ENTREPRENEURSHIP
ABRHAM.A
Understanding Entrepreneurship and
Environment
Business environment refers to the factors external to
a business enterprise which influence its operations
and determine its effectiveness. Business environment
may be healthy or unhealthy.
Healthy business environment means the conditions
are favorable to the growth of business.
Unhealthy environment implies conditions hostile
or unfavorable to business operations.
Business and its environment interact with each other.
Economic system and other conditions in the
environment determine the success of business
enterprises. Therefore, business enterprises and their
management have to adjust to the conditions
prevalent around them.
Classification of Business Environment
Business environment may be classified into two
broad categories; namely: external; and
internal .environment
i. External Environment It is the environment which is
external to the business and hard to influence
independently. The following are the components of
external environment:
Economic Environment
1. Economic environment is of multidimensional in
nature. It consists of:
the structure of the economy,
the industrial, agricultural, trade and transport
policies of the country,
the growth and pattern of national income and its
distribution,
Economic Environment
the conditions prevailing in industrial, agricultural
and other sectors,
There is a close relationship between a business firm
and the economic environment around it. The success
of a business enterprise depends significantly upon the
State and growth of the economy
2. Legal Environment
2. Legal Environment Business must function within
the framework of legal structure. Therefore, adequate
knowledge of laws and rules is necessary for efficient
managerial performance. There are several business
laws (such as law of contract, law of sales, law of
agency, law of bankruptcy, law of negotiable
instruments etc) in our country. A working knowledge
of these laws is very helpful for the entrepreneur. Such
knowledge will keep them away from innocent
breaches and resultant penalties
3. Political Environment
Political Environment Businessmen should learn to
take public opinion into account in the decision-
making process because today's public opinion
becomes tomorrow's legislation. Therefore, managers
and entrepreneurs should understand the working of
the political system in order to discharge their
responsibilities to the satisfaction of the public.
4. Socio-Cultural Environment
Socio-Cultural Environment It consist the social and
cultural norms/customs of a society in a given period
of time. The level of rigidity/flexibility of a given
society towards a new Product/service/concept
depends on the socio-cultural practices of that
particular society such as values, beliefs, norms,
fashions and fads. It is important to protect traditional
culture as long as it is not a hindrance to innovation,
motivation, and development
5. Demographic Environment
It assesses the overall population pattern of a given
geographical region. It includes variables like
age profile, distribution,
sex,
education profile,
income distribution ,
Religion,
occupation, etc. The demographic assessment can help
in identifying the size of target customers.
ii. Internal Environment
Internal environment is the environment which is under the
control of a given organization. Following are the components
of internal environment of a business:
1. Raw Material: It assesses the availability of raw material now
and in the near future.
2. Production/Operation: It assesses the availability of various
machineries, equipment, tools and techniques that would be
required for production/operation.
3. Finance: It assesses the total requirements of finance in terms
start-up expenses, fixed expenses and running expenses. It also
indicates the sources of finance that can be approached for
funding
[Link] Resource: It assesses the kind of human
resources required and its demand and supply in the
market. This further helps in estimating the cost and
level of competition in hiring and retaining the human
resources.
Identifying Environmental Factors Affecting Entrepreneurship
A complex and varying combination of financial,
institutional, cultural and personality factors
determines the nature and degree of entrepreneurial
activity at any time. The following are some of the
environmental factors which hinder/delay
entrepreneurial growth.
Sudden changes in Government policy.
Outbreak of war or regional conflicts.
Political instability or hostile Government attitude towards
industry.
Excessive red-tapism and corruption among Government agencies.
Ideological and social conflicts.
Unreliable supply of power, materials, finance, labor and other
inputs.
Rise in the cost of inputs.
Unfavorable market fluctuations.
Non-cooperative attitude of banks and financial institutions
Business Ideas
A business idea is a short and precise description of
the basic operation of an intended business. Before
you start a business, you need to have a clear idea of
the sort of business you want to run. Your business
idea will tell you.
Business Ideas
Which need will your business fulfills for the
customers and what kind of customers will you
attract?
What good or service will your business sell? Who
will your business sell to?
How is your business going to sell its goods or
services?
How much will your business depend upon and
impact the environment?
A good business idea will be compatible with
the sustainable use of natural resources and
will protect the social and natural
environment on which it depends.
A good business idea is essential for starting
a successful venture and to stay ahead of
competition in the market. Finding a good
business idea is the first step in transforming
the entrepreneur‘s desire and creativity into a
business opportunity. Good business ideas
Generating and Screening business
ideas
Sources of Business Idea
The followings are some of the sources from which business ideas
are generated
Mass Media (newspapers, magazines, TV, Internet)
Hobbies/Personal Interest
Personal Skills and Experience
Business Exhibitions
SurveyCustomer Complaints
Natural scarcities and pollution
Changes in Society
Brainstorming
Being Creative
Some tips to generate a successful
business idea
Start thinking! Get your brain to work
Buy a note book
Follow your passion
Keep your eyes open
Capitalize on your strengths
Explore new things
Check your bank account
Know what you want in life
Choose a business that suits your personality
Read about other people that started their own business
Steps in generating and screening the best
viable business idea
Out of the business ideas generated through
brainstorming, the best business idea can be screen
out using the following steps:
Step 1: Brain Storming
Step 2: Macro Screening
Step 3: Micro Screening Step
4: SWOT analysis
Step 1: Brain Storming
Brainstorming is a creative idea generation technique.
It is also a problem solving technique. This technique
provides free environment to present individual ideas,
without attracting criticism from any one.
Every generated idea is recorded and considered as
solution to a problem. This is used to find out large
number of business ideas in shorter time
Step 2: Macro screening
In this step, the viability of the business idea is
checked according to the following criteria:
1. Marketability
2. Availability of raw materials &other inputs
3. Ease of implementation
4. Financial ability of the entrepreneur
5. Consistency with government priorities
Step 3: Micro Screening
Step 3: Micro Screening In this step, the viability of the
business idea is checked according to the following
criteria:
1. Marketing Viability
2. Technical Viability
3. Organizational and Management Viability
4. Financial Viability
5. Environmental Viability
6. Ecological Viability
Step 4: SWOT Analysis
A SWOT analysis is a simple tool to help you work out
the internal and external factors affecting your
business. The S stand s for strengths, the W stands for
weaknesses, the O stands for opportunities and the T
stands for threats. It is one of the most commonly used
business analysis and decision-making tools.
A SWOT analysis helps you to build on strengths (S),
minimize weakness (W), seize opportunities (O) and
counteract threats (T)
