P020209E Foundation of Entrepreneurship

The Entrepreneurial Mindset

Concept of an entrepreneur, Concept and Evolution of entrepreneurship,
Distinction between entrepreneur and manger, Distinction between entrepreneur
and intrapreneur, Attributes of Entrepreneurs, Core elements of entrepreneurship,
Entrepreneurship in a Developing economy, Factors affecting Entrepreneurship
development, Entrepreneurship as a Process, Role of entrepreneurship in the
developing economy.

Q1. Define the term 'entrepreneur.'

Answer:
An entrepreneur is a person who initiates, organizes, and manages a business venture,
taking risks to earn profits.
Example: Ratan Tata (Tata Group) launched new businesses like Tata Motors and Tata
Consultancy Services, creating jobs and wealth.

Q2. What is entrepreneurship?

Answer:
Entrepreneurship is the activity of identifying opportunities, innovating, arranging
resources, and managing risks to establish and grow a business.
Example: Elon Musk (Tesla, SpaceX) demonstrated entrepreneurship by creating
innovative solutions in electric vehicles and space technology.

Q3. List any two attributes of an entrepreneur.

Answer:
1. Innovative Thinking – Example: Steve Jobs innovated with the iPhone.
2. Risk-Taking Ability – Example: Dhirubhai Ambani risked starting Reliance with
very little capital.

Q4. State one difference between entrepreneur and manager.

Answer:
• Entrepreneur: Creates a business by taking risks (e.g., Narayana Murthy starting
Infosys).
• Manager: Operates and controls an already established business (e.g., a CEO
running daily operations).
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Q5. Who is an intrapreneur?

Answer:
An intrapreneur is an employee who uses entrepreneurial skills within a company to
innovate and develop new ideas.
Example: The development of Gmail by Paul Buchheit at Google.

Q6. Which are two core elements of entrepreneurship?

Answer:
1. Innovation – Introducing new products/services.
o Example: Ola introducing app-based taxi booking in India.
2. Risk-taking – Facing uncertainty in markets.
o Example: Flipkart entering Indian e-commerce when internet usage was
low.

Q7. Name any two factors that affect entrepreneurship development.

Answer:
1. Finance availability – Example: Startups like Paytm grew due to venture capital
funding.
2. Government support/policies – Example: “Startup India” initiative promotes
entrepreneurship.

Q8. Mention one role of entrepreneurship in a developing economy.

Answer:
Entrepreneurship generates employment opportunities, reducing poverty and
promoting industrial growth.
Example: Startups in India’s IT sector have created lakhs of jobs, boosting economic
development.

Q9. State the meaning of entrepreneurship as a process.

Answer:
Entrepreneurship as a process means a series of steps from idea generation to
establishing and managing a business.
Example:
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• Idea: Creating a food delivery app

• Planning: Market study, business model
• Resource gathering: Hiring staff, raising funds
• Launch: App goes live
• Growth: Expanding services nationwide

Flow Chart: Entrepreneurship as a Process

Idea Generation
↓
Opportunity Recognition
↓
Feasibility Analysis
↓
Resource Mobilization
↓
Launch of Business
↓
Managing & Growth

Long question
Q1 Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:
• Ability to take a risk- Starting any new venture involves a considerable amount
of failure risk. Therefore, an entrepreneur needs to be courageous and able to
evaluate and take risks, which is an essential part of being an entrepreneur.
• Innovation- It should be highly innovative to generate new ideas, start a
company and earn profits out of it. Change can be the launching of a new product
that is new to the market or a process that does the same thing but in a more
efficient and economical way.
• Visionary and Leadership quality- To be successful, the entrepreneur should
have a clear vision of his new venture. However, to turn the idea into reality, a lot
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of resources and employees are required. Here, leadership quality is paramount

because leaders impart and guide their employees towards the right path of
success.
• Open-Minded- In a business, every circumstance can be an opportunity and
used for the benefit of a company. For example, Paytm recognised the gravity of
demonetization and acknowledged the need for online transactions would be
more, so it utilised the situation and expanded massively during this time.
• Flexible- An entrepreneur should be flexible and open to change according to
the situation. To be on the top, a businessperson should be equipped to embrace
change in a product and service, as and when needed.
• Know your Product-A company owner should know the product offerings and
also be aware of the latest trend in the market. It is essential to know if the
available product or service meets the demands of the current market, or
whether it is time to tweak it a little. Being able to be accountable and then alter
as needed is a vital part of entrepreneurship.

Q2 Difference between Entrepreneur and Manager

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Aspect Entrepreneur Manager

Meaning A person who creates and establishes A person who runs and
a new business, taking risks and administers an existing business
innovating. or organization.
Focus Innovation, creativity, and growth. Efficiency, stability, and achieving
organizational goals.
Risk Bears financial and business risks. Works with minimum personal
risk, as risks are borne by the
owner.
Objective To generate profit, growth, and To ensure smooth functioning and
expand business opportunities. maximize performance.
Role Creates vision and direction for the Executes policies and plans set by
business. entrepreneurs or owners.
Example Narayana Murthy starting Infosys. Satya Nadella managing Microsoft
as CEO.

Q 3 Distinguish between an Entrepreneur and an Intrapreneur.

Aspect Entrepreneur Intrapreneur
Ownership Starts and owns the business. Works within an existing
organization.
Risk Bears all business risks and Uses company resources, bears
rewards. little personal risk.
Independence Operates independently, makes Works under the company’s
own decisions. structure and policies.
Outcome Owns profits, losses, and Organization owns results and
intellectual property. outcomes.
Example Ratan Tata (Tata Group). Paul Buchheit (developer of Gmail
at Google).

Q4. Discuss the Role of Entrepreneurship in a Developing Economy.

Answer:
Entrepreneurship is a key driver of economic growth and social progress in developing
countries. Entrepreneurs act as innovators, risk-takers, and job creators who accelerate
industrialization and modernization. Their role can be explained as follows:
1. Job Creation
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o New businesses generate employment opportunities for skilled and

unskilled workers.
o Small and medium enterprises (SMEs) absorb a large part of the labor
force, reducing unemployment and underemployment.
o Example: India’s start-ups like Swiggy and Zomato have created thousands
of jobs in logistics and delivery sectors.
2. Innovation and Technology Advancement
o Entrepreneurs introduce new products, services, and processes,
improving efficiency and consumer satisfaction.
o They adapt modern technologies and make them affordable for local
markets.
o Example: Ola transformed traditional taxi services into app-based
mobility solutions.
3. Productivity Growth
o By improving business methods and adopting efficient practices,
entrepreneurs raise productivity levels.
o Increased productivity enhances competitiveness in global markets.
o Example: Indian IT companies like Infosys and TCS have improved
productivity in the service export sector.
4. Wealth Generation and Capital Formation
o Profitable ventures contribute to national income through taxes and
foreign exchange earnings.
o Reinvested profits support industrial expansion and capital formation.
o Example: Flipkart’s success attracted large-scale foreign investment,
boosting India’s e-commerce sector.
5. Socio-Economic Transformation
o Entrepreneurship reduces poverty by creating income opportunities.
o It supports regional development by setting up industries in semi-urban
and rural areas.
o Entrepreneurs often address social challenges through social enterprises
and sustainable innovations.
o Example: Microfinance initiatives like Grameen Bank have empowered
rural women and reduced poverty.
6. Encouraging Self-Reliance and Export Growth
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o By producing goods and services locally, entrepreneurs reduce

dependence on imports.
o They promote exports, earning valuable foreign exchange.
o Example: India’s pharmaceutical entrepreneurs have made the country a
global hub for affordable medicines.

Entrepreneurship is not just about individual profit but also about national
development. In a developing economy, entrepreneurs act as change agents who
generate employment, bring technological progress, reduce poverty, and enhance global
competitiveness.

Q-5 Five Stages in the Process of Entrepreneurship

The entrepreneurship process follows a sequence of stages:
1. Idea Generation & Identification of Opportunity
o Spotting market gaps and developing innovative ideas.
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o Example: Identifying demand for affordable electric two-wheelers in

India.
2. Feasibility Study & Planning
o Assessing technical, financial, and market feasibility.
o Preparing a business plan.
3. Resource Mobilization
o Arranging finance, manpower, technology, and raw materials.
o Example: Seeking venture capital funding for a start-up.
4. Launching & Managing Enterprise
o Starting production or services, managing operations, and marketing.
5. Growth & Sustenance
o Scaling the business, adopting innovation, and maintaining
competitiveness.
o Example: Flipkart expanded from book sales to a full e-commerce
marketplace.

6.
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Q-6 Five Features of the Evolution of Entrepreneurship

1. From Trading to Manufacturing
o Early entrepreneurs were traders; later, they moved to manufacturing
during the Industrial Revolution.
2. Innovation as the Core
o With Schumpeter’s theory, entrepreneurship evolved as a driver of
innovation and technological change.
3. Shift from Individual to Institutional Entrepreneurship
o Earlier, individuals ran businesses; now, institutions, start-ups, and
corporations are entrepreneurship drivers.
4. Globalization & Digital Revolution
o Technology, e-commerce, and globalization have transformed
entrepreneurship into a global phenomenon.
o Example: Start-ups like Paytm, Zomato, and BYJU’S grew rapidly due to
digital platforms.
5. Social & Sustainable Entrepreneurship
o Modern entrepreneurship also focuses on social welfare and
sustainability.
o Example: SELCO India provides solar solutions for rural electrification.
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Q-7 : Explain the importance of innovation in entrepreneurship with examples.

Answer:
Innovation is very important in entrepreneurship because it helps entrepreneurs create
new products, improve services, and find better ways of doing business. It makes a
business different from others and gives it a competitive advantage.
1. Helps in Growth – Innovative ideas attract customers and increase sales.
2. Improves Efficiency – New methods save time and reduce cost.
3. Solves Problems – Innovation provides new solutions to customer needs.
4. Builds Brand Value – Innovative businesses become more popular and trusted.
Case Study Example:
Ola and Uber in India – Earlier, people faced problems in finding safe and affordable
taxis. Uber and Ola introduced app-based cab booking, online payments, and real-time
tracking. This innovation solved a major transportation issue, attracted millions of
users, and helped these companies grow rapidly while building a strong brand value.

Q-8: Q: Define creativity. What are the key stages in the creative process? Explain
with examples.
Answer:
Creativity is the ability to think differently, generate original ideas, and develop new
solutions to problems. It is the starting point for innovation and entrepreneurship.
Key stages in the creative process:
1. Preparation – Gathering information and understanding the problem.
Example: A student researching different packaging materials for eco-friendly
bottles.
2. Incubation – Thinking quietly and allowing ideas to connect in the background.
Example: While taking a break, the student suddenly connects the idea of using
sugarcane waste as packaging material.
3. Illumination – The “Aha!” moment when a new idea appears.
Example: The student realizes that bagasse (sugarcane waste) can be molded into
biodegradable bottles.
4. Evaluation – Testing and checking if the idea is useful and practical.
Example: The student tests whether bagasse bottles can hold water without
leaking.
5. Implementation – Applying the idea into reality.
Example: The biodegradable bottles are manufactured and marketed as an eco-
friendly alternative to plastic.
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Q:9 What are the main sources of innovation? Illustrate with organizational
example.
Answer:
Innovation can come from many sources, both inside and outside an organization. The
main sources are:
1. Internal R&D (Research and Development) – New ideas generated within the
company through experiments and product development.
Example: Pfizer developed innovative COVID-19 vaccines through its R&D
department.
2. Employees – Workers suggest improvements based on their practical
experience.
Example: Toyota uses employee suggestions for continuous improvement
(Kaizen).
3. Customers and Market Needs – Customer feedback and demands inspire new
products.
Example: Apple introduced larger-screen iPhones after customer demand.
4. Competitors – Observing and improving upon competitor products.
Example: Samsung innovated foldable smartphones to stand out in competition.
5. Universities and Research Institutions – Collaboration with academic
research.
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Example: Google works with universities on AI and machine learning

innovations.
6. Technology and External Environment – New technologies, government
policies, and social changes push innovation.
Example: Tesla used advancements in battery technology to develop electric cars.