Important Topics:
- Innovation: Meaning and Schumpeter's 6 Types
- Innovations leading to Entrepreneurial Ventures (Penicillin, Pacemaker, etc.)
- Role of Technology and Social Media in creating new forms of business
- Benefits of Social Media for Business
- Network Marketing (Multi-level Marketing)
- Concept of Risk Taking: Types of Risks (Internal & External)
- How to Manage Risk
- Entrepreneurship Development Club (ED Club): Objectives and Functions
- District Industries Centre (DIC): Objectives and Functions
- Entrepreneurship Support Scheme (ESS): Meaning and Objectives
- Business Incubation: Meaning, Services, and Benefits
- SWOT Analysis
Entrepreneur the Innovator (സംരംഭകൻ നവീനാശയക്കാരൻ)
Innovation (നവീകരണം)
Innovation involves the translation of useful idea into application which has commercial value. Innovation means doing new things or doing existing things in a new way. "Any creative idea, getting implemented or realised successfully, is called Innovation".
According to Joseph A Schumpeter, Innovation may be:
- Introduction of a new product.
- Introduction of a new method of production.
- Developing new markets.
- Finding fresh source of raw-materials.
- Making changes in the form of organisation.
- Making changes in Management.
- New Product: The first smartphone (iPhone) was an innovation.
- New Method: Henry Ford's assembly line for car production.
- New Market: Taking a local product and selling it globally online.
- New Source: Using recycled plastic as a raw material for clothing.
- New Organisation: Moving from a traditional hierarchy to a flat, team-based structure.
Innovations leading to Entrepreneurial Ventures
Creativity is a continuous activity of the Entrepreneur. Creativity is a mental process leading to the generation of new ideas. Innovation means application of such creative ideas. So, creativity is developing something new, original and unique. Innovation is an attempt to produce new things.
- Penicillin: Discovered by scientist Sir Alexander Fleming. It is now the most widely used antibiotic and became a successful business venture.
- Pacemaker: Invented by electrical engineer John Hops. It became a successful business venture for regulating heartbeats.
| Old products | Innovative products |
|---|---|
| 3G Mobile Phones | 5G Mobile Phones |
| MP3 | HD Sound |
| LED TV | Ultra HD TV |
| Printing Press | 3D Printing |
| CFL Bulb | LED Bulb |
Role of Technology and Social Media in creating new forms of business
Consumers want more powerful devices and applications, while businesses seek more cost-effective technology to cope with increasingly complex challenges. Satisfying these demands leads to explosive growth and realignment of many industries. For example, Paytm, Amazon, Flipkart, Snapdeal, e-Bay, e-Pay etc. have a prominent market share in the world economy.
The Power of Social Media
Facebook, Twitter, Google+, Instagram, WhatsApp, Wechat, LinkedIn, Pinterest etc. are now reshaping the way companies communicate with employees, partners, and customers. Through the possibilities for "social listening", businesses are able to better understand what their customers and employees need and want.
Facebook: The biggest social network on the Web. It is a great medium for connecting people from all over the world with your business. Businesses create a Facebook page to market their products, share text, images, live videos, etc.
Twitter: A social media and online news platform where people communicate in short messages (tweets) up to 240 characters. Businesses can use this to increase sales, boost brand recognition, and improve customer service.
Google+: The social network from Google, linking other Google products like Drive, Gmail, and YouTube. It offers a unique way of connecting with various contacts, allowing you to send group messages to particular social circles (family, co-workers, friends).
WhatsApp: A good tool to promote new products or discount offers. You can send detailed information about a product to individuals or targeted groups, share digital images or videos. Surveys can be conducted, and you can get direct feedback from customers.
Benefits of Social Media for Business
- Faster and easier communication.
- Increase brand awareness.
- Increase sales.
- Build relationships.
- Customer feedback.
- Find out what competitors are doing.
Network Marketing (Multi-level Marketing)
Network marketing, also known as multi-level marketing, is a direct selling method that uses a network of people to sell a product. It is a type of business opportunity that is very popular with people looking for part-time, flexible businesses. Examples are Amway, RCM, RMP, Avon, etc.
Concept of Risk taking (നഷ്ടസാധ്യത ഏറ്റെടുക്കൽ)
Risks are inherent in all business activities. The entrepreneur has to face a number of risks. Business risk means the possibility of loss or uncertainty about the future. He may not be able to sell all that is produced due to change in fashion, change in attitude of customers, reduction in purchasing power, severe competition, etc.
Types of Risks - Risks may be classified into Two types:
Internal Risks (ആന്തരിക നഷ്ടങ്ങൾ): Risks which arise from events taking place within the business enterprise. Such risks arise during the ordinary course of business and can be forecasted. Main causes:
- Human factors: Strikes and lock-outs, dishonesty of employees, accidents, bad debts, incompetence of manager.
- Technological factors: Unforeseen changes in technology, new inventions, technological obsolescence.
- Physical factors: Failure of machinery, fire, theft, accidents, damages in transit.
External Risks (ബാഹ്യ നഷ്ടങ്ങൾ): Risks arising due to events occurring outside the business organisation. These are generally beyond the control of an entrepreneur. Main causes:
- Economic factors: Changes in demand, competition, price fluctuations, changes in tastes and preferences, trade cycles.
- Natural factors: Unforeseen natural calamities like earthquake, flood, cyclone, lightning.
- Political factors: Fall or change in Government, communal violence, civil war, changes in government policies.
- Internal: A key machine breaks down (physical factor), halting production. This is internal and can be managed with maintenance schedules.
- External: A sudden flood (natural factor) damages your warehouse. This is external and can be partially mitigated with insurance.
How to manage risk (നഷ്ടസാധ്യത മാനേജ് ചെയ്യൽ)
- The entrepreneur should undertake unavoidable and reasonable risks.
- An Entrepreneur should be ready to undertake risk with self confidence.
- Necessary precautions should be taken to minimise risk.
- Risks can be minimised by sharing them with others. Insurance is an effective way of transferring the risk.
- Reduce risk from product failure and warranty claims by implementing a quality assurance program.
Entrepreneurship Development Club (ED Club)
The Department of Industries and Commerce, Government of Kerala, in association with Education Department, set up Entrepreneurship Development Clubs in schools and colleges to:
- Provide entrepreneurial spirit among the students.
- Give an insight into the current economic and industrial development.
- Bring successful Entrepreneurs into the Institution and arrange interaction with the students.
- Get tips and ideas from successful Entrepreneurs.
- Know how to set up a business and to know entrepreneurial culture in the students.
An ED Club requires a minimum of 25 student members and a teacher coordinator. It is implemented by the District Industries Centre (DIC).
Functions of the ED Club
- Organise interactive sessions with successful entrepreneurs.
- Organise workshops/debates, industrial visits.
- Interaction with the promotional agencies.
- Organise Entrepreneurship Clinics and Entrepreneur awareness Programs.
- To introduce talented youths to industrial research organisations.
- To familiarise the youths to the latest developments through media.
District Industries Centre (DIC) (ജില്ലാ വ്യവസായ കേന്ദ്രം)
The District Industries Centre (DICs) was started by the central government in 1978 with the objective of providing a focal point for promoting small, tiny, cottage and village industries in a particular area and to make available to them all necessary services and facilities at one place. DIC is the institution at the district level that provides all services and support facilities to the entrepreneur such as preparation of feasibility reports, arrangements for credit facilities, machinery, provision of raw materials, allotment of sheds, etc.
Objectives of District Industries Centre
- Accelerate the overall efforts for industrialisation of the district.
- Development of rural industries and handicrafts.
- Attainment of economic equality in various regions of the district.
- Providing the benefit of the government schemes to entrepreneurs.
- To minimise the efforts to obtain various permissions, licenses, registrations, subsidies etc.
Functions of District Industries Centre
- Acts as the focal point of the industrialisation of the district.
- Prepares the industrial profile of the district.
- Collection of information about local sources of raw materials and their availability.
- Manpower assessment with respect to skilled and semi-skilled workers.
- Assessment of availability of infrastructure facilities like transport, warehouse etc.
- Organises entrepreneurship development training programs.
- Provides information about various government schemes, subsidies, grants and assistance.
- Implements government sponsored schemes for educated unemployed people.
- Helps entrepreneurs in obtaining licenses from Electricity Board, Water Authority, etc.
- Assist the entrepreneur to procure imported machinery and raw materials.
Entrepreneurship Support Scheme (ESS)
The ESS aims to merge and replace all the previous schemes titled the Entrepreneur Support Scheme to be operated in the State of Kerala from 01.04.2012. This Scheme is started by the Dept. of Commerce and Industries for giving a helping hand to the Micro, Small and Medium Enterprise (MSME) in the manufacturing sector.
Objectives of ESS
- Provide extensive support to micro, small and medium enterprises.
- Give one time support to entrepreneurs, with due regard to special categories.
Business Incubation (ബിസിനസ് ഇൻകുബേഷൻ)
Business incubation is a process where new startups are supported with resources and services to help them grow and succeed. Business incubators are organisations that provide these resources until the startup is strong enough to stand on its own.
In Kerala, Startup Village, launched by Kris Gopalakrishnan (co-founder of Infosys) in April 2012, is a famous example of a business incubator.
Services Provided by Business Incubators
- Preparation of Project report.
- Provide advisory services.
- Marketing strategies.
- Pricing techniques.
- Sharing secretarial services, office facilities, training facilities, transport facilities, etc.
How Business incubators help start-ups
- Technical assistance: Help with product development, technology, etc.
- Inexpensive workplace: Provide affordable office space.
- Marketing expertise: Guidance on marketing and sales.
- Shared operational costs: Reduce costs by sharing facilities.
- Seed funding: Help raise initial capital.
- Finance/accounting services: Assistance with financial management.
SWOT analysis
SWOT analysis is a planned method used to evaluate the Strength, Weakness, Opportunities and Threats of a person or an organisation. It helps to identify external or internal factors that are favourable or unfavourable to a person in achieving an objective.
- Strengths (ശക്തികൾ): The merits which help us to progress.
- Weaknesses (ദൗർബല്യങ്ങൾ): The qualities which prevent us from utilising our potentialities.
- Opportunities (അവസരങ്ങൾ): The facilitative factors for the attainment of our goals.
- Threats (വെല്ലുവിളികൾ): The external factors which prevent us from performing or progressing.
- Strength: Great location, unique recipes.
- Weakness: Small space, limited marketing budget.
- Opportunity: Growing demand for specialty coffee, local food delivery apps.
- Threat: New large coffee chain opening nearby, rising rent costs.
പ്രധാന പാഠഭാഗങ്ങൾ (മലയാളത്തിൽ):
- നവീകരണം (Innovation): അർത്ഥവും ഷുംപീറ്ററിന്റെ 6 തരങ്ങളും
- സംരംഭങ്ങളിലേക്ക് നയിക്കുന്ന നവീകരണങ്ങൾ (പെൻസിലിൻ, പേസ് മേക്കർ)
- പുതിയ ബിസിനസ് രൂപങ്ങൾ സൃഷ്ടിക്കുന്നതിൽ സാങ്കേതികവിദ്യയുടെയും സോഷ്യൽ മീഡിയയുടെയും പങ്ക്
- ബിസിനസിന് സോഷ്യൽ മീഡിയയുടെ ഗുണങ്ങൾ
- നെറ്റ്വർക്ക് മാർക്കറ്റിംഗ് (മൾട്ടി-ലെവൽ മാർക്കറ്റിംഗ്)
- നഷ്ടസാധ്യത: തരങ്ങൾ (ആന്തരികവും ബാഹ്യവും), മാനേജ്മെന്റ്
- എന്റർപ്രണർഷിപ്പ് ഡെവലപ്മെന്റ് ക്ലബ് (ED Club): ലക്ഷ്യങ്ങളും പ്രവർത്തനങ്ങളും
- ജില്ലാ വ്യവസായ കേന്ദ്രം (DIC): ലക്ഷ്യങ്ങളും ധർമ്മങ്ങളും
- എന്റർപ്രണർഷിപ്പ് സപ്പോർട്ട് സ്കീം (ESS): അർത്ഥവും ലക്ഷ്യങ്ങളും
- ബിസിനസ് ഇൻകുബേഷൻ: അർത്ഥം, സേവനങ്ങൾ, നേട്ടങ്ങൾ
- SWOT വിശകലനം
Important Exam Questions (Unit 4)
Very Short Answer Type (1 Mark)
- Business Incubator was launched by Kris Gopalakrishnan the co-founder of Infosys in April 2012 in Kerala. Name it. (Ans: Startup Village)
- The minimum number of members to form an ED club is ______. (Ans: 25)
- DIC stands for ______. (Ans: District Industrial Centre)
- The implementing agency of ED club is ______. (Ans: DIC)
- ______ is a mental process leading to the generation of new ideas or concepts. (Ans: Creativity)
- Name any two business incubators in India. (Ans: Startup Village, T - TBI)
- Expand KSUM. (Ans: Kerala Startup Mission)
- Whatsapp is an example of ______. (Ans: Social media)
Match the following:
| A | B |
|---|---|
| 1. Amway | 25 Members |
| 2. ESS | Network Marketing |
| 3. Business Incubation | Help to MSME |
| 4. ED Club | Startups |
| 5. Twitter | Social Media |
Answer: 1- Network marketing, 2- Help to MSME, 3- Startups, 4- 25 members, 5- Social media.
Short Answer Type (2/3/4 Marks)
- 'Risk is inherent to all business activities / No risk means no gain'. Point out any four feasible measures to manage risk.
- Discuss the role of social media in creating new business.
- Write any four objectives of ED club.
- Enumerate the functions of Entrepreneurship Development Club.
- Write a short note on: a. E. D. Club, b. Business Incubation, c. Facebook, d. Innovation.
- Mention the services provided by business incubators.
- Risk is akin in all business activities. Describe the different types of risks.
- Make a note on any four social medias that create new forms of business organisations.
- Explain the term Business Incubation.
- Identify the functions of DIC.
- What is SWOT analysis? Explain its components.
Long Answer Type (5/6/8 Marks)
- Explain Schumpeter's concept of innovation with examples.
- Describe the various types of risks faced by an entrepreneur and suggest measures to manage them.
- Write a detailed note on the role and functions of the District Industries Centre (DIC).
- Explain the concept of business incubation and discuss the various services provided by a business incubator.
- What is SWOT analysis? Explain how an entrepreneur can use it to evaluate a business idea.
| Acronym | Full Form |
|---|---|
| DIC | District Industries Centre |
| ED Club | Entrepreneurship Development Club |
| ESS | Entrepreneurship Support Scheme |
| KSUM | Kerala Startup Mission |
| MSME | Micro, Small and Medium Enterprise |
| SWOT | Strengths, Weaknesses, Opportunities, Threats |
| TIZ | Technology Innovation Zone |