EntrepreneurialOpportunity

TEXTBOOK QUESTIONS SOLVED

A.VERY SHORT ANSWER TYPE QUESTIONS
Q1. What is a business opportunity?
Ans. It refers to an attractive and accessable economic idea which could be implemented to
create a business, earn maximum profit, and leads to further growth.

Q2. What factors are involved in the process of sensing an entrepreneurial opportunity?
Ans.

Q3. Define the term environment scanning.

Ans. Environment scanning refers to careful monitoring of an organization’s internal and
external environments for detecting early signs of opportunities and threats that may influence
its current and future plans.

Q4. List the environmental factors affecting external environment.

Ans. Climate, technology, social, economy, ecological, political, legal, competition, media and
fashion.
Q5. What is the meaning of trend spotting?
Ans. It is an immediate identification of new trends like fashions, activities, designs,
assumptions, etc.

Q6. What is required to convert an idea into opportunity?

Ans. Sensing entrepreneurial opportunities is only a process of converting an idea into an
opportunity and then into an enterprise.

Q7. What is Idea Generation?

Ans. The process of creating, developing, and communicating ideas which are in an abstract,
concrete, or visual form. It includes the process of constructing through the idea, innovating
the concept, developing the process, and bringing the concept to reality.

B. SHORT ANSWER TYPE QUESTIONS-I

Q1. What is the purpose to scan the environment?
Ans. The main purpose of environmental scanning is to know the rapid changes occurring in
the environment by which organizations gather information on changing conditions and
incorporate those observations into a process where necessary changes can be made.

Q2. What are the factors involved in sensing opportunities?

Ans. The most important factors involved in the process are:
(i)Ability to perceive and preserve basic ideas which could be used commercially,
(ii)Ability to harness different sources of information,
(iii)Vision and creativity.

Q3. Draw the enterprise process diagram.

Ans.

Q4. What is PESTEL model? Explain it.

Ans. “PESTEL model involves the collection and portrayal of information about external
factors which have, or may have, an impact on business.” It is an analysis of the political,
economic, social and technological factors in the external environment of an organization,
which can affect its activities and performance.
C. SHORT ANSWER TYPE QUESTIONS-II
Q1. Enlist the various sources which lead to the emergence of basic ideas.
Or
Explain any three sources which lead to the emergence of basic ideas.[CBSE Sample Paper
2016]
Ans. The various sources which lead to the emergence of basic ideas.
(i) Problems: When a problem exists, an idea leads to a solution to resolve that problem,
emerges as a business opportunity.
(ii)Change: A change in social, legal, technological aspects etc. leads to new opportunities to
start a business,
(iii) Inventions: New products or services leads to new business opportunities.
(iv)Competition: Competition often results in emergence of new and better ideas that result in
new business opportunities.
(v)Innovation: Creating new things of value as well as new and creative processes that add
value to the existing products or services. For example, computers to tablets.

Q2. Write the meaning of product identification in terms of business opportunity.

Ans. So the first step is to obtain a concept of the product or service suggested bone idea. We
should also see whether this product is already available in the market or not. If it is, then we
should identify the reason for introducing the same product or service in the market. For
example, innovating a new pen drive especially for teachers which will have a built in antivirus
and which can be worn like a watch. So, it minimises the problem of losing the pen drive.

Q3. What are the factors an entrepreneur has to keep in mind while assessing the market?
Or
Give the details of market assessment.
Ans. (i) Demand: The demand assessment will be based on the size of market being targeted
and also involve a study of the groups of consumers, their preferences, tastes, etc.
(ii)Supply and nature of competition: It is a study supply position what is meant is the
complete picture of quantities of the product made available in the market by all the existing
players including future supplies.
(iii)Cost and price of product: To determine what will be the actual cost price and preferable
selling price. This will influence the delivery mechanism of the identified product or service.
(iv)Project innovation and change:Market assessment will require a study of prevailing
innovations and changes being carried out by existing entrepreneurs using technological
advancements in the field.

Q4. What are the various ways in which an entrepreneur spot trends?
Ans. (i) Read trends:
(a)Entrepreneurs regularly read the leading publications and websites affecting their business.
(b)Publications include industry publications, trade association sites, major newspapers, key
business magazines, thought leaders and influential bloggers.
(c)They scan information from a wide variety of sources – from international news on down to
niche bloggers focused on specific aspects of their industry. Obviously, there is a sunami of
information available. They use tech-tools like RSS feeds, e-mail newsletters or websites and
forums to keep on top out of all and get the information they want. They understand quickly
which sources are valuable and which should be avoided.
(ii)Talk trends:
(a)Talking to people is an equally important trend-spotting tactic. They get involved in specific
industry’s trade association and attending events both online and offline.
(b)From social networking tools like social network websites and forums.
(c )They even start or join groups on the networks and see what people are buzzing about the
latest trends to customers regarding what customers thinking, buying, doing, etc. what
customers are saying about the business, but what they’re saying about the competitor’s
business.
(iii)Watch trends:
(a)Watching and observing the customers in the market place.
(b)If the customers are teenagers, in the local mall.
(c)If they are business class people, it might be restaurant or office park restaurant center.
(d)The entrepreneur spends some time simply watching and observing, what people are
eating, doing, wearing, using.
(iv)Think trends:
(a)As an entrepreneur begins gathering all these information regularly, they will start to develop
a “trend-spotter mind.”
(b)They collect from what they read, heard and observed, and they start to making
connections and observations that will lead to business-boosting insights.

D.LONG ANSWER TYPE QUESTIONS

Q1. “An opportunity may be derived from the needs and problems of the society.” Comment.
Ans. “An opportunity may be derived from the needs and problems of the society”. Yes, it is a
correct statement.
An entrepreneur is one who perceive opportunities, synthesize the available information and
analyse emerging patterns that escape the attention of other people. It is the first step of an
entrepreneur to grab the opportunity and setup a business enterprise to offer the solution of
various problems and needs that exist.
This involves awareness about the surrounding environment, determining and evaluating the
needs of people, problems faced by the people in their day-to-day life related with any type of
goods or services, etc.
A rational entrepreneur with a vision senses the opportunities present in the environment and
finds creative solution to the problems coming in between him and the success through
analysis and observation.
Entrepreneurs see and craft opportunities that other people miss, even though the opportunity
manifests themselves. He uses his sharpened skills of observation, analysis and synthesis to
identify an opening.
For example,
(i)Detergent Nirma captured the market by introducing a low priced detergent. Here the
entrepreneur sensed the need of low priced product in the society.
(ii)With the increase in number of murders and other crimes taking place in big cities
entrepreneurs can tap the niche of households for installing security systems like alarms,
CCTVs, cameras and other safety gadgets, etc.

Q2, “Sensitivity to environmental factors is essential for an entrepreneur.” In light of above

statement explain the importance of environment scanning.
Ans. Importance of Environment: Sensitivity to environmental factors is crucial for an
entrepreneur. If a company is able to adapt to its environment, it would succeed in the long
run. For example, Sony is failing to understand the changing trends in mobile phones and
therefore losing its market share. The benefits of understanding the relevant environment of
business are:
(i)Identification of opportunities to get first mover advantage: An entrepreneur must be keen
and alert and must be aware of all the changes in the external environment, so that he can
identify opportunities and find strategies to capitalise on the opportunities at the earliest.
For example, Volvo, the Swedish brand, has 74% share in the luxury bus segment as it had
entered India earlier.
(ii)Formulation of strategies and policies: An entrepreneur must be capable of formulation of
strategies and policies which is really going to help in identifying threats and opportunities in
the market.
(iii)Tapping useful resources: If an entrepreneur has complete and a thorough knowledge of
the external environment, then easily he can tap raw materials, technology and even financial
resources from the market at economical prices, at the right time.
(iv)Better performance: Proper understanding of the various elements of the external
environment is necessary to take timely action to deal with threats and avail opportunities for
the purpose of improvement in the performance of the firm.
(v)Sensitisation of entrepreneurs to cope up with rapid changes: A keen watch on the trends
in the environment would help sensitise the entrepreneur to changing technology, competition,
government policies and changing needs and taste of the customers. For example, trends in
clothing, outdoor celebration of family events. Showing more interest in fast food, changing
fitness trend.
(vi)Image building: If a company is sensitive to the external environment, it will come out with
new products and services to meet the requirements of the customers. This would build the
image or reputation of the firm in the eyes of the general public.
For example, call-radio taxis with additional features like GPS systems, online booking, etc.

Q3. Entrepreneurship does not emerge and grow spontaneously. Rather it is dependent upon
several various environmental factors. Explain them.
Ans. Yes,itiscorrecttosaythat“Entrepreneurship does not emerge and grow spontaneously.” It
is dependent upon several factors , like economic, social, political, legal and other factors.
The basic PESTEL analysis includes four factors:
Political factors are basically to what degree the government intervenes in
the economy. Various political factors include areas are:
(i)Taxation Policy, Trade Regulations, Tariffs policy, Policy regarding export and import.
(ii) Government Affairs: Government in power, attitude of government towards different groups
of the societies, Government Stability, Policy changes implemented by changed government,
Labour laws, Unemployment policy.
(iii)Goods and services which the government wants to produce and how much quantity to be
produced.
(iv)It also influences the health, education, and infrastructure of a nation.
Economic factors:
(i)Gross domestic product, Income level at national level and per capita income, economic
growth.
(ii)Profit earning rate, interest rate, exchange rate, inflation rate, fiscal and monetary policy of
the government. For example, interest rates will affect the cost of debt and, potentially, the
cost of equity, e.g. when interest rates increase the cost of debt increases, which increases the
firms cost of capital to what extent a business grows and expands.
(iii)Exchange rates affect the costs of exporting goods and the supply and price of imported
goods in an economy.
(iv)It includes the close study of important variables like supply and demand. Details of
consumer trends, economic preference, costing, discounting, etc. are all economic decisions.
(v)Economic details will also help the entrepreneur in determining the size of the project and
the reasons of finance and have major impacts on how businesses operate and make
decisions.
Social factors:
(i) Social factors include the cultural aspects and include health conscious¬ness, population
growth rate, age distribution, career attitudes and emphasis on safety.
(ii)Trends in social factors affect the demand for a company’s products and how that
company operates.
(iii)For example, an aging population may imply a smaller and less-willing workforce (thus
increasing the cost of labour).
(iv)Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).
Technological factors:
(i)An entrepreneur must be aware of importance of technological development for the firm and
how it is to be resolved.
(ii)He should show complete knowledge of technology required to produce the product?
(iii)Availability of training at a local area or can outsource it.
(iv)What would be the position of supply of plant and machinery for such a technology?
(v)It also includes technological aspects such as resources and development activity,
automation, technology incentives and the rate of technological change.
(vi)Influence various decision for better and latest technology, costs, quality, and lead to
innovation.
Environmental factors:
(i)It includes ecological and environmental aspects such as weather, climate, and climate
change, which may especially affect industries such as tourism, farming, and insurance.
(ii)Growing awareness of the potential impacts of climate change is affecting how companies
operate and the products they offer, both creating new markets and diminishing or destroying
existing ones.
Legal factors:
(i)It includes discrimination law, consumer law, antitrust law, employment law, and health and
safety law.
(ii)These factors can affect how a company operates, its costs, and the demand for its
products.

Q4. Explain creative process.

Ans. Creativity means bring something new into existence. Creativity is the ability. Creativity is
a process leads to evolution of idea. Those ideas are further enhanced and developed by the
entrepreneurs. It consists of five stages:

Idea Germination:
(i)It is the first stage or seeding stage of new idea.
(ii)In this stage an entrepreneur recognises that an opportunity exists in an environment.
(iii)The first stage takes a shape only when an entrepreneur shows an interest and curiosity
according to which opportunity is explored and exploited to its best potential.
(iv)Creative idea germinates on the basis of needs and problems of people and according to
the area of study.
For example, Mansukhbhai Prajapati, who thought of a non-stick pan made from clay and a
clay refrigerator that works without electricity. He wanted to explore the idea of making the
refrigerator which will be eco-friendly. He conceived this idea in 2001, but the final product
could take shape only in 2004.
Preparation:
(i)More interest and curiosity, the need is adjudged by the entrepreneur and he starts looking
for the answer to implement the idea.
(ii)Again market research is to be conducted, if the idea is to launch a new product or service.
(iii)Market research helps an entrepreneur to foresee the future of the product. For example, in
the aforesaid story of Mansukhbhai since his wife could not afford to buy a non-stick TAYA
(pan).Mansukhbhai’s brain stormed immediately that, not only his wife but other housewives
are also in need of a nonstick-TAVA. And he decided to go ahead.
Incubation:
(i)This is the subconscious assimilation of information.
(ii)It is also considered as the transition period (Change of one stage to another stage).
(iii)The entrepreneur starts thinking about the idea, imaginating and thinking about
implementation in his sub-conscious mind.
For example, Manshukhbhai went through the process of studying the pros and cons of
manufacturing the product before he had launched it.
Illumination: In this period of illumination the idea re-surfaces in realistic way and entrepreneur
comes out with viable plan to give practical shape by collecting raw-material, arranging funds,
policy-making for the implementation of idea.
In this case of Mansukhbhai it was important to have enough of funds in hand to buy and keep
in store enough raw-material.
Verification: Also called the validation or testing stage. This is where the idea is verified to
prove that it has value. This is the most difficult phase of creativity as obstacles begin to
appear.
This is the developing stage in which knowledge is developed into application.

Q5. What is Innovation and explain the elements of innovation process?

Ans. Innovation: It is the process of entrepreneurship which involves the translation of a useful
idea into an application which has commercial value. It takes persistent effort on work out
analytically on the details of the enterprise or service, to develop marketing strategies, to
organize finances and strategize operations.
(i)Analytical Planning: Identifying the important features, its design and the resources required
for the selected product or services.
(ii)Resource Organization: Arranging and obtaining the required resources, materials,
technology, human or capital resources.
(iii)Implementation: Utilization of the resources in order to accomplish the plans and delivering
results and objectives. Or converting the input into output.
(iv)Commercial Application: The provision of value to customers, reward employees, and
satisfy the stake holders.
E.VERY LONG ANSWER TYPE QUESTIONS
Q1. Elaborate the factors involved in sensing opportunities.
Ans. To sense an entrepreneurial opportunity, an entrepreneur employs his sharpened skills of
observation, analysis and synthesis to identify an opening.
The most important factors involved in the process are:
(i)Ability to perceive and preserve basic ideas which could be used commercially.
(ii)Ability to harness different sources of information.
(iii)Vision and creativity.
(i)Ability to perceive and preserve basic ideas: Basic ideas emerge from various sources.
These ideas can be categorized as follows:

(ii) Ability to harness different sources of knowledge and information: The information
gathered from different sources has to be analyzed and utilized for identification of the right
opportunity. Various sources like magazines, journals, books, seminars, trade shows, family
members, customers, friends, etc. help in getting information that results in evolution of basic
ideas. Bring together various sources of information and knowledge, and analyze it to the best
possible extent. The analysis helps in the identification of the right opportunity to start a new
business.
(iii) Vision and Creativity: Creativity is the most striking behavioural characteristics of an
entrepreneur. He should be able to develop an idea through a process of creativity and build
something of value to solve a generated problem. Once the solution is identified their vision to
convert the solution into business opportunity help them to move forward, overcoming all the
obstacles. They constantly:
(a)overcome the adversity (b) are able to exercise control over the business (c) are capable of
making significant difference.
Vision and Creativity: e.g. Code Division Multiple Access (CDMA) technology to common man.
Introducing WhatsApp free messaging, text, pictures.

Q2. Examine the sources from where business ideas emerge.

Ans. Basic ideas emerge from various sources. These ideas can be categorized as follows:
Q3. Discuss the steps involved in the investigation of ideas.
Or
Explain the steps involved in idea and opportunity assessment.
Ans. (i) Product Identification:
(a)To select a product or services which is in demand and an entrepreneur can sell easily.
(b)To check with the product whether it is available in the market or not.
(c)If it is, then he should identify the reason for introducing the same product or service in the
market.
(d) Take further step to further improvisation of the product.
For example, entrepreneur selected pen drive but it is already available in the market but he
improvised V the same by innovating a new pen drive especially for teachers which will have a
built in anti-virus and which can be worn like a watch so it minimises the problem of losing the
pen drive.
(ii)Application and Use:
(a)Ideas should be examined for their real life use and application.
(b)If it already exists in the market then finding out its present use, improvisation of the
product, modifying it for better use.
(c)For example, the new pen drive especially for teachers which will have a built in antivirus
and which can be worn like a watch. This example of pen drive and watch is an already
existing product produced by many companies but according to new trend an entrepreneur
has innovated a new type of pen drive especially for teachers which will have a inbuilt antivirus
which shows improvisation and modifying a product for a better use.
(iii) Level of Operation:
(a)This is a crucial test for product/ service identification.
(b)Depending on the nature of the enterprise, the production is undertaken, the enterprise can
be cottage industry, small scale, medium scale or large scale industry.
(c)Quantity of production is considered.
(d)Requirement of labour, technical experts, skilled labour, etc. all are to be considered.
(iv) Cost:
(а)An entrepreneur first finds out the cost price of the product and then ultimately decides the
sale price.
(b)Every entrepreneur must answer the following questions before deciding the selling price of
the product:
•What is the per unit cost of the product at particular level of operation?
•Whether this cost is comparable with that of other competitive products?
For example, a large manufacturing unit would be expected to have a lower cost per unit of
output than a smaller unit, all other factors being equal, while a company with many facilities
should have a cost advantage over a competitor with fewer.
(v) Competition:
(а)The extent, intensity and trends in competition are to be analysed. This has direct impact on
production capacity and supply.
(b)Any product or service will face market competition at some stage.
(c) An entrepreneur should be assessed through a study of the trends in demand and supply.
(vi) Technical Complexity: What type of technology is required to produce the product?
Whether training and application of such technology will be locally available or will it have to
be supported from other places? What would be the position of supply of plant and machinery
for such a technology? These are important issues that have to be resolved.
(vii) Annual turnover and profit margin:
(a)An entrepreneur has to examine the basis of expected annual turnover. It refers the total
sales of the year.
(b)This will also indicate the market share or profit margin of the product or service.
(c)Once the entrepreneur has assessed the opportunities on these basis he should go ahead
and assess the market also.

Q4. What do you understand by Trend Spotting? What are the ways by which entrepreneurs
can spot trends?
Ans. Trend spotting refers to identification of new trends which helps an entrepreneur to
understand the market and produce goods or provide services in sync with the market trends.
(i)Read trends:
(a)Entrepreneurs regularly read the leading publications and websites affecting their business.
(b)Publications include industry publications, trade association sites, major newspapers, key
business magazines, thought leaders and influential bloggers.
(c)They scan information from a wide variety of sources – from international news on down to
niche bloggers focused on specific aspects of their industry. Obviously, there’s a tsunami of
information available. They use tech-tools like RSS feeds, e-mail, newsletters or websites and
forums to keep on top out of all and get the information they want. They understand quickly
which sources are valuable and which should be avoided.
(ii) Talk trends:
(a)Talking to people is an equally important trend-spotting tactic. They get involved in specific
industry’s trade association and attending events both online and offline.
(b)From social networking tools like social network websites and forums.
(c)They even start or join groups on the networks and see what people are buzzing about the
latest trends. To customers regarding what customers thinking, buying, doing, etc. What
customers are saying about the business, but what they’re saying about the competitor’s
business.
(iii)Watch trends:
(а)Watching and observing the customers in the market place.
(b)If the customers are teenagers, in the local mall.
(c)If they are business class people, it might be restaurant or office park restaurant center.
(d)The entrepreneur spends some time simply watching and observing what people are eating,
doing, wearing, using.
(iv)Think trends:
(а)As an entrepreneur begins gathering all these information regularly, they will start to
develop a “trend-spotter mind.”
(b)They collect from what they read, heard and observed, and they start to making
connections and observations that will lead to business-boosting insights.

Q5. Explain in detail Idea Fields.

Ans. Idea fields are well defined frames of reference that guide the generation of ideas.
Various idea fields are examined below: (i) Natural resources: The idea for a product or service
can be derived from the available natural resources like
(a)Agricultural
(b)Breeding and Caring of animals (animal husbandry)
(c)Cultivation or Horticulture
(d)Human
(e)Mineral or Soil
(f) Solar
(g)Tidal
(h)Wind
Entirely new products or service related ideas can be generated from these resources or ideas
to supplement these natural resources can be derived.
(ii)Current products or services: It requires careful analysis of the existing products or services
and put the expertise and imagination to improve the current products or services. The
demand for a product or service or the need to tackle the competition will also help in
origination of a new idea. As the value addition to the existing product or service is as good as
inventing a new product, the existing products or services also act as a good source of new
ideas.
(iii)Demand or Market: Conducting a research in the market to procure the information relation
to the gap between demand and supply, changing consumer preferences, trends, technology
helps in the generation of new ideas for products or services. The data gathered is analyzed
using business intelligence and helps as a good sources of new ideas.
In addition to this, the demand prevailing in the market will also help in generation of new
ideas.
The analysis of the products and services offered by the competitors will also act as a
valuable source for generating a new idea.
(iv)Trade: As the globalization has expanded the scope of business to the entire world, a
careful analyis of the prevailing trades and methods will act as a good source of idea
generation. Earlier the trading was limited to local distribution network or grocery stores.
However the trade has expanded from the local market to import and export of goods. The
most recent revolution in the trade is e-commerce and has broadened the scope of trading
globally and is not time bound. Thus it became a valuable, most effective, less risk prone area
for originating new ideas.
(v)Service sector: As the society is becoming more educated and as there is tremendous
growth in information and technology, it opened up new challenges and opportunities and
became a great source for generation of new ideas in various entrepreneurial sectors. Few of
the sources are in the
(a)Service of home appliances
(b)Automobile servicing
(c)Fast food
(d)Cool drink outlets
(e)Ice cream outlets
(f) Tourism
(g)Personal grooming
(h)Career counseling
(i) Emigration services
(vi)Creativity: Creativity being one of the most important competency of an entrepreneur plays
a vital role in getting an idea for a new product or service or improving an existing product or
service. Most often it is noticed that the need to solve a problem triggers creativity to come up
with new ideas. It helps in
(a)Adding additional value to an existing product or service
(b)Innovate a new product or service
(c)Innovate a new methodology or material to produce a product
(d)Expand the demand and market for the current product or service
(e)Expand the usability of an existing product or service
F. HIGHER ORDER THINKING SKILLS
Q1. Aditi started her boutique business near an industrial area and she was not getting
clients as she had expected. What are the factors which have been ignored before starting
the boutique? Suggest the various factors that she has to look into before venturing into
business.
Ans. Aditi started her boutique business near an industrial area and she was not getting clients
as she had expected because selection of a product or service will depend upon many factors.
They are:
(i)Demand
(ii)Supply and Nature of Competition
(iii)Cost and Price of Product
(iv)Project Innovation and Change Here, the main factor which had been ignored before
starting the boutique is DEMAND of the product. It is to be suggested to Aditi that while
assessing the market, an entrepreneur has to prepare details on the following lines:
(i)Demandl:
(a)The demand assessment will be based on the size of market being targeted.
(b)The different types of markets are local markets, market at state level or
national/international market.
(c)It involves a detailed study of the target groups of consumers, their preferences, tastes and
other related variables.
(ii)Supply and nature of competition:
(a)Supply position refers to the complete picture of quantities of the product made available in
the market by all the existing players.
(b)It should take into account future supplies from possible entrants in the field.
(iii)Cost and price of product:
(a)It is important to determine the cost of the product and its comparison with available
products in the market.
(b)Cost variable of competitors in terms of transportation delays, wastage, storage etc., have
to be studied to spot cost advantage. This will influence the delivery mechanism of the
identified product or service.
(iv)Project innovation and change: (a) Market assessment will require a study of prevailing
innovations and changes being carried out by existing entrepreneurs.
(b) Technological advancements in the field have to be analysed because they may change the
quality and influence the cost and price ultimately.

Q2. Mr. Raghav had always wanted to manufacture an innovative, energy efficient fan. He
was looking into various options and has finally narrowed it down to one option. He
understands that the entire idea would have to follow a process. Identify and explain the
process.
Ans. The process is idea and opportunity assessment.
(i)Product identification: An idea should lead the entrepreneur to a definite product/service
which he can sell. So the first step is to obtain a concept of the product or service suggested
by one idea. We should also see whether this product is already available in the market or not.
If it is, then we should identify the reason for introducing the same product or service in the
market. For example, innovating a new pen drive especially for teachers which will have a built
in antivirus and which can be worn like a watch so it minimises the problem of losing the pen
drive.
(ii)Application and use: Ideas should be examined for their real life use and application. If it
already exists in the market we will have to find out its present use, then we may think of
modifying it for better use. In the above mentioned example, we can clearly see that even
though there are lot of companies manufacturing pen drives, the latest will be in consonance
with the upcoming trends.
(iii)Level of operation: This is a crucial test for product/service identification. Depending on
the use of the product/ service the entrepreneur will produce it in a cottage industry or a small
scale industry or a large scale industry.
(iv)Cost: What is the per unit cost of the product at particular level of operation? Whether this
cost is comparable with that of other competitive products? These are some of the questions
that have to be answered. This will ultimately decide the sale price.
(v)Competition: Any product or service will face market competition at some stage. So market
competition should be assessed through a study of the trends in demand and supply.
(vi)Technical complexity: What type of technology is required to produce the product?
Whether training and application of such technology will be locally available or will it have to
be supported from other places? What would be the position of supply of plant and machinery
for such a technology? These are important issues that have to be resolved.
(vii)Annual turnover and profit margin: Ideas should also have to be examined on the basis of
expected annual turnover. This will also indicate the market share of the product or service.
Once the entrepreneur has assessed the opportunities on these basis he should go ahead and
assess the market also.

Q3. These are convenient frames of reference for streamlining the process of generation of
ideas. Identify them and explain any three briefly.
Ans.

(i) Natural resources: Ideas can be generated based on natural resources. A product/service
may be desired from forest resources, agriculture, horticulture, mineral marine, or aqua
mineral, animal husbandry, wind, sun and human resources. A further exercise with a field may
generate many useful products ideas. For example:
If we are getting ideas in the field of forest resources, we think wood- based product, bio-
fertilizers, etc. Solar energy is used for many purpose like cooking, electricity consumption and
water heater.
(ii) Existing Products/Services: Existing products and services can general number of ideas to
improvise the product, to come up with cheaper substitution or sometimes by reducing the
price of the product.
There is a constant and consistent effort on the part of all entrepreneurs to improve the
product/services already existing in the market. This can be improved by using old techniques
with more care or using newly developed technology. So, thinking about existing product/
services he can generate number of ideas to improve them.
For example:
(a) Thinking of introducing Laser Printer in place of Dot Matrix Printers.
(b) In an area, where automobiles are being made, there is a scope of starting a small unit of
spare parts.
(iii) Service Sector Ideas:
(a)Service sector field is the most growing field these days all over the world. It emerges
knowledge to societies doing advance research in information technology.
(b)An entrepreneur identifies new opportunities and by understanding it he links services to
develop various business activities.
(c)Various service base units in an enterprise are transport, security, catering, recruitment,
training and communication, health care centres.
(d)It serves the purpose of helping enterprise to satisfy their day-to-day needs like bill
collection, water tank cleaning, travel arrangement, etc.
(e)For example: Cyber cafe (internet facilities), ATM Facilities and other banking services,
Metro trains, etc. In Amongst the most interesting ones in the food sector are the following:
•Indian fast food chains: McDonald’s and Pizza Hut can be the role models in terms of
efficiency of service, hygiene, quality, and overall value.
•Family dinner: Nirula’s offering Indian style “Plated or Combo” meals with table service and
overall good price-value equation.
•Ice-cream and Juice/Beverage Parlours, (Indian “desserts” and “snack food” chains).
Lastly, in the genre of food and food service chains, one of the biggest opportunities remains in
starting national or at least regional chains offering Indian mithai, namkeen/ farsaans, and
snack-foods such as pakodas and samosas. Haldiram’s success should certainly put any
doubt on this opportunity to rest.
(iv)Market driven or demand driven ideas:
(a)For an entrepreneur market is the only place where he can carry out or generate maximum
ideas. Such a study yields valuable data about trends of supply, demand and consumer taste
and preferences.
(b)Market research is any organized effort to gather information about target markets or
customers as it is one of the important component of business strategy.
(c)Market research is a key factor to maintain competitiveness over
competitors and it provides important information to identify and analyze the market need,
market size and competition.
(d)It also includes social and opinion research by systematic gathering and interpretation of
information about individuals or organizations using statistical and analytical methods and
techniques of the applied social sciences to gain insight or support decision-making.
(e)Idea generation develops from knowledge of the consumer, the market, the technology and
the general environment, and it creates newness in product, production and marketing. It
systematically develops product ideas to satisfy the aim of the project and therefore the
business strategy.
(v) Trading related ideas:
(a)Trade in simple terms is buying goods and services and selling them to consumers at a
profit. One big advantage that trading has over other types of businesses is that it is easier to
launch and less risky.
(b)Trading these days is not limited to ordinary grocer or distributor outlets. With increasing
consumerism, the scope and nature of trade has enlarged; local trade, import and export, e-
commerce are all making trading a very wide area of enterprise. It is however, necessary for a
prospective trader to be aware of the trends in an economy.
(c)With the opening of the market to International Companies, large size departmental stores,
chain shops and umbrella markets have become omnipresent; competition has become
intense and to survive in the market new entrants will have to acquire skills, competencies and
knowledge required to launch, manage and expand business opportunities.

Q4. Varun decided to start his own venture and was looking into various ideas. Explain to him
various sources from where he can get some good business ideas.
Ans. Varun decided to start his own venture and was looking into various ideas. The process
of generation of ideas can be streamlined by developing an awareness for different idea fields.
This will help the Varun in enlarging the scope of thinking, at the same time structuring the
ideas according to convenient frames of reference. By following different ways for generating
ideas Varun collects a number of good business ideas.

G.EVALUATION AND MULTI-DISCIPLINARY QUESTIONS

Q1. ‘Environmental factors exert influence upon each other and do not operate in isolation’.
Discuss.
Ans. Yes, it is true. All environmental factors are interrelated and exert the influence upon each
other.
Political Factor: Political factor is the outcome of a combination of various ideologies
advocated by different political parties. The rules and regulations and the laws that monitor
and regulate the market forces are framed and promulgated by the Government.
The policies of the Government in power have to be reckoned and implemented:
(i)for taking a business decision,
(ii)growth of trade industry and commerce,
(iii)aims at improving infrastructural facilities which encourage new business ventures,
(iv)relaxation of import-export policies, Example: Taxation Policy, Trade regulations,
Governmental stability, Unemployment Policy, etc.
Socio-cultural Factor:
(i)Business is born and develops in society and in it various social factors exist.
(ii)It involves a close study of the life styles, beliefs, customs, conventions, practices, etc.
Expectations of individuals their preferences on the basis of their family background, age
group and education will also form a part of this study.
(iii)This is a crucial process for the simple reason that the product or service that the
entrepreneur envisages will have to satisfy the need of these individuals.
Example. An entrepreneur wants to open a showroom of branded foot wears.
Economic Factor: It includes the close study of important variables like supply and demand.
Details of consumer trends, economic preference, costing, discounting etc. are all economic
decisions. Inflation rate, growth in spending power, economic details will also help the
entrepreneur in determining the size of the project and the reasons of finance.
(i)Legal: Legal scanning of the environment demands analyzing the legal requirements in the
establishment of a project. Managing of the project and also in getting assistance from
different sources, e.g. welfare of employees, safety, simple contracts entered into with
suppliers of raw materials financer’s, health and safety.
(ii)Product Safety: Advertising regulations, product labeling, labour laws etc., real estate
owners., etc. require legal assistance.
Technical Factor: It is influenced by government spending on research, new discoveries and
development, Internet, E-commerce, Social Media, Electronic Media, Research and
Development, Rate of technological change government and industry focus employment law.
Value points:
(i) Truthfulness (ii) Universal
(iii)Faithful justice (iv) Discipline
(v)Helpfulness (vi)Readiness to cooperate.

Q2. “If you don’t adapt, you don’t endure”. Evaluate the validity of the statement.
Ans. Yes, it is correct. The business environment is increasingly becoming uncertain and
complex due to political realignments, economic crises, terrorism threats, technological
innovations and natural disasters.
In rapidly changing environments, one rule of thumb applies: If you don’t adapt, you don’t
endure. It is the core idea behind environmental scanning, which refers to the means by which
organizations gather information on changing conditions and incorporate those observations
into a process where necessary changes are made.
The right information, combined with the right adaptations, can determine an organization’s
future viability. Environmental scanning can help you identify the trends that are most likely to
directly affect the organisation and product. Then an entrepreneur can craft a strategy that will
help him take advantage of various changes occurring and get through the success and at the
same time if he is not aware of what the environment surrounding his business he is sure to
fail.
(i)E.g., HMT watches lost its market to Titan;
(ii)Sony failing to understand the changing trends in mobile phones and therefore losing it’s
market share.
Value Points:
(i)Spirit of Enquiry
(ii)Services to others
(iii)Initiative
(iv)Self-existent
(v)Awareness of responsibility of citizenship
(vi)Social service
(vii)Endurance (viii) Tolerance
(ix)To protect national property.

H.APPLICATION-BASED QUESTION
Q1. Vinay was a young entrepreneur who wanted to start a new business with an initial
investment of 25 lakhs. He was not sure of what business he has to undertake. His friend
suggested seeking the help of professionals who would spot the latest trends in the market
and give him an idea, but Vinay decided to do it by himself. Suggest the various ways by
which he can do it.
Ans. Vinay is a young entrepreneur and wanted to start a new business with some initial
investment, accordingly he can follow different sources of business idea ways for generating
ideas.
Sources of business ideas
(i)Vinay must examine his own skill set for business ideas
(ii)Keep up with current events and be ready to take advantage of business opportunities
(iii)Invent a new product or service
(iv)Add value to an existing product
(v)Investigate others markets
(vi)Improve an existing product or service
(vii)Get on the band wagon.

MORE QUESTIONS SOLVED

I. VERY SHORT ANSWER TYPE QUESTIONS
Q1. What is the basic test for a successful entrepreneur?
Ans. The basic test of a successful entrepreneur is the identification of business opportunity in
the environment and initiating steps to produce and sell goods and services to make use of the
opportunity.

Q2. How Peter F. Drucker defined the word entrepreneur?

Ans. Peter F. Drucker defined entrepreneur as one who has always searches for an
opportunity.

Q3. What do you understand by the word ‘Scan’?

Ans. The word ‘scan’ – means to examine closely especially in search of something.

Q4. How scanning of environment is beneficial to an entrepreneurs?

Ans. Scanning of environment is always beneficial to an entrepreneur to know the present
situation in the market, the various changes occurring in the economy as new trends, issues
and expectations of people due to changes in the environment.

Q5. Who said, “Entrepreneur as one who always searches for an opportunity”.
Ans. Peter F. Druker.

Q6. Define Entrepreneurship Environment.

Ans. Entrepreneurship environment refers to the various forces within which various small,
medium and large enterprises operate. These factors exert influence upon each other and do
not operate in isolation.

Q7. Name two levels of external environment.

Ans. The two levels of external environment: (a) Micro environment (b) Macro environment

Q8. State the components of micro environment.

Ans.

Q9. State the components of macro environment.

Ans.

Q10. What do you mean by product line?

Ans. It refers to a series of different products which form a group, all made by the same
company.
Or it is a set of sequential operations established in a factory whereby materials are put
through a refining process to produce an end-product that is suitable for onward consumption;
or components are assembled to make a finished article.

Q11. What is problem identification?

Ans.A problem is a road block in a situation, something that sets up a conflict and forces you
to find a solution. When an entrepreneur identifies such a road block he is said to have
identified the problem.

Q12. How an entrepreneur is different from others?

Ans. The entrepreneurs perceive opportunities, synthesize the available information and
analyse emerging patterns that escape the attention of other people. They are people with
vision, capable of persuading others such as customers, partners, employees and suppliers to
see the opportunity, share and support it.

Q13. From where does a business opportunity or ideas comes from? Give one example.
Ans. A business idea or opportunity comes from day-to-day problems of people and an
entrepreneur is the person who solves it and fulfils it by providing product or services to
people.

Q14. State some sources of information which helps an entrepreneur to get information that
results in evolution of basic ideas.
Ans. Some sources of information are:
Magazines, journals, books, seminars, trade shows, family members, customers, friends,
competitors.

Q15. Why an entrepreneur should be able to creatively identify an idea?

Ans. The entrepreneur should be able to creatively identify an idea so that he can easily
generate a valuable solution to a problem.

Q16. Once the solution is identified by an entrepreneur how it helps him?

Ans. Once the solution is identified their vision to convert the solution into business
opportunity help them to move forward, overcoming all the obstacles.

Q17. What is the key component of the talents and abilities needed for an entrepreneur.
Ans. Creativity is an important key component of the talents and abilities needed for an
entrepreneur.

Q18. What are born as a result of problem solving?

Ans. Creative products and services are born as results of problem solving.

Q19. A prospective entrepreneur find opportunity?

Ans. For a prospective entrepreneur an opportunity may be derived from the needs and
problems of the society.

Q20. Give one advantage that trading has over other types of businesses.
Ans. One big advantage that trading has over other types of businesses is that it is easier to
launch and less risky.

Q21. State few cost variable of competitors which have to be studied to spot cost
advantage.
Ans. Cost variable of competitors in terms of transportation delays, wastage, storage, etc.,
have to be studied to spot cost advantage.

Q22. How trend spotting will helps an entrepreneur?

Ans. Trend spotting will helps the entrepreneur to understand the market and produce goods
or provide services in collaborate and integrate with the market trends, changing habits,
consumers taste and preferences, etc.

Q23. Who are called Professional trend-spotters?

Ans. Professional trend-spotters are some entrepreneurs who spot the trends themselves and
charge big money for reports and industry trend updates.
Q24. Who is a trend spotter?
Ans. A trend spotter refers to someone who specializes in identifying new market trends and
make the changes possible. He is a keen observer, alert and notices on new fashions,
changing habits, activities in the market. He can be forecaster, business leader, politician,
stock analysist, futurist who identify trends and talk about the future to transmit a story into
value for others.
In short, the role of a trend spotter is to tell persuasive stories about the present and the future
to influence others.

Q25. “A trend is a description of a change taking place in the long term or short term”.
Comment.
Or
What do you understand by the term trend?
Ans. Atrend can be short term manifestations, e.g. a fashion, design, assumption. A trend can
also be a long term mega trends, which typically has a minimum of 30-50 years relevance, e.g.
globalization, individualization, digitalization.

Q26. Give one example of each “Trends can be invisible and visible”.
Ans. Trends can be visible e.g. change in the gender roles; Trends can be visible, e.g. Gadgets

Q27. Why creativity is important to entreprneurs?

Ans. Creativity is important to entrepreneurs because it is the first stage in the process of
innovation, providing the stimulus for opportunity discovery and new venture creation.

Q28. When is the illumination period starts for an entrepreneur?

Ans. Illumination starts when an entrepreneur re-surfaces the idea in realistic way and
entrepreneur comes out with viable plan to give practical shape and implement an idea.

Q29. What should an entrepreneur do, “if the opportunity looks promising”?
Ans. When the opportunity looks promising, an entrepreneur should look into the
environmental factors before choosing the best opportunity.

Q30. Kartik wants to start a new ready made garments shop in his colony. He knows that it is
the best opportunity for him and it is going to give him high rate of promising returns. How
do you agree with Kartik that he has selected a right opportunity?
Ans. Kartik should look into various factors before deciding on the opportunity. Even if the
opportunity looks promising, he must took into the environmental factors (PESTEL) before
choosing the best opportunity.

Q31. What do you understand by supply position?

Ans. Supply position is the complete picture of quantities of the product made available in the
market by all the existing players.

Q32. From what do entrepreneurs spot business opportunities?

Ans. Entrepreneurs spot business opportunities from problems and needs that exist in the
environment.

Q33. State two main objectives of environment study by an entrepreneur.

Ans. (i) To get familiar with environment
(ii)To get .stability in the environment

Q34. What develops an idea into viable and successful project?

Ans. Entrepreneurs vision and creativity develop an idea in a viable and successful business.

Q35. What do you understand by market research?

Ans. Market research is a process of working on various trends in market, it gives an
organized effort to gathering information about target markets or customers. Marketing
research is the means by which the necessary information necessary to run a business is
obtained. It is the gathering, recording, and analysis of all facts about problems relating to the
transfer and sale of goods and services from producer to consumer.

Q36. Give two examples of Service-sector idea fields.

Ans. Transportation, communication, banking, courier services, event management, etc.

Q37. What is an opportunity?

Ans. It may be a chance to do something new. When a problem is solved by an entrepreneur in
a challenging way, they find opportunities.

Q38. What do you understand by created opportunities?

Ans. Opportunity lies in our surroundings. Successful entrepreneurs are always looking for
opportunities to help others by providing creative solutions to their problems and needs.
In business, entrepreneur always look for new ways to market our business, reach to target
market and he creates opportunities by attending networking events, conferences, twitter
chats, etc. for potential clients, meeting new people to refer business to or to grow our
community.

Q39. Give examples of created opportunities.

Ans. Invention of radio, telephone, etc.

Q40. Name one important component of business strategy.

Ans. Market research is one of the important component of business strategy.

Q41. Give the alternative name used for verification stage.

Ans. The alternative given for verification stage is validation stage or testing stage.

Q42. Name the factor which relate to rules and regulations.

Ans. Political Factors.

Q43. Give one example showing that both economic and social factors can affect business
idea together.
Ans. Selling of flowers during festive season. Here, festival is a social factor whereas demand
for flowers is a economic factor.

Q44. How does market research help in generating ideas?

Ans. By market research an entrepreneur collects valuable information related to trends of
demand, supply, consumers tastes and preferences and market, as it help in generation of
ideas.

Q45. What is an idea?

Ans. It is a thought or collection of thoughts that generate in the mind of an individual.

Q46. Give the meaning of‘Legal Environment’.[CBSE Delhi 2015]

Ans. It covers all such areas such as taxation, employment, law monopoly, legislation and
environmental protection laws.
Q47. Give the meaning of ‘Ecological Environment’. [All India 2015]
Ans. ‘Ecological Environment’ considers the ways in which the organisation can produce its
goods or services with minimum environmental damage.

Q48. Since her college days Mehak, loved the thrill of adventure sports. She was an avid
reader which helped her to keep track of various new adventure sports taken up all around
the world. She had recently read an article on increasing trend towards ‘space tourism and
adventurous holidays’. Using her personal experiences and her passion for adventure sports
she decided to start a company called ‘YOLO’. For the same purpose she also decided to
collect statistics to see how much of these sports were accepted in our country. Identify the
ways in which she was able to spot the trend. [CBSE Sample Paper 2016]
Ans. Following are the ways by which she can able to spot the trend:
(a)Entrepreneurs regularly read the leading publications and websites affecting their business.
(b)Publications include industry publications, trade association sites, major newspapers, key
business magazines, thought leaders and influential bloggers.
(c)They scan information from a wide variety of sources – from international news on down to
niche bloggers focused on specific aspects of their industry. Obviously, there’s a tsunami of
information available. They use tech-tools like RSS feeds, e-mail, newsletters or websites and
forums to keep on top out of all and get the information they want. They understand quickly
which sources are valuable and which should be avoided.

Q49. ‘ For a viable venture to be born, a entrepreneur is required to apply his knowledge
strategically to market’. Identify the requirement to be complied with by these factors for
successful processing of an idea into opportunity.[CBSE Sample Paper 2016]
Ans. Strategic positioning is the positioning of an organization in the future, while taking into
account the changing environment, plus the systematic realization of that positioning.

Q50. Although not mandatory, some entrepre¬neurs may file part I of entrepreneurs
memorandum district Industries Centre. Why? [CBSE Sample Paper 2016]
Ans.This may be necessary for claiming certain incentives/subsidies and for certain
formalities at the state level.

Q51. Balwant Singh of Bikaner thought of air- conditioned houses which do not require
electricity. He wanted to explore the idea of construction of such eco-friendly houses which
will remain cool in summers and warm in winters. He conceived the idea in 2010 but the final
product could take shape in 2014. name the stage in ‘The Creative Process’ described in the
above lines. [All India 2016]
Ans. Idea germination stage of ‘The Creative Process’ is described in the above lines.

II.SHORT ANSWER TYPE QUESTIONS

Q1. “Sensitivity to environmental factors is crucial for an entrepreneur.” Do you agree?
Ans. Sensitivity to environmental factors is crucial for an entrepreneur. If a company is able to
adapt to its environment, it would succeed in the long run. E.g., Sony failing to understand the
changing trends in mobile phones and therefore losing it’s market share.

Q2. Why is environment an important factor for entrepreneurship?

Ans. Environment means surroundings. Environment of a business means forces (economic,
social, political technological), etc. and institution (suppliers, customers, competitors, etc.)
Outside the firm with which an entrepreneur must deal to achieve its goal.

Q3. Define Environment.

Ans. A term used by A. Marshall as an alternative to conjunction, to indicate the condition that
makes it possible for a person to enjoy consumer’s surplus.

Q4. Enumerate two important points that an entrepreneur has to ensure before selecting an
opportunity.
Ans. Before selecting an opportunity, the entrepreneur has to ensure two things:
(i)There should be a good market for the product he is going to introduce/ produce.
(ii)The rate of return on the investment should be maximum and attractive and can be
accepted by him.

Q5. Can all ideas be converted into opportunities? Give reason.

Ans. No, all ideas may not be converted, into opportunities because if an entrepreneur
conceive an idea and start its business without even analysing the market and as per the
needs and problems of the people and only try to satisfy his own ego, then the result/outcome
of launching a business and a product will end with only few customers.

Q6. How an entrepreneur perceive an opportunity?

Or
How is entrepreneurs different from others in perceiving opportunities?
Ans. The entrepreneurs perceive opportunities, synthesize the available information and
analyse emerging patterns that escape the attention of other people. They are people with
vision, capable of persuading others such as customers, partners, employees and suppliers to
see the opportunity, share and support it.

Q7. “Many times creative products and services are born as results of problem solving”. Give
examples.
Ans. (i) Problem was over tightening of screwdriver and the solution came in the form of a
self-adjusting screwdriver which prevented over tightening.
(ii)Problem was when doctors found monitoring of dosage of medicine to be administered to
patients on a regular basis through traditional methods using a syringe cumbersome and a
solution was a pharmaceutical firm developed a new process of implanting the required
medicine in the patient for constant discharge of regulated and required dosage in to the
blood stream.

Q8. Why do we need to scan our environment?

Ans. In rapidly changing environments, one rule of thumb applies: If you don’t adapt, you don’t
endure. That’s the core idea behind environmental scanning. Definitions of the term abound,
but in essence it refers to the means by which organizations gather information on changing
conditions and incorporate those observations into a process where necessary changes are
made. The right information, combined with the right adaptations, can determine an
organization’s future viability. If an entrepreneur is not aware of what the environment
surrounding his business he is sure to fail. E.g., HMT watches lost its market to Titan.

Q9. What do you mean by environment analysis?

Ans. Environment analysis is the process of monitoring the economic and non-economic
environment to determine the opportunities and threats to an organisation.

Q10. State the factors involved in environment analysis.

Ans. Such an analysis involves data collection, information processing and forecasting to
provide a rational basis for developing goals and strategies for business survival and growth.

Q11. What do you mean by scanning of environment?

Ans. Scanning of environment refers to a close examination of the environment so that it can
develop an understanding between all the environmental factors like sociocultural, economic,
political and other developmental factors in order to ensure that the perceived entrepreneurial
opportunity is compatible with them.

Q12. “Creativity is a continuous activity for the entrepreneur”. Explain.

Ans. As creativity is a continuous activity for the entrepreneurs they keep on disturbing
markets and keeps on challenging large established businesses. Entrepreneurs always see
new ways of doing things with little concern. Creativity in the entrepreneur is a mixture of
ability to innovate, to take the idea and make it work in practice. Once the project is
accomplished, the entrepreneur look for new venture.

Q13. “Often times, a company will improve or change their existing products”. Give reasons.
Ans. Improvisation or change in the existing product can:
(i)Make a substantial difference in the success of the company,
(ii)Take a firm/company as a whole new direction by increasing sales.

Q14. State any two pros to changing or improving your existing product line by an
entrepreneur.
Ans. (i) keep up with the competition
(ii)increase sales

Q15. Mention any two important variables, which are considered under economic factors.
Ans. The economic environment includes interest rates, inflation, business cycles, etc.

Q16. What do you mean by market driven idea or demand driven ideas?
Ans. If the idea is generated through the market research. Such studies gives an entrepreneur
information about trends of demand, supply consumer taste and preferences.

Q17. Explain the importance of creativity for an entrepreneur.

Ans. Creativity is important to entrepreneurs because it is the first stage in the process of
innovation, providing the stimulus for opportunity discovery and new venture creation.

Q18. How do hobbies help in generating business idea?

Ans. If any individual is master/talented in any skills (hobbies) and are ready to teach others
with passion then he can easily convert his/her hobbies into business idea.
For example, teaching piano lessons (any other instrumental classes),teaching cooking
classes, or teaching another language, spoken English and personality classes, coaching
classes, selling handmade confectioneries, bakery items, handmade handicrafts, own small
restaurant, etc. Example: “Mahila Griiha Udyog Lijjat Papad” hobbies converted into business.

Q19. What is the basic function of the process of environment scanning?

Ans. Spotting and generating ideas is the most important function in the process of
environment scanning.

Q20. What will be the level of operation for metal-based handicraft item?
Ans. Small cottage industries.

Q21. What will be the level of operation for automobile spare parts?
Ans. Small scale industries.

Q22. Enumerate the main objectives of problem identification.

Ans. Objectives of problem identification:
(i)State the problem
(ii)The target group who is facing the problem
(iii)Market acceptability of the solution for the problem.

Q23. What is the difference between creativity and innovation?

Ans.

Q24. How marketing research helps an entrepreneur?

Ans. It helps an entrepreneur to take decisions related to:
(i)The type of product,
(ii)The pricing policy,
(iii)The channel of distribution,
(iv)And sales promotion techniques can be made rightly with the help of marketing information
at the right time.
For example, the owner of a food court (small restaurant) should find out what all services are
needed to satisfy its customers.

Q25. Explain the process of analysis of environment with the help of chart.
Ans. The flow chart shows that an opportunity received by the entrepreneur should be tested
against important environmental parameters to arrive at a sound business choice. This
interface is an evaluative process leading to a judgement. Is it a viable idea? Does it make
sound business sense? If yes, the entrepreneur can proceed to the next stage of product or
service identification.

Q26. State some service sector based ideas related to commercial establishment.
Ans. Following are few of the service sector based ideas related to commercial establishment:
(i)Speciality tourism
(ii)Indian fast food.
(iii)Personal grooming salons
(iv)Career counselling centres
(v)Chain of repair and maintenance services for electrical/electronic products.
Q27. Describe Perceiving and Sensing Opportunities.
Ans. Entrepreneurs perceive opportunities, synthesize the available information from various
sources.
They analyse changing and emerging patterns that other people fail to note. Entrepreneurs are
people with vision, capable of persuading others to see the opportunity, share and support it.

Q28. Why does an entrepreneur need to scan environment? Explain.[CBSE Sample Paper
2016]
Ans. The right information combined with the right adaptations can determine an organization
future viability.
If an entrepreneur is not aware of the environment surrounding his or her business, he/she will
not succeed.

III. LONG ANSWER TYPE QUESTIONS

Q1. How business environment can be classified into different categories?
Ans. Business environment can be classified into two major categories:

Q2. How an environment offers the firm/ entrepreneur numerous opportunities in changing
the needs of customers and market? Give two examples.
Ans. (i) Examples: (a)When an entrepreneur notices that the people in the neighbourhood are
complaining about : the lack of availability of chemist shop.
So he opens a chemical shop. As we know that entrepreneur search for an opportunity in an
environment, and he converts it into a reality.
(b)The growing demand of AC has attracted many new comers (GE Godrej and LG
Electronics). It is the environment that decides his choice of business venture. An entrepreneur
keeps constant interaction between human factors and other developmental factors prevailing
in the environment at any given time that why a study of environment factor become
important for entrepreneurship.

Q3. ‘The process diagram shows different stages environment means surroundings’. State
the difference.
Ans. When an entrepreneur looks outside for business idea he often sees that business
opportunities exist in the environment. First Stage: Spotting an opportunity by analyzing the
needs and problems that exist in the environment.
(i)Busy life work schedules, frequent corporate travelling created the need for fast banking
services and hence the ATM, credit card, debit card and telephone banking came in popularity.
(ii)With the increase in number of murders and other crimes taking place in big cities
entrepreneurs can tap the niche of households for installing security systems like alarms,
CCTVs, cameras and other safety gadgets, etc.
Second Stage: Evaluating the ideas received from different sources to find a creative solution.
Third Stage: After evaluating each ideas received, selecting the best ideas to start a business
venture.
Fourth Stage: Setting up a project and nurturing success.

Q4. Why is scanning of environment considered as interface between spotting and product
identification? Support your answer with at least one example.
Ans. An entrepreneur spots an opportunity to know the demand for the product and
sustainable and profitable. He has to scan an environment by which the entrepreneur first
identifies the key elements and characteristics. In the absence of environment scan, an
entrepreneur can bear loss in business because lack of knowledge about the customers and
its demand about the product.
For example, in the form of electricity shortage or more demand of electricity, the entrepreneur
spot opportunity. He, then scans the environment in order to know the need of electricity.
Customers to produce a substitute of electricity would be a viable or not could only be sensed.
After scanning an environment, he can move on to the identification of the product i.e. whether
to produce invertors or candles can be the substitute.

Q5. State five elements of business opportunity.

Ans.A business opportunity has five elements which are as follows:

Q6. What are the five ways in which creative ideas can be generated?
Ans . Creativity is an important and key component of the talents and abilities needed for an
entrepreneur. Creativity can be applied to develop new products and services. There are
basically five ways as given below:
(i)Develop a new product or service.
(ii)Improve an existing product or service.
(iii)Find a new use for a product or service.
(iv)Find a new process or resource for manufacturing a product.
(v)Find new markets for existing products or services.

Q7. Explain the stages of enterprises model with the help of a diagram.
Or
Explain Enterprise Process diagram.
Ans.
This diagram shows the following stages:
(i)Opportunity spotting by analysing the needs and problems that exist in the environment.
(ii)Evaluating the ideas received from different sources to find a creative solution.
(iii)Identifying a product or service through innovation.
(iv)Setting up a new venture and nurturing it to success.

Q8. Enumerate the sources from which information for environmental scanning can be
collected by an entrepreneur.
Ans. Information for environmental scanning can be collected from several sources. These
include:
(i)Verbal communication and time to time information from: customers, wholesalers, retailers,
distributors, consultants., stakeholders, etc.
(ii)Complete records of companies.
(iii)Government publications and information.
(iv)Publications by various financial institutions and related organisations.
(v)Formal studies conducted by strategic planners.

Q9. How the uses of problem identification helps an entrepreneur?

Ans. (i) It helps an entrepreneur to bring out new products in the market.
(ii)It helps him to understand the problems and needs of the market.
(iii)Helps the entrepreneur to be creative.
(iv)Increase in employment generation.
(v)Increase in national income of the country.
For example, Instant noodles, Ready to eat food, Easy to drink.

Q10.“ Creative products and services are born as results of problem solving”. Explain with
the help of an example.
Ans. Creativity is an important key component of the talents and abilities needed for an
entrepreneur. Often he can apply it to develop new products and services and creative
products and services are born as results of problem solving. For example, (i) Someone found
that while tightening screws, over tightening often resulted in damage to the fixtures. Here was
a problem and the solution came in the form of a self-adjusting screwdriver which prevented
over tightening.
(ii) When doctors found monitoring of dosage of medicine to be given to patients on a regular
basis by using traditional methods using a syringe cumbersome, by looking into a problem of
most of the patients a pharmaceutical firm developed a new process of implanting the dosage
of medicine required the patient for even discharge of in time and required dosage into the
blood stream.

Q11. What is the difference between basic idea and post-scanning ideas?
Ans. The difference between basic idea and post-scanning ideas are as follows:
Q12. State the various sources of idea generation.
Ans.

Q13. What is meant by ‘Problem Identification’? State its any two objectives and also give an :
example of‘Problem Identification’. [All India 2015]
Ans. Problem Identification: A problem is a roadblock in a situation, something that sets up a
conflict and forces you to find a solution.
Objectives of Problem Identification are:
(i)It should clearly state the problem.
(ii)Identify target group facing the problem.
(iii) Identify the market acceptability of solution to the problem.
Example of Problem Identification: Ready to eat foods for the younger career oriented
generation.

Q14. The first step in the creative process is ‘Idea Germination’. State the other steps of this
process. [All India 2015]
Ans. Following are the other three steps:
(i)Preparation: On the basis of the idea, interest and curiosity an entrepreneur starts looking
for an answer to implement the idea.
(ii)Incubation: This is an sub-conscious assimilation of information.
(iii)Illumination: The idea resurfaces in a realistic way in the form of a viable plan.
(iv)Verification: The idea is verified to prove that it has value.

Q15. Shahida, a student of School of Rug Weaving Institute, Turkey, visited her grandparents
in Kashmir for the first time. Breathtaking mountain scenery, clear lakes, lush vegetation and
magnificent forests mesmerized her. The valley is home to a rich biodiversity including a
large number of bird species, many of which are unique to Kashmir, it is home to Yak and
sheep that are taken care of by Nomads. Kashmiri lifestyle is essentially slow paced and
reflects religious diversity. Kashmiris are known to enjoy their music in its various local
forms, and the traditional dress of both genders is often quite colourful. Tulip, Saffron, dry
fruits and artistic woodwork are its hallmark.
She also observed that the government was stable and all the tourist places were well
guarded by the army.
She found it to be an ideal place to start a unit for carpet weaving and employ local people to
preserve the ethnic touch. After the devastating floods a considerable population was
rendered jobless, her unit would help to revive their economic condition. She started
scanning and screening the environment and collected the following information.
(i)Help her categorize the information making use of PESTEL MODEL.
(ii)Also state a value communicated by Shahida. [CBSE Sample Paper 2016]
Ans. (i) (a) Political: The political environment includes taxation policy, govern¬ment stability
and foreign trade regulations.
(b)Economic: The economic environment includes interest rates, inflation, business cycles,
unemployment, disposable, income, energy, availability and cost.
(c) Social: The social/cultural environment includes population demographics, social mobility,
income distribution, lifestyle changes, attitudes to work and leisure, levels of education and
consumerism.
(ii) Sharing and compassion.

Q16. Explain the factors that help an entrepreneur to identify a product.[CBSE Sample Paper
2016]
Ans. The factors that help an entrepreneur to identify a product are:
(i)Application and use: Ideas should be examined for their real life use and application. If it
already exists in the market, we will have to find out its present use, then we may think of
modifying it for better use.
(ii)Level of operation: This is a crucial test for product/service identification. Depending on the
use of the product/ service the entrepreneur will produce it in a cottage industry or a small
scale- industry or a large-scale industry.
(iii)Cost: What is the per unit cost of the product at particular level of operation? Whether this
cost is comparable with that of other competitive products? These are some of the questions
that have to be answered. This will ultimately decide the sale price.
(iv)Competition: Any product or service will face market competition at some stage. So market
competition should be assessed through a study of the trends in demand and supply.

IV. VERYLONG ANSWER TYPE QUESTIONS

Q1. Explain how the process of a basic idea becoming an opportunity?
Or
Explain the transformation of ideas into opportunity.
Ans. The given diagram shows how the process of a basic idea becoming an opportunity:

The above given diagram explains that it is just a process of conversion of basic idea into
opportunity. Business idea arises from an opportunity in the market. It originates from any
need or wants of any product or services that an entrepreneur can identify. In this process all
basic ideas have to undergo a vigorous process of close examination, evaluation, analysis and
synthesis to become viable opportunities. This diagram explains an entrepreneur utilize the
skills, knowledge, creative thinking and competency needed to develop an idea which is
backed up by various political economical, social, technological, ecological and legal factors in
the existing competitive market. By this process an entrepreneur convert ideas into viable
business opportunities.

Q2. How environmental scanning is helpful for an entrepreneur?

Ans. (i) Environmental scanning will be helpful to an entrepreneur/firm to understand the
actual happening in an organisation (inside and outside),
(ii) It is necessary because of rapid changes taking place in the environment that has a great
impact on the working of the business firm.
(iii)Analysis of business environment helps to identify strength, weakness, opportunities and
threats. So that the enterprise can survive and grow,for longer time.
(iv)It is helpful to frame out different plans and policies for the establishment and further
development.
(a)It act as a tool in understanding, for casting and decision making in all situation of the
business enterprise.
(vi)Study of environmental analyses enables the firm to select the best option for the success
and growth of the firm.
(vii) It helps an entrepreneur to act quickly, take advantage of all environmental opportunities
before others take a chance andimmediate respond to reduce damage
(a) take advantage of opportunities before competitors do
(b) respond to environmental threats before significant damage is done.

Q3. How many levels are there in external environment? Explain.

Ans. The external environment consists of two levels, i.e. micro environment and macro
environment.

Producer/Seller: The goals, objectives, policies, strategies, etc. of the organization are the
foremost forces which govern the market. Successful companies are those that can recognize
and respond profitably to unmet needs and trends in the society.
Customers: Consumer satisfaction is the foundation stone of a successful business. Business
has to produce goods according to the needs,taste and preferences of the customers.
Enterprises have to take into consideration the following features to create, maintain and
retain this force: Tradition, customs, beliefs, values of society, lifestyle, standard of living,
consuming, habit, thinking behaviour, income level, demographic characteristics, etc.
Competitors: Competitors are such factors in the micro environment that provide similar
offerings for goods and services. To remain competitive, an enterprise must consider who
their biggest competitors are.
Suppliers: Suppliers are another key component in the core system of market. Any
manufacturing unit uses necessary resources for the conversion of input (material,machines
labour and funds) into output for that the necessary resources are generally obtained by the
supplier.
The companies growth depends upon the production and production depends upon the
regular supply of resources therefore working of the various supply markets depends upon
maintaining good relations with suppliers. Lack or non-availability of suppliers can ruin the
market for a product.
Marketing Intermediaries: Marketing intermediaries are institutions that facilitate the flow of
goods and services between the company and its final markets. They include resellers (i.e.
wholesalers, retailers, agents, and brokers), transporters, warehouses, banks and promoting
agencies.
These all institutions come into being to facilitate the work of consummating exchanges in the
market. They perform a great deal of work in bringing about transactions between the buyers
and sellers, market cannot survive without these intermediaries.
Macro Environment includes:
Political factor: Political factors is the outcome of a combination of various ideologies
advocated by different political parties. The rules and regulations and the laws that monitor
and regulate the market forces are framed and promulgated by the government. This include
the political factor. These policies generated aims at improving infrastructural facilities which
encourage new business ventures. For example, after relaxation of import-export policies, an
entrepreneur who exported textile material used its earning to import heavy industrial
machines.
Economic factor: It includes the close study of important variables like supply and demand.
Details of consumer trends, economic preference, costing, discounting, etc. are all economic
decisions. Economic details will also help the entrepreneur in determining the size of the
project and the reasons of finance. Socio-Cultural factor: Business is born and develops in
society and in it various social factors exists. It involves a close study of the life styles, beliefs,
customs, conventions, practices, etc. Expectations of individuals their preferences on the basis
of their family background, age group and education will also form a part of this study. The
main aim of an entrepreneur is to satisfy the need of all individuals of a society.For example,
an entrepreneur wants to open a showroom of branded footwears. Hence, he will target the
high income group of society.
Technological factors: It is influenced by government spending on research, new discoveries
and development, government and industry focus of technological effort, speed of
technological transfer and rates of obsolescence. Ecological factors: It considers the ways in
which the organisation can produce its goods or services with minimum environmental
damage.
Legal and finance factors: Legal scanning of the environment demands analyzing the legal
requirements in the establishment of a project. Managing of the project and also in getting
assistance from different sources. For example, welfare of employees, safety, simple
contracts entered into with suppliers of raw materials financer’s, real estate owners, etc.
require legal assistance.

Q4. Explain the benefits of understanding the relevant environment of business.

Ans. The benefits of understanding the relevant environment of business are:
(i)Identification of opportunities to get first mover advantage:
By keeping in touch with the changes in the external environment, an enterprise can identify
opportunities and find strategies to capitalise on the opportunities at the earliest.
For Example, Volvo, the Swedish brand has 74% share in the luxury bus segment as it had
entered India earlier.
(ii)Formulation of strategies and policies: It helps in identifying threats and opportunities in
the market. These can serve as the basis of formulation of strategies to counter threats and
capitalise on opportunities in the market.
(iii)Tapping useful resources: If the company has a thorough knowledge of the external
environment, it can tap raw materials, technology and even financial resources from the
market at economical prices at the right time.
(iv)Better performance: Proper understanding of the various elements of the external
environment is necessary to take timely action to deal with the threats and avail opportunities
for the purpose of improvement in the performance of the firm.
(v)Sensitisation of entrepreneurs to cope up with rapid changes: A keen watch on the trends
in environment would help to sensitise the entrepreneur to the changing technology,
competition, government policies and changing needs of the customers. E.g., changing trends
in clothing.

Q5. Explain the various environmental factors crucial for an entrepreneur.

Ans. Some environmental factors crucial for an entrepreneur are:
Political factor: Political factors is the outcome of a combination of various ideologies
advocated by different political parties. The rules and regulations and the laws that monitor
and regulate the market forces are framed and promulgated by the government. This include
the political factor. These policies generated aims at improving infrastructural facilities which
encourage new business ventures. For example, After relaxation of import-export policies, an
entrepreneur who exported textile material used its earning to import heavy industrial
machines. Socio-Cultural factor: Business is bom and develops in society and in it various
social factor exists. It involves a close study of the life styles, beliefs, customs, conventions,
practices, etc. Expectations of individuals their preferences on the basis of their family
background, age group and education will also form a part of this study. The main of an
entrepreneur is to satisfy the need of all individuals of a society.
Ex. An entrepreneur wants to open a showroom of branded footwears. Hence, he will target
the high income group of society.
Economic factor: It includes the close study of important variables like supply and demand.
Details of consumer trends, economic preference, costing, discounting, etc. are all economic
decisions. Economic details will also help the entrepreneur in determining the size of the
project and the reasons of finance. Legal and Finance factors: Legal scanning of the
environment demands analyzing the legal requirements in the establishment of a project.
Managing of the project and also in getting assistance from different sources, e.g. welfare of
employees, safety, simple contracts entered into with suppliers of raw materials financer’s, real
estate owners, etc. require legal assistance.

Q6. ‘Information for environmental scanning can be collected from several sources.’ State
any four such sources.[CBSE Delhi 2015]
Ans. Following are the sources for collecting the information for environmental scanning:
(i) The sources can be obtained by analyzing the verbal information from customers,
wholesalers, retailers, distributors, consultants, etc.
(ii)The record of the companies is also analyzed.
(iii)Various sources can be obtained by analyzing the various government publications.
(iv)The sources can be obtained by the publications of various financial institutions.

Q7. ‘The process of generation of ideas’ can be streamlined by developing an awareness

about it and these work as the convenient frames of references for this. [CBSE Delhi 2015]
(i)Identify the concept stated in the above lines.
(ii)Explain any three sources of the concept identified which are used by an Entrepreneur.
Ans. (i) Idea fields
(ii) (a) Natural resources: Ideas can be generated based on natural resources. Aproduct or
service may be desired from forest resources, agriculture, horticulture, mineral, animal
husbandry, wind, sun, and human resource.
(b)Existing products or service: A business opportunity or idea often comes from everyday
problems that someone solves. Successful businesses find a need and fill it by providing a
service or product. Entrepreneurs who look at ways to make an existing product or service
better can be as successful as those who create or invent products.
(c)Market driven or demand driven: Market research is any organized effort to gather
information about target markets or customers. Ideas can be generated based on existing
demand in the market. It is a very important component of business strategy.

Q8. Lalita Devi did her post-graduation from Manipur University, Imphal. She had offers to
joi^ eputed firms in metropolitan cities like Delhi and Mumbai. Instead of ^joining any of
these firms she decided to do some creative work in Imphal. She observed that a special
type of chilli is grown by the farmers of most of the villages around Imphal. This chilli has a
distinct flavour and the pickle made from it has a taste that may be liked by many people in
other parts of the country. But the farmers were neither trained in the farming of this kind of
chilli on a large scale nor was there a secured market for their produce. Lalita Devi met
eighteen like-minded women of the area and formed an organization for doing the business
of pickle manufacturing. Each of them contributed ? 2,00,000 towards its capital and were
equally responsible for its management. On one hand they assured the farmers to purchase
the chilli produced by them and on the other hand, the organization with the help of the local
agriculture department arranged for the training of the farmers. They also employed 10 local
unemployed graduate girls for doing the various operations of pickle manufacturing. [All
India 2015] ,(i) Name the process that helped Lalita Devi in ‘converting an idea into an
opportunity’.
(ii) Identify the kind of organization that Lalita Devi had decided to set up. (iii) State any two
values which Lahta Devi wants to communicate to the society.
Ans. (i) The process that helped Lalitha Devi is Sensing entrepreneurial opportunities.
(ii)Partnership form of business organi¬zation was formed by Lalitha Devi.
(iii)Values involved are Courtesy; fostering respect for differences; sensitivity to environment,
good behaviour in human interaction; sharing, compassion, empathy; discipline; responsibility;
respect for law and order; conflict resolution; team work; honesty and integrity.

Q9. ‘ One of the keys to business success is to anticipate what the market will want or need.’
Since it is not possible for an entrepreneur to see into the future, there is one best way. This
‘best way’will help the entrepreneur to understand the market and produce goods or provide
services accordingly.
(i) Identify the concept discussed in the above lines.
(ii) Explain any three ways in which an entrepreneur can perform the activities related to the
concept identified.
Ans. (i) Concept stated in the above lines is Trend spotting.
(ii) Following are the ways in which an entrepreneur can perform activities relating to the trend
spoting:
1. Real Trends:
•Entrepreneurs regularly read the leading publications and websites affecting their business.
•Publications include industry publications, trade association sites, major newspapers, key
business magazines, thought leaders and influential bloggers.
•They scan information from a wide variety of sources — from international news on down to
niche bloggers focused on specific aspects of their industry. Obviously, there is a sunami of
information available. They use tech-tools like RSS feeds, e-mail newsletters or websites and
forums to keep on top out of all and get the information they want. They understand quickly
which sources are valuable and which should be avoided.
2. Talk Trends:
•Talking to people is an equally important trend-spotting tactic. They get involved in specific
industry’s trade association and attending events both online and offline.
•From social networking tools like social network websites and forums.
•They even start or join groups on the networks and see what people are buzzing about and
about the latest trends. To customers regarding what customers thinking, buying, doing etc.
what customers are saying about the business, but what they’re saying about the competitor’s
business.
3. Watch Trends:
•Watching and observing the customers in the market place.
•If the customers are teenagers, in the local mall.
•If they are Business class people, it might be restaurant or office park restaurant center.
•The entrepreneur spends some time simply watching and observing, what people are eating,
doing, wearing, using.
4. Think Trends:
•As an entrepreneur begins gathering all these information regularly, they will start to develop a
“trend-spotter mind.”
•They collect from what they read, heard and observed, and they start to making connections
and observations that will lead to business-boosting insights.

V. VALUE BASED QUESTIONS

Q1. Sonam, a dropout from 10th class is forced by her mother to start working as a domestic
help. Sonam agrees on the condition to do only if every day she is allowed to cook at home
and in 2-3 houses as she was fond of cooking. One family turns out to be Punjabi, other
Gujarati and the third one is Rajasthani. She cooked their kind of food for an year and to
everyone’s surprise, she expressed her desire to open up a small eating joint of her own.
All alone, determined, she finally opens “Apna Bhoj”, a small eating joint with her savings and
it became a hot spot because of the fusion food platter being offered. Do you think Sonam is
an entrepreneur? Give reasons for your answers. Give two value points related.
Ans. Yes, Sonam is an entrepreneur.
(i)Sonam’s one year occupational experience provides her confidence to start her own
business.
(ii)It converted her hobbies into reality by sheer hard-w v and application of mind.
(iii)Her desire to work independently and potential efforts, helped her to reduce the element of
uncertainity.
(iv)She is innovative as she created new idea and new market to start business.
(iv)Understanding of the area/market in which she is going to start her business.
•She is a creative entrepreneur as, she has taken initiative and created an opportunity for
innovation, experimentation and production.
•Her competitiveness which means willingness to compete honestly with others and providing
quality product and services and reduction in price.
•She is an innovator of ideas, products, practices, services to meet the perceived opportunity, a
lot of effort has done by Sonam to convert her dream into reality.
Value points: Initiative, resourcefulness, service to others, social service, unwillingness to hurt
others.