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Macro Environment and its impact on Entrepreneurship

Group Members
Kumar Amit Romeel Suraj Megha Niki Himanshu


Introduction to Entrepreneurship - suraj Entrepreneurship Environments - himanshu Significance of Entrepreneurship Environment- Types of Macro Environments Political Environment - romeel Economic Environment-kumar Technological Environment -amit Demographic & Ecological Environment -Niki Legal Environment -megha Cultural Environment -amit + suraj

10 steps to change Entrepreneurship Culture- niki Entrepreneurship Stimulants and the Economic system -Romeel Barriers to Entrepreneurship: Environmental Barriers - Niki Economic Barriers -KUMAR Non - Economic Barriers -MEGHA + HIMANSHU Personal Barriers -AMIT Conclusion -KUMAR

Introduction to Entrepreneurship

Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or industrial objective.

The capacity to take risk independently and individually with a view to making profits and seizing the opportunity to make more earnings in the market-oriented economy is the dominant characteristics of modern entrepreneurship.

The concept of Entrepreneurship can he depicted as under:

Entrepreneur Entrepreneurship Enterprise


Process of Action


Entrepreneurs Vs Entrepreneurship
Entrepreneur Refers to a Person Visualizer Creator Organizer Innovator Technician Initiator Entrepreneurship Refers to a Process Vision Creation Organization Innovation Technology Initiative

Entrepreneur Decision Maker Planner Leader Motivator Programmer Risk Taker Communicator Administrator

Entrepreneurship Decision Planning Leadership Motivation Action Risk Taking Communication Administration

Entrepreneurship management is basically concerned with the development and coordination of entrepreneurial functions, it can be said that entrepreneurship precedes entrepreneurship

Entrepreneurship the Dynamic need:

Entrepreneurship is one of the most important inputs in the economic development of a country or a region it helps in solving problems related to: Employment Generation National Income Balanced Regional Development Dispersal of Economic Power

Entrepreneurship Environment refers to the various facets within which enterprises-big, medium, arid small have to operate. The enterprise is therefore influenced by the environment. By and large entrepreneurship is influenced by an environment created by political, social, economic, technological, legal forces etc.

Entrepreneurial environment is broadly classified into six important segments

Political Environment Demographic Environment

Economic Environment

Entrepreneurial environments

Legal Environment

Technological Environment

Cultural Environment

Political Environment
Quality of political Leadership, Ideology, Stability, Vested interests, political atmosphere. The political conditions that bring about new laws have effects on the organisation. Organisations in the private sector are less directly affected than public ones, but they must be attuned to the political climate. Politics plays a role at the local level as well as at more national or global level.

Current Political Environment

Economic Environment
Fiscal & Monetary policies (budget,), Tariffs, Trade, Reservation, Subsidies & Incentives. There is an importance of economic conditions when budgets are being prepared, defended, and appropriated. Changing economic conditions serve as important constraints on any organisation. There may be major swings through large and small recessions, depressions, inflationary periods and so on. Economic competition can be most easily seen among small business organisations, where success is measured in the competitive market place.

Current Economic Environment: Budget 2007

Technological Environment
The organisation does not exist in a vacuum; technological developments in any sphere have the potential to get organisations affected. Technology keeps on changing; and the firm has to keep themselves up-to-date with the changing technology. Innovation in Manufacturing Equipments must be updated.

Current Technological Environment

Today, because of Computers everything is done online. By using Computers Entrepreneurs can make better analysis of there Projects. Computers also enable Customer Database Management Currently Computers are been replaced by LAPTOPS which is a Mobile Computer. Innovations in the Manufacturing Equipments has helped in Standardization of Products Example : Banks (Internet Banking/Plastic Money)

Demographic Conditions
An organisation can predict its probable market for the future from information in census data but population shifts such as from migration are less predictable and make the organisation more vulnerable. In a society where race religion and ethnicity are important considerations shifts in these aspects of the demographic condition must also be considered.

Current Demographic Environment (of Mumbai)

Mumbai is the largest city in India with a population of 11.99 million (2001 census)

Ecological Conditions

Factors such as climatic and geography set limits on how they allocate resources. Transportation and communication costs rise if an organization is distant from its markets or clients.

Legal Environment
Rules & Regulations & consumer protection. An entrepreneur must be updated with all the laws, rules and regulations which affect the organization. At one extreme are organisations that operate outside the law and respond to the legal system and At the other extreme would be local voluntary organisation which have no involvement whatsoever with safety, health or other kinds of local state and national laws and regulations.

When a new law is passed or an interpretation modified, organisations must make some important changes if the law has relevance for them. Tax and employment regulations are important for nearly all organisations. Laws and regulations concerning pollution that have affected many organisations.

Current Legal Environment

Cultural Environment

The Entrepreneurs do not emerge all of a sudden. They come from different vocations. In many countries, the Entrepreneurs appear to have been motivated by combination and interaction of the following factors: Socio-Economic Environment Family Background Standard of Education and Technical Knowledge Stability Political Stability and Governments Policy Caste and Religious Affiliations Availability of Supporting Facilities Achievement Motivation Personality and Personal Skills

Impact of culture on Entrepreneurship

Culture can be defined as a sum total of knowledge, belief, morals, arts, customs and habits acquired as the member of society. It is the way of life of the people While the influence of national culture is now an accepted fact, it is not clear whether culture overrides other factors in determining how an organization is shaped and operates. Culture is important for organizational structuring. It also has an important impact on the ways in which organizations formulate their strategies for the future.

Material Culture: includes man-made things such as automobiles, televisions, telephone, etc. Non-Material culture: includes such as language ideal, beliefs, music, etc. The three most important elements of culture are knowledge and beliefs, ideals and preferences.

Entrepreneurial Culture

Entrepreneurial culture implies vision, values, norms and traits that are conducive for the development of the economy. The emerging globalized business environment is demanding every person in the organization to consider, evaluate and bring about changes in thinking, vision and action. The Changes that are required to be brought about should facilitate organizations in becoming competitive, profitable and sustainable. It is no longer adequate for the organization to just make profit or generate surplus; the output has to be maximum from the grassroots level onwards so that the entire organization shows a healthy growth.

Ten steps to change Entrepreneurship Culture

Changing entrepreneurial culture doesnt require magic. What it needs is down-to-earth action that will set a good example at the top. The following ten steps will help an entrepreneur to create a culture supportive of change:

2. 3. 4. 5. 6. 7. 8. 9. 10.

Start at the top. Lead the enterprise Attune to a culture of innovation Remove the hidden obstacles Create an integrated enterprise culture Create a marketing culture Create a listening environment Absorb competing technologies and involve people Do not let product innovations fool you Be flexible and open for diversification arid new ideas Always be ready to change cultures

Entrepreneurship Stimulants

A variety of social, economic political and cultural factors are stimulating entrepreneurial activity and consequently generating economic development These stimulants are as follows: An Increasing focus on capital formation. The ability to transform scientific and technical developments The supportive government programmes Availability of required training inputs A collaborative relationship between business and research An effort to create an environment conducive to innovation

Entrepreneurship and the Economic system

Economic systems grow and take shape under the influence of industrial policy, economic policy, socio-cultural and political ideas of the people. Economic system is a basic structure of capitalism, socialism and mixed economy in which a certain level of entrepreneurship is found


features of capitalism are:

Free enterprise Freedom to save or invest Free and healthy competition Lack of dominance of central plan Consumers sovereignty


features are:

The responsibility for mobilization of resources allocation and reallocation of the same is not shared by the private entrepreneur and these are canalized towards the industries of national importance. The role of the entrepreneur under socialism is negligible.

Mixed Economy
Government undertakes the production of capital goods while the production of consumer goods is left to the private enterprises. The private entrepreneurs are equally responsible for upliftment of the people as they produce not only the luxuries and comforts but also the basic requirements of the people. The role of entrepreneur in the mixed economy is quite significant as it permits the growth of both private and public sector.

Barriers to Entrepreneurship

Environmental Barriers: It has been observed that some societies are more entrepreneurial than others. These societies promote and encourage entrepreneurial behavior and as a result they throw up more number of entrepreneurs as compared to other societies.

Economic Barriers

Capital: Capital is a lubricant to the process of production. Money is the resource that helps mobilize other resources like men materials and machines.

Labour: It is the poor quality of labour rather than inadequate quantity of labour force that acts as a real barrier to entrepreneurship.
Raw Materials: The lack of raw materials is normally the greatest economic barrier

Non Economic Barriers

Cultural Block People are bound by their cultural values every society lays down some unwritten norms of acceptable behavior. All members of that society are required to follow these norms. An entrepreneur is required to be innovative thus conformity and enterprise seldom go hand in hand

Practical Values: Psychologist agrees that children are more creative than adults as adults are more aware of their practical constraints. As a person grows and mature more and more stress is placed on practice.
Respect for entrepreneur: The socio-cultural setting of any society determines the degree of approval or disapproval of the entrepreneurial activities.

Importance of Logic:
Many people give higher importance to reason and logic as compared to intuition and subjective



prefer to live in good old days some cultures place a great deal of emphasis on the preservation of traditional ways of life at the expense of innovation and development.



Entrepreneurship involves risk; besides financial risk it involves emotional risk. Every entrepreneur runs a risk of making mistakes and incurring losses in this venture.

Personal Barriers to entrepreneurship


following factors act as personal barriers to entrepreneurship:

Lack of sustained motivation Difficulty with ambiguity Inability to dream and use subconscious Impatience in solving problems Lack of clean perception

Lack of sustained motivation: The entrepreneurship requires a sustained level of motivation and commitment arid it is often difficult to sustain this motivation against the initial hurdles.

Difficulty with ambiguity: When a new method of working is initiated, it is not possible to foresee every eventuality and predict the exact outcome. Entrepreneurs do need an ability to bring an order to chaos and their first requirement is to be able to tolerate chaos

Inability to dream and use subconscious: The entrepreneur needs to use both parts of his intellect, the conscious & the sub conscious. The subconscious intellect facilitates day dreaming. Entrepreneurs are day dreamers and a few of them in our society have ability to day dream and use their subconscious intellect. Impatience in solving problems: The entrepreneur has to find more creative, imaginative and sustainable solutions. Lack of Clear Perception: An entrepreneur is one who can easily identify an opportunity and exploit it for commercial gain.


The various environmental factors can be summarized as follows Entrepreneurship is not influenced by a single factor but is outcome of the combination and interaction of various environmental factors By changing the environment, society is created The desire to make money drives one to start an industry rather than the amount of money one owns. Encouraging government policy and social recognition influences a person to become an entrepreneur

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