Need and importance of Entrepreneurship

August 11, 2012

allabakash

Class XI 7 Comments

1. Give any two reasons to show that entrepreneurship facilitates the rate of development of a country?

entrepreneurship facilitates the rate of development of a country by significantly contributing to the

following factors.

By increasing the rate of growth in GDP of a country

Increasing productivity.
Growing employment opportunity.
Increasing economic diversification.
Optimum use of local resources
Continued innovation in techno managerial practices
Improving in international competitiveness.
2. Entrepreneurship helps in conserving the outflow of national wealth Do you agree? Give two
points to vindicate your answer.

The developing countries usually have a limited national wealth. However, they need to spend this
wealth to import goods and services. Also, to trade with other countries, they need foreign exchange.
Entrepreneurship helps in conserving the outflow of the national wealth in the following ways.

As entrepreneurship is a low-cost strategy of economic development, job creation and technical

innovation. Thus they enable the production locally and reduce the need of import.
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product,
commercializing an invention, adopting a technology and enveloping a new market. They will even help
in generation of foreign exchange, thus conserving the outflow of national wealth.

3. Entrepreneurship is an exercise in low-cost strategy Analyse the statement.

Entrepreneurship is a low-cost strategy for

Economic development.
Job creation.
Technical innovation
The entrepreneurs bear the costs and risks of launching a new venture, developing a new product,
commercializing an invention, adapting a technology and developing a new market, there by offering a
highly leveraged strategy of development.

Entrepreneurship alone results in generating wealth and employment, in increasing GDP and the overal
development of society. Governments need to spend a lot of money if they have to provide employment
and to establish enterprises. But by encouraging entrepreneurs and by supporting them goverment can
achieve these targets easily. So entrepreneurship is called an excercise in low-cost strategy.

4. What is the sweat equity of an Entrepreneur.

Entrepreneurship contributes to the increasing national production through

Its low cost strategy of economic development

Job creation
Technical innovation
Entrepreneurs bear the costs and risks of

Launching a new venture.

Develooping a new product

Commercializing an invention
Adapting a technology
Developing a new market
All these factors which the entrepreneur bears upon himself offers highly leveraged strategy of
development and contributes to the increased national production.
So, all these bearings of costs and risks, by the entrepreneur, can be considered as Sweat Equity of the
entrepreneur. Even if the entrepreneurs receive government assistance, they will keep on adding
considerably more value through their Sweat Equity

5. Entrepreneurship is not only an exercise in self-employment, but it is employment generative

Justify

Wage-employment has the following drawbacks.

It does not necessarily generate resources.

It can be organized only with existing usable wealth.
It has a strong tendency of self-saturation. So, once availed, it blocks the employment opportunities for
others for another 10 years assuming an average 3 promotions in a 30-year service career.
Entrepreneurship or self-employment overcomes these problems as

Adds to the GNP

It has unique characteristics of self-generation.
In other words, entrepreneurship offers employment to others. As it is economic activity, it also leads to
the emergence of other economic activities. This creates unending employment oppotunities.
Thus, Entrepreneurship is not only an exercise in self-employment, but it is employment generative.

6. What are the disadvantages of the absence of local entrepreneurs for a society.

In the absence of local entrepreneurs for a society, enterprises are organized by the entrepreneurs
coming from outside. This leads to

The draining of the wealth generated out of the local resources to the areas of the entrepreneurs
origin.
A large share of the profits earned by the entrepreneurs will not be reinvested in the area of the
enterprise.
backward development of the areas, especially in the developing contries
the leech effect be developed in the areas where enterprises are established.
Non-availability of the wealth which would have been re-invested in the welfare of the area of profit
generation.
Reduction in the standard-of-living of the area of profit generation.
Absence of balanced area development in the nation.
7. Identify two states where there is the absence of local entrepreneurship and analyze the reasons for
the same?.

Im still in the process of preparing an answer for this question.

8. What is meant by balanced area development? How does entrepreneurship help in achieving the
same?.

The development of a country majorly depends upon

Industrial activities.
Economic activities activities.
When any area prospers in the above activities, it also results in the development of the following
welfare activities.

Development of roads
Transport
Communication
Health
Education
Entertainment etc.
When the industrial and business activities are evenly distributed all over the country and not
centralized in only few areas, it is called as balanced area development.

As entrepreneurs establish the enterprises, this will result in balanced area of development, as the
enterpreneurs try to make the best use of the available resources in their local area. This results in
sprouting of enterprises all across the country, resulting in the development of the above welfare
activities and overall development of the country.

9. Promotion of entrepreneurship in society leads to channeling the youth energy Why?.

Due to excessive unemployment, the youth in India are diverting their attention to violence and other
anto-social activities. One of the prime factors for the increase in unemployment is that the youth in
India are excessively dependent on wage/salary employment and not the pursuit of entrepreneurship.
This often results in channelling of youth energy to self-destruction and non-productive areas. Thus the
nation is losing its most valuable youth energy.

Entrepreneurship can harness such youth energy. The entrepreneural pursuit is challenging and creative
and can harness the extra vigour that is abundantly available with the educated youth. As the
entrepreneural opportunities are limitless, they open up new opportunities for the unemployed youth.
Especially in developing countries, where in the youth lacks self-confidence, entrepreneurship plays a
vital role in developing their self-confidence. Thus the promotion of entrepreneurship in society amonth
the youth leads to entrepreneurisation of the society, thereby leading to the channelization of the
youth energy.

10. Why are the entrepreneurs called risk bearers?.

The markets in which the entrepreneurs operate has little tolerance for

Miscalculation about business opportunities

For lack of commitment
Laziness or incompetence
Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product,
commercializing an invention, adopting a technology and enveloping a new market. Entrepreneurs
either succeed or make a developmental contribution or they fail and disappear from the market place.
For this reason, they are called as risk bearers.

11. Entrepreneurs facilitate in healthy competitiveness in the market State two reasons to justify the
above.

1. The markets in which the entrepreneurs operate has little tolerance for

Miscalculation about business opportunities

For lack of commitment
Laziness or incompetence
Entrepreneurs, by bringing sinsitivity to the discipline of the market, make the markets more
competitive by reducing both static and dynamic inefficiencies.

2. Entrepreneurs facilitates a variety of innovative collaboration, merger and fusion. This helps in
improving the international competitiveness.

12. What is Franchising?

Franchising is an efficient way of importing marketing and retail know-how. Business format franchising
is like entrepreneurship with training wheels. It offers immediate levels of risk, cost and return to
potential but least experienced entrepreneurs.

12. Examine the merits and demerits of franchising?

Merits

Frachising provides an opportunity to take advantage of an established brand

No need of innovating a new product.
The cost and time is of the investor is reduced.
Demerits

The investor will be implementing someone elses idea and no freedom to implement his own idea.
A major portion of the profit has to be transferred to the franchisor. No freedom to implement their
own finacial planning and budgeting.
More depenndency on the franchisor. All the goodwill earned will be lost once the franchisor stops
supporting a particular franchisee.
13. For a developing country Entrepreneurship is vital. How would you relate the above statement to
India? Identify any three major bottlenecks in promoting entrepreneurship in India.

Entrepreneurship has a tendency to automatically contribute to the development of a country in the

following ways in India.

The entrepreneurship makees the society an enterprising one, thus reducing the dependancy on the
wage-employment.
Makes the society more self-confident and capable of solving its problems on its own and feel
concerned for change and growth and value work.

India has many resources lying unutilized e.g. human resources. Entrepreneurship will help in locating
these resources and mobilizing them to meet the challenges.
Bottlenecks in promoting entrepreneurship in India

Inadequate infrastructure and the high cost of transportation.

Difficulty involved in procuring a loan for investment.
Lack of Entrepreneurship friendly policy framework and strategy.