in nurturing and developing
necessary skills and competencies. These Institutions provide guidance, allow for routines to
develop and ultimately reduce the uncertainty of social interaction. The B-Schools are the most
appropriate nursery of shaping and developing management graduates for entrepreneurship
who possess integrity and ethical standards, a deep sense of social responsibility, a
commitment to the up-liftment of their communities, understand protection and sustainability
of the environment, and the improvement of the people’s quality of life. The educational
institutions plays important role in development of entrepreneurial competencies through
various courses, training and development programs. These may be in the form of short term or
long term programs, requiring graduation or no by an individual.

Entrepreneurship is the activity driven by need for achievement of an individual and these
institutions help the individuals with motivational training. Individuals are encouraged by the
course structure and activity based programs by the institutions to identify, develop and
sharpen their skills and competencies. Case studies of various successful entrepreneurs help
them to identify the processes and potholes in their entrepreneurial journey so that they can
learn and formulate their strategies based on them. Also case studies prepared by the

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institutions help the individuals to link themselves and encouraged by their role models, which
provides a positive motivation.

Educational institutions provide a platform for individuals to nurture their creativity and
innovativeness. These play an important role both in financial and technical assistance to the
individuals through guides, mentors and consultants.

One fundamental question that is usually posed is can entrepreneurship be taught? Teaching
entrepreneurship is just like teaching any other skill, which requires a different pedagogy. Like
any other discipline, entrepreneurship has its own vocabulary, tools, techniques, concepts and
body of knowledge. The teaching/learning of entrepreneurship requires greater focus on
experiential learning and therefore things such as games, exercises, films, projects,,
assignments, and group activities play a Vitol role in teaching entrepreneurship.it has been well
proved that students who have gone through formal education in entrepreneurship are have
done better in managing their start-ups and taking them in greater heights.

If we look at the contribution of the leading institutions in the developed world, what strikes
immediately are:

-Stanford technology venture programs,

-Lester center for entrepreneurship and innovation UC Berkeley;

-MIT entrepreneurship center and so on.

Brief summary of world institutions providing a path to young entrepreneurs

1. Stanford technology ventures programs
(STVP)
2. Lester center for entrepreneurship &
innovation UC Berkeley
3.Massachusetts institute of technology (MIT)
-To inspire and prepare students for
leadership roles within organization, new
ventures and academia.
-pioneering silicon valley, CISCO, Hewlett
Packard, yahoo, goggle and sun microsystems.
-fosters teaching of successful
entrepreneurship and innovation, encourages
students for new businesses.
-to design and launch successful new
ventures.
-E & I

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 11. Entrepreneurship and strategic management
Strategic management research has often given the impression that entrepreneurship can be
treated as a subset of strategic management. The fact that the Entrepreneurship Division of the
AoM was a “spin-off” of the Business Policy and Strategy Division contributes to this image. The
more recent calls for the integration of these two fields are mainly due to the reasons that;

1) Researchers in both fields use company performance as a major dependent variable, and

2) The new competitive landscape makes entrepreneurial strategies more and more important
(Meyer et al., 2002).

Stevenson and Jarillo (1990) remark that there is a need to establish links between the fields of
entrepreneurship and strategic management. As Dess et al. (1999) put it, “understanding
entrepreneurial processes has been a central theme in a good deal of both the
entrepreneurship and strategic management literatures” (p. 85). Schendel and Hofer (1979)
had already linked both research fields in the late 1970s when defining strategic management
as “a process that deals with the entrepreneurial work of the organization, with organizational
renewal and growth…” (p. 11), and furthermore stating that “the entrepreneurial choice is at
the heart of the concept of strategy” (p. 6). One of the most obvious linkages between
entrepreneurship and strategic management are opportunities. Opportunities are both at the
very heart of entrepreneurship and part of e.g. the SWOT analysis of strategic management.
Enterprises create value by identifying opportunities in their external environment and by
subsequently developing competitive advantages to exploit them (Hitt et al., 2001; Ireland et
al., 2001).

12. Mistakes start-ups make

The majority of the start-up ventures fail within one to three years of their inception. There are
different reasons behind it.

Startups, investors, economic development folks, academics and corporations all wanted some
insight into the question:

“Are there a few primary drivers of startup failure?”

So we gave those post-mortems the CB Insights’ data treatment to see if we could answer this
question. And so after reading through every single of the 101 postmortems, we’ve learned two
things. One – there is rarely one reason for a single startup’s failure. And two – across all these
failures, the reasons are very diverse. And so after sifting through these post-mortems, we
identified the 20 most frequently cited reasons for failure.

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#1 – Building a solution looking for a problem, i.e., not targeting a “market need”

Tackling problems that are interesting to solve rather than those that serve a market need .
Treehouse Logic applied the concept more broadly in their post-mortem, writing, “Startups fail
when they are not solving a market problem. We were not solving a large enough problem that
we could universally serve with a scalable solution.

#2 – Ran out of cash

Money and time are finite and need to be allocated judiciously. The question of how should you
spend your money was a frequent conundrum and reason for failure cited by failed startups
(29%). As the team at Flud exemplified, running out of cash was often tied to other reasons for
startup failure into product-market fit and failed pivots.

#3 – Not the right team

A diverse team with different skill sets was often cited as being critical to the success of a
starting a company.

#4 – Get outcompeted

Despite the platitudes that startups shouldn’t pay attention to the competition, the reality is
that once an idea gets hot or gets market validation, there may be many entrants in a space.
And while obsessing over the competition is not healthy, ignoring them was also a recipe for
failure in 19% of the startup failures.

#5 – Pricing/Cost Issues

Pricing is a dark art when it comes to startup success and startup post-mortems highlight this
difficulty in pricing a product was not too high or too low to make money in context of the
particular costs of a company.

#6 – A “User Un-Friendly” Product

Bad things happen when you ignore a user’s wants and needs whether done consciously or
accidentally.

#7 – I got this product. Now I just need a business model

Failed founders seem to agree that a business model is important – staying wedded to a single
channel or failing to find ways to make money at scale left investors hesitant and founders
unable to capitalize on any traction gained.

#8 – Poor Marketing

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Knowing your target audience and knowing how to get their attention and convert them to
leads and ultimately customers is one of the most important skills of a successful business. The
inability to market was a function of founders who liked to code or build product but who didn’t
relish the idea of promoting the product and came up in 14% of the startup postmortems.

#9 – Being inflexible and not actively seeking or using customer feedback

Ignoring users is a tried and true way to fail. Tunnel vision and not gathering user feedback are
fatal flaws for most startups.

#10 – Release product at the wrong time

If you release your product too early, users may write it off as not good enough and getting
them back may be difficult if their first impression of you was negative. And if you release your
product too late, you may have missed your window of opportunity in the market.

#11 – Lose Focus

Getting sidetracked by distracting projects, personal issues, and/or general loss of focus was
mentioned 13% as a contributor to failure.

#12 – Disharmony with Investors/Co-founders

Discord with a cofounder was a fatal issue for startup post-mortem companies. But acrimony
isn’t limited to the founding team, and when things go bad with an investor.

#13 – Lack Passion and Domain Expertise

There are many good ideas out there in the world, but 9% of startup post-mortem founders
found that a lack of passion for a domain and a lack of knowledge of a domain were key reasons
for failure.

#14 – No Financing or Interested Investors

Tying to the more common reason of running out of cash, a number of startup founders
explicitly cited a lack of investor interest either at the seed follow-on stage (the Series A
Crunch) or at all.

#15 – Legal Challenges

Sometimes a startup can evolve from a simple idea to a world of legal complexities that can
prove to be a core cause of shutting a startup down.

#16 – Burn Out

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Work life balance is not something that startup founders often get and so the risk of burning
out is high. Burn out was given as a reason for failure 8% of the time The ability to cut your
losses where necessary and re-direct your efforts when you see a dead end was deemed
important to succeeding and avoiding.

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 13. Managing Start-Ups during Downturn
The real test of a venture lies in recession or downturn of economy. The recessionary phase, if
it coincides with setting up a venture, becomes tough and challenging to respond to. As such,
downturn economy provides different sorts of opportunities compared with the normal phase.
Therefore, ventures that is suited to the downturn economy mainly in the areas of basic
necessities such as education, health and telecom, and solution providers for productivity
enhancement such as software and infrastructure, and agriculture not particularly dependent
on food processing keep doing well. However, other ventures start seeing downturn as a cause
of their failure. One has to find out ways and means to survive by identifying useful indicators
and strategic action to sustain during difficult times. What matters most is to pull on in difficult
times through creative solutions and having a balance between optimism and realism. It is the
phase when crying and giving up does not help in any way whatsoever. Dynamic leaders with
guts consider it a challenge and respond to it judiciously. Some of the key strategies that can
help in responding to trying times are as follows:

 Do not get disturbed and panicky! Economic cycles in any economy are part and parcel
of the growth process. The best companies successfully come out of worst times and
strengthen their operations for the future. Of founders give any signal of closure to a
venture, employees will start quitting and remember that the toughest thing in building
an organization is to get the right people. If one panics, one’s employees will panic.
 Conserve cash and initial profits earned: If any, to face tough times. Cut all
unproductive and allied expenses. Cut cost by adopting measures such as renegotiating
with suppliers and reviewing rental contracts.
 Focus on ways of improving productivity: Means by channelizing human potential to
come up with creative solutions. Encourage low performance to get aligned with high
performance.
 Regularly communicate and share your concern with employees: Develop confidence
in your employees that are serious about the business and this too shall pass. Make
them realize that you are building a lasting and successful enterprise and that some of
the cost-cutting measures are a must for survival in which you would like your
employees to partner with.

14. Entrepreneurship- Emerging Trends in the Global Knowledge

Economy
Entrepreneurship revolves around customers. The purpose and existence of a venture depends
upon the customer as a source of knowledge. Only ventures having value proposition to the
customer on a continuing basis can sustain and survive. Agile competition demands that the

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processes that support the creation, production and distribution of goods and services be
centered company. Agility in competition focuses on enriching customers who are becoming
more and more demanding. Customers pay a modest profit for products or pay a percentage of
perceived value for the solution provided to his problem. The focus becomes more on value-
based strategy to enrich customer satisfaction. Entrepreneurs in the knowledge economy have
to particularly develop an entrepreneurial organization by responding to fast changes in the
environment. Ventures in the 21st century have to thrive on change and uncertainty by having a
horizontal structure rather than a hierarchical structure, so as to be innovative. Further,
upcoming ventures would require their strength on knowledge and information through
leveraging the strength of people. Companies would be making investments for talent
management so as to increase the strategic impact of their people and information on their
bottom line. The fundamental change that has taken place over the years is that first
generation business had focused on management of technology or the product/services
specific to the particular industry. This shifted to project as an asset to be managed with a focus
on customer retention in the second generation business. In the third generation, the emphasis
shifted to enterprise as an asset with a focus on customer satisfaction. Thereafter, the
customer became an asset and a central point of management, so as to bring in a new
relationship with them. Now in the 21st century, the whole business emphasis is to likely to be
shifted to knowledge-based management practices that will have a foundation based on
collaboration.

Handy’s Sigmoid curve is an S-shaped curve, described by Charles Handy, highlighting the lift
cycle of products, organization, empires and even relationships. The curve basically symbolized
that almost all endeavors start slowly. These dip and falter through an experimental stage
before reaching an accelerated phase of success. The curve reaches the peak and decline
thereafter. The success lies mainly in our ability to innovate and come up with another such
curve on a continuous basis before the earlier curve reaches its peak. Charles Handy suggested
that constant growth and development can be achieved only by those organizations that are
always on the path of innovation to introduce related or non-related goods and services.

The success of a venture lies in understanding and knowing when to start building a new curve
in its growth trajectory. Further, whether the next curve in the chain of curves will be product,
process, way of operation, a strategy or a culture mainly requires fresh ideas that are unique.
According to Handy, the paradox of success is that what got you where you are will not keep
you where you are. Thus, entrepreneurial journey requires foresight to start making changes
even when it is not yet obvious that is necessary, and the courage to switch from one curve to
the next when the time has come. In the knowledge economy, the opportunities and challenges
are increasing at an unprecedented rate.

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 In the present business environment, because of the fast expansion of the internet
worldwide, e-commerce has become the latest mantra in increasing one’s sales. E-commerce is
bringing in a major change by way of intense compression and digitalization of business
processes, resulting in reduction in operational costs. It is converting physical infrastructure
into virtual ones on web sites.

Internet- Emerging Trend for Entrepreneurship Opportunities

Peter Dracker predicted long back that the major changes in society would take place through
information. He had highlighted that knowledge has become the key resource and does not
have any boundaries. According to him, the largest working group will constitute knowledge
workers. The basic characteristic of these knowledge workers would be the level of their formal
education. Therefore, education and development, and to some extent training, will be the
central concern around which the knowledge society would develop. The transformation of
business world will be guided by the way customer would perceive value from goods and
services. The number of internet users has been increasing at an accelerated rate globally. The
estimated number of internet users touched 1.80 billion as against the world population of
6.76, accounting for 26.6 percent of the world population as of December 2009. The ease of
internet usage has resulted in an emerging trend in E-commerce, which is spreading like fire. E-
commerce generally linked with buying and selling goods and services over the internet. It
basically implies selling goods and services online through internet. This requires designing and
developing an attractive web site and an e-commerce outlet by entrepreneurs.

Benefits and Emerging Challenges of E-Commerce

Some of the key benefits, as evident from the foregoing discussion, that would accrue to even
to small businesses are potential to capture global markets; great possibility for start-up
ventures to respond to the opportunity, particularly because of reasonable or very low
investment requirements; flexibility transact. Irrespective of business hours and doing business
from home without necessarily having a physical business space; competitive advantage to
small businesses because of less operational cost; and potential to grow and earn profits and
enter into a field that threatens well-established businesses by creating their own niche. Other
than these, the key benefits and challenges associated with E-commerce are discussed in the
following sub-sections:

Benefits

 Cost reduction- production, marketing distribution

 Increased profit
 Increased sales

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  Local to global market reach
 Focus on selected market segments
 Ease and flexibility in price quote and changes to effected
 Encourages quick innovations
 Facilitates business process reengineering


Challenges

 Keeping pace with technological development both on software and hardware front
 Costs of a technological solution and investments required to maintain the site
 Identifying, recruiting and retaining skilled professionals
 Cyber laws and their incorporation
 Customer resistance to accept
 Language barriers across globe
 Training requirements for employees

E-names: The first step to enter into an arena of E-commerce is to select an internet name,
which is not very easy for multiple reasons; someone else might already have been operating
with a name that thought for your business, and it needs to be simple, easy to remember and
should have potential the nature of business such as eBay, Amazon and Bingo.

It was 32 years ago, that is, 15 March 1985 that the first dot.com domain name,
symbolics.com appeared on the internet, ushering in the commercial age of the World Wide
Web. This made it easy and simpler for the average person to access a web site. Instead of
having to remember a long series of number and dots, one could simply type in ATT.com or
CNN.com.

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References

-Indresh Sharma IBTM 5th Yr, Role of educational institutes in entrepreneurship development,
TMU, Moradabad; Retrievd from:
http://tmimtjournal.org/Pdf/Poceddings/Track3/Track3_Paper6.pdf

- Sascha Kraus Int. Journal of Business Science and Applied Management, Volume 4, Issue 1,
2009 Strategic management and entrepreneurship: Friends or foes? ; Retrieved from:
http://www.business-and-management.org/library/2009/4_1--37-50-Kraus,Kauranen.pdf

- The top 20 reasons for failure in new start-ups by CB Insights.

- Entrepreneurship development in emerging markets, chapter from course pack.

-Young Entrepreneurs-https://tribune.com.pk/story/1098357/pakistans-youngest-social-
entrepreneur-is-nine-years-old/

-Female Entrepreneurship-https://hbr.org/2013/09/global-rise-of-female-entrepreneurs

-Islam & Entrepreneurship:

https://www.google.com.pk/?gws_rd=cr&ei=cCOfWPDAA6WP6ASFmb3wBQ#q=Hazrat+Khadija+%26+e
ntrepreneurship

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