ED Question Paper Solved by Ms.

Prabhjot Kaur

Answer 1: Entrepreneur:
The term Entrepreneur first appeared in the French Language and was applied
to leaders of military expeditions in the beginning of the 16th century.
Richard Cantillion
An Irishman living in France was the first person to use the term Entrepreneur to refer to
economic activities. He defined Entrepreneur as a person who buys factor services at
certain prices for selling his product at uncertain prices in future. He viewed an
Entrepreneur as a bearer of non insurable risk.
Entrepreneurship is a process wherein after setting up a venture one looks for
diversification and growth. An entrepreneur is always in search of new challenges. An
entrepreneur is not a routine businessman he might not have resources but he will have
ideas. He is innovative and creative. He can convert a threat into an opportunity. Small
businessmen might shut-down or change his business if he anticipates losses but an
entrepreneur will try again after analyzing the situation. On the other hand an
entrepreneur can leave a perfectly running business to start another venture if he so
desires.
Entrepreneurial class came into being in 17th century.

Invention

of Steam

Engine

resulted

(1769). It changed small scale production to

large

Industrial revolution, the Agrarian society in

in
scale

Industrial
production.

revolution
Due

to this

Europe got transformed into Industrial

society. The European society was mainly dominated by Artisans and Peasants and
they witnessed large scale production.
A group of people mainly traders took risk for large scale production and they were
called Entrepreneurs. Due to large scale production the Entrepreneurs had surplus
matter available with them. They needed market to get their product absorbed.
As Britain had colonies all over the world so they marketed their products to other
countries. This is how Entrepreneurship originated.
Entrepreneurial Competencies
Initiative
Sees and Acts on Opportunities
Persistence
Knowing/Information
Concern for High Quality of Work
The concept of entrepreneurship and its theory have been evolved over a period
of more than two centuries. Following are the theories wrt it:
THE ECONOMISTS VIEW
G.F.Papanek and J.R.Harris- major advocates
Entrepreneurship and economic growth take place where economic conditions are
favourable
Economic incentives are the major drivers for entrepreneurship

When an individual recognises that the market for a product or service is out of
equilibrium, he may purchase or produce at the prevailing price and sell to those
who are prepared to buy at the highest price.
THE SOCIOLOGISTS VIEW
Cochran and Hagen
Entrepreneurship most likely to emerge under a specific social culture
Social

sanctions,cultural

values,role

expectations

are

responsible

for

entrepreneurship
E.g.- Mahatma Gandhi- Khaadi, Verghese- White Revolution
THE PSYCHOLOGISTS VIEW
Entrepreneurship is likely to emerge when a society has sufficient supply of
individuals possessing particular psychological characteristics
SCHUMPETER believes that entrepreneurs are primarily motivated by a strong will
to power, will to find a private kingdom or will to conquer.
Mc Clelland- it is the high need for achievement which drives people towards
entrepreneurial activities.
Individual with high achievement motive tend to take keen interest in situations of
high risk, desire for responsibility and a desire for a concrete measure of task
performance.

Answer 2: Entrepreneurial Opportunity Search:

Markets arise for new products & services from wants & needs of consumers.

Observe surroundings and consciously question how to resolve issues that come
across.
Develop sensitivity to changes around yourself.
Carefully scan environment to gather ideas.
Ideas for new products or services need not be earth-shakers but money makers.
E.g. In its simplest form, the entrepreneur might notice that one person is willing to
sell something for less than someone else is willing to pay for it, so the entrepreneur
can act as a middle man, profiting from buying at the lower price and selling for
more.
The profit, which is the return to the entrepreneurs alertness to the opportunity, was
created entirely by the entrepreneurs activity, because the sale would not have
taken place without someone having noticed the profit opportunity.
The entrepreneurs activity benefits the buyer, the seller, and more generally, the
entire economy.
Furthermore, the entrepreneurs profit signals potential suppliers and demanders
about their market opportunities, and even signals other potential middlemen of the
profit opportunity for facilitating exchanges.
Search for Business Idea

Scanning the Environment

It is quite possible that many of the promising opportunities might not make commercial
sense. It involves close examination of the environmental conditions and their impact
upon the business idea. This analysis may advice to modify, adapt, rearrange,
substitute, combine, reverse, etc.

Internal Environment
Effective analysis of a firms internal environment (learning what the firm can do)
requires:
Fostering an organizational setting in which experimentation and learning are
expected and promoted Using a global mind-set Thinking of the firm as a bundle of
heterogeneous resources and capabilities that can be used to create an exclusive
market position By exploiting their core competencies or competitive advantages,
firms create value Value is measured by A products performance characteristics
The products attributes for which customers are willing to pay
Firms create value by innovatively bundling and leveraging their resources and
capabilities. Core competencies, in combination with product-market positions, are the
firms most important sources of competitive advantage. Core competencies of a firm, in
addition to its analysis of its general, industry, and competitor environments, should
drive its selection of strategies. Strategic decisions in terms of the firms resources,
capabilities, and core competencies Are non-routine Have ethical implications
Significantly influence the firms ability to earn above-average returns
External Environment
The Companys environment consists of the actors and forces outside marketing that
affect marketing managements ability to develop and maintain successful transactions
with its target customers
Kotler et al, 1994
A business does not operate in a vacuum. It has to act and react to what happens
outside the factory and office walls. These factors that happen outside the business are
known as external factors or influences. These will affect the main internal functions
of the business and possibly the objectives of the business and its strategies.
Understanding the Environment- Issues
Diversity Many different influences Complexity

Interconnected influences- eg. Information Technology changes the nature of workchanges lifestyles- alters consumer behaviour
Speed of change Particularly ICT means more and faster change
Analysis of the External Environments
General environment
Focused on the future
Industry environment
Focused on factors and conditions influencing a firms profitability within an industry
Competitor environment
Focused on predicting the dynamics of competitors actions, responses and
intentions
External Environmental Analysis
A continuous process which includes
Scanning for early signals of potential changes and trends in the general
environment
Monitoring changes to see if a trend emerges from among those spotted by
scanning
Forecasting projections of outcomes based on monitored changes and trends
Assessing the timing and significance of changes and trends on the strategic
management of the firm

Answer 3:
Stages in Formation of a company:
1. Promotion of a company:

An idea has to come in the mind of certain persons to form a company. These
persons are called promoter. He takes all necessary steps to form the company.

The promoter may be an individual, association of persons, partners etc who

originate the scheme for formation of the company; get together the subscribers
to the memorandum, gets the Memorandum and Article, prepared, executed and
registered, finds the bankers, brokers and legal adviser s, find the directors ,
settle the terms of preliminary contracts with vendors and agreement with
underwriters and makes arrangement for preparation, advertisement and
circulation of the prospectus and placement of the capital.

2.

Registration,

Incorporation

and

Commencement

of

Company:

The following aspects have to decide before a company incorporate and

commence its business:

a. Types of company: Any two or more persons required to start a private

company and 7 members for a public company, associated for a lawful purpose,
by subscribing their names to the memorandum of association in respect of
registration, form an incorporated company, with or without limited liability.

b. Application for availability of name of company: The promoters choose at least

five names apart from the main name of the company and make an application
along with prescribed fee( presently Rs. 500) to the Registrar of Companies for to
ascertain the availability of the name. According to Section 20 of the Act, a
company cannot be registered with the name which is undesirable in the opinion
of Central Government or which is identical with or too nearly resembles the
name of an existing company. The name of the company must end with the word
Limited in the case of a public company and the words Private Limited in the
case of a private company. The Registrar of Companies shall have to furnish the
information regarding the availability of name within seven days. In case the
name is undesirable, the registrar may reject the same or ask for resubmission of

the application with new name or calls for further information, ordinarily within
three days of receipt of the application.

c. Preparation of Memorandum and Article of Association: Memorandum of

Association is the constitution of the company which specifies the area of the
company, within which it can act. It contains clauses like, name clause, object
clause, capital clause, liability clause, subscription clause and registered office
clause. Article of Association is another important document which contains rules
and regulations relating to the internal management of a company.

d. Vetting of Memorandum and Articles, Printing, Stamping and Singing of the

same: The draft of the Memorandum and Articles Association should be
prepared and typed. But before printing the Memorandum and Articles of
Association, it is desirable to get the draft vetted by the Registrar. This helps in
avoiding mistakes and unnecessary delay in registration of the Company. It
should be signed separately by the subscribers. It should be stamped.

e. Power of attorney: With a view to fulfill the various formalities that are required
for incorporation of a company, the promoters may appoint an attorney
empowering him to carry out the instruction/ requirement stipulated by the
Registrar. This requires execution of a Power of Attorney on a non-judicial stamp
paper

of

value

prescribed

in

the

respective

State

Stamp

Laws.

f. Additional Documents Required:

A) Consent of director:

In case of public limited company having share capital, the director has to give
written consent to act as director.

B) Notice of the Registered office:

The notice of location of the registered office in the memorandum and article of
association is necessary.

C) Particulars of directors:

The persons who are to act as first directors may file their particulars to the
Registrar at the time of registration.

g. Statutory Declaration in e-Form No. 1:

Statutory Declaration for completing of all legal formalities should be signed by

an advocate of High Court or Supreme Court or attorney or Chartered
Accountant or by a person named in the Article as a director, manager, or
secretary of a company and filed with the Registrar. The Registrar may accept
such

declaration

as

sufficient

evidence

of

such

compliance.

h. Payment of Registration Fees:

The fee prescribed for registration of company is required to be paid to the

Registrar.

i. Certificate of incorporation:

If all the documents mentioned above are complete and the Registrar of
Companies is satisfied that all requirements are complied with, the Registrar
shall certify under his hand that the company is incorporated. The certificate of
incorporation given by the Registrar and it is the conclusive evidence that all
requirements of the Companies Act, 1956, have been complied with in respect of
registration.

But, a public company cannot start its business until it gets certificate of
commencement of business from Registrar of Companies. To get the certificate
of commencement of business a public company has to pass through capital
subscription state i.e. raise sufficient capital to commence its business. There are
two ways of raising capitals i.e. from private source and from the public.

Legal requirements of establishment of a new unit:

Three important Indian Legislations presently enjoin the industry to remain within the
pollution control standards set by government:
1. Water (Prevention and Control of Pollution) Act, 1974, with amendments made in
1988
2. Air (Prevention and Control of Pollution) Act, 1981, with amendments made in
1987
3. Environment (Protection) Act, 1986
4. The Marpol Convention

Businesses often create a brand selling one line, or a similar grouping of products or
services. A small business unit is established when a company wants to designate
different branding, whether by product or by target buyer. For example, a bank offers
financial services but will create a specialized unit for high net worth clients. A business
unit can eventually be sold as its own self-standing business.
1) Separate Products And Services
The first step in establishing an SBU is looking at the existing business plan and model
of the parent company. Establish the items that differentiate the existing revenue
streams from the new proposed SBU. The SBU can be established to take existing
products and services, and target a highly specialized group or to support new
technology. Clearly define the goals of the SBU and write a business plan specific for

the unit treating it as if it were its own business entity. Analyze the demographics, the
need and financial estimates to determine the business viability of the SBU.
2) Name And Entity Requirements
If you are marketing your SBU as a new entity, it most likely has its own name. As such,
review the business entity options that best meet the needs of your SBU. If there is no
increased liability, registering the SBU as a fictitious name under the parent
organization is an inexpensive options. If you are considering selling the SBU at a later
time or seek to reduce liabilities between the parent entity and the SBU, look at a limited
liability company or a corporation as a subsidiary to the parent entity. Many film
production companies register each film production as a separate LLC entity under the
parent to keep financing, income and expenses separated from the parent company.
Also file any pertinent patents, trademarks and copyrights with the US Patent and
Trademark Office at USPTO.gov or the US Copyright Office at copyright.gov.
3) Launch Small Business Unit
Once the plan and legalities are established, it is time to unveil the SBU to the public.
Each company is different in the strategy employed. A company unveiling a technology
can benefit from using the already-established name and reputation of the parent
company. An SBU seeking to create a premier or customized service provider might be
better off not linking itself to a bigger, broader-based parent company. Execute a
marketing plan with streamlined advertising efforts exclusively to the target market.

Answer 4:
Venture capital is money provided by an outside investor to finance a new, growing,
or troubled business.
The venture capitalist provides the funding knowing that theres a significant risk
associated with the companys future profits and cash flow.
Capital is invested in exchange for an equity stake in the business rather than given
as a loan, and the investor hopes the investment will yield a better-than-average
return.

Venture capital is an important source of funding for start-up and other companies
that have a limited operating history and dont have access to capital markets. A
venture capital firm (VC) typically looks for new and small businesses with a
perceived long term growth potential that will result in a large payout for investors
A venture capitalist is not necessarily just one wealthy financier. Most VCs are
limited partnerships that have a fund of pooled investment capital with which to
invest in a number of companies. They vary in size from firms that manage just a
few million dollars worth of investments to much larger VCs that may have billions of
dollars invested in companies all over the world. VCs may be a small group of
investors or an affiliate or subsidiary of a large commercial bank, investment bank,
or insurance company that makes investments on behalf clients of the parent
company or outside investors. In any case, the VC aims to use its business
knowledge, experience and expertise to fund and nurture companies that will yield a
substantial return on the VCs Investment, generally within three to seven years.
VCs may be generalists that invest in a variety of industries and locations. More
typically, they specialize in a particular industry. Make sure your company falls within
the VCs target industry before you make your pitch a VC thats focused on
biotechnology start-ups will not consider your request for later-stage funding for
expansion of your semiconductor firm. You can often gain insight into a VCs
investment preferences by reviewing its website.
Venture capital is not an option for all new businesses. In fact, VCs are very
selective in choosing new companies to invest in, so your company may not qualify.
Theyre most interested in businesses with high growth potential that will allow them
to successfully exit with a higher than average return in a time frame of roughly three
to 10 years, depending on the type of investment. Given the rigorous expectations,
most venture funding goes to companies in rapidly expanding industries such as
technology, biotechnology, and life sciences.
TYPES OF FUNDING

1. Seed Capital:
If youre just starting out and have no product or organized company yet, you would
be seeking seed capital. Few VCs fund at this stage and the amount invested would
probably be small. Investment capital may be used to create a sample product, fund
market research, or cover administrative set-up costs.
2. Startup Capital.
At this stage, your company would have a sample product available with at least
one principal working full-time. Funding at this stage is also rare. It tends to cover
recruitment of other key management, additional market research, and finalizing
of the product or service for introduction to the marketplace.
3. Early Stage Capital. Two to three years into your venture, youve gotten your
company off the ground, a management team is in place, and sales are
increasing. At this stage, VC funding could help you increase sales to the breakeven point, improve your productivity, or increase your companys efficiency.

4. Expansion Capital. Your company is well established, and now you are looking
to a VC to help take your business to the next level of growth. Funding at this
stage may help you enter new markets or increase your marketing efforts. You
should seek out VCs that specialize in later stage investing.

5. Late Stage Capital. At this stage, your company has achieved impressive sales
and revenue and you have a second level of management in place. You may be
looking for funds to increase capacity, ramp up marketing, or increase working
capital.
THE FUNDING PROCESS
Step 1: Business Plan Submission
At minimum, your plan should include:

A description of the opportunity and market size; resumes of your management

team; A review of the competitive landscape and solutions; Detailed financial
projections; and A capitalization table.
You should also include an executive summary of your business proposal along with
the business plan. Once the VC has received your plan, it will discuss your
opportunity internally and decide whether or not to proceed. This part of the process
can take up to three weeks, depending on the number of business plans under
review at any given time. Dont be passive about your submission. Follow up with
the VC to check the status.
Step 2: Introductory Conversation/Meeting
If your firm has the potential to fit with the VCs investment preferences, you will be
contacted in order to discuss your business in more depth. If, after this phone
conversation, a mutual fit is still seen, youll be asked to visit with the VC for a oneto two hour meeting to discuss the opportunity in more detail. After this meeting, the
VC will determine whether or not to move forward to the due diligence stage of the
process.
Step 3: Due Diligence
The due diligence phase will vary depending upon the nature of your business
proposal.
The process may last from three weeks to three months, and you should expect
multiple phone calls, emails, management interviews, customer references, product
and business strategy evaluations and other such exchanges of information during
this time period
Step 4: Term Sheets and Funding
If the due diligence phase is satisfactory, the VC will offer you a term sheet. This is a
non-binding document that spells out the basic terms and conditions of the
investment agreement. The term sheet is generally negotiable and must be agreed

upon by all parties, after which you should expect a wait of roughly three to four
weeks for completion of legal documents and legal due diligence before funds are
made available
Documentation required for Venture Capital
In India, it may be examined under two broad headings:
i)

Regulation of VC funds registered in India: It comprises the taxation regime

and the regulation of their business activities by the SEBI (Venture Capital
Funds) Regulations, 1996.

ii)

Regulation of foreign VC funds: These are regulated either by the FDI regime
in India or regulations governing FIIs who are registered with SEBI.

Non Disclosur Agreements (NDAs)

Its not advisable to ask a VC for a non-disclosure agreement, and may even risk
stopping your potential VC deal in its tracks.
Venture capitalists may review hundreds or thousands of business plans in any
given year. Even if you think your ideas are proprietary, they may be just similar
enough to another entrepreneurs that the VC takes on the added risk of legal action
against it just by signing your NDA. Also, for the VC, accepting NDAs adds the
administrative burden of having to keep track of which NDA covers what
entrepreneurs ideas.
Termsheet
A term sheet is a document that sets out the basic terms and conditions under which
the VC will invest in your company. Work completed in the due diligence phase of
the funding process is used to draft this document. The term sheet is generally nonbinding and is used as a template, along with further due diligence, to draw up more
detailed legal documents.

To arrive at the figure of company value , the VC takes into account the
management team, your companys market and competitive advantage in the
marketplace, and your earning potential. The various factors that go into a
valuation are determined during the due diligence phase.
Note the difference between pre-money valuation the valuation of your company
before a VC invests in it, and post-money valuation the pre-money valuation plus
the contemplated investment amount.
A good tip for negotiating the best valuation is to have multiple VCs interested in
investing in your company.
In negotiating your term sheet, keep in mind that there are two central issues for the
VC.
The first is the economics of the deal, i.e. the return on investment and the terms
that dictate that return. The second is control, meaning how the VC will be able to
exercise control over your companys decisions. The pertinent negotiations will
revolve aroundthese two issues.

Answer 5: Entrepreneurial Development Programmes (EDP)

Meaning
It is designed to help a person in strengthening and fulfilling his entrepreneurial
motive and in acquiring skills and capabilities necessary for playing
entrepreneurial role effectively.
A programme not touching entrepreneurial motivation and behavior cannot be
called an EDP.

EDP is primarily meant for developing those first-generation entrepreneurs, who

on their own cannot become successful entrepreneurs.
The Entrepreneurship Development Programme (EDP) promotes the creation
and/or growth of enterprises

through a National Team of Trainers and

Counselors that provides training and counseling to young promoters

to

establish their own business and to reduce the failure rate of start-ups,
contributing thereof to the economic growth of the Country.
It covers three major variables:
Location
Target group
Enterprise (Entrepreneurial activities)
Role and Contribution of EDPs in India
1) Elimination of Unemployment and Poverty
2) Balanced Regional Development
3) Utilization of local resources
4) Prevention of slums in urban area
5) Diffusion of tension among youth
Phases or steps in EDP
1. Pre-training Phase
2. Training Phase
3. Post-training Phase or Follow up stage
4. Evaluation of EDP
1) Pre-training Phase

a) Selection of Faculty Designing of course curriculum Advertisement Selection /

Identification Arrangement
2) Training Phase
Instructions are imparted to develop skills and to bring desirable changes in the
behavior.
1) Post-training phase or follow up stage
a) Follow-up meeting Correspondence Counseling and guidance Escort service
Project report preparation Selecting location Financial Institutions
4) Evaluation of EDP
a) To review the pre-training work To review the process of training To review the
post-training approach
Role of Government in Organizing EDPs
In India there are many organizations which are providing training in developing
potential businessman. The main purpose of these entire institutes is to find out more
and more entrepreneur who can contribute in the growth of Indian economy.

1. National Institute of Enterprise and Small Business Development (NIESBUD):

National Institute of Enterprise and Small Business Development was founded by
Ministry of Industries of Government of India in the year 1983. National Institute of
Enterprise and Small Business Development is responsible for setting up the standard
for EDP and deciding the contents and curriculum during the training period.

Some of the function of National Institute of Enterprise and Small Business

Development are as follows:

a. Deciding the effective strategies for training.

b.

Deciding

the

training

manuals

and

infrastructure

for

the

training.

c. Aiding all those agencies which are responsible for entrepreneur development
activities.

2. IIC( Indian Investment Centre): IIC was founded by Government of India. The
main goal of this centre is to facilitate the entrepreneurial activities between Indian and
foreign investors and prompting the foreign investors to invest in India which in turn
increase globalization.

3. EDII( Entrepreneur Development Institute of India): EDII is founded by the mutual

coordination

of Gujrat

government

and

Public

Financial

Institutions.

Some of the function of EDII are as follows:

a. Selection of potential entrepreneur and motivating them start their own business
venture.
b. Providing practical training in the industries.
4. TCO(Technical Consultancy Organization): TCO main aim to provide technical
training to potential entrepreneur. TCO firs identify the industry potential and check its
feasibility and generate the report. Then TCO select the participants and provide them
industrial training and assist them in the completion of the project.

Answer 6: Role of Entrepreneurs in Economic Development

1) Develop new markets.

Under the modern concept of marketing, markets are people who are willing and
able to satisfy their needs. In Economics, this is called effective demand.
Entrepreneurs are resourceful and creative. They can create customers or
buyers. This makes entrepreneurs different from ordinary businessmen who only
perform traditional functions of management like planning, organization, and
coordination.
2) Discover New Sources Of Materials.
Entrepreneurs are never satisfied with traditional or existing sources of materials.
Due to their innovative nature, they persist on discovering new sources of
materials to improve their enterprises. In business, those who can develop new
sources of materials enjoy a comparative advantage in terms of supply, cost and
quality.
3) Mobilize Capital Resources.
Entrepreneurs are the organizers and coordinators of the major factors of
production, such as land labor and capital. They properly mix these factors of
production to create goods and service. Capital resources, from a layman's view,
refer to money. However, in economics, capital resources represent machines,
buildings, and other physical productive resources. Entrepreneurs have initiative
and self-confidence in accumulating and mobilizing capital resources for new
business or business expansion.
4) Introduce new technologies.
Aside from being innovators and reasonable risk-takers, entrepreneurs take
advantage of business opportunities, and transform these into profits. So, they
introduce something new or something different. Such entrepreneurial spirit has
greatly contributed to the modernization of economies. Every year, there are new
technologies and new products. All of these are intended to satisfy human needs
in a more convenient and pleasant way.
5) Create Employment.

The biggest employer is the private business sector. Millions of jobs are provided
by the factories, service industries, agricultural enterprises, and the numerous
small-scale businesses.
PROMOTION OF ENTREPRENEURSHIP
Entrepreneurship was potential to support economic growth and social cohesion,
it is the policy goal of many governments to develop a culture of entrepreneurial
thinking. This can be done in a number of ways: by integrating entrepreneurship
into education systems, legislating to encourage risk-taking, and national
campaigns.
Many of these initiatives have been brought together under the umbrella of
Global Entrepreneurship Week, a worldwide celebration and promotion of youth
entrepreneurship, which started in 2008.
FINANCIAL ASSISTANCE
Financial assistance is available from institutions such as Nationalised Banks,
Small Industries Development Bank of India, Regional Rural Banks, National
Small Industries Corporation, State Financial Corporations etc. depending upon
the project requirement and promoters background. Financial assistance has two
components. Loan for fixed capital is used to acquire Plant and Machinery, land
and building. Working capital loan is used to meet day to day operational cost of
the production. State Financial Corporation and National Small Industries
Corporation generally provide working capital. However under package
assistance, State Financial Corporations also provide a composite loan covering
plant and machinery and working capital.
The general conditions for getting financial assistance are:

Eligibility criteria

Technical /Economic viability

Promoters contribution

Capacity to repay loan

Collateral securities/guarantee
FACTORS AFFECTING ENTREPRENEURIAL GROWTH
There are large numbers of varied factors which contribute to the growth of
entrepreneurship. These factors can be broadly classified into five.
- Inspiration for achievement prepares an
entrepreneur to set higher goals and achieve them. The important psychological
factors influencing entrepreneurial growth may be outlined as below:
(A) Need for Achievement: - Need for achievement means the drive to achieve a
goal. People having need for achievement will be so much self confident that
they do not believe in mere luck. If an individual has need for achievement, he
will become a successful entrepreneur.
(B) Personal Motives: - These have been found to be one of the crucial factors
responsible for entrepreneurship amongst individuals. Bill Gates dreamt that one
day he would become the richest person. His dream became a reality later.
(C) Recognition: - Many people become successful entrepreneurs just for getting
recognition from others.
(D) Need of Authority: - Need of authority will inspire men to work. When they
become entrepreneurs, they can exercise authority over managers, employees
etc.
- Culture consists of (1) Tangible man made objects
like furniture, buildings etc.., (2). Intangible concepts like Laws, morals,
knowledge etc.., (3) Values and behaviour acceptable within the society. The
important cultural factors influencing entrepreneurial growth are briefly explained
as follows:

(A) Culture: - Culture is closely related with accepted values and human
behaviour. For e.g. some societies have customs of polygamy and some have
not.
(B) Religious Belief: - According to Max Weber, entrepreneurism is a function of
religious belief and the impact of religion shapes the entrepreneurial culture. He
emphasized that the entrepreneurial energies are exogenous supplied by means
of religious belief.
(C) Minority Groups: - Hoselitz explained that the supply of entrepreneurship is
governed by cultural factors, and culturally minority groups are the spark plugs of
entrepreneurial and economic development. Minority groups like the Jews and
Greeks in Medieval Europe, the Lebanese in West Africa, the Indians in East
Africa has important roles in promoting economic development.
(D) Spirit of Capitalism: - It guides the entrepreneur to engage in activities that
can bring more and more profits. The profit motive character coupled with the
attitude towards acquisition of money urges the individual to start new venture.
- What mould a man into an entrepreneur is the
sociological and environmental factors during childhood, and at the school,
personal experience in adult life at the college and job environments, the
mobility, occupation and support from parents. The social factors include:
(A) Legitimacy of Entrepreneurship: - System of norms and values within a socio
cultural setting is responsible for the emergence of entrepreneurship. The
degree of approval or disapproval granted to entrepreneurial behaviour will
influence its emergence and its characteristics if it does emerge.
(B) Social Marginality: - Individuals or groups on the perimeter of a given social
system or between two social systems provide the personnel to assume the
entrepreneurial roles. Social marginality is likely to promote entrepreneurship are
largely determined by two factors, namely the legitimacy of entrepreneurship and
social mobility.

(C) Family, Role Models and Association with Similar Type of Individuals: - If an
individual has a supportive family, he or she is more likely to become an
entrepreneur. Similarly, if an individual has role models who have been
successful in entrepreneurship, certainly, he may be motivated to start ventures.
If a person is in association with entrepreneurs, this may add to his or her desire
of setting up a new venture. Reliance, Tata, Birla etc. are the industries depend
upon family based inheritance. Roberts (1991) has developed the idea of the
entrepreneurial heritage to describe the importance of the family background for
the entrepreneur. This heritage includes factors such as the fathers occupation,
the family work ethic and religion, family size and the first born son, growing up
experience and so on.
(D) Caste System: - Certain religions and caste encourage the growth of
entrepreneurial talent. Some religious communities like the parsees, marwaris
and sindhees seem to have an affinity for entrepreneurial activity. The caste
system in Hindu society has promoted to the growth of business and professional
skills.
(E) Occupation :- Those born in rich families with silver spoons in their mouth
have not only an advantage of having financial resources for carrying out
business but also learn the business skill by continuous interaction and contacts
with parents, customers, employees and visitors in family shops, offices and
homes.
(F) Education and Technical Qualifications: - Education is the best means of
developing mans resourcefulness which encompasses different dimensions of
entrepreneurship. It may be expected that the high level of education may enable
the entrepreneurs to exercise their entrepreneurial talent more efficiently and
effectively.
(G) Social Status: - Every human being aspires for a high social status and once
he achieves a reasonable level, his aspirations and desires for its start getting

multiplied. People work hard to maintain their status as it also contributes to their
entrepreneurial growth.
(H) Social Responsibility: - It is the obligation to the society in which the business
enterprise operates. An entrepreneur generates employment for others besides
helping himself.
- Economic factors also influence the growth of
entrepreneurship.
The important economic factors are:
(A)Infrastructural Facilities: - Entrepreneurship development requires certain
basic

infrastructure like

power, transportation,

communication,

technical

information etc. These provide external economies and improve the efficiency of
investments by entrepreneurs. These infrastructural facilities are scarce in less
developed countries. The entrepreneurs themselves have to procure these
facilities at their own cost. They have to obtain these facilities at higher costs.
This will greatly discourage the entrepreneurship development. In advanced
countries, those who are desirous of starting an enterprise will find no difficulty in
procuring the infrastructural facilities at reasonable costs.
(B) Financial Resources: - Finance is the life blood of business activity. Capital is
required to obtain materials, machinery, equipment, etc. and to undertake
innovation. Capital is regarded as lubricant to the process of production. The lack
of financial resources discourages the youth and potential entrepreneurs to start
new ventures. Hence, the need for fixed and working capital should be
adequately met if new entrepreneurs are to come forward and grow.
(C) Availability of Material and Know How: - Entrepreneurship is encouraged
only if there is an adequate supply of materials and know-how. Easy availability
of materials attracts more individuals towards entrepreneurship. Technical knowhow is essential for innovation. With technical knowledge, men discover more
and sophisticated techniques of production.

(D) Labour Conditions: - The quality rather than quantity of labour is another
factor which influences the emergence and growth of entrepreneurship. The
availability of cheap labour positively affects entrepreneurship. Labour problem
can be solved not by capital intensive technologies but by increasing their
mobility, by offering them facilities, incentives and concessions in every remote
corner of the country.
(E) Market: - The size and composition of market influence entrepreneurship in
their own ways. Practically, monopoly in a particular product in a market
becomes more influential for entrepreneurship than a competitive market.
(F) Support System: - Ability, initiative and support systems include financial and
commercial institutions, research, training, consultancy services, ancillary
industry etc.
(G) Government Policy: - The socio- political and economic policies of the
government inhibit or foster entrepreneurial growth. Land and factory sheds at
concessional rates, adequate sources of power, supply of materials and other
physical facilities should be provided by the government to facilitate the setting
up of new enterprises. The government has a dominant role to play in the
industrial development of backward regions with a view to attain a balanced
regional development.
- The supply of entrepreneurship in a society is
largely

influenced

by

the

presence

of

individuals

with

the

initiative,

foresightedness and organizing and managerial competence. The following

personality factors contribute to the entrepreneurial development:
(A). Personality: - The entrepreneurial personality comprises of the person, his
skills, styles and motives. Impressive personality and individual skill help to
develop entrepreneurship. These qualities are required for entrepreneurs
because they have to work with officers, managers, engineers, labourers,
customers, investors, govt. officers, ministers etc.

(B).

Independence:-Another

personality

factors

which

influences

entrepreneurship is independence. An entrepreneur works out plans on his own,

searches and explores resources and experiences and uses inner urge to make
the enterprise a success instead of waiting for suggestions or directions from
others.
(C). Compulsion: - Certain compelling reasons also force the people to become
entrepreneurs. These include: (a) unemployment or dissatisfaction with existing
job or occupation, (b) to use technical or professional knowledge and skills, (c) to
put the idle funds to use. A large number of technically qualified people after
gaining initial experience and confidence and not being satisfied by their growth
in the profession have a compulsive reason to try entrepreneurship.
THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP
Small and Medium-sized Enterprises (SMEs) in market economies are the
engine

of

economic

development.

Owing

to

their

private

ownership,

entrepreneurial spirit, their flexibility and adaptability as well as their potential to

react to challenges and changing environments, SMEs contribute to sustainable
growth and employment generation in a significant manner.
SMEs have strategic importance for each national economy due a wide range of
reasons. Logically, the government shows such an interest in supporting
entrepreneurship and SMEs. There is no simpler way to create new job positions,
increasing

GDP

and

rising

standard

of

population

than

supporting

entrepreneurship and encouraging and supporting people who dare to start their
own business. Every surviving and successful business means new jobs and
growth of GDP.
Therefore, designing a comprehensive, coherent and consistent approach of
Council of Ministers and entity governments to entrepreneurship and SMEs in the
form of government support strategy to entrepreneurship and SMEs is an
absolute priority. A comprehensive government approach to entrepreneurship
and SMEs would provide for a full coordination of activities of numerous

governmental institutions (chambers of commerce, employment bureaus, etc.)

and NGOs dealing with entrepreneurship and SMEs. With no pretension of
defining the role of government in supporting entrepreneurship and SMEs, we
believe that apart from designing a comprehensive entrepreneurship and SMEs
strategy, the development of national SME support institutions and networks is
one of key condition for success. There are no doubts that governments should
create different types of support institutions:
i)

To provide information on regulations, standards, taxation, customs

duties, marketing issues;

ii)

To advise on business planning, marketing and accountancy,

quality control and assurance;

iii)

To create incubator units providing the space and infrastructure for

business beginners and innovative companies, and helping them to solve

technological problems, and to search for know-how and promote innovation;
and
iii)

To help in looking for partners. In order to stimulate entrepreneurship and

improve the business environment for small enterprises.

Training
Basic training differs from product to product but will necessary involve
sharpening of entrepreneurial skills. Need based technical training is provided by
the Govt. & State Govt. technical Institutions.
There are a number of Government organisations as well as NGOs who conduct
EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's,
NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and
other state government developmental agencies.
Marketing Assistance

There are Governmental and non-governmental specialised agencies which

provide marketing assistance. Besides promotion of MSME products through
exhibitions, NSIC directly market the MSME produce in the domestic and
overseas market. NSIC also manages a single point registration scheme for
manufacturers for Govt. purchase. Units registered under this scheme get the
benefits of free tender documents and exemption from earnest money deposit
and performance guarantee.
Promotional Schemes
Government accords the highest preference to development of MSME by framing
and implementing suitable policies and promotional schemes. Besides providing
developed land and sheds to the entrepreneurs on actual cost basis with
appropriate infrastructure, special schemes have been designed for specific
purposes

like

quality

upgradation,

common

facilities,

entrepreneurship

development and consultancy services at nominal charges.

Government of India has been executing the incentive scheme for providing
reimbursement of charges for acquiring ISO 9000 certification to the extent of
75% of the cost subject to a maximum of Rs. 75,000/- in each case. ISO 9000 is
a mechanism to facilitate adoption of consistent management practices and
production technique as decided by the entrepreneur himself. This facilitates
achievement of desired level of quality while keeping check on production
process and management of the enterprise.
Concession on Excise Duty
MSME units with a turnover of Rs. 1 crore or less per year have been exempted
from payment of Excise Duty. Moreover there is a general scheme of excise
exemption for MSME brought out by the Ministry of Finance which covers most of
the items. Under this, units having turnover of less than Rs. 3 crores are eligible
for concessional rate of Excise Duty. Moreover, there is an exemption from
Excise Duty for MSME units producing branded goods in rural areas

Credit Facility to MSME

Credit to micro, small and medium scale sector has been covered under priority
sector lending by banks. Small Industries Development Bank of India (SIDBI) has
been established as the apex institution for financing the MSME. Specific
schemes have been designed for implementation through SIDBI, SFCs,
Scheduled Banks, SIDCs and NSIC etc. Loans up to Rs. 5 lakhs are made
available by the banks without insisting on collaterals. Further Credit Guarantee
Fund for micro, small and medium enterprises has been set up to provide
guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks
and some Regional Rural Bank.
Policies and Schemes for Promotion of MSME Implemented By State
Governments
All the State Governments provide technical and other support services to small
units through their Directorates of Industries, and District Industries Centers.
Although the details of the scheme vary from state to state, the following are the
common areas of support.
1. Development and management of industrial estates
2. Suspension/deferment of Sales Tax
3. Power subsidies
4. Capital investment subsidies for new units set up in a particular district
5. Seed Capital/Margin Money Assistance Scheme
6. Priority in allotment of power connection, water connection.
7. Consultancy and technical support
Government of India runs a scheme for giving National Awards to micro, small
and medium scale entrepreneurs providing quality products in 11 selected

industry groups of consumer interest. The winners are given trophy, certificate
and a cash price of Rs. 25000/- each.
CONCLUSION
Government accords the highest preference to development of MSME by framing
and implementing suitable policies and promotional schemes like policies and
promotional schemes, providing incentives for quality upgradation, concession on
excise duty and provides technical supportive services. Thus Government play
supportive role in developing entrepreneurs.

Answer 7: Role of Entrepreneurs in Export Promotion

Development of entrepreneurs in India has led to both export promotion and
import substitution. Micro and small entrepreneurs have been exporting the
following types of items:
a) Traditional Products
b) Non traditional Products
EXPORT PROMOTION
In India custom clearance is a complex and time taking procedure that every export
faces in his export business. Physical control is still the basis of custom clearance
in India where each consignment is manually examined in order to impose various types
of export duties. High import tariffs and multiplicity of exemptions and export promotion
schemes also contribute in complicating the documentation and procedures. So, a
proper knowledge of the custom rules and regulation becomes important for the
exporter. For clearance of export goods, the exporter or export agent has to undertake
the following formalities:
Registration
Any exporter who wants to export his good need to obtain PAN based Business

Identification Number (BIN) from the Directorate General of Foreign Trade prior to filing
of shipping bill for clearance of export goods. The exporters must also register
themselves to the authorised foreign exchange dealer code and open a current account
in the designated bank for credit of any drawback incentive.
Registration in the case of export under export promotion schemes:
All the exporters intending to export under the export promotion scheme need to get
their licences / DEEC book etc.
Processing of Shipping Bill - Non-EDI:
In case of Non-EDI, the shipping bills or bills of export are required to be filled in the
format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991. An
exporter need to apply different forms of shipping bill/ bill of export for export of duty free
goods, export of dutiable goods and export under drawback etc.
Processing of Shipping Bill - EDI:
Under EDI System, declarations in prescribed format are to be filed through the Service
Centers of Customs. A checklist is generated for verification of data by the
exporter/CHA. After verification, the data is submitted to the System by the Service
Center operator and the System generates a Shipping Bill Number, which is endorsed
on the printed checklist and returned to the exporter/CHA. For export items which are
subject to export cess, the TR-6 challans for cess is printed and given by the Service
Center to the exporter/CHA immediately after submission of shipping bill. The cess can
be paid on the strength of the challan at the designated bank. No copy of shipping bill is
made available to exporter/CHA at this stage.
Quota Allocation
The quota allocation label is required to be pasted on the export invoice. The allocation
number of AEPC (Apparel Export Promotion Council) is to be entered in the system at
the time of shipping bill entry. The quota certification of export invoice needs to be
submitted to Customs along-with other original documents at the time of examination of
the export cargo. For determining the validity date of the quota, the relevant date needs
to be the date on which the full consignment is presented to the Customs for
examination and duly recorded in the Computer System.
Arrival of Goods at Docks:
On the basis of examination and inspection goods are allowed enter into the Dock. At
this stage the port authorities check the quantity of the goods with the documents.
System Appraisal of Shipping Bills:
In most of the cases, a Shipping Bill is processed by the system on the basis of
declarations made by the exporters without any human intervention. Sometimes the
Shipping Bill is also processed on screen by the Customs Officer.
Customs Examination of Export Cargo:
Customs Officer may verify the quantity of the goods actually received and enter into

the system and thereafter mark the Electronic Shipping Bill and also hand over all
original documents to the Dock Appraiser of the Dock who many assign a Customs
Officer for the examination and intimate the officers name and the packages to be
examined, if any, on the check list and return it to the exporter or his agent.
The Customs Officer may inspect/examine the shipment along with the Dock Appraiser.
The Customs Officer enters the examination report in the system. He then marks the
Electronic Bill along with all original documents and check list to the Dock Appraiser. If
the Dock Appraiser is satisfied that the particulars entered in the system conform to the
description given in the original documents and as seen in the physical examination, he
may proceed to allow "let export" for the shipment and inform the exporter or his agent.
Stuffing / Loading of Goods in Containers
the exporter or export agent hand over the exporters copy of the shipping bill signed by
the Appraiser Let Export" to the steamer agent. The agent then approaches the proper
officer for allowing the shipment. The Customs Preventive Officer supervising the
loading of container and general cargo in to the vessel may give "Shipped on Board"
approval on the exporters copy of the shipping bill.
Drawal of Samples:
Where the Appraiser Dock (export) orders for samples to be drawn and tested, the
Customs Officer may proceed to draw two samples from the consignment and enter the
particulars thereof along with details of the testing agency in the ICES/E system. There
is no separate register for recording dates of samples drawn. Three copies of the test
memo are prepared by the Customs Officer and are signed by the Customs Officer and
Appraising Officer on behalf of Customs and the exporter or his agent. The disposal of
the three copies of the test memo is as follows:

Original to be sent along with the sample to the test agency.

Duplicate Customs copy to be retained with the 2nd sample.
Triplicate Exporters copy.

The Assistant Commissioner/Deputy Commissioner if he considers necessary, may also

order for sample to be drawn for purpose other than testing such as visual inspection
and verification of description, market value inquiry, etc.
Amendments:
Any correction/amendments in the check list generated after filing of declaration can be
made at the service center, if the documents have not yet been submitted in the system
and the shipping bill number has not been generated. In situations, where corrections
are required to be made after the generation of the shipping bill number or after the
goods have been brought into the Export Dock, amendments is carried out in the
following manners.
1. The goods have not yet been allowed "let export" amendments may be permitted
by the Assistant Commissioner (Exports).

2. Where the "Let Export" order has already been given, amendments may be
permitted only by the Additional/Joint Commissioner, Custom House, in charge of
export section.
In both the cases, after the permission for amendments has been granted, the Assistant
Commissioner / Deputy Commissioner (Export) may approve the amendments on the
system on behalf of the Additional /Joint Commissioner. Where the print out of the
Shipping Bill has already been generated, the exporter may first surrender all copies of
the shipping bill to the Dock Appraiser for cancellation before amendment is approved
on the system.
Export of Goods under Claim for Drawback:
After actual export of the goods, the Drawback claim is processed through EDI system
by the officers of Drawback Branch on first come first served basis without feeling any
separate form.
Generation of Shipping Bills:
The Shipping Bill is generated by the system in two copies- one as Custom copy and
one as exporter copy. Both the copies are then signed by the Custom officer and the
Custom House Agent.
ForEx Earnings
The entrepreneurs have been contributing to Indias economic growth in two
ways:
1) They are producing goods for exports which leads to earning of foreign exchange
2) They are producing those goods which were earlier imported. That means, they
are facilitating import substitution leading to huge savings in foreign exchange
Thus, Entrepreneurs have been helping the country in earning foreign exchange
through exports and they are also helping the country in saving precious foreign
exchange through import substitution.

Answer 8: a) Types of Entrepreneurs

1. Innovative Entrepreneurs

2. Imitative Entrepreneurs
3. Fabian Entrepreneurs
4. Drone Entrepreneurs
1. Innovating entrepreneurs: Innovative entrepreneurship is characterized by
aggressive assemblage of information and the analysis of results derived from
sound combination of factors. Persons of this type are generally aggressive in
experimentation and cleverly put attractive possibilities into practice. An
innovating entrepreneur sees the opportunity for introducing a new technique or
a new product or a new market. He or she may raise money to launch an
enterprise, assemble the various factors, choose top executives and set the
organization going. Schumpeters entrepreneur was of this type. Such an
entrepreneur introduces new products and new methods of production, opens
new markets and re-organizes the enterprise.
Among the different types of entrepreneurs, the innovating entrepreneur is the most
vigorous type of entrepreneur. Innovating entrepreneurs are very commonly found in
developed countries. There is dearth of such entrepreneurs in underdeveloped
countries. A country with little or no industrial tradition can hardly produce innovating
entrepreneurs. Such entrepreneurs can emerge and work only when a certain level of
development is already achieved and people look forward to change and progress.
Innovating entrepreneurs played the key role in the rise of modern capitalism through
their enterprising spirit, hope of money making, ability to recognize and exploit
opportunities, etc.
2) Adoptive or imitative entrepreneurs: These kinds of entrepreneurs are
characterized by readiness to adopt successful innovations created by innovative
entrepreneurs. These type of entrepreneur are revolutionary entrepreneurs with
the different that instead of innovating the changes themselves, they just imitate
the technology and techniques innovated by others. These entrepreneurs are
most suitable for developing countries because such countries prefer to imitate
the technology, knowledge and skill already available in more advanced

countries. The Cochin Shipyard is a good example of the result of imitative

entrepreneurship. The Shipyard has been constructed using the innovative
technology provided by the Mitsubishi Heavy Industries Ltd. of Japan. Imitative
entrepreneurs are most suitable for the underdeveloped nations because in
these nations people prefer to imitate the technology, knowledge and skill
already available in more advanced countries. In highly backward countries there
is shortage of imitative entrepreneurs also. People who can imitate the
technologies and products to the particular conditions prevailing in these
countries are needed.
Sometimes, there, is a need to adjust and adopt the new technologies to their special
conditions. Imitative entrepreneurs help to transform the system with the limited
resources available. However, these entrepreneurs face lesser risks and uncertainty
than innovative entrepreneurs. While innovative entrepreneurs are creative, imitative
entrepreneurs are adoptive.
Imitative entrepreneurs are also revolutionary and important. The importance of these
humbler entrepreneurs who exploit possibilities as they present themselves and mostly
on a small scale must not be under-estimated. In, the first place, such adaptation
requires no mean ability. It often involves what has aptly been called subjective
innovation that is the ability to do things which have not been done before by the
particular industrialist, even though, unknown to him, the problem may have been
solved in the same way by others. By western standards, an imitative entrepreneur may
be a pedestrian figure, an adopter and imitator rather than a true innovator. He is more
an organizer of factors of production than a creator. But in a poor country attempting to
industrialized, he is nevertheless a potent change producing figure. He can set in
motion the chain reaction which leads to cumulative progress. This humbler type of
entrepreneur is important in under developed countries for another reason. These
countries are placing great emphasis in their economic planning on small scale
industries and decentralized industrial structure.
3) Fabian entrepreneurs: Entrepreneurs of this type are very cautious and
skeptical while practicing any change. They have neither the will to introduce new

changes nor the desire to adopt new methods innovated by the most enterprising
entrepreneurs. Such entrepreneurs are shy and lazy. Their dealings are
determined by custom, religion, tradition and past practices. They are not much
interested in taking risk and they try to follow the footsteps of their predecessors.

4) Drone entrepreneurs: Drone entrepreneurship is characterized by a refusal to

adopt and use opportunities to make changes in production methods. Such
entrepreneurs may even suffer losses but they do not make changes in
production methods. They are laggards as they continue to operate in their
traditional way and resist changes. When their product loses marketability and
their operations become uneconomical they are pushed out of the market. They
are conventional in the sense that they stick to conventional products and ideas.
The traditional industries of Kerala are characterized by drone entrepreneurs.
The coir and bamboo industries are still in the hands of laggards who refuse to
innovate.

i)

Entrepreneurs create both direct and indirect employment for the society

ii)

Entrepreneurs set up industries which remove scarcity of essential commodities

iii)

Entrepreneurs are conscious of their social responsibilities

iv)

Entrepreneurs start and run productive ventures

Ethics and social responsibility are very important values in entrepreneurship
ventures. This is particularly essential in decision making process. Ethical
conscience reminds entrepreneurs to make trustworthy and profitable
entrepreneurship decisions. Likewise, the social responsibility component sought
entrepreneurs to make entrepreneurial decisions that can enhance benefits and
repelling harms to the stakeholders.

The entrepreneur must establish a balance between ethical exigencies,

economic expediency, and social responsibility. A managers attitudes concerning
corporate responsibility tend to be supportive of laws and professional codes of
ethics. Entrepreneurs have few reference persons, role models, and developed
internal ethics codes. Entrepreneurs are sensitive to peers pressure and social
norms in the community as well as pressures from their companies.
While ethics refers to the study of whatever is right and good for humans,
business ethics concerns itself with the investigation of business practices in light
of human values. The word ethics stems from the Greek ethos, meaning
custom and usage. Development of Our Ethical Concepts Socrates, Plato, and
Aristotle provide the earliest writings dealing with ethical conceptions; earlier
writings involving moral codes can be found in both Judaism and Hinduism.

Ethics and social responsibilities of an entrepreneur is certainly an important

issue considering the role of social responsibility in society and ethics in
business. Social responsibility is beneficial for business community and at the
same time for global community. Social responsibility is significant owing to the
realism of globalization. The people of the universe are becoming interconnected
more owing to the advancement of technology, transportation and
communication. The world market economy is affecting not only services and
goods but values and ideas as well. Expansion on the global front, enhancing
regulatory omission and the factors which is responsible for creating awareness
regarding the significance of making for sectored, macro and operational hazards
to both an organizations and entrepreneurs competitive position and reputation.
As small business owners and entrepreneurs, activities which harm the people
and the planet, will spoil the scope for your profits. For this reason there is great
significance for triple bottom line which is profits, planet and people.

The world economy requires innovators and entrepreneurs to both advance and
sustain global community. While ethics and social responsibilities of an

entrepreneur and businesses undertake the plan and consider social

responsibility a vital event in their activities, everybody benefits. The effect could
be noticed within local communities and ultimate profit making from their
business. With the extension of cooperation for businesses, governments and
NGOs, they encourage in the matter of corporate social responsibility and
entrepreneurship and take steps to improve the mechanism for its potential
growth. Therefore, in regards ethics and social responsibilities, an entrepreneur
has to become aware about his role and strive to obey them in perfect manner
which would be beneficial to him as well as the community as a whole

An entrepreneur is actually running his own business and being a businessman

he has some obligation of a business to meet his economic and legal
responsibilities. Social responsibility is basically a business intention, beyond its
legal and economic obligation to do the right things and act in ways that are good
for society.

While we are talking about the business ethics, there are three things that need
consideration:

(1)

Avoid breaking criminal law in ones work related activity

(2)

Avoid action that may result in civil law suits against the company

(3)

Avoid actions that are bad for the company image.

For example, an entrepreneur made a chemical that looks like a pesticide and he
started selling it like a pesticide in the market and earns the profit, this act is
against the law.