Long Answer Type Question- Entrepreneurial Opportunities | Entrepreneurship Class 12 - Commerce PDF Download

Sensing Entrepreneurial Opportunities

Question.1: Enlist and draw a chart of the, various stages in enterprise process diagram.

The various stages in enterprise process diagram are:

1. Opportunity spotting by analysing the needs and problems that exist in the environment.
2. Evaluating the ideas received from different sources to find a creative solution.
3. Identifying a product or service through innovation.
4. Setting up a project and nurturing it to success.
   

Question.2: Why is entrepreneurship important for a country?

How is entrepreneurship significant for economic and social development of a country?

Entrepreneurship helps the country by:

1. Increasing national output.
2. Balanced regional development.
3. Increasing National Income and GDP by sweat equity.
4. Reducing concentration of income in few hands.
5. Providing challenging career options.
6. Commercializing new inventions and products.
7. Making national and international market more competitive.
8. Optimum utilization of resources.
9. Increasing economic diversification.
10. Helps in raising profit level by reinvesting the profit in the area of profit generation.
11. Improves the standard of living of the society.
12. All these factors greatly influence the pace of economic prosperity of the country.

Question.3: Explain the ability to perceive and preserve basic ideas as an important factor in sensing opportunities.

‘Ability to perceive and preserve basic ideas’ is an important factor in sensing opportunities. Spotting an idea often triggers the process of sensing an

opportunity.

The following are the various sources which lead to the emergence of basic ideas.

1. Problems: When a problem exists, an idea leads to a solution, which emerges as a business opportunity.
2. Change: A change in social, legal, technological aspects, etc. leads to new opportunities in starting a business.
3. Inventions: New products or services lead to new business opportunities.
4. Competition: Competition often results in emergence of new and better ideas that result in new business opportunities.
5. Innovation: Creating new things of value as well as new and creative processes that add value to the existing products or services. For example, computers to tablets.

Question.4: Kavita has observed that there can be a good market for hand-knitted cotton and woollen trendy garments for small kids up to the age of three years. She thought of starting a small enterprise for the same. She also ensured that the enterprise will require 10 – 15 trained workers and an investment of rupees two lakhs. This will give 40% annual return on investment.
(i) Quoting lines from the above para, identify and give the meaning of the entrepreneurship concept being stated in the above para.

(ii) Also, state the elements of the concept identified in (i) above

(i) The entrepreneurship concept stated above is Business Opportunity.

Meaning: A business opportunity may be described as an attractive economic idea which

could be implemented to create a business, earn profits and achieve future growth.

Lines: 

1. Good market for ________ 3 years.
2. This will give 40% annual ________ on investment.
3. She ensured that ________ on investment of ₹2 lakh.

(ii) Elements of business opportunity are :

1. Assured market scope;
2. An attractive and acceptable rate of return on investment;
3. Practicability of idea;
4. Competence of entrepreneur to cash;
5. Potential of future growth.

Question.5: “Problems pose a challenge to entrepreneurs and in solving them, they find opportunities.” Justify with the help of an example.

Once a man from Kerala went on a tour to Punjab with his family. He liked Punjabi Food, but the other members of his family liked only typical Kerala food. It was available hardly in one or two restaurants and was expensive too. This was a problem. The man from Kerala decided to find a solution. The result was that he started an inexpensive eating place which offered typical South Indian food. Soon people started visiting his place. Now they can satisfy their need of South Indian food. The enterprise was a great success. Thus, a problem gave rise to an opportunity.

Question.6: What are the different tasks which an entrepreneur must undertake as an innovator?

As an Innovator, an Entrepreneur must:

1. Engage in doing things in a new and better way.
2. Be able to take decisions in uncertain conditions.
3. Take actions even in cases of unknown and unpredictable results.
4. Be able to grab the opportunity for introducing the new technique or new product or exploring new market.
5. He must explore new markets and re-organise the enterprise. (Any four)

Question.7: What is meant by Sensing Entrepreneurial Opportunities? Explain the important factors involved with suitable examples.

“It is a process of converting an idea into an opportunity and thereby into an enterprise.” It can be represented as follows:

Entrepreneurs perceive opportunities, synthesize the available information and analyze emerging patterns that escape the attention of others, e.g., providing good quality food to people, who are ready to pay money for good quality, while travelling.

Factors affecting Sensing Opportunities:

1. Ability to perceive and preserve basic ideas:
   Spotting of an idea often triggers the process of sensing an opportunity. The following are the various sources which lead to the emergence of basic ideas.
   • Problems: When a problem exists and an idea leads to a solution to resolve that problem, it emerges as a business opportunity.
   • Change: A change in social, legal, technological aspects etc. leads to new opportunities to start a business.
   • Inventions: Invention of new products or services leads to new business opportunities.
   • Competition: Competition often results in emergence of new and better ideas that result in new business opportunities.
   • Innovation: It includes creating new things of value as well as new and creative processes that add value to the existing products or services. For example, computers to tablets
2. Ability to harness different sources of information: Various sources like magazines, journals, books, seminars, trade shows, family members, customers, friends etc. help in getting information that helps in evolution of basic ideas. Bring together various sources of information and knowledge, and analyze it to the best possible extent. The analysis helps in the identification of the right opportunity to start a new business.
3. Vision and creativity: Creativity in innovating a solution and vision. The entrepreneur should be able to creatively identify an idea to generate a valuable solution to a problem. Once the solution is identified their vision to convert the solution into business opportunity help them to move forward, overcoming all the obstacles. They constantly:
   • Overcome the adversity;
   • are able to exercise control over the business;
   • are capable of making significant difference.

Scanning Environment

Question.1: “An entrepreneur who fails to scan the business environment is unlikely to survive in the long run.” Explain this statement. 

The above statement is correct because scanning the business environment provides following benefits:

1. Enables the firm to identify opportunities and have first mover advantage.
2. Helps the firm to identify the threats and receive early warning signal.
3. Helpful in tapping and assembling resources.
4. Helps to adjust and adapt with the rapid changes.
5. Assisting in planning and policy making.
6. Improvement in performance.

Question.2: Airline revenues are very sensitive to business traffic. Identify the environment highlighted in this statement. Name some aspects of this environment.

Some aspects of economic environment are:

1. Role of Private and Public Sector
2. Rate of Saving and Investment
3. Balance of Trade
4. Balance of Payments
5. Money Supply in the Economy
6. Rate of growth of GDP, GNP, Per Capita Income
7. International Debt
8. Transport and Communication System.

Question.3: Suprabh was trained under ‘Skill-India- Programme’ and was carefully monitoring the environment for detecting early signs of opportunities. Under the ‘Skill-India-Programme’, he was sensitized about different uses of waste materials. He grabbed this opportunity and decided to use old newspapers and notebooks to prepare file covers for students with an art called ‘papermache’. He formulated plan of action to capitalize on the opportunities in the market. He decided to procure the raw materials from scrap dealers based in each locality to create a recyclable resource generation. This way he was not only able to contribute to the environment but was also able to improve the profits of his business.

Quoting the lines from the above para, identify and explain the benefits Suprabh had by understanding the environment.

He grabbed this opportunity and decided to use old newspapers and notebooks to prepare file covers for students with an art called ‘papermache’.

1. Identification of opportunities to get first mover advantage: By keeping in touch with the changes in the external environment, an enterprise can identify opportunities and find strategies to capitalise on the opportunities at the earliest.
2. Tapping useful resources: If the company has a thorough knowledge of the external environment, it can tap raw materials, technology and even financial resources from the market at economical prices, at the right time.
3. Better performance: Proper understanding of the various elements of the external environment is necessary to take timely action to deal with threats and avail opportunities for the purpose of improvement in the performance of the firm.
4. Image building: If a company is sensitive to the external environment, it will come out with new products and services to meet the requirements of the customers. This would build the image or reputation of the firm in the eyes of the general public. For example, call–radio taxis with additional features like GPS systems, online booking etc.

Question.4: Why is scanning of environment is considered as an interface between spotting and product identification? Support your answer with at least one example.

An entrepreneur spots an opportunity to know the demand for the product and its sustainability and profitability. For durability, he has to scan the environment in which the entrepreneurs first identifies the key elements and characteristics.

In the absence of environmental scan, an entrepreneur can bear loss in business because lack of knowledge about the customers and their demand for the product may cause failure to him e.g., in the form of electricity shortage, the entrepreneur spots an opportunity. He, then scans the environment in order to know the need of electricity of customers and produces a substitute of electricity which would be viable or could not only be sensed. After scanning an environment, he can move on to the identification of the product i.e., whether to produce inverters or only candles can be the substitute.

The flow chart shows that an opportunity perceived by the entrepreneur should be tested against important environmental parameters to arrive at a sound business choices. Successful scanning catches important changes, and an entrepreneur easily proceed to the next stage of product or service identification. Only environmental scanning makes a project viable and enterprise sustainable in the long run.

Question.5: Give two examples showing that both economic and social factors can affect business ideas together.

1. Selling of flowers during festive season. Here, festival is a social factor whereas demand for flowers is an economic factor.
2. Selling of ceiling fans and air-conditioners at a discount during winter season to clear the stock. Here, winter season is a social factor whereas demand for ceiling fans is an economic factor.

Question.6: Sensitivity to environmental factors is crucial for an entrepreneur. With an appropriate example explain the relevance of the statement.

Importance of environment:

For example, Sony failing to understand the changing trends in mobile phones and therefore losing its market share.

The benefits of understanding the relevant environment of business are:

1. Identification of opportunities to get first mover advantage: By keeping in touch with the changes in the external environment, an enterprise can identify opportunities and find strategies to capitalise on the opportunities at the earliest. For example, Volvo, the Swedish brand has 74% share in the luxury bus segment as it had entered India earlier.
2. Formulation of strategies and policies: It helps in identifying threats and opportunities in the market. These can serve as the basis of formulation of strategies to counter threats and capitalise on opportunities in the market. For example, to understand new trends in the market.
3. Tapping useful resources: If the company has a thorough knowledge of the external environment, it can tap raw materials, technology and even financial resources from the market at economical prices at the right time. For example, resources or raw materials which can be obtained from different countries.
4. Better performance: Proper understanding of the various elements of the external environment is necessary to take timely action to deal with threats and avail opportunities for the purpose of improvement in the performance of the firm. For example, new entry of competitor with advanced technological product.
5. Sensitisation of entrepreneurs to cope with rapid changes: A keen watch on the trends in environment would help to sensitise the entrepreneur to the changing technology, competition, government policies and changing needs of the customers. For example, hanging trends in clothing.

Question.7: ‘Dhanwantri Ayurveda Ltd. (DAL)’ are the manufacturers of soaps, detergents, dental care products, cosmetics, grocery products and even medicines based on Ayurveda. It has grown since its inception. The reasons for the growth and popularity of DAL can be attributed to the fact that it started its operations at a time when the Government in the country is moving towards making the country self-reliant. DAL is following government initiatives like ‘Make in India’ campaign. Government is promoting Ayurveda through the “Ayush Ministry” that promotes Yoga, Ayurveda and other traditional and complementary medicines. This gives DAL a huge boost as it itself claims to be an Ayuredic company. DAL’s input cost increases or decreases based on the taxation policies of the government. Implementation of Goods and Services Tax (GST) has benefited DAL as the genre of DAL is not taxable. With inflation rate increasing continuously, people are looking for cheaper and effective substitutes which are provided by the extensive range of products provided by DAL. The people of India are becoming more health conscious and want to consume organic products. The company focuses only on retailing in India through its own retail chain stores and also through online mode through its E-commerce website AyurPro. The detergent products of the company are non-polluting. The packing material used for the products is also biodegradable. DAL has a separate department to prosecute and get penalized those who misrepresent its brand and its name.

Quoting lines from the paragraph, analyse the success of Dhranwantri Ayurveda Ltd. (DAL) on the basis any four points of the PESTEL Model.

On the basis of PESTEL model: (Any four) 

Political: DAL’s input cost increases or decreases based on the taxation policies of the government. Implementation of Goods and Service Tax (GST) has benefited DAL as the genre of DAL is not taxable

Economic: With inflation rate increasing continuously, people are looking for cheaper and effective substitutes which are provided by the extensive range of products provided by DAL.

Social: The people of India are becoming more health conscious and want to consume organic products.

Technological: Through online mode through its E-commerce website AyurPro.

Ecological: detergent products of the company are non-polluting. The packing material used for the products is also bio degradable.

Legal: DAL has a separate department to prosecute and get penalized those who misrepresent its brand and its name.

Question.8: Entrepreneurs does not emerge and grow spontaneously, rather it is dependent upon several environmental factors. Explain those factors.

Entrepreneurs does not emerge and grow spontaneously, rather it is dependent upon several environmental factors. These are:

1. Political Factor: Political factor is the outcome of a combination of various ideologies  advocated by different political parties. The rules and regulations and the laws that monitor and regulate the market forces are framed and promulgated by the Government. This includes the political factor. The policies of the Government in power have to be reckoned with while taking a business decision. A Government which gives priority to growth of trade, industry and commerce will provide a great importance to entrepreneurship. These policies aim at improving infrastructural facilities which encourage new business ventures.
2. Social Factor: It involves a close study of the life style, beliefs, essential customs, conventions, practices, etc. Expectations of individuals, their preferences on the basis of their family background, age group and education will also form a part of this study. This is a crucial process for the simple reason that the product or service that the entrepreneur envisages will have to satisfy the need of these individuals. For example, an entrepreneur wants to open a showroom of branded foot wears. Hence, he will target the youth of urban population.
3. Economic Factor: It includes the close study of important variables like supply and demand. Details of consumer trends economic preferences, costing, discounting, etc. are all economic decision. Economic details will also help the entrepreneur in determining the size of the project and the reasons of finance.
4. Legal Factors: Legal scanning of the environment demands analyzing the legal requirements in the establishment of a project, managing the project and also in getting assistance from different sources. For example, welfare of employees, safety simple contracts entered into with suppliers of raw materials, financiers, real estate owners, etc. require legal assistance.
5. Technological Factors: It is influenced by government spending on research, new discoveries and development, government and industry focus on technological effort, speed for technological transfer and rate of obsolescence.
6. Ecological Factors: It considers the ways in which the organization can produce its goods or services with minimum environmental damage.

Product Identification and Selecting Right Opportunity

Question.1: Ishita was manufacturing lunch-boxes for school going children. To increase sales and ultimately the revenue she decided to improve the quality of lunch boxes and added a warmer in the lunchboxes so that children could eat warm food in winter. She also gathered information about target markets and customers for the same.

(i) Identify and explain the ‘Idea fields’ discussed in the above para.

The idea fields discussed above are:

(i) Market driven or demand driven ideas: One important method for generating ideas is to carry out a market research. Such a study yields valuable data about trends of supply, demand, consumer preferences, etc. Sometimes information related to different products is available with associations and organisations which carry out routine market surveys. Whatever the source of information about the market, it is a promising field for generation of ideas.

(ii) Existing products or services: There is a constant and consistent effort on the part of all entrepreneurs to improve the products and services already in the market. When black and white computer screen came into use, immediately entrepreneurs started thinking of introducing colour monitors. There are new techniques and strategies being developed in every service like teaching, medicine, management, etc.

Question.2: Describe briefly the ways in which an entrepreneur spots trend.
OR
Discuss fields of ideas available to the entrepreneur with suitable examples.

Various ways in which an entrepreneur spot trends are:

(i) Read trends: They regularly read the leading publications and websites affecting their business. This could include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.

(ii) Talk trends: They get involved in specific industry’s trade association and in attending events and in talking to customers both online and offline. They also take advantage of social networking tools like LinkedIn and Facebook.

(iii) Watch trends: They make it a point to regularly go where their target customers hang out. The entrepreneur spends some time simply watching and observing what people eat, doing, wearing, using etc.,

(iv) Think trends: As they absorb and mull about what they’ve read, heard and observed they’ll start making connections and observations that will lead to business boosting insights.

Question.3: Give the meaning of ‘creativity’ and ‘innovation’. Also state the steps in the process of ‘Innovation’.

Creativity is the first stage in the process of innovation, providing the stimulus for opportunity discovery.

Innovation is a process of translating a useful idea into an application which has commercial value. Steps/ Elements of innovation are enlisted below:

1. Analytical Planning: Carefully identifying the product or service features, design as well as the resources that will be needed.
2. Resources Organization: Obtaining the required resources, materials, technology, human or capital resources.
3. Implementation: Applying the resources in order to accomplish the plans and delivering results.
4. Commercial application: The provision of providing value to customers, to reward employees and to satisfy the stake holders.

Question.4: Explain the various factors involved in assessing the market while selecting a product or service?
OR
State any factors that an entrepreneur has to take into consideration while assessing the market.

1. Demand: The demand assessment will be based on the size of market being targeted, i.e., local markets, market at state level or national international market. It will also involve a study of the target groups of consumers, their preferences, tastes and other related variables.
2. Supply and nature of competition: While assessing market, supply position is also studied by entrepreneurs. A complete picture of quantities of the product made available in the market by all the existing players should be made available. It should take into account future supplies from possible entrants in the field.
3. Cost and price of product: It is important to determine the cost of the product and its comparison with available products in the market. Cost variable of competitors in terms of transportation delays, wastage, storage etc., have to be studied to spot cost advantage. This will influence the delivery mechanism of the identified product or service.
4. Project innovation and change: Market assessment will require a study of prevailing innovations and changes being carried out by existing entrepreneurs. Technological advancements in the field have to be analysed because they may change the quality and influence the cost and price ultimately.

Question.5:  Sheila has a degree in robotics and she loves to design products. She started her career in ‘Robotech’ which uses high end technology in all their products. Her job profile included travelling a lot also. Whenever she travelled she noticed that disabled people have difficulty in maneuvering their wheelchair from one place to another because in some places ramp is not provided and there is no way they can walk up the stairs.

She came up with an idea of a wheelchair which can be used on stairs easily. She decided to quit her job and start her own company. She realized that her idea was the first stage in the process of innovation.

Identify the concept and explain the steps in its process.

Creativity

The creative process:

The process of creativity involves five steps:

1. Idea germination,
2. Preparation,
3. Incubation,

4. Illumination and,
5. Verification.

1. Idea germination: This is the seeding stage of a new idea. It is the stage where the entrepreneur recognizes that an opportunity exists. The idea germination takes place according to interest, curiosity of the entrepreneur according to which opportunity is explored and exploited to its best potential. Creative idea germinates besides the interest, the need of a specific problem or area of study.
2. Preparation: On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking of the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted. That happens because the seed of curiosity has taken the form of an idea. The entrepreneurs foresee the future of the product.
3. Incubation: This is the subconscious assimilation of information. This is the  transition period. The entrepreneur starts thinking about the idea and implementation in his/her sub-conscious mind.
4. Verification: Also called the validation or testing stage. This is where the idea is verified to prove that it has value. This is the most difficult phase of creativity as obstacles begin to appear. This is the developing stage in which knowledge is developed into application.
5. Innovation: It is the process of entrepreneurship which involves the translation of a useful idea into an application which has commercial value. It takes persistent efforts to analytically work out the details of the enterprise or service, to develop marketing strategies to organize finances and strategies operations.

Question.6: Explain the factors that help an entrepreneur to identify a product.

The factors that help an entrepreneur to identify a product are:

1. Application and use: Ideas should be examined for their real life use and application. If it already exists in the market, we will have to find out its present use, then we may think of modifying it for better use.
2. Level of operation: This is a crucial test for product/service identification. Depending on the use of the product/service the entrepreneur will produce it in a cottage industry or a small scale-industry or a large-scale industry.
3. Cost: What is the per unit cost of the product at particular level of operation? Whether this cost is comparable with that of other competitive products? These are some of the questions that have to be answered. This will ultimately decide the sale price.
4. Competition: Any product or service will face market competition at some stage. So, market competition should be assessed through a study of the trends in demand and supply.
5. Technical complexity: What type of technology is required to produce the product? Whether training and application of such technology will be locally available or will it have to be supported from other places? What would be the position of supply of plant and machinery for such a technology? These are important issues that have to be resolved.
6. Annual turnover and profit margin: Ideas should also have to be examined on the basis of expected annual turnover. This will also indicate the market share of the product or service.

Question.7: The first step in the creative process is ‘Idea Germination’. State the other steps of this process.
OR
Idea germination is the seeding stage of a new idea in the creative process. Explain the next four stages in the process.

Preparation: On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted.

Incubation: This is the subconscious assimilation of information. This is the transition period.

Illumination: In this period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting raw-material, arranging funds, policy–making for the implementation of idea.

Verification: Also called the validation or testing stage. This is where the idea is verified to prove that it has value. This is the most difficult phase of creativity as obstacles begin to appear.

This is the developing stage in which knowledge is developed into application. (Steps to be in sequence)

Question.8: Discuss the steps involved in the investigation of ideas.

The process of testing ideas for assessing their opportunity potential can be divided into following steps:

1. Product Identification: Identification of product or service is the first step. The idea provides the concept of the product or service. Already existing products guide the entrepreneur in understanding the scope of innovations that can be undertaken. If a totally new product is to be launched then the policy related with advertising, sales promotion, popularizing are to be effectively prepared. A critical analysis of the product in light of the competition to be faced, choices of the customers, extent of the customers, etc. is to be made.
2. Evaluation of Use and Application: The present use of the product/service is to be found out. This helps in innovating the existing product and in increasing the dependability on the product.
3. Level of Operation: Depending on the nature of the enterprise, the production is undertaken, the enterprise can be small scale, medium scale or large scale industry. Quantity of production is considered. Requirement of labour, technical experts, skilled labour, etc. all are to be considered.
4. Cost: The per unit cost of production is different for different level of operations. “Is the cost competitive ?” This is to be answered as the price of the product depends on it.
5. Competition: The extent, intensity and trends in competition are to be analysed. This has a direct impact on the production capacity and supply.
6. Selection of Technique of Production: Labour intensive or Capital intensive technique–a choice is made between the two. If Capital technique is to be utilized then the availability of skilled labour and their sources are to be ascertained.
7. Annual Turnover: The idea of annual turnover is to be examined. Which means determining the market share of the product or service. Fixation of annual turnover has a impact on profit margin.
8. Profit Margin: A minimum amount has to be produced for earning minimum possible profit. The calculations regarding break even point are to be kept ready. (Any six)

Question.9: Disha, a graduate of Horticulture from Kurukshetra University came across a barren land near Solan when she visited this place. Disha was fond of strawberries and was inquisitive to understand the reason why strawberries could not be grown there. She took this as a challenge and believed in its success. Best quality strawberries now mark the beauty of that barren piece of land.

(i) Identify and explain the idea field from where the idea has been generated.

(ii) Also explain and give one example each for four other idea fields which may generate

useful product ideas.

(i) Natural resources: Ideas can be generated on the basis of natural resources.

(ii) (a) Existing products or service: A business opportunity or idea often comes from everyday problems that someone solves. Successful businesses find a need and fill it by providing a service or a product. Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who create or invent products.
(b) Market driven or demand driven Market research: It is an organized effort to gather information about target markets or customers. Ideas can be generated based on existing demand in the market. It is a very important component of business strategy.
(c) Trading related: Trade is buying goods and services and selling them to consumers at a profit. One big advantage that trading has over other types of businesses is that it is easier to launch and it is also less risky. It is however, necessary for a prospective trader to be aware of the trends in an economy.
(d) Service sector: Service sector is the most growing fields these days due to emerging knowledge societies and advances in Information and Technology.
Technology. So new opportunities can be identified by understanding the linkages to different business activities.

Question.10: Dr. Bhim is a senior cardiologist and is concerned about the depleting health index. He researched and found that proper eating habits can improve the quality of life. He initiated ‘MediBytes’, a unique canteen, where the food is provided as per one’s health needs. The food served at ‘MediBytes’ has no fast food and no aerated drinks. It provides zero oil food with all the basic nutrients required for the body. Initially health conscious, ‘MediBytes’ is planning to open their branches in other locations also.

(i) Identify and explain the idea field that was explored by Dr. Bhim.

(ii) State any two idea fields with examples other than the one identified in (i) above.

(i) Service Sector Ideas: Entrepreneurial opportunities are not only restricted to the manufacturer. Service sector is the most growing field these days, the world over, thanks to emerging knowledge societies and advancements in Information and Technology. So, new opportunities can be identified by understanding the linkages to different business activities.

OR

Market driven or demand driven ideas: Market research yields valuable data about trends of supply, demand and consumer preferences. Market research is a key factor to maintain competitiveness over competitors.
OR

Creative efforts: Apart from applying creativity to spot and harness opportunities, it can also be applied to develop new products and services.
There are basically five ways in which creative ideas can be generated:

(a) Develop a new product or service.

(b) Improve an existing product or service

(c) Find a new process or resource for manufacturing a product.

(d) Find new markets for existing products or services.

(e) Find a new use of an existing product or service.

A very useful concept to bear in mind is that, most often creative products and services are born as results of problem solving.

The child could have written any one of the above options and should not have explained the same option in (ii) part.

(ii) (a) Natural resources: Ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture etc.,

(b) Existing products or services: A great business idea combines skills with imagination and market demand.

(c) Trading related ideas: Trading these days is not limited to ordinary grocer or distributor outlets. With increasing consumerism, the scope and nature of trade has enlarged; local trade, import and export, e-commerce are all making trading a very wide area of enterprise. (Any two with proper examples)

Question.11: Explain the various sources of idea fields.

1. Natural resources: Ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun and human resource. A further exercise with a field may generate many useful product ideas. 
2. Existing products or services: A great business idea combines skills with imagination and market demand. A business opportunity or idea often comes from everyday problems that someone solves. Successful businesses find a need and fill it by providing a service or product. Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who create or invent products. 
3. Market driven or demand driven ideas: Market research is a key factor to maintain competitiveness over competitors. Market research provides important information to identify and analyze the market need, market size and competition. Whatever the source of information about the market, it is a promising field for generation of ideas. Idea generation is knowledgeable, creative and systematic. It develops from knowledge of the consumer, the market, the technology and the general environment, and it creates newness in product, production and marketing. It systematically develops product ideas to satisfy the aim of the project and therefore the business strategy.
4. Trading related ideas: It is necessary for a prospective trader to be aware of the trends in an economy. With the opening of the market to International Companies, large size departmental stores, chain shops and umbrella markets have become omnipresent; competition has become intense and to survive in the market, new entrants will have to acquire skills, competencies and knowledge required to launch, manage and expand business opportunities. 
5. Service sector ideas: Entrepreneurial opportunities are not only restricted to the manufacturer. Service sector is the most growing field these days, the world over, thanks to emerging knowledge societies and advancements in Information and Technology. So, new opportunities can be identified by understanding the linkages to different business activities. 
6. Creative efforts: Creativity is an important and key component of the talents and abilities needed for an entrepreneur. Apart from applying creativity to spot and harness opportunities, it can also be applied to develop new products and services.

There are basically five ways in which creative ideas can be generated:

1. Develop a new product or service.
2. Improve an existing product or service.
3. Find a new process or resource for manufacturing a product.
4. Find new markets for existing products or services.
5. Find a new use of an existing product or service.

Question.12: Comment on the following diagram:

On the basis of generation of ideas and scanning of the environment, one can take up a thorough study of ideas of different types. It provides ideas to variety of situations which have to undergo a vigorous process of close examination, evaluation, analysis and synthesis out of which product and services can be selected. An entrepreneur gathers information about product or services that already exist in the market by using different approaches, like brainstorming, converting hobbies into business, etc. A systematic and in-depth study is undertaken by an entrepreneur to obtain useful data to determine demand and supply position for a particular product by market survey e.g., demand for stationery by students. By this, an entrepreneur can learn the gap between the demand and supply of stationery in the beginning of the year to the school/college. Then it can be a good opportunity to start venture using this information.

Question.13: Rajeev has just completed his B. Tech and wants to start his own business. He knew that the demand of electricity in India was increasing day-by-day, whereas its generation was not sufficient. Rajeev shared his views with some of his friends and they all decided to start the business of electricity generation. They experimented various methods and ultimately succeeded in electricity generation through garbage. They all were very happy as India is also facing the problem of garbage disposal.

(i) Identify and explain the source of ‘Idea-field’ from where the idea had been generated by Rajeev and his friends.

(ii) Also explain two other sources of Idea-fields with the help of example.

(i) Rajeev and his friends generated the idea from Demand driven or Market Driven. One of the important method for generating ideas is to carry out a market research. Such a study yield valuable data about trends of supply, demand and consumer preference. Market research is any organized effort to gather information about target markets or customers.

(ii) Two other sources of Idea are:

(a) Natural resources: Ideas can be generated based on natural resources. A product  or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun and human resources. A further exercise with a field may generate many useful product ideas.

(b) Existing products or services: A great business idea combines skills with imagination and market demand. A business opportunity or idea often comes from every day problems that someone solves. Successful business finds a need and fill it by providing a service or product. Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who create or invent products.

Question.14: Hema Enterprises is dealing in Health Drinks. The enterprise has been manufacturing ‘Mother’s Choice’ a malt based health drink. Adapting to the latest market trends she decided to bring out an improved form of fortified health drink with vitamin B-12, iron and minerals to increase immunity. She believed that by modifying the product she will be able to create a new product.

(i) Identify the concept and define it.

(ii) What are the different ways of doing it.

Trend spotting means identification of new trends. It helps the entrepreneur to understand the market and produce goods or provide services in synchronisation with the market trends.

Ways by which entrepreneurs can spot trends are as follows:

(i) Read Trends: Entrepreneurs regularly read the leading publications and visit websites affecting their business.

(ii) Talk Trends: Talking to people is an equally important trend spotting tactics.

(iii) Watch Trends: Entrepreneurs go out in the market place to see what customers want.

(iv) Think Trends: Entrepreneurs absorb and think about what they have read, heard and observed. They start making connections and observations which lead to business boosting insight.

Question.15:  Mr. Raghav had always wanted to manufacture an innovative energy efficient fan. He was looking into various options and has finally narrowed it down to one option. He understands that the entire idea would have to follow a process. Identify and explain the process.

This is creative process which involves five steps:

1. Idea germination: This is the seeding stage of a new idea. It is the stage where the entrepreneur recognizes that an opportunity exists. The idea germination takes place according to interest, curiosity of the entrepreneur according to which opportunity is explored and exploited to its best potential. Creative idea germinates besides the interest, the need of a specific problem or area of study.
2. Preparation: On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking of the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted. That happens because the seed of curiosity has taken the form of an idea. The entrepreneurs foresee the future of the product.
3. Incubation: This is the subconscious assimilation of information. This is the  transition period. The entrepreneur starts thinking about the idea and implementation in his/her sub-conscious mind.
4. Verification: Also called the validation or testing stage. This is where the idea is verified to prove that it has value. This is the most difficult phase of creativity as obstacles begin to appear. This is the developing stage in which knowledge is developed into application.
5. Innovation: It is the process of entrepreneurship which involves the translation of a useful idea into an application which has commercial value. It takes persistent efforts to analytically work out the details of the enterprise or service, to develop marketing strategies to organize finances and strategies operations.

Question.16: Bunty, a fitness freak NRI, had done his masters in nutritional sciences from U.K., during his vacations, he was disappointed to see that no Gymnasium in Delhi had a workout module to suit his requirement. Anyhow, Fitness Fine Gymnasium of his friend offered him freedom to exercise the way be wanted. In short time, Bunty became popular amongst the other members because of his knowledge, experience, competency, tactics and tips on exercising.
He now explored deeply his curiosity of starting a Gymnasium in Greater Kailash 2, having a fusion of both diet and exercise under one roof. He conducted a market research and subconsciously assimilated a whole data bank of information pertaining to lifestyle, interests, etc. of people in and around the area. He approached his father for financial help of ₹25 lacs as he had ₹20 lacs only. The ground floor of his flat was to be converted into a Gymnasium. He started networking and negotiating with the manufacturers who could provide him with customized machines of his choice.

“One of the first task demanded of an entrepreneur is to manifest creative ability through the conceiving of new product-market propositions”–Identify and explain the steps involved in this process being initiated by Bunty.

Creativity:

It is important to entrepreneurs because it is the first stage in the process of innovation, which provides stimulus for opportunity discovery and new venture creation.

As only from the initial acts of creativity, entrepreneurs can build effective organizations.

It does not happen overnight thus the process of creativity which Bunty underwent involved the following steps:

(i) Idea germination: “Looking at the statistics... concern for fitness,” acted as the seeding stage for his idea to launch hi-tech gymnasium. It is this stage where the entrepreneur recognizes the existence of an opportunity. Being himself fitness conscious he explored an opportunity according to his intent.

(ii) Preparation and Incubation: On the basis of the idea interest and curiosity the need is adjusted by the entrepreneur in next phase and he starts looking for the answer to implement the idea. Bunty conducted a market research in and around the target market to foresee the future of his idea.

(iii) Illumination: “Therefore he approached machines” is the step of illumination where Bunty is now trying to give his idea a practical shape through a viable plan by collecting raw materials, arranging funds, negotiating so as to implement his idea.

Question.17: Explain by giving any four points, why market assessment is needed for an entrepreneur.

Market assessment is important for an entrepreneur for the following reasons: 

1. Estimating Demand or Demand Analysis: Demand of product or service has to be assured for stabilizing the production process. The size of the categories of consumers, tastes and preferences, etc. are to be kept in mind for fixing the production capacity.
2. Understanding Supply and Competition in the market: The extent of competition has a direct impact on the supply of the product. Further, supply can be planned out on the basis of competition. Financial position has to be accordingly varied and enhanced. 
3. Determining cost of the product: Cost of the product has to be critically analysed as the price of the product is dependent on it. A comparison of cost variables, like wastage, procurement, transportation delay, etc. as compared to the competitors helps to gain upper hand in the competition. 
4. Determining price of the product: Minimising cost not only helps in keeping the price low but also in maximizing profit. 
5. Helps in project innovations and changes: Existing innovations guide the entrepreneur in creating new innovations in his product. Suitable and favourable changes can be brought in the present product. (Any Four)

Question.18: ‘The process of ‘generation of ideas’ can be streamlined by developing an awareness about it and these work as the convenient frames of references for this. 

1. Identify the concept stated in the above para.
   
2. Explain any three sources of the concept identified which are used by an entrepreneur.

1. Idea fields
2. (a) Natural resources: Ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun, and human resource.
   (b) Existing products or service: A business opportunity or idea often comes from everyday problems that someone solves. Successful businesses find a need and fill it by providing a service or a product. Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who create or invent products.
   (c) Market driven or demand driven Market research: It is an organized effort to gather information about target markets or customers. Ideas can be generated based on existing demand in the market. It is a very important component of business strategy.
   (d) Trading related: Trade is buying goods and services and selling them to consumers at a profit. One big advantage that trading has over other types of businesses is that it is easier to launch and it is also less risky. It is however, necessary for a prospective trader to be aware of the trends in an economy.
   (e) Service sector: Service sector is the most growing fields these days due to emerging knowledge societies and advances in Information and Technology.
   Technology. So new opportunities can be identified by understanding the linkages to different business activities.
   (f) Creative efforts: There are basically five ways in which creative ideas can be generated:
   • Develop a new product or service.
   • Improve an existing product or service.
   • Find a new process or resource for manufacturing a product.
   • Find new markets for existing products or services.
   • Find a new use for a product or service.

Question.19: One of the keys to business success is to anticipate what the market will want or need. Since it is not possible for an entrepreneur to see into the future, there is one best way. The best way will help the entrepreneur to understand the market and produce goods or services accordingly.

(i) Identify the concept stated in the above lines.

(ii) Explain any three ways in which an entrepreneur can perform the activities related to concept identified.

(i) Trend spotting.

(ii) (a) Read trends: They regularly read the leading publications and websites affecting their business. This could include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.

(b) Talk trends: They get involved in specific industry’s trade association and in attending events and in talking to customers both online and offline. They also take advantage of social networking tools like LinkedIn and Facebook.

(c) Watch trends: They make it a point to regularly go where their target customers hang out. The entrepreneur spends some time simply watching and observing what people eat, doing, wearing, using etc.,

(d) Think trends: As they absorb and mull about what they’ve read, heard and observed they’ll start making connections and observations that will lead to business boosting insights.

Question.20: ‘An idea that is not assessed for its opportunity potential may fail in business.’ Comment on this statement with appropriate examples.

Earlier people used to believe that entrepreneurs are born, not made but now the concept has totally changed. “Entrepreneurs are made not  born. Accordingly, we can say that all those person possessing adequate knowledge and skill acquired through education, experience and scanning of environment before implementing any idea can become successful entrepreneurs.”

An idea that is not assessed for its opportunity potential may fail in business. For example, an NRI on the advice of his friends launched a herbal farm by investing huge amount for the purchase of agricultural land and developed irrigation system. But, the venture was an early disaster. The reason was that the entrepreneur was unsuccessful in fulfilling the requirement of the purchasers due to delayed deliveries. This venture folded up in a very short time.

Question.21: Naveen has just completed his B.Tech. and wants to start his own business. He knew that the demand for electricity in India was increasing day by day, whereas its generation was not sufficient. Naveen shared his views with some of his friends and they all decided to start the business of electricity generation. They experimented various methods and ultimately succeeded in electricity generation through garbage. They all were happy as India is also facing the problem of garbage disposal.
Identify and explain the source of ‘idea-field’ from where the idea had been generated by Naveen and his friends.
Also explain two other sources of Idea-fields with the help of example.

(i) Creative Efforts: We have seen that creativity is an important and key component of the talents and abilities needed for an entrepreneur. A part from applying creativity to spot and harness  opportunities, it can also be applied to developed new products and services. There are basically five ways in which creative ideas can be generated: (a) Develop a new product or service. (b) Improve an existing product or service. (c) Find a new process or resource for manufacturing a product. (d) Find new markets for existing products or services. (e)

Find a new use for an existing product or service.

(ii) (a) Natural Resources: Ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun, and human resource.

(b) Existing products or services: Any great business idea combines skills with imagination and market demand. A business opportunity or idea often comes from everyday problems that someone solves. Successful businesses find a need and fill it by providing a service or product.

(c) Market driven or demand driven ideas:

Market research yields valuable data about trends of supply, demand, consumer preferences. It is a very important component of business strategy. Market research is a key factor to maintain competitiveness over competitors. Market research provides important information to identify and analyze the market need, market size and competition.

(d) Trading related ideas: Trade in simple terms is buying goods and services and selling them to consumers at a profit. It is however, necessary for a prospective trader to be aware of the trends in an economy. With the opening of the market to International Companies, large size departmental stores, chain shops and umbrella markets have become omnipresent.

(e) Service sector ideas: Entrepreneurial opportunities are not only restricted to the manufacturer. Service sector is the most growing field these days all over the world, thanks to emerging knowledge societies and advancements in Information and Technology. So new opportunities can be identified by understanding the linkages to different business activities. E.g. Tourism.