1405009510 Q1) Explain the different types of personalities of entrepreneurs defined by Zahorsky. Ans : different types of personalities of entrepreneurs by zahorsky : 1. The improver: an improver operates business with high degree of integrity and ethics and focus on continuous improvement. 2. The advisor: An advisor entrepreneur tends to be focused o consumer needs, and they provide high level of assistance and advice to customers. 3. The superstar: Charismatic entrepreneur is a superstar. Business is centered around the superstar who is very competitive in nature. 4. The artist: An entrepreneur is reserved but creative in nature, like an artist. Creativity based businesses succeed with this types of entrepreneurs. 5. The visionary: Some entrepreneurs are completely driven by their own vision and values. They have curiously to understand and improve the world around them. 6. The analyst: Some have tendency of investing their time in fixing problems in a methodical way. Where problems are of structured nature like that in science, engineering and software development this type of entrepreneurs succeed well. 7. The fireball: An entrepreneur who brings energy, optimism and life in the environment is called the fireball. These people set higher goals and achieve them, but are often impulsive. 8. The hero: when will and ability to lead is so strong that a person can take the business through any challenge 9. The healer: An entrepreneur who has ability to nurture and develop people, who usually have user claim, bring harmony in the organization and act as healer. Q2) what do you mean by business plan? Explain its significance. Ans) Business plan: Business plan is a written description of a business. It is comprehensive in nature and comprises details like promoters, existing and proposed products and services ,know-how and techniques intended to use ,potential markets and customers, proposed strategies for the marketing of the products and services ,details of manpower ,available or planned infrastructure , sources of supply input items, organizational structure, estimated costs and revenues, estimated investment in fixed assets as well as working capital and finally projection financing needs. A well prepared business plan server several purposes such as: 1. Integrated perspective: A business plan gives multi-year integrated perspective of business. The integration of product and technology understanding, understanding of marketing mechanics and organizational interplay collectively gives a bigger picture through a business plan. 2. Develops common understanding: Due to integration, The understanding among partners as well as among employees at all the level would increase the efforts of coordination and reducing the chances of misunderstanding. 3. Identifies resource requirements: Although a business plan begins with he assumption, it passes through a stage where resources requirement planning is also done. That helps the business identify the sources of resources, their availability and pricing, among others. 4. Gives a comprehensive estimates of funds requirement: All assumptions together would identify the short-term as well as long-term funding gaps. 5. Facilities funds raising: one can plan out working capital financing and project financing requirements ahead of time and avoid crisis situation. Timely action for fund raising would reduce the cost of capital. 6. Getting manpower: In case of a new startup firm, a business plan often helps in luring suitable manpower resources. Getting the right type of human resource is a very important for a start-up. Q3 ) Explain harvesting strategy. Ans) Harvesting strategy: Harvesting of a business though becomes necessary when in the process of bankruptcy it is realized that the business is not visible. At this time business is not harvested or sold voluntarily but through court intervention. If there is no buyer of the business-as-is then assets are sold one by one and the proceeds are used for repaying the dues in the order of priority as laid down by the law. This is called salvaging. An entrepreneur may consider harvesting as exist strategy and consider either direct sale, management buy-out or employee stock option plan 1. Direct sale: Mergers and acquisition is often easy when a firm is publicly traded firm. If the firm is in a partnership form, one or more of the co-owners may consider selling their interest to the remaining partners .In case of a sole proprietorship and partnership forms the valuation of business is difficult. Therefore, businesses are sold based on some thumb rules like ,x-times three last years’ average sales revenue or y-times are location and industry specific based on the common understanding of business scope in that location. Payment terms are important to negotiate and not just the payment amount .Though the entrepreneur may like to be relieved instantly from all obligations, it may not be desirable nor could be possible in the interest of the business, buyer and employees of the business 2. Management buy-out: An entrepreneur may like to reward some key and important management team members by inviting them to acquire and own the business rather than selling it to any outsider. In this case both the sides are operating from the full knowledge perspective and therefore, easy deal is possible with full trust and confidence. Moral obligations of both the sides will continue for quite some time. The management buy-out has one more important advantage ; the relationship with employees, lenders, customers and suppliers remains almost unchanged and therefore, continuing business effectiveness is easy. The offer for management buy-out may be by invitation. Before the invitation is extended an assessment of fair value becomes essential of business can remain central while exploring their options for raising money for the new management team. Tax implication cannot be ignored in determining payment terms 3. Employee stock option plan: Stock option plans are designed to retain employees for longer period. It is also called sweat equity, because it is made available if employees ‘sweat’ for some period. ESOP is a variation of making employees part- owners of business, so that they work harder to create firm’s value. As the term indicates, ESOPs are possible when the shares are traded on the stock market, though ESOPs are possible when the shares are traded on the stock market, though ESOP’s are designed for unlisted firms also. Expert services are available in the market for designing and managing employee stock option plan, otherwise managing it on one’s own may be difficult and controversial. Price of stock option, determining how many stock should be given in the option , timing of making it available, vesting period of stock option, option to buy more than entitlement, and several other highly complex issues are involved in designing the stock option plans. ESOP’s would work if the firm is actually able to create value that reflects in increasing share price, otherwise it will not work as an incentive. Some employees may view it as a deferred payment of salary, with risk built into it.