MB – Midsems – Unit 1

Definition of Entrepreneur -
An entrepreneur is a visionary who initiates business ventures, embracing risks to pursue ideas. They
identify opportunities, invest capital, and make crucial decisions, shaping the direction of their
enterprise. Innovation is central to their approach, whether through creating new ventures or
reimagining existing ones. They lead by example, driving innovative actions and seeking like-minded
collaborators to achieve shared goals.

An entrepreneur is a person who combines various factors of production, processes raw material,
converts the raw material into a finished product and creates utility and sells the produce in the
market to earn profit.

“ENTREPRENEURS ARE MADE, NOT BORN”

Definition of Intrapreneur –
An intrapreneur is an employee who spearheads new business ventures or innovations within a
company, exhibiting leadership and accountability. They are deeply engaged with the organization,
driven by a passion for seizing opportunities. Some function independently, leveraging company
resources and expertise, often covering their own α expenses.
Δ Intrapreneurs are highly valued for their
perseverance, creativity, and dedication to their projects, fostering relationships with companies
built on trust, independence, and flexibility.

Common Traits of an Entrepreneur –

1. Risk takers: Entrepreneurs like Jeff Bezos of Amazon and Elon Musk take bold risks to disrupt
industries and pioneer new technologies. For example, Bezos invested heavily in Amazon's expansion
beyond books, risking the company's stability but ultimately transforming it into an e-commerce
giant. Similarly, Musk's ventures, such as SpaceX and Tesla, involve significant financial risks but have
the potential to revolutionize space exploration and sustainable transportation.

2. Flexible: Mark Zuckerberg, the founder of Facebook, demonstrated flexibility by continuously

evolving the platform to adapt to changing user preferences and technological advancements.
Facebook started as a social networking site for college students but expanded its features and user
base over time to remain relevant in an ever-changing digital landscape.

3. Knowledgeable: V.G. Siddhartha, the entrepreneur behind Cafe Coffee Day, exhibited deep
industry knowledge by recognizing the potential for a coffee culture in India and establishing a

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successful chain of cafes. Siddhartha understood consumer preferences and market dynamics,
leveraging his expertise to introduce a Western-style coffee experience to Indian consumers.

4. Independent: Entrepreneurs like Elon Musk demonstrate independence by pursuing their visions
despite skepticism or opposition from traditional industry players. Musk's determination to develop
sustainable energy solutions with Tesla and pursue space exploration with SpaceX showcases his
independence and willingness to challenge established norms.

5. Energetic: Jeff Bezos's relentless drive and energy propelled Amazon from a small online bookstore
to a global conglomerate. Bezos's boundless enthusiasm for innovation and customer satisfaction
fuelled Amazon's rapid growth and expansion into various industries, including cloud computing and
artificial intelligence.

6. Creative: Mark Zuckerberg's creative vision transformed Facebook from a simple social networking
platform into a multifaceted ecosystem that includes messaging services, virtual reality, and digital
advertising. Zuckerberg's ability to innovate and introduce new features keeps Facebook relevant and
engaging for its billions of users worldwide.

7. Dynamic leader: Elon Musk's dynamic leadership style inspires employees at SpaceX and Tesla to
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push the boundaries of technology and achieve ambitious goals. Musk's hands-on approach and
visionary leadership foster a culture of innovation and collaboration, driving his companies to new
heights of success.

8. Responsive to suggestions or criticisms: Entrepreneurs like V.G. Siddhartha actively seek feedback
from customers and stakeholders to improve their products and services. Siddhartha’s
responsiveness to customer preferences enabled Cafe Coffee Day to tailor its offerings and
experiences to meet the evolving needs of its patrons, contributing to its sustained growth and
success.

9. Initiators: Mark Zuckerberg initiated the idea for Facebook while studying at Harvard University,
recognizing the need for a digital platform to connect students on campus. Zuckerberg's proactive
approach to addressing this need led to the creation of one of the world's largest social media
platforms, with billions of active users worldwide.

10. Persistent: Elon Musk's perseverance in the face of adversity is evident in his relentless pursuit of
ambitious projects like SpaceX's reusable rockets and Tesla's electric vehicles. Despite numerous
setbacks and challenges, Musk remains committed to his long-term vision of advancing humanity's
presence in space and transitioning to sustainable energy solutions on Earth.

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Types of Entrepreneurs –
1. Innovating Entrepreneurs: Innovating entrepreneurs are trailblazers who introduce
groundbreaking ideas or technologies into the market. An example is Bhavish Aggarwal, co-founder
of Ola Cabs, who revolutionized the Indian transportation industry by pioneering the concept of ride-
hailing services through a mobile app.

2. Imitative Entrepreneurs: Imitative entrepreneurs replicate successful business models or concepts

in their own ventures, often with slight modifications or adaptations. An example is Deepinder Goyal,
founder of Zomato, who emulated the success of international food delivery platforms like Yelp and
adapted it to the Indian market, creating a leading restaurant discovery and food delivery platform.

3. Fabian Entrepreneurs: Fabian entrepreneurs are cautious and methodical, preferring gradual and
incremental growth over rapid expansion. An example is Kunal Bahl, co-founder of Snapdeal, who
initially focused on building a strong customer base and refining operations before scaling up the e-
commerce platform, demonstrating a Fabian approach to entrepreneurship.

4. Drone Entrepreneurs: These are entrepreneurs who do not like a change. They are
considered as 'old school'. They want to do business in their own traditional or orthodox
methods of production and systems. Such people α Δ attach pride and tradition to even outdated
methods of doing business. An example is Vijay Shekhar Sharma, founder of Paytm, who swiftly
pivoted from a mobile recharge platform to a full-fledged digital payments and financial services
provider, seizing the opportunity presented by India's growing digital economy.

Objectives of Entrepreneurs -

1. Profit: The primary objective of entrepreneurship is to generate profits, as exemplified by Mukesh

Ambani's Reliance Industries, a conglomerate with diverse businesses focusing on profitability and
growth.

2. Expansion: Entrepreneurs aim to expand their ventures, like Flipkart, founded by Sachin Bansal
and Binny Bansal, which grew from an online bookstore to a leading e-commerce platform.

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3. Employment generation: Creating job opportunities is vital, demonstrated by Narayana Murthy's
Infosys, which has employed thousands in the IT sector, contributing to India's workforce.

4. Wealth maximization: Entrepreneurs strive to maximize wealth, as seen with Azim Premji's Wipro,
a global IT services company that has created substantial wealth for its stakeholders.

5. Contribution in economy: Entrepreneurial ventures like Biocon, led by Kiran Mazumdar-Shaw,

contribute significantly to India's economy through innovation and export of pharmaceutical
products.

6. Societal outreach: Tata Group, under leaders like Ratan Tata, focuses on societal outreach through
initiatives in education, healthcare, and rural development, aligning entrepreneurship with social
welfare.

7. Meeting demand of customers: By addressing consumer needs, businesses like Amul, founded by
Verghese Kurien, have become synonymous with quality products, meeting customer demands
effectively.

8. Introduction of innovative products: Startupsαlike

ΔByju's, founded by Byju Raveendran, introduce
innovative learning solutions, reshaping education and meeting the evolving needs of students.

Do’s of Entrepreneurship –
1. Network and building professional relationships: Entrepreneurs should cultivate a strong network
for support and opportunities. For instance, MRF's success lies in its robust dealer network and
partnerships, enabling market penetration and growth. In contrast, the failure of MBA Chaiwala, a
startup aiming to disrupt the tea industry, can be attributed partly to a lack of effective networking
and collaboration.

2. Taking risks (calculative risk): Entrepreneurs must take calculated risks for growth. Starbucks'
introduction of paper cups to reduce environmental impact exemplifies strategic risk-taking aligned
with consumer trends, enhancing brand reputation and sustainability efforts.

3. Recognizing and learning from your mistakes: Entrepreneurs should acknowledge and learn from
failures. The tragic suicide of VG Siddhartha, founder of Cafe Coffee Day (CCD), underscores the

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importance of recognizing mental health issues and learning from business setbacks to prevent
similar outcomes in the future.

4. Being open to feedback: Entrepreneurs benefit from being receptive to feedback for continuous
improvement. Starbucks' responsiveness to customer feedback regarding environmental concerns
led to the introduction of paper cups, demonstrating a willingness to adapt and address consumer
preferences for a positive impact.

Don’ts of Entrepreneurship -

1. Not being impatient: Rushing can lead to hasty decisions. An example is the downfall of Kingfisher
Airlines due to Vijay Mallya's impatience in expanding beyond sustainable limits.

α Δ opportunities. For instance, Nokia's delay in

2. Don't overanalyze: Overthinking can lead to missed
adapting to the smartphone market led to its decline despite prior success.

3. Don't forget your roots: Losing sight of core values can alienate customers. The failure of Maggi
noodles in India, due to quality concerns, shows the importance of maintaining trust and
authenticity.

4. Company is a separate entity from owner: It's crucial to separate personal and business finances.
An example is the continuity of Tata Group's operations despite changes in leadership, highlighting
the resilience of the company beyond individual ownership.

Creativity and its significance in Entrepreneurship –

Creativity is the ability to generate original ideas, solutions, or concepts that are both novel and
valuable. It involves thinking outside the box, making unexpected connections, and challenging
conventional wisdom. In entrepreneurship, creativity is paramount as it drives innovation,

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differentiation, and problem-solving. Entrepreneurs who harness their creativity can identify new
business opportunities, develop unique products or services, and find creative ways to overcome
challenges and setbacks. Creative thinking enables entrepreneurs to stay ahead in dynamic markets,
adapt to changing trends, and create memorable brand experiences that resonate with customers.
Ultimately, creativity fuels entrepreneurial success by fostering a culture of innovation, driving
growth, and enabling businesses to thrive in competitive environments.

Types of Innovations –
1. Product innovation: This involves creating new or improved products. Fogg perfumes
revolutionized the fragrance industry with long-lasting scents, while Oreo's innovative branding
strategies tailored its products to Indian tastes, boosting sales and market presence.

2. Process innovation: Process innovation improves how products or services are produced or
delivered. Online ticket booking platforms like BookMyShow streamlined the ticketing process,
enhancing convenience and efficiency for consumers, while reducing operational costs for event
organizers. αΔ

3. Position innovation: Position innovation involves repositioning a product in the market. The Tata
Nano targeted a different segment than the Maruti 800, offering affordability and convenience to a
wider audience, thus challenging traditional perceptions of the automotive market.

4. Paradigm innovation: This entails introducing entirely new concepts or technologies that disrupt
existing industries or markets. The introduction of the internet and smartphones revolutionized
communication, commerce, and entertainment, fundamentally changing how people interact and
conduct business on a global scale.

Sources of New Ideas –

1. Consumers: Feedback and preferences from consumers drive new ideas. For instance, Patanjali's
success in the Indian market stemmed from its ability to cater to the rising demand for natural and
Ayurvedic products among consumers.

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2. Distribution channels: Insights from distribution channels can inspire new ideas. Flipkart's
transition from an online bookstore to a comprehensive e-commerce platform was influenced by
data and trends observed through its distribution channels.

3. Government: Policies and initiatives by the government can spark innovation. The Indian
government's "Make in India" campaign promotes domestic manufacturing and entrepreneurship,
encouraging new ideas and ventures across various sectors.

4. R&D: Research and development efforts lead to innovative breakthroughs. ISRO's development of
cost-effective satellite launch vehicles, such as the PSLV, showcases India's R&D capabilities and
contributions to space exploration.

5. Existing products and services: Improvements or adaptations of existing offerings can generate
new ideas. Paytm's evolution from a mobile recharge platform to a digital payments and financial
services provider demonstrates innovation through the expansion of its existing product offerings to
meet changing consumer needs.

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Market and its Types -

The market refers to the arrangement where buyers and sellers interact to exchange goods or
services, facilitated by mechanisms such as price determination, competition, and demand-supply
dynamics. In technical terms, it can be described as the locus of transactions where the forces of
supply and demand converge to establish equilibrium prices and quantities traded within an
economic system.

1. Resource market: In this market, resources like labor, land, and capital are bought and sold.
Examples include labor markets where companies hire employees and real estate markets for buying
and selling property.

2. Consumer market: This market involves the direct exchange of goods and services between
businesses and consumers. Examples include retail stores, online shopping platforms, and service
providers catering directly to end-users.

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3. Intermediary market: Intermediaries facilitate transactions between buyers and sellers. Examples
include wholesalers, distributors, and brokers who help connect producers with retailers or
consumers, streamlining the distribution process.

4. Manufacturer markets: These markets involve businesses that produce goods or components for
further manufacturing or assembly. Examples include suppliers of raw materials, parts, and
equipment used in various industries like automotive, electronics, and construction.

5. Government markets: This refers to the procurement of goods and services by government
entities at local, state, or national levels. Examples include government contracts for infrastructure
projects, defense equipment, and public services like healthcare and education.

Classification of Markets –
1. Perfect competition: In this market structure, numerous buyers and sellers trade identical
products, with no single entity having control over prices. Examples include agricultural markets
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where many farmers sell homogeneous products like wheat or rice.

2. Monopoly: A monopoly exists when a single seller dominates the market, controlling the supply
and prices of goods or services. An example is Indian Railways, which holds a monopoly on long-
distance railway transportation in India.

3. Monopolistic competition: This market structure features many sellers offering differentiated
products, allowing them some control over prices. Examples include fast-food chains like McDonald's
and Burger King, which offer similar but slightly differentiated products in the fast-food industry.

4. Oligopoly: In an oligopoly, a few large firms dominate the market, leading to intense competition
and interdependence among them. Examples include the smartphone industry, where companies
like Apple, Samsung, and Huawei control a significant portion of market share, influencing pricing
and product innovation.

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Company and its Types -

A company is a legal entity created by law to conduct business activities separate from its owners or
shareholders. It is considered an artificial person because, like a natural person, it can enter into
contracts, own property, sue, and be sued in its own name. This legal concept of corporate
personhood grants the company rights and liabilities distinct from those of its owners, providing a
framework for conducting business activities, raising capital, and managing assets while limiting the
personal liability of its shareholders.

Public companies – 7 to Infinite members

Private companies – 2 – 200 members

1. Limited Liability Company (LLC): An LLC is a business structure that provides limited liability
protection to its owners, meaning their personal assets are typically not at risk for the company's
debts or obligations. Examples include tech startups like Google and Airbnb.

2. Unlimited Liability Company: In this type of company, the owners are personally liable for all the
company's debts and obligations. Sole proprietorships and partnerships are common examples of
unlimited liability companies.

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3. Government Company: A government company is owned and operated by the government, either
at the national or state level, and is typically established to provide essential services or manage
public assets. Examples include Air India and Indian Railways in India.

4. Public Company: A public company is owned by shareholders and trades its shares on a public
stock exchange. Examples include Tata Consultancy Services (TCS) and Reliance Industries Limited
(RIL) listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.

5. Private Company: A private company is owned by a small group of individuals or a single entity
and does not offer its shares for sale to the public. Examples include Infosys and Wipro, which are
privately held by founders and select investors.

In the context of government companies, the stakeholder percentage of 49% or 51% holds significant
implications regarding ownership and control. When the government holds a stake of 51% or more in
a company, it typically has a controlling interest, allowing it to exercise significant influence over the

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company's operations, decision-making processes, and strategic direction. This level of ownership
enables the government to appoint key executives, influence board decisions, and maintain oversight
to ensure alignment with national interests and policy objectives.

Conversely, when the government holds a stake of 49% or less, it does not have a controlling interest
in the company. While it may still hold a significant minority stake, control may lie with private
investors or entities. In such cases, the government's influence over the company's affairs may be
limited, although it may still retain certain veto powers or regulatory authority depending on the
specific legal framework governing the company.

In the context of Public Sector Undertakings (PSUs) in India, particularly those categorized as
Navratna and Maharatna companies, the stakeholder percentage is often a key determinant of their
classification and associated privileges. Maharatna companies, for example, are typically required to
have a government stake of 51% or more, along with other financial criteria, to qualify for enhanced
autonomy and operational flexibility granted by the government. Conversely, Navratna companies
may have a lower government stake but still enjoy certain operational freedoms and financial
delegations aimed at promoting efficiency and competitiveness. Therefore, the stakeholder
percentage plays a crucial role in defining the nature of government control and the corporate
governance framework of government companies, including PSUs.

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Definition of Partnership -
Partnership in entrepreneurship is a business structure where two or more individuals come together
to share ownership, responsibilities, and profits of a venture. Partnerships offer advantages such as
shared decision-making, diverse skill sets, and shared financial resources, fostering collaboration and
synergy. However, partnerships also come with risks, including shared liabilities and potential
conflicts among partners. Effective communication, mutual trust, and a well-defined partnership
agreement are essential for the success of a partnership, enabling partners to leverage their
collective strengths while mitigating risks and navigating challenges in the entrepreneurial journey.

Characteristics of Partnership –

1. Persons (number involved): A partnership typically involves two or more individuals, known as
partners, who jointly own and manage the business. This arrangement allows for the pooling of

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resources, skills, and expertise to achieve common business goals, as governed by the Partnership
Act.

2. Profit and loss sharing as per deed or document: Partnerships allocate profits and losses among
partners according to the terms outlined in the partnership deed or agreement. This ensures
transparency and fairness in distributing financial outcomes based on each partner's contributions
and agreed-upon profit-sharing ratios.

3. Existence of lawful businesses: Partnerships engage in lawful business activities, adhering to

relevant legal regulations and statutes governing their operations. This ensures compliance with
business laws and ethical standards, mitigating legal risks and promoting the sustainability and
legitimacy of the partnership enterprise.

4. Principle of faith: Partnerships operate on the principle of utmost good faith, requiring partners to
act honestly, transparently, and in the best interests of the partnership. This fosters trust, integrity,
and mutual respect among partners, enhancing collaboration and fostering a conducive business
environment based on trust and reliability.

5. Transfer of shares: Unlike in corporations, where shares can be freely bought and sold,
α Δ interests without the unanimous consent of
partnerships typically restrict the transfer of ownership
all partners. This limitation ensures stability and continuity in the partnership structure, preventing
unwanted changes in ownership that may disrupt business operations.

6. Principle-agent relationship: Partnerships involve a principle-agent relationship, where each

partner acts as both a principal, representing their own interests, and an agent, acting on behalf of
the partnership and other partners. This dual role requires partners to exercise fiduciary duties,
loyalty, and due care in managing partnership affairs, aligning their actions with the collective
interests of the partnership entity.

End of Partnership –

1. Insolvency: If a partner becomes insolvent, unable to pay debts, it can lead to the dissolution of
the partnership, as it may affect the financial stability and viability of the business, potentially
exposing other partners to liabilities beyond their capacity.

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2. Death of partners: The death of a partner typically results in the dissolution of the partnership
unless otherwise stipulated in the partnership agreement. The surviving partners may choose to
continue the business, but legal formalities may be required to reconstitute the partnership.

3. To change ratio of profit, loss: If partners wish to alter the distribution of profits and losses, they
must mutually agree and amend the partnership agreement accordingly. This change may reflect
shifts in contributions, responsibilities, or business dynamics, ensuring fairness and equity among
partners.

4. To add another partner: Introducing a new partner requires unanimous consent from existing
partners and may involve renegotiating terms of the partnership agreement. This decision impacts
ownership, profit-sharing, and decision-making, necessitating careful consideration of the new
partner's compatibility and contributions.

5. Completion of venture: When the partnership achieves its objectives or the agreed-upon venture
comes to an end, partners may choose to dissolve the partnership. This could occur due to the
fulfillment of goals, expiration of a fixed-term agreement, or mutual agreement to discontinue
operations, requiring a formal dissolution process.

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