1. Give any two reasons to show that entrepreneurship facilitates the rate of development of a country?

entrepreneurship facilitates the rate of development of a country by significantly contributing to the following factors.

  1. By increasing the rate of growth in GDP of a country
  2. Increasing productivity.
  3. Growing employment opportunity.
  4. Increasing economic diversification.
  5. Optimum use of local resources
  6. Continued innovation in techno – managerial practices
  7. Improving in international competitiveness.

2. ‘Entrepreneurship helps in conserving the outflow of national wealth’ – Do you agree? Give two points to vindicate your answer.

The developing countries usually have a limited national wealth. However, they need to spend this wealth to import goods and services. Also, to trade with other countries, they need foreign exchange. Entrepreneurship helps in conserving the outflow of the national wealth in the following ways.

  1. As entrepreneurship is a low-cost strategy of economic development, job creation and technical innovation. Thus they enable the production locally and reduce the need of import.
  2. Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product, commercializing an invention, adopting a technology and enveloping a new market. They will even help in generation of foreign exchange, thus conserving the outflow of national wealth.

3. ‘Entrepreneurship is an exercise in low-cost strategy’ – Analyse the statement.

Entrepreneurship is a low-cost strategy for

  1. Economic development.
  2. Job creation.
  3. Technical innovation

The entrepreneurs bear the costs and risks of launching a new venture, developing a new product, commercializing an invention, adapting a technology and developing a new market, there by offering a highly leveraged strategy of development.

Entrepreneurship alone results in generating wealth and employment, in increasing GDP and the overal development of society. Governments need to spend a lot of money if they have to provide employment and to establish enterprises. But by encouraging entrepreneurs and by supporting them goverment can achieve these targets easily. So entrepreneurship is called an excercise in low-cost strategy.

4. What is the ‘sweat equity’ of an Entrepreneur.

Entrepreneurship contributes to the increasing national production through

  1. Its low cost strategy of economic development
  2. Job creation
  3. Technical innovation

Entrepreneurs bear the costs and risks of

  1. Launching a new venture.
  2. Develooping a new product
  3. Commercializing an invention
  4. Adapting a technology
  5. Developing a new market

All these factors which the entrepreneur bears upon himself offers highly leveraged strategy of development and contributes to the increased national production.
So, all these bearings of costs and risks, by the entrepreneur, can be considered as “Sweat Equity” of the entrepreneur. Even if the entrepreneurs receive government assistance, they will keep on adding considerably more value through their “Sweat Equity”

5. ‘Entrepreneurship is not only an exercise in self-employment, but it is employment generative’ – Justify

Wage-employment has the following drawbacks.

  1. It does not necessarily generate resources.
  2. It can be organized only with existing usable wealth.
  3. It has a strong tendency of self-saturation. So, once availed, it blocks the employment opportunities for others for another 10 years assuming an average 3 promotions in a 30-year service career.

Entrepreneurship or self-employment overcomes these problems as

  1. Adds to the GNP
  2. It has unique characteristics of self-generation.

In other words, entrepreneurship offers employment to others. As it is economic activity, it also leads to the emergence of other economic activities. This creates unending employment oppotunities.
Thus, Entrepreneurship is not only an exercise in self-employment, but it is employment generative.

6. What are the disadvantages of the absence of local entrepreneurs for a society.

In the absence of local entrepreneurs for a society, enterprises are organized by the entrepreneurs coming from outside. This leads to

  1. The draining of the wealth generated out of the local resources to the areas of the entrepreneur’s origin.
  2. A large share of the profits earned by the entrepreneurs will not be reinvested in the area of the enterprise.
  3. backward development of the areas, especially in the developing contries
  4. the ‘leech effect’ be developed in the areas where enterprises are established.
  5. Non-availability of the wealth which would have been re-invested in the welfare of the area of profit generation.
  6. Reduction in the standard-of-living of the area of profit generation.
  7. Absence of balanced area development in the nation.

7. Identify two states where there is the absence of local entrepreneurship and analyze the reasons for the same?.

I’m still in the process of preparing an answer for this question.

8. What is meant by balanced area development? How does entrepreneurship help in achieving the same?.

The development of a country majorly depends upon

  1. Industrial activities.
  2. Economic activities activities.

When any area prospers in the above activities, it also results in the development of the following welfare activities.

  1. Development of roads
  2. Transport
  3. Communication
  4. Health
  5. Education
  6. Entertainment etc.

When the industrial and business activities are evenly distributed all over the country and not centralized in only few areas, it is called as balanced area development.

As entrepreneurs establish the enterprises, this will result in balanced area of development, as the enterpreneurs try to make the best use of the available resources in their local area. This results in sprouting of enterprises all across the country, resulting in the development of the above welfare activities and overall development of the country.

9. Promotion of entrepreneurship in society leads to channeling the youth energy – Why?.

Due to excessive unemployment, the youth in India are diverting their attention to violence and other anto-social activities. One of the prime factors for the increase in unemployment is that the youth in India are excessively dependent on wage/salary employment and not the pursuit of entrepreneurship. This often results in channelling of youth energy to self-destruction and non-productive areas. Thus the nation is losing its most valuable youth energy.

Entrepreneurship can harness such youth energy. The entrepreneural pursuit is challenging and creative and can harness the extra vigour that is abundantly available with the educated youth. As the entrepreneural opportunities are limitless, they open up new opportunities for the unemployed youth. Especially in developing countries, where in the youth lacks self-confidence, entrepreneurship plays a vital role in developing their self-confidence. Thus the promotion of entrepreneurship in society amonth the youth leads to ‘entrepreneurisation of the society’, thereby leading to the channelization of the youth energy.

10. Why are the entrepreneurs called risk bearers?.

The markets in which the entrepreneurs operate has little tolerance for

  1. Miscalculation about business opportunities
  2. For lack of commitment
  3. Laziness or incompetence

Entrepreneurs also bear the costs and risk of launching a new venture, developing a new product, commercializing an invention, adopting a technology and enveloping a new market. Entrepreneurs either succeed or make a developmental contribution or they fail and disappear from the market place. For this reason, they are called as risk bearers.

11. ‘Entrepreneurs facilitate in healthy competitiveness in the market’ State two reasons to justify the above.

1. The markets in which the entrepreneurs operate has little tolerance for

  1. Miscalculation about business opportunities
  2. For lack of commitment
  3. Laziness or incompetence

Entrepreneurs, by bringing sinsitivity to the discipline of the market, make the markets more competitive by reducing both static and dynamic inefficiencies.

2. Entrepreneurs facilitates a variety of innovative collaboration, merger and fusion. This helps in improving the international competitiveness.

12. What is Franchising?

Franchising is an efficient way of importing marketing and retail know-how. Business format franchising is like entrepreneurship with training wheels. It offers immediate levels of risk, cost and return to potential but least experienced entrepreneurs.

12. Examine the merits and demerits of franchising?


  1. Frachising provides an opportunity to take advantage of an established brand
  2. No need of innovating a new product.
  3. The cost and time is of the investor is reduced.


  1. The investor will be implementing someone else’s idea and no freedom to implement his own idea.
  2. A major portion of the profit has to be transferred to the franchisor. No freedom to implement their own finacial planning and budgeting.
  3. More depenndency on the franchisor. All the goodwill earned will be lost once the franchisor stops supporting a particular franchisee.

13. ‘For a developing country Entrepreneurship is vital’. How would you relate the above statement to India? Identify any three major bottlenecks in promoting entrepreneurship in India.

Entrepreneurship has a tendency to automatically contribute to the development of a country in the following ways in India.

  1. The entrepreneurship makees the society an enterprising one, thus reducing the dependancy on the wage-employment.
  2. Makes the society more self-confident and capable of solving its problems on its own and feel concerned for change and growth and value work.
  3. India has many resources lying unutilized e.g. human resources. Entrepreneurship will help in locating these resources and mobilizing them to meet the challenges.

Bottlenecks in promoting entrepreneurship in India

  1. Inadequate infrastructure and the high cost of transportation.
  2. Difficulty involved in procuring a loan for investment.
  3. Lack of Entrepreneurship friendly policy framework and strategy.