Entrepreneurship and Innovation

Management

Submitted To:
Prof. Dharmendra Khairajani

Submitted By:
Simran Lalchandani
(17P125)
PGDM Batch: 2017-2019
1. What do you mean by Entrepreneur? Explain the role of an Entrepreneur and
various reasons for growth of Entrepreneurship?

Economists have never had a consistent definition of "entrepreneur" or "entrepreneurship"

(the word "entrepreneur" comes from the French verb entreprendre, meaning "to undertake").
An entrepreneur is a person who identifies a need and starts a business to fill that void. But
this basic definition provides little insight into the specific character traits and attributes that
make a person thrive as an entrepreneur.

The term Entrepreneur is defined as:

Joseph Schumpeter - an innovator playing the role of a dynamic businessman adding

material growth to economic development

Richard Cantillion – an entrepreneur is someone who takes the risk of running an enterprise
by paying a certain price for securing and using resources to make a product and reselling the
product for an uncertain price.

Reasons for growth of Entrepreneurship

Industry Structure:
Performance, in terms of economic growth, is shaped by the degree to which the prevalent
industry structure efficiently utilizes scarce resources. Technological changes in the first three
quarters of the previous century had favoured the performance of large centralized units.

Now, recent technological changes have led to an industry structure that is generally shifting
towards a bigger role for small firms. The employment share of large companies has been
steadily decreasing (Carlsson 1992, 1999). Growing competitiveness of small firms lowers
entry barriers for new entrants.
New Technologies:
This factor is related to the changes in industry structure. Fundamental changes in nature of
technological development have led to diseconomies of scale. Piore and Sabel (1984) state
that instability in the markets led to the decrease of mass production and the move towards
flexible specialization. Small technology-based firms are now able to challenge larger
companies still dependant on economies of scale (Meredith 1987, Carlsson 1989). Acs and
Audretsch (1987) provide empirical evidence that small firms have an advantage over large
firms in highly innovative industries. Now companies have to deal with less licences and
fewer government controls. Many state-owned enterprises have also been privatized leading
to a greater role for the private sector in general and entrepreneurs in particular.

Formation of New Business Communities:

Efficiencies across markets, primarily resulting from use of new technologies, have led to
declining cost of transactions. Jovanovich states that recent advances in information
technology have made inter-firm coordination relatively cheaper compared to intra-firm
coordination. Business exchanges such as alibaba.com help smaller firms to be competitive.
This promotes setting up of new firms in the new-age business communities.

Increasing Demand for Variety:

Increased wealth has led to increase in the demand for variety (Jackson 1984). The increasing
demand for new products is of advantage to smaller firms. A number of studies have shown
the comparative advantage of smaller firms in being innovative and coming up with new
products (Prusa and Schmitz 1991, Rothwell 1984). Changes in consumer tastes are a major
reason for growth of entrepreneurship (Brock and Evans 1989). People are inclined to
products that are specifically designed to meet their special needs. Mass produced
homogenous goods do not enjoy as wide an appeal anymore. Jovanovic (1993) states that
large firms have not been comfortable entering into niche markets.

Services Sector:
Increase in per capita income leads to a greater share of the services sector in the national
economy (Inmar 1985). The average size of firms in many sections of the services sector is
relatively small. This in turn promotes entrepreneurial activity across a number of service
sector industries. Currently, services account for over 60 per cent of the GDP of developed
economies. Interestingly, even for some developing countries such as India, services account
for over half of the total GDP. Growing importance of services in the overall economy has
paved the way for entrepreneurial activity. New industries such as software and business
process outsourcing have emerged and these have a large number of entrepreneurial firms.

Government Incentives and Subsidies:

Loveman and Sengenberger (1991) have discussed the positive role of government incentives
and subsidies. In India, there are incentives being given by both the state and central
government. Many of the incentives are often sector specific, being given by the concerned
ministry. Similarly, entrepreneurship is being encouraged in many countries with a variety of
incentives such as tax breaks, preferred sourcing or grants.
Increasing Flow of Information:
Information is the lifeblood of business. Information is being increasingly democratized. The
Internet has become the chief source of varied information. Search engines such as Google
and Yahoo enable you to access information from trade bodies, academic or research
institutions, news networks, corporate sites, etc.

Easier Access to Resources:

Today, it is easier for an entrepreneur to access debt and equity finance than ever before. Not
just capital, most other factors of production are now easily available to entrepreneurs. With
greater flow of information, it is easier to contact and to deal with resource providers such as
raw material suppliers and dealers of capital goods.

Also, many business services are now tailored to suit the needs of small business owners.
Prominent examples of such services are the delivery services of international courier
companies such as DHL and UPS and procurement management services of Ariba.

Entrepreneurial Education:
Many universities and institutes are nowadays offering entrepreneurship education. A number
of institutes have set up successful entrepreneurship centres, which provide help to budding
entrepreneurs by conducting formal training and structured mentoring programmes.

Return on Innovation:
Strengthening of Intellectual Property Rights (IPR) has acted as a major boost to
entrepreneurs willing to take a risk on an innovation. Now they feel the confidence in the
sanctity of their IPR without feeling the need to be backed up by a large corporation.

Entrepreneur as a Hero:
People like Dhirubhai Ambani and Narayan Murthy have become heroes to the middle class.
The common man reveres them as super-achievers. There is something glorious in the tale of
their struggle to create new and enduring businesses that inspire a lot of other people.

High Regards for Self-Employment:

Kirchoff (1996) discovered that self-employment is not looked down upon and is thought of
as the best way to achieve a variety of personal goals. Schiller and Crewson (1997) produce
evidence to suggest that one out of four young workers in the US pursue self-employment by
choice.

Rising Dissatisfaction at Job:

Employers are finding it hard to retain talented employees. People now have confidence in
their abilities, which in turn prompts them to find alternate employment. For example, the
BPO sector in India witnesses employee turnover rates in excess of 60 per cent per annum.

Acceptance of Ex-entrepreneurs in the Job Market:

Companies are willing to re-employ people who have been entrepreneurs. Their experience in
creating and starting a new enterprise is highly valued by many employers. As a result, a
potential entrepreneur perceives a lower risk as there is always the security of a well-paid job
in case the venture does not fare well.

2. How Business plan will help young entrepreneur to define the future of their
business?

The term business plan is a word that found its origin during the Second World War period.
Back then it was mostly used to define the long term strategies of big firms. The Business
Plan was a highly confidential document and was only exposed to a very limited audience.

In today’s environment, the business plan is the entrepreneur’s most important document
when setting up a new business. Without the help of a well-designed and well- presented
business plan the entrepreneur will find it very difficult to express its business goals or secure
financing. Without a business plan, it is almost impossible for someone to take your business
idea seriously or even consider investing in it.

Abrams & Barrow (2005) define the business plan as a roadmap to the company’s targeted
destination. Ideally, it enables the entrepreneur to get from the basic business concepts to a
healthy, successful business.

Some major applications of the business plan are discussed here.

 Equity Funding: A venture capitalist or an angel investor will very rarely commit
an investment to a start-up without perusing its business plan. The venture
capitalist will primarily use the business plan to gauge risks and forecast growth
prospects. The investor will never restrict analysis of the business to just the
business plan but it will always remain an important reference point.
 Bank Finance: A banker obviously concentrates on the ability of the business to
repay the debt and on the availability of collateral or other securities. Banks look
for at least some specific issues to be addressed in the business plan. For example,
a bank needs projected balance sheets and profit and loss accounts for the first five
years.
 Alliances: An entrepreneurial firm may need to form alliances with other firms to
reach new markets, develop new products, or create common facilities. Other
firms may want to know more about the business before committing to any long-
term arrangement. Sometimes, a business plan can help convince a well-
established retailer or distributor to commit to the start-up.
 Recruitment: A good business needs support from experienced top-level
employees. A business plan will help them understand what they are getting into.
Of course, showing the business plan to the rank and file is not necessary.
 Explain the Business: A business plan helps in planning. While writing the
business plan, it is likely that the entrepreneur was able to detect many
shortcomings in the original business idea and these shortcomings could be
overcome by thinking through and plugging the gaps.Later, this plan can serve as
a guide or manual to help in business and strategy formulation.
  Others: Very often, an entrepreneur seeks moral support from friends and family.
A business plan can be a good way of presenting your business to your father,
mother, wife, and colleagues. By going through it, they will have a better
appreciation of what you are setting out to do.

3. Explain the stages of Growth with example.

Products are like living beings. They are created and nurtured during their beginning stages.
Eventually, they grow up and mature with the market. Ultimately, much like living beings,
they will decline and get phased out. As a sales or marketing professional, it’s important to
know and understand the product life cycle. This will allow you to alter or change your
marketing plan/sales pitch as needed to fit the stage that your product is currently in.

The product life cycle consists of four unique stages: Introduction, Growth, Maturity, and
Decline.

Introduction
The introduction stage is often times the most difficult phase that a product or a company will
go through. Oftentimes, when a product is first released, costs are extremely high for the
company and sales are pretty low. Even if the product is revolutionary, new products usually
appeal to the early adopter customer segment, so the market for a brand new product is often
not large enough to realize a profit. During this stage, the company is focusing a lot of time
and energy on research & development, testing, market research, consumer testing, and initial
marketing efforts. At this point, it’s absolutely crucial for a product to get positive reviews
from the early adopters.

Examples in the tech world: Holographic projection technology, virtual reality experiences,
self-driving vehicles

Growth
After the early adopters purchase the product, sales will start to climb from there. Once the
initial (hopefully positive) reviews of the product are published, sales will begin to
exponentially grow. From here, companies can take full advantage of economies of scale and
improved distribution channels, meaning the overall costs will decrease while profits
increase. At this time, successful companies will invest profits into marketing and sales
efforts to help a product reach the next stage.

Examples in the tech world: Tablet pcs, Ultra HD 4k curved tvs, 100% electric vehicles

Maturity
After the product experiences exponential growth, the sales will eventually begin to plateau.
This stage is called the maturity stage. Here, the product is established in the market and has
captured a good amount of the market share. The overall goal of companies in this stage is to
hold on to the market share as much as possible. This is the most competitive time for a
product because, by this time, competitors usually have released similar products that directly
compete with your product. Successful companies will usually begin to modify the product
with new tech or new applications to gain a competitive advantage. This is where sales,
marketing, and customer service really have to be on their A-game.

Examples in the tech world: Laptops, HD flatscreen tvs, gas/electric hybrid vehicles

Decline
Nothing good lasts forever. Eventually, sales will start to decline. This can be attributed to a
variety of different reasons. The most common reason is that the market has become
saturated (i.e. All the customers who will buy the product have already purchased it), or
because the consumers are switching to a different type of product/new technology. At this
stage, successful companies will attempt to salvage any remaining profits by switching to less
expensive production methods or limiting the distribution to make way for a new product in
the growth phase.

Examples in the tech world: Typewriters, analog TV, low MPG vehicles

There are really no exceptions to the product life cycle. Every product will follow the cycle –
some products move through the cycle within a few years, while other products may take
decades. In the modern business environment, the rapid implementation and adoption of
technology are shortening the product life cycles dramatically. Now more than ever, it’s
important to understand where your product is and how to effectively market/sell it.

4. Discuss the various Growth strategies for the business.

Market Penetration
Market penetration is probably the first – almost default – option of small businesses hoping
to grow and expand their operations. This works best in a scenario where there are no new
products, and there are no new markets to enter. Left with no choice, the business will then
look at what it currently has, right where it currently is. That means the focus will be on the
current products or services, in the current market.

Some of the market penetration strategies employed by businesses are:

 Reducing the selling prices of the products or services, with the intention of
attracting consumers with the lower price. This works best in a market with very little
differentiation. Walton effectively used this strategy when it set up its first Walmart
store. There were other retail stores at the time, but what made his market share go up
is because he was able to offer the products at lower retail prices than the other
retailers.
 Increasing promotions for products or services to improve their pull strategy.
Aside from both conventional and non-conventional forms of advertising, small
businesses can also employ other means to attract customers. Examples are special
 offers, special promotional events, offering trade and sales discounts, rebates and
similar schemes. Not only will this appeal to your current customers, it will also catch
the attention of the users in the market that were initially unaware of your product,
brand or company.
 Expanding distribution channels to widen your reach. Usually, this is done by
looking for more distributors, retailers and dealers, making the distribution channel
wider. Businesses should also consider entering into partnerships with these major
channel players, and nurturing the relationship so they will want to continue working
with you. A wider and more stable distribution channel means greater chances of
reaching your customers, and staking a claim on a bigger market share.
 Effecting improvements on the product. You can encourage more people to buy
your product if you are able to improve on its existing features, or find alternative
uses for it. However, in many cases, there is usually no need to actually do any
changes to the product. A change in packaging and an assertion in advertising about
the “new and improved” product is often enough to attract the attention of customers.
 Zeroing in on the competition’s customers and distribution channels. Naturally, if
businesses can win over the customers of their competitors to their side, they will gain
a larger market share, and make their rival’s smaller. It’s striking two birds with one
stone. In this strategy, the efforts are focused specifically on the customers of the
competitors. But it also extends to the dealers, retailers and distributors currently
working with the competitor. If you can offer them a deal better than what they are
currently getting from their partnership with the competitor, they may consider
jumping ship.
It is important to note that, in market penetration, the size of the target market is fixed
or unchanged. This is markedly different when the strategy used is Market
Development.

Market Development
Growth can be achieved even without a change in the size of the market, and that is
demonstrated by the Market Penetration strategy. However, businesses can also grow when
they seek to expand their market, and that is Market Development.

Market development, also referred to as “market expansion”, is another popular growth

strategy that is applicable to businesses, especially those that are having problems finding
solid footing in the current market they are in. Faced with too many and too stiff competition,
small businesses will be hard-pressed to look elsewhere for “greener pastures”.

Product Expansion
Product development, or product expansion, means exactly what the phrase implies. There is
no new market, but there is a new product, and that new product will be introduced to the
existing market to gain a bigger market share.
This is a strategy adopted in industries with fast-paced technological developments. The
electronics or mobile industry is one. Manufacturers of mobile phones are prolific in churning
out new and updated models of their products to the market in order to keep up with the
changes and improvements in technology.
What businesses can do when using the product expansion growth strategy are:

a) Expanding product line by developing and introducing new products

b) Adding new features to existing products
c) Updating features of products when the old ones become obsolete

Diversification
Businesses also use diversification, where they will sell new products to new markets.

This is a high risk, high return strategy, since it is basically akin to starting from scratch, as if
the small business is starting anew. As a matter of fact, this poses the highest risk for
businesses, big or small. This risk arises from the fact that diversification will require
substantial investment of resources: time, money, manpower and other assets. After all, it
involves going through the motions of starting a new business, in the sense that it has to
conduct marketing research in that new market, with respect to the new product.

In the context of growth strategies, there are two types of diversification.

a) Conglomerate diversification

When the small business suffers from limited opportunities in its current line of
business or product line, it may choose to diversify into areas that are not related, or
are so far removed, from its current operations. For example, a manufacturer of
children’s apparel may not be satisfied with the current results of operations.
Therefore, it decided to diversify by acquiring a small catering business. These two
are completely unrelated, but the diversification is able to increase the profitability of
the company and, consequently, its growth rate.

b) Concentric diversification

This time, the small business diversifies by adding products related to its current
products, or adding markets related to its current market. Since there is a certain
degree of parallelism, this strategy is more synergistic than conglomerate
diversification. Picking up from the previous example, the manufacturer of children’s
apparel can use concentric diversification if it buys into another company that
formulates healthy food for children aged 8 years and below. These have related
markets, with parents and children as the target customer. If, instead of children’s
food, the company goes into manufacture of footwear for children, then this is
concentric diversification using related products.

Many identify diversification mostly as a marketing strategy, but from the point of view of
management, it is a very effective business growth strategy when done right, despite the high
risk involved.
Acquisitions (And Mergers)
M&A, or “mergers and acquisitions”, deals with the purchase of one company by another,
and/or the consolidation, combination or joining of two companies. The role it plays in
corporate restructuring puts it high on the list of growth strategies for businesses.

Acquisition is primarily considered as a big-business growth strategy, since it is the big

businesses that have the resources to acquire other companies. Generally, small businesses
are seen to have a difficult time making acquisitions, considering the large amount that will
be required to cover the purchase price. Even if the small business is able to raise the amount
and cover the purchase price, the risk that it will eventually turn out to be a bad purchase
decision is much too big for a small business to handle.

Businesses may choose to exercise any of the three acquisition categories:

a) Upstream acquisition: A small business will seek to have a merger with a bigger
company in the same industry or field, and they will operate or function as one entity.
The goal of this type of merger is to consolidate the market forces of the two
companies and secure their employees. It is also seen as an excellent way to ensure
higher investments. In a report by the Boston Consulting Group on acquisitive
companies, they might not have recorded spectacular profits, but the acquisitions
created value, and this was favorably looked at by investors, resulting to higher
investments as well as shareholder dividends.
b) Downstream acquisition: This applies if the small business acquires another
business, usually in a straightforward purchase transaction of the smaller business or
of its ownership shares. The acquisition will result in the acquiring company being the
surviving company, and the one in control of the smaller business, which will now
lose its identity once assimilated into the acquiring company. The goal of this
acquisition type is the expansion of the business and its operations. The key here is to
choose your acquisitions wisely. Prudence and common sense dictate that you should
buy only the companies that you can afford.
c) Lateral acquisition: This acquisition type can be seen between two businesses of
roughly the same size joining together for the purpose of consolidating or pooling
their resources. This will result in an entirely new business entity that is considerably
bigger than either of them when they were still operating separately.

Market Segmentation
This is another big business growth strategy that may also be adapted by businesses,
especially those that find themselves in an industry and market dominated by larger
companies.
In market segmentation, the business would have to undergo the process of dividing the
market into segments, with each segment characterized by distinct groups of customers with
their own needs and preferences. Once the pie has been divvied up, it is time to identify
which slice of the pie seems to be the most receptive to the strategies of the business.
Segmentation is performed using the usual bases that were utilized by the business when
drawing up its marketing plan: demography, geography, market and customer behavior, and
even the psychographic profiles of the market.

Leveraging Partnerships
Have you heard of the Renault-Nissan Alliance, which was forged to increase economies of
scale for both brands? This strategic partnership between France’s Renault and Japan’s
Nissan had substantial terms and conditions. One of them involves how Nissan generated
increased sales in its units sold in Europe, which were manufactured with engines built by
Renault.

This is a prime example of how these big companies were able to leverage partnerships as a
growth strategy.

In the more modest setting where the small business exists, leveraging partnerships is also a
viable growth strategy. We have made mention earlier of how small businesses can enter into
partnerships with its distributors and dealers. They can actually look further, into other
partnership prospects.

Briefly, some of the possible strategic alliances that businesses can leverage for growth
include:

a) Shared distribution. Two businesses acts as distributors or dealers of the other in

their respective markets.
b) Technology transfer. Two businesses collaborate in development of new
technologies.
c) Cross-manufacturing. Two businesses make use of the same manufacturing line for
their processes. An example is how Ford and Mazda use the same manufacturing and
assembly line in their automobile manufacturing operations.

Use Alternative Channels

The internet has opened up other channels for businesses to reach their customers and sell
their products. In fact, this has been greatly beneficial for small businesses and entrepreneurs,
since they were provided a platform where they can have a chance of competing against more
established brands.

Today, businesses have the option to find their customers and sell their products to them
through the following:

a) Selling online. Businesses can set up their own websites where they can sell directly
to customers, or partner with retail websites that will serves as their online storefronts.
Many businesses sell their products through sites such as ebay, Amazon, and Etsy, to
name a few.
b) Selling through subscription programs. Small businesses formulate subscription
and membership programs to find their customers and introduce their product to them.
 c) Selling through the use of mobile apps. Mobile internet is also becoming a greatly
accepted mode of transacting nowadays, and more and more businesses are looking
for ways to integrate this in their marketing and growth strategies.

5. You have to select the Women Entrepreneur of your choice and present the
summary of her business venture skills, characteristic and innovation used by her in
her business.

Richa Kar

Richa is the founder of online lingerie store Zivame, she grew up in Jamshedpur and
completed her engineering from BITS Pilani (2002) and after having worked briefly in the IT
industry she acquired Masters’ degree from Narsee Monji Institute of Management Studies in
2007, and worked with a retailer and global technology company before
starting Zivame.com.
Zivame is probably the first in the online lingerie space in India and has played a role in
educating women across the country about intimate wear and shaping consumer behaviour.

About Zivame

Zivame is an online lingerie store featuring hundreds of styles for the Indian woman. Zivame
was officially launched in August 2011 by Richa Kar and Kapil Karekar. Zivame offers a
wide range of products for women in three different categories including lingerie, activewear,
and Women Apparels through its online and offline platforms.

The inception of Zivame:

The idea of Zivame came out while Richa was conducting a research on lingerie market in
India. She realized that lingerie shopping in India was more a bottleneck for women than and
experience. That is when she decided to start a platform for lingerie shopping for
women. The website sells panties and lingerie of all sort and types like the backless bra and
bikini collections. Other than various panty set, the site also has a collection of pajamas,
boxers, housecoats, etc.

Motivational Factor and Challenges

One of the challenges that Richa faced before launching her business was to convince her
loved ones for the lingerie business. There were questions raised on the image of the family
and their respect in the society. Her people wondered if she really had to disclose that she is
selling bra and panty on the web in the typical Indian language. In the first few months of the
launch of the business itself, Richa was available with the answers to all her hurdles and
queries raised about her business.

She strongly believes in time management in balancing her personal and professional life.
Funding from friends, family, and other institutions helped her to raise business on a
successful path. It is thus, her modesty that she shares her success with everyone and gives all
her loved ones the credit of her glory.

The strongest challenge faced by this enthusiastic woman, was with the category. She still
believes that there is a high level of discomfort and people feel uneasy to talk about the
category on lingerie. People still consider it taboo to discuss about their inner wear. This is
one of the reasons why retailers try to stock only the fast selling items and categories. The
consequence is faced by the women who land up choosing whatever is available to them.
It is pretty understandable that women find it difficult to convey their choices and preferred
sizes even with their man. Richa has taken a bold step indeed to meet the needs of all those
women, who have a desire to look beautiful and in shape without attire. The objective behind
Zivame was to cover all the needs and requirements of women.

Characteristic and innovation

Zivame has also taken off, thanks to its business positioning and team members. Richa says
with a lot of pride that "I have got a very good team that ensures things happen in the best
possible way. So, Zivame's success is mainly because of the team. The second part of it is our
understanding of the consumer buying behavior.. We have close to 18,000 skus on the site
and 20 brands. Also we have introduced something like A to G cups that was absent in the
Indian market. We have introduced International brands like wonderbra, and we have seen
people coming back and buying them."

Zivame gathers insights through an in-house analytics tool that helps them understand what
customers are buying, why they are buying it, and what products they want. Richa explains:
"Also every order has a story. We also keep a track of whether the loyalty has increased or
not. How much are they buying when they come back to our site? Every business tracks
consumer behavior in this manner. All our customer care executives are women, and women
love talking, so when a woman customer and the customer representative meet over the
phone, they talk a lot, and this is something that gives us a direct and clear feedback. At such
a moment, women get candid and share great stories of their lives as well. A lot of women
interact with us on our website too and we get to know about their problems, or
dissatisfaction with their sizes. And, we try to address these issues, either through products,
through services or through consultation. And that's how we evolve our product offering
also."