10 Characteristics of Successful Entrepreneurs

Do you have the qualities of a successful entrepreneur?

Although there is no "one size, fits all" theory for entrepreneurship, a few
guidelines may help those with a good idea become successful
entrepreneurs. The following insights can help you embark on your next
entrepreneurial venture with due diligence.
1. Passion & Motivation
The one word that describes the basic requirement for an entrepreneurship
venture is Passion.
o

Is there something that you can work on over and over again, without
getting bored?
Is there something that keeps you awake because you have not
finished it yet?
Is there something that you have built and want to continue to
improve upon, again and again?
Is there something that you enjoy the most and want to continue
doing for the rest of your life?

Your demonstration of passion and motivation will determine your success

in any entrepreneurial venture. From building and implementing a
prototype, to pitching your idea to venture capitalists, success is a function
of passion and determination. (For more, see: Turn Your Passion into a
Profitable Side Business.)
2. Risk Taking
Entrepreneurs are risk takers ready to dive deep into a future of
uncertainty. But not all risk takers are successful entrepreneurs. What
differentiates a successful entrepreneur from the rest in terms of risk?
Successful entrepreneurs are will to risk time and money on unknowns, but
they also keep resources, plans and bandwidth for dealing with "unknown
unknowns" in reserve. When evaluating risk, a successful entrepreneur will

ask herself, is this risk worth the cost of my career, time and money? And,
what will I do if this venture doesn't pay off?
3. Self-belief, Hard work & Disciplined Dedication
Entrepreneurs enjoy what they do. They believe in themselves and are
confident and dedicated to their project. Occasionally, they may show
stubbornness in their intense focus on and faith in their idea. But the flip
side is their demonstrated discipline and dedication.
4. Adaptability & Flexibility
Its good to be passionate or even stubborn about what you do. But being
inflexible about client or market needs will lead to failure. Remember, an
entrepreneurial venture is not simply about doing what you believe is good,
but also making successful business out of it. Market needs are dynamic:
changes are a recurring phenomenon. Successful entrepreneurs welcome
all suggestions for optimization or customization that enhances their
offering and satisfies client and market needs. A product you develop for
yourself alone may qualify as a hobby, but a product for the market should
satisfy market needs.
5. Understand Your Offering And Its Market
Entrepreneurs know their product offering inside and out. They also know
the marketplace and its dynamics inside and out. Remaining unaware of
changing market needs, competitor moves and other external factors can
bring even great products to failure (for example, Blockbuster).
6. Money Management
It takes time to get to profitability for any entrepreneurial venture. Till then,
capital is limited and needs to be utilized wisely. Successful entrepreneurs
realize this mandatory money management requirement and plan for
present and future financial obligations (with some additional buffer). Even
after securing funding or going fully operational, a successful businessman

keeps a complete handle on cash flows, as it is the most important aspect

of any business.
7. Planning (But not Over-planning)
Entrepreneurship is about building a business from scratch while managing
limited resources (including time, money and personal relationships). It is a
long-term commitment, and attempting to plan as much as possible at the
beginning is a noble impulse. In reality, however, planning for everything
and having a ready solution for all possible risks may prevent you from
even taking the first step. Successful entrepreneurs do keep some dry
powder in reserve, but more importantly they maintain a mindset and
temperament to capable of dealing with unforeseen possibilities.
Do a feasibility analysis; identify time and capital thresholds; take the deep
dive with your limited resources. If your thresholds are crossed, look for
alternatives and be prepared to take the next exit.
8. Networking Abilities
How do you tap your network for solutions? Many people seek comfort in
commiseration: friends, colleagues and neighbors are happy to complain
with you about "the global slowdown, poor demand, or unfair competition;
but that won't improve the bottom line. What do successful entrepreneurs
do? They reach out to mentors with more experience and extensive
networks to seek valuable advice.
Having such networking abilities, including more experienced mentors, is a
key characteristics of successful entrepreneurs.
9. Being Prepared to Take the Exit
Not every attempt will result in success. The failure rate of entrepreneurial
ventures is very high. At times, it is absolutely fine to take the practical
exit route and try something new, instead of continuing to make sunk
cost investments in the same venture. Many famous entrepreneurs weren't

successful the first time around. But they had the serenity and foresight to
know when to cut their losses.
10. Entrepreneurs Doubt Themselves But Not Too Much
You may ask yourself, am I an entrepreneur? And the very question may
put you in doubt about the answer. Even if you don't have the flair of Steve
Jobs or the hair of Elon Musk, if you have the courage to ask yourself
intimidating questions Can I do this? Do I want to do this? you have the
stuff to be an entrepreneur.
Instead of worrying about fitting the image of the perfect entrepreneur,
check in with your gut. Is it on board?
The Bottom Line
Personal qualities and their correct demonstration with the right
stakeholders are the determining factors for success or failure as an
entrepreneur. A realistic self-assessment checklist against these suggested
guidelines will ensure you take the right steps in the right direction to
succeed.
The process of creating, developing, and communicating ideas which
are abstract, concrete, or visual. The process includes the process of constructing
through the idea, innovating the concept, developing the process, and bringing
the concept to reality is venture idea generation.
Business ideas:
Great business ideas are all around you. Just open yourself to the possibilities,
and you're bound to find a winner. To start your search for that drop-dead idea
that's going to set the world on fire, start with the following sources. Culled from
marketing guru Al Ries, chairman of Roswell, Georgia-based marketing strategy
firm Ries & Ries and co-author with Laura Ries of 22 Immutable Laws of Branding,
and business trendwatcher Perry Lowe, professor of marketing at Bentley College

in Waltham, Massachusetts, these can be the first steps in your search for the
business of your dreams.
1. Start with family. Tapping family for great business ideas may not seem like an
obvious first step. Sure, you'll hit them up for cash once you've developed your
idea, but what can your aging father or cousin Margaret contribute this early in
the process? Plenty. Donald Trump certainly wasn't bashful about learning the
real estate business from his dad, Fred, who ran a thriving real estate
development company, says Ries. Trump had the good sense to get some
priceless training before going off to become one of the country's foremost
builders and real estate developers. "If his father hadn't provided the foundation
and training [he needed] to create a profitable business, Trump wouldn't be
where he is today," Ries explains. "Unfortunately, many people insist on [creating
a business] themselves without any help from their family. That's foolish."
2. Get a little help from your friends. Ries says you are severely limiting yourself if
you rely solely on your own ideas--especially when your creative juices run dry.
"This is reason enough to listen to ideas others may have," he says. "If you have
15 or 20 friends, chances are a couple of them have some incredible business
ideas."
If it weren't for Steve Jobs' good friend Steve Wozniak, there would be no Apple
Computer today, Ries points out. "Jobs didn't know anything about computers,"
he says. "Wozniak, on the other hand, was the computer genius who developed
the first Apple." Jobs had an eye for great business ideas and saw the marketing
potential for developing a new type of computer. The important lesson is to keep
your antenna up at all times so you can retrieve good ideas when you stumble

across them. Ries insists you can make more money recognizing someone else's
idea than creating one yourself.
3. Look at all the things that bug you. It may not sound profound, but Ries says
this is fertile ground for great business ideas. He cites how upset Kemmons
Wilson was in the 1950s when a motel owner wanted to charge him an additional
price for each of his five children. He was so ticked off, he launched Memphis,
Tennessee-based Holiday Inn, today one of the world's largest hotel chains.
If King C. Gillette hadn't been fed up with the tedious process of sharpening his
straight-edge razor, he wouldn't have founded the massive disposable razor
industry. When he took his idea for a portable razor with a blade that could be
used several times to a research university for assistance, engineers questioned
his sanity. Gillette followed his instincts and the rest is history.
4. Tap your interests. Thousands of clever people have taken up hobbies and
turned them into a successful business. Tim and Nina Zagat, who launched
the Zagat Surveys, a publishing empire that sells restaurant guides for many
major U.S. and European cities, are great examples. In the early 1970s, the Zagats
were high-priced corporate attorneys whose passion was dining out. For fun, they
created a newsletter in which they asked their friends to rank popular restaurants
in several categories. Each year, the newsletter encompassed more restaurants.
Eventually it became such an expensive and time-consuming undertaking that the
couple began charging money for it to allay their expenses. That was the meager
beginning of the famedZagat Survey, which is sold in bookstores worldwide.
"When you're doing something you love, it's never considered work," says Ries.

5. Travel. Traveling opens your eyes to a plethora of potential business ideas. Ries
cites Leopoldo Fernandez Pujals' discovery of Domino's Pizza on a trip to the
United States from his native Spain. Pujals was so impressed with the fast-food
operation, he went back to Spain and launched his own version, called TelePizza,
in 1986. His company now registers $260 million in sales, and employs 13,000
people in eight countries.
6. Keep your eyes open. "When you see something that piques your interest, ask
yourself, What is it about this situation that's special?" says Ries. "Then narrow
your focus so you home in on the idea." The process of zeroing in on the idea
often spawns important niche markets. "Blockbuster Video's niche is renting
videos, and Bulbs Unlimited's niche is selling light bulbs," says Ries. Get it?
7. Examine old mousetraps--then build a better one. "If a product doesn't meet
your own high standards, create a better one," advises business trendwatcher
Perry Lowe. "That's what put Ben & Jerry's on the map." Ice cream fanatics Ben
Cohen and Jerry Greenfield felt popular ice creams weren't rich and tasty enough
for their cultivated palates, so they created their own super-premium line of ice
cream, which is a bestseller nationwide. Just think: If these ice cream gurus
weren't such picky eaters, there would be no Cherry Garcia, Chubby Hubby or
Phish Food to enjoy.
8. Take it to the streets. There's no better place to lock into up-and-coming
trends than city streets, Lowe contends. Street culture spawned punk, hip-hop,
grunge and a number of other fads that rapidly evolved into multimillion-dollar
businesses. "Great ideas can often be found by just browsing happening inner-city
neighborhoods in virtually any big city in the United States," says Lowe.

9. Sleep on it. Many people ignore their dreams, and some don't remember them
at all. But sometimes it pays to listen to those inner messages, no matter how
strange or unintelligible they are. "You never know, you might just find the germ
of a great idea," says Lowe. The tough part is crawling out of bed in the dead of
night to jot down those great ideas before they're forgotten.
10. Check out the Net. Finally, Lowe endorses Web surfing as a fun way to log on
to potential business ideas. "Virtually every search engine has a 'What's New' or
'What's Hot' section, where it lists new trends, news tidbits and hot new Web
sites," says Lowe. "Make it a point to check out various sites daily. It may trigger
an idea or concept you never thought of."
What are the Characteristics of Woman Entrepreneur in India?
1. Management and Control:
A woman or a group of women manages the whole business of enterprise. She
prepares various plans and executes them under her own supervision and control.
There may be some persons to help her but ultimate control lies with the woman.
2. Employment to Women:
A woman entrepreneur must provide at least 51 percent of the employment
generated in her enterprise to women.
3. Risk-taking:
Risk means uncertainty. It is the condition of not knowing the outcome of an
activity. A woman entrepreneur takes calculated risk.
She faces uncertainty confidently and assumes risk. She has to tie up capital and
wait for good returns. A woman entrepreneur likes to take realistic risks because
she wants to be a successful entrepreneur.
4. Good organizer:

The most critical skill required for industrial development is the ability of building
a sound organization. A woman entrepreneur assembles, co-ordinates, organizes
and manages the other factors namely land, labor and capital. She obtains factors
of production from the society and supplies them finished product.
5. Self confidence:
It is essential to be a self confident for a woman entrepreneur. She should have
faith in herself and in her abilities. She should have the confidence to implement
the change and overcome any resistance to change. A woman entrepreneur
should have courage to own the mistakes and correct them.
6. Decisionmaker:
The main function of a woman entrepreneur is to make decision. She takes
various decisions regarding the activities of her enterprise. She decides about the
type of business to be done and the way of doing it. A woman entrepreneur must
be clear and creative in decision making process.
7. Visionary:
A woman entrepreneur is one who incubates new ideas, starts her enterprise
with these ideas and provides added value to society based on their independent
initiative.
8. Hard worker:
A distinguishing feature of a woman entrepreneur is the willingness to work hard.
She has to follow the principle, Hard-work is the key to success.
9. Achievement oriented:
A woman entrepreneur is an achievement oriented lady, not money hungry. She
works for challenge, accomplishment and service to others. Achievement
orientation is a derive to overcome challenges, to advance and to grow.
10. Optimistic:
A woman entrepreneur must be optimistic. She should approach her venture with
a hope of success and attitude for success rather than with a fear of failure. The
positive thinking of woman entrepreneur can turn the situation favorable to her.

11. Technically competent:

The success of an enterprise largely depends upon the ability of woman
entrepreneur to cope with latest technology. Technical competency refers to the
ability to devise and use the better ways of producing and marketing goods and
services.
12. Bold and brave:
Women entrepreneurs face the adversities boldly and bravery. She has faith in
herself and attempts to solve the problems even under great pressure.
13. Mentally sound:
A woman entrepreneur is energetic, single-minded, having a mission and a clear
vision. She should be a lady of creative thinking and analytical thinking. She must
be intelligent, adaptable and problem solver.
14. Leadership:
Leadership quality is one of the most important characteristic of a woman
entrepreneur. It is the process of influencing and supporting others to work
enthusiastically towards achieving objectives.
8 Problems Faced by Women Entrepreneurs in India Explained!
by DK Sinha Entrepreneurship
Advertisements:

Some of the problems faced by women entrepreneurs are as follows:

1. Problem of Finance:
Finance is regarded as life-blood for any enterprise, be it big or small. However,
women entrepreneurs suffer from shortage of finance on two counts.

Firstly, women do not generally have property on their names to use them as
collateral for obtaining funds from external sources. Thus, their access to the
external sources of funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage
women borrowers on the belief that they can at any time leave their business.
Given such situation, women entrepreneurs are bound to rely on their own
savings, if any and loans from friends and relatives who are expectedly meager
and negligible. Thus, women enterprises fail due to the shortage of finance.
2. Scarcity of Raw Material:
Most of the women enterprises are plagued by the scarcity of raw material and
necessary inputs. Added to this are the high prices of raw material, on the one
hand, and getting raw material at the minimum of discount, on the other. The
failure of many women co-operatives in 1971 engaged in basket-making is an
example how the scarcity of raw material sounds the death-knell of enterprises
run by women (Gupta and Srinivasan 2009).
3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of
money for canvassing and advertisement. Thus, they have to face a stiff
competition for marketing their products with both organized sector and their
male counterparts. Such a competition ultimately results in the liquidation of
women enterprises.

4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A
single woman asking for room is still looked upon suspicion. Cumbersome
exercise involved in starting an enterprise coupled with the officials humiliating
attitude towards women compels them to give up idea of starting an enterprise.
5. Family Ties:
In India, it is mainly a womens duty to look after the children and other members
of the family. Man plays a secondary role only. In case of married women, she has
to strike a fine balance between her business and family. Her total involvement in
family leaves little or no energy and time to devote for business.
Support and approval of husbands seem necessary condition for womens entry
into business. Accordingly, the educational level and family background of
husbands positively influence womens entry into business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root
cause of socio-economic problems. Due to the lack of education and that too
qualitative education, women are not aware of business, technology and market
knowledge. Also, lack of education causes low achievement motivation among
women. Thus, lack of education creates one type or other problems for women in
the setting up and running of business enterprises.
7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India
speaks of equality between sexes. But, in practice, women are looked upon as

abla, i.e. weak in all respects. Women suffer from male reservations about a
womens role, ability and capacity and are treated accordingly. In nutshell, in the
male-dominated Indian society, women are not treated equal to men. This, in
turn, serves as a barrier to women entry into business.
8. Low Risk-Bearing Ability:
Women in India lead a protected life. They are less educated and economically
not self-dependent. All these reduce their ability to bear risk involved in running
an enterprise. Risk-bearing is an essential requisite of a successful entrepreneur.
In addition to above problems, inadequate infrastructural facilities, shortage of
power, high cost of production, social attitude, low need for achievement and
socioeconomic constraints also hold the women back from entering into business.
Preliminary screening involves using resource maps and other basic tools
to choose technologies to pursue further. Basically it is pre determination of
ideas process before starting a business.
Problems Faced by Entrepreneurs While Starting Business in India are 1.
Bureaucracy, 2. Corruption, 3. Labour, 4. Regional Sentiments, 5. Grey Market
and Counterfeit Goods and 6. Social Capitals!
Not everybody will call the factors discussed here problems, but these can lead to
problems if not managed properly.
These are the factors you have to take into account if you are operating in India. If
managed correctly, these can be advantages; otherwise these can lead to serious
problems for the enterprise.

Bureaucracy:
The word bureaucracy comes from the French word bureau, which refers to an
office and the Greek suffix kratos, which means power or rule. So,
bureaucracy refers to the rule of the office.
Max Weber is one of the most influential social thinkers to have studied
bureaucracy in detail. According to Weber, some of the main characteristics of
bureaucracy are as follows:
1. Official business is conducted on a continuous basis.
2. Official business is conducted according to written rules.
3. Roles and responsibilities are defined within a hierarchy, with rights of supervision and appeal.
4. Official and private business and income is strictly separate.
Public offices are set up for the good of the people and the officials manning the
posts are referred to as public servants. But, if left unchecked, these public
officials can become self-serving and corrupt.
Firstly, there are a large number of procedures to be followed and clearances to
be obtained to start and operate a business. Secondly, each of these procedures
can take an inordinately large amount of time.
Procedures are established to safeguard the interest of the common man. But,
sometimes, the rules and regulations stop serving the purpose they were

designed for. Rules become tyrannical in nature and an enormous wasted effort is
directed towards compliance with rules and regulations.
Lack of resources is one of the major problems faced by entrepreneurial firms. In
this situation, new ventures find it extremely taxing to divert time and attention
to time-taking procedural issues.
Corruption:
While under no circumstances, corruption can be justified, it is a bitter truth that
it is rampant in many government departments. Even private sector is not spared
by it. We have to make a collective effort to curb this social evil. As it hampers
growth of the business, it is a challenge for budding entrepreneurs.
Sometimes, people pay money to just hasten processes and do not ask for any
undue favours. According to Kauffman and Wei (1999), in an environment in
which bureaucratic burden and delay are exogenous, an individual firm may find
bribes helpful to reduce the effective red tape it faces.
For example, the bank is not releasing money even though it has sanctioned
release of funds. There might be some official who has raised an unwarranted
objection. In such cases, some people are tempted to grease the palms to get
things flowing.
Some people also pay bribes to get something beyond the scope of what is fairly
due to them, for example paying bribe to get money released from bank even
though the paperwork is not in order. Sometimes, this is carried to a ridiculous

extent such as paying money to ensure that the competitors funds are not
released from the bank.
Many entrepreneurs have experienced a higher degree of corruption among
employees of large private-sector companies than in the government. How you
prefer to deal with corruption is your personal choice. There are some
entrepreneurs who have taken the difficult path and have played it by the book.
Many entrepreneurs have chosen the middle path and have given in to corruption
in some instances but later have fought vehemently against it and succeeded.
There are also some dangerous entrepreneurs who use their access to corrupt
officials as a competitive edge. But, such practice does not give them success in
the long run.
Corruption has also spawned a business of consultants whose only activity is to
mediate between the corrupt officials and those seeking favours from them.
Some entrepreneurs use them to secure funding from banks, get approvals for
constructions, and for periodic submissions relating to labour laws, taxes, and
industrial approvals.
The situation is now changing rapidly and there is hope that corruption will come
down in the near future. The factors likely to lead to a lesser degree of corruption
are as follows:
1. There is greater transparency in procedures to be seen across government
departments. A number of departments have initiated e-governance initiatives,

which decrease public interface with officials by enabling registration, filing,

payments, and registering complaints through the Internet.
2. The right to information (RTI) Act has significantly changed the situation by
giving greater access of government records to interested or affected members of
the general public.
3. The media too has played an active and visible role by conducting sting operations to expose corruption at many levels. The public humiliation suffered by
officials caught in these operations has served as a deterrent to corruption.
Labour:
Lack of manufacturing capability in India has been attributed to red tapism and
corruption, but the low productivity of labour is also a big factor. In the early days
of offshoring, firms from the US and Western Europe preferred to set up
manufacturing facilities in Thailand, Mexico, and China, rather than in India.
Though these countries too had an equally bad record of red tapism and
corruption, the labour in these countries was found to be more productive.
In spite of our huge population and high economic growth, it was only in 2006
that the economy of India overtook that of Mexico in terms of GDP.
An active workers union is not bad, but sometimes, in India, there may be more
than one union (e.g., one affiliated to CITU and the other to AITUC), with differing
agendas, claiming to represent the workers interests.

Since India is a secular country, religious beliefs of every religion are respected.
So, it has holidays on occasions such as Christmas, Good Friday, Holi, Diwali,
Muharram, Id-ul-Zuha, Guru Nanaks Birthday, Buddha Jayanti, and Mahavir
Jayanti. There are also holidays on occasions of national importance.
As a result, the number of working days in a year is reduced. Furthermore, long
breaks in work brought about by bandhs, regional unrest, and breakdown of
supporting infrastructure in times of floods, earthquakes, and other natural
calamities also disrupt the work.
Welfare measures that restrict long hours of work, protect women workers, and
prohibit underage employees are desirable; but, misuse of these clauses to halt
legitimate business practices is harmful for the growth of industry.
The Indian labour is cheap because of a comparatively low wage structure. But,
the productivity of the cheap labour is not always satisfactory. Employers often
need to keep a regular check on their employees.
The manufacturing sector is now beginning to take off, and there has been a
spectacular growth in the services sector. There is a tremendous shortage of
skilled and semi-skilled manpower. There are not enough institutions in India
geared to train employable youth on skills that are in demand in the job market.
The manufacturing sector is facing a dearth of fitters, welders, draftsmen, and
machine operators. The lack of elementary skills in many call centre and BPO

employees has been very well documented by NASSCOM and other industry
watchers.
Finally, stringent laws governing lay-off of employees make it very difficult to fire
workers in case of non-performance or during times of financial distress when it
becomes imperative to lay-off workers to maintain the financial viability of the
business operations.
Regional Sentiments:
Many businesses have failed because they failed to take into account the
sentiments of the local population. Many successful businesses have managed to
identify and respond to local sentiments. Many outlets of international fast food
chains such as Pizza Hut and McDonalds do not serve beef or pork as a sign of
respect for local mores. On the other hand, scores of businesses suffer because of
anti-social elements trying to score political points by going on a rampage.
The local community expects to gain from every business being set up in its
vicinity. This is especially true when businesses come up in economically
backward areas with very little industrialization. The local community expects
employment in the firm and does not react favourably to employment of migrant
workers.
In case the business is also planning on marketing its end products in that area,
some local businesses will be adversely affected. It is important to address the
concerns of those who fear for their businesses. Otherwise, they are likely to try
their best to drum up for an organized opposition to your business.

For example, if you are setting up a large biscuit factory, some local bakery owner
will fear that his/her unit will have to close down. The local biscuit factory owner
has to be reassured that the biscuits from your factory are aimed at a different
market and are going to compete with Britannia and Parle and not with him/her.
You have to be truthful; lying at this stage will not be of much use in the long run.
Sometimes, setting up an industrial unit will put pressure on the availability of
scarce resources or might adversely affect the quality of the resources. For
example, pollution can affect the quality of the ground water, or if it is a powerintensive unit, it might affect the availability of power in the area.
In case such adverse reactions from the local population are foreseen, it is usually
desirable to spread the word about the advantages of having the business in the
vicinity. Some of the advantages that can be presented to the local community
are growth in employment, possibility of generating business for service providers
such as small transporters and welding shops, long-term possibility of small
ancillary units, and improvement of some local infrastructure such as roads.
Sometimes, entrepreneurs make goodwill gestures such as donating money to the
local puja committee, buying a computer for the school, or something similar.
Overdoing this can backfire as it can raise the expectation of the local community.
Grey Market and Counterfeit Goods:
The grey market refers to the flow of goods through a distribution channel not
authorized or intended by the manufacturer. Usually, this happens when the price
of a product in the domestic market is much higher than in other nearby markets.

Sometimes, this may be because of high local taxation. In India, the goods that are
usually smuggled in are cell-phones, electronic goods, jewellery, and alcohol.
Chen (2002) even suggests that grey marketing activities can develop a situation
of fair competition in which social welfare increases. In India, the prices of cellphones used to be very high but rampant smuggling has prompted a change in
taxes and prices, greatly reducing the differential between India and Singapore or
Dubai.
Another problem is that of counterfeit goods. Even though, strictly speaking
counterfeit goods are not part of the grey market, increasingly people are
clubbing the two together and including counterfeit goods in the definition of
grey products.
The existence of a well-entrenched grey market is a truth in the Indian business
scene. The problem of grey markets can be visualized as existing at various
levels. Let us look at the following situations to have a clearer perception.
Suppose a customer is interested in buying a DVD player. She goes to an
authorized dealer and the authorized dealer tries to sell her a spurious product.
This is common in the case of branded electronic items, clothes, perfumes, and
accessories. It is very easy for unscrupulous manufacturers to make imitation of
the actual product and try to sell it as the real thing.
Sometimes, in the case of pirated products, the buyers know that they are buying
fake items. They are willing to buy a product that gives them the same utility as
the real product at a much lower cost. In many parts of India, people make a living

by selling pirated copies of software, movies, and video games to customers who
know that they are buying a pirated copy for a fraction of the cost of a legally
procured copy.
Now, a range of proactive measures are taken by companies to stamp out
counterfeit and grey goods. Some of these are outlined here:
1. Manufacturers are drastically reducing prices to narrow the gap in prices in
local and overseas markets.
2. Warranties may not be extended to products not purchased through the regular channels. So, a Nokia service centre will not honour a manufacturers warranty
on a Nokia product that has not been bought from a bona-fide dealer paying all
taxes.
3. Some high-tech solutions have also been devised such as the use of DVD
regional codes to protect movies and other digital content.
A new enterprise desirous of building a brand or an image of a manufacturer of
high-quality goods needs to think about a strategy to tackle the problems posed
by the grey market.
Fake products are an industry by themselves. There are many shady enterprises
manufacturing fake labels, packaging, etc. There are many products that carry a
name similar to that of the successful product. HUL has identified dozens of

manufacturer of washing powder who sell using a brand name very similar to
Surf. This is a direct contravention of the intellectual property rights of HUL.
Social Capital:
It is also loosely defined as Pehchaan in India or Guanxi in China. Social capital has
been defined as the aggregate of the actual or potential resources that are linked
to relationships of mutual acquaintance and recognition (Bourdieu 1983). It can
also be referred to as connections or relationships. Unlike other forms of capital,
social capital is not depleted by its use; rather, it is depleted by its non-use.
People like to do business with people they know. Conversely, it becomes easier
to do business if you know the right people. They may be the people either in the
industry or in the bureaucracy. When relationships take precedence over the
principles of fair play and rules, it leads to cronyism and nepotism. Sometimes,
these relationships extend to doing special favours to others in your social group
or caste and those connected by kinship.
Portes (1998) has identified the following negative consequences of misuse of
social capital:
i. Exclusion of meritorious outsiders
ii. Excessive claims on group members
iii. Restrictions on individual freedom
iv. Norms aimed at downward levelling

Measuring social capital can prove to be tricky, but it depends on how many
people you know, how powerful are those people, and what they are willing to do
for you. There are a number of cases of entrepreneurs who have benefited by
knowing the right people and using it to their advantage.
Similarly, there will be a lot of cases of business failure that can be attributed to
not having a close relationship with some significant individuals. Whether use of
social capital for business purpose is right or wrong, can be argued for long, but
its existence is a reality that every entrepreneur has to deal with.
10 Reasons Why Entrepreneur Fail Their Business
If you want to be an entrepreneur, you should be aware of reasons why
most first time entrepreneurs fail their effort. Here are the reasons:
1. They Have No Written Plan
A business plan will be needed and people underestimate this. Written plan
helps you to develop your ideas into a real business in market. You must
have the plan.
2. No Revenue
Most small business begins the effort without setting revenue on their
effort. This is a bad start. You need revenue and even the smallest one
needs revenue to make more stabile company.
3. Business Opportunities are Limited
Sometimes, a good idea cannot be a great business too. This is maybe
caused by the people not wanting to buy your service or product. Do market
research first.
4. Unable to Execute

Idea is not the one that worth the money. It is about the execution. You
must be able to make even the hardest decision and taking the risks wisely.
5. Competition is Too Much
If you do not have competitor then your idea is maybe out of market.
However, too much competition kills a business all the time too because the
team cannot handle it.
6. They Have No Intellectual Property
You need to be more than registered. You also need to make your property
patented, and you need to have trademarks and copyrights.
7. Inexperienced Team
Having a team will be a great start but you also need people with enough
experience to work with you. They will know what to do and how to handle
things. So, look for someone experienced when you make vacancy ads.
8. Resource Requirements are Underestimated
Your cash is not the only needed capital. Your resource like marketing
contacts, vendors partnership, and others need to be well managed.
9. Small Marketing
Your business should have great promotion and it is should be assessed and
executed by professional marketing team. If you have nice product or
service, you also need great marketing so people will buy it.
10. Early Giving In
Most entrepreneurs are really serious at first time but they get tired sooner
and they are exhausted in trying. Instead of being that way, you should
keep on going and try your best.

Now, learn from those reasons and try to avoid it and you will be one of few
entrepreneurs who are success since the very first time they establish a
business.
MSMED ACT MICRO SMALL MEDIUM DEVELOPMENT
Definitions of Micro, Small & Medium Enterprises In
accordance with the provision of Micro, Small & Medium Enterprises
Development (MSMED) Act, 2006 the Micro, Small and Medium
Enterprises (MSME) are classified in two Classes:
1. Manufacturing Enterprises-he enterprises engaged in the
manufacture or production of goods pertaining to any industry specified in
the first schedule to the industries (Development and regulation) Act, 1951)
or employing plant and machinery in the process of value addition to the
final product having a distinct name or character or use. The Manufacturing
Enterprise are defined in terms of investment in Plant & Machinery.
2. Service Enterprises:-The enterprises engaged in providing or
rendering of services and are defined in terms of investment in
equipment..
The limit for investment in plant and machinery / equipment for
manufacturing / service enterprises, as notified,vide S.O. 1642(E) dtd.2909-2006 are as under
Manufacturing Sector
Enterprises
Investment in plant & machinery
Micro Enterprises Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five
crore rupees
Medium
Enterprises

More than five crore rupees but does not exceed ten crore
rupees

Service Sector
Enterprises
Investment in equipments
Micro Enterprises Does not exceed ten lakh rupees:
Small Enterprises More than ten lakh rupees but does not exceed two crore
rupees
Medium
Enterprises

More than two crore rupees but does not exceed five core
rupees

SME Rating Agency of India

SMERA Ratings Ltd (SMERA) is a full service credit rating
agency exclusively set up for micro, small and medium enterprises (MSME)
in India and has grown to rate SME, mid & large corporate . It provides
ratings which enable MSME, SMEs,Corporates to raise bank loans at
competitive rates of interest.[3] However, its registration with Securities
Exchange Board of India SEBI as a Credit Rating Agency and accreditation
by Reserve Bank of India RBI in September 2012 as an external credit
assessment institution (ECAI) to rate bank loan ratings under Basel II
guidelines has paved way for SMERA to rate/grade various instruments
such as: IPO, NCDs, Commercial Papers, Bonds, Security Receipts, Fixed
Deposits etc. In addition to this, RBI has told that Banks may use ratings of
bank facilities (Bank Loan Ratings) from SMERA, to assign risks to loans
for the purpose of computing capital adequacy requirements.

Project appraisal is a generic term that refers to the process of assessing,

in a structured way, the case for proceeding with a project or proposal. In
short, project appraisal is the effort of calculating a project's viability. [1] It
often involves comparing various options, using economic appraisal or
some other decision analysis technique.[2][3]

Process[edit]

Initial Assessment
Define problem and long-list
Consult and short-list
Evaluate alternatives
Compare and select Project appraisal

Types of appraisal[edit]
Technical appraisal
Project appraisal
Commercial and marketing appraisal
Financial/economic appraisal
organisational or management appraisal
[4][5][6]
Cost-benefit analysis
[7]
Economic appraisal
Cost-effectiveness analysis
Scoring and weighting
prefeasibility study
In large (and usually joint venture or multinational) projects, a
preliminary study undertaken to determine if it would be
worthwhile to proceed to the feasibility study stage.

What is the purpose of the cash flow statement?

The purpose of the cash flow statement or statement of cash flows is to provide
information about a company's gross receipts and gross payments for a specified
period of time.
The gross receipts and gross payments will be reported in the cash flow statement
according to one of the following classifications: operating activities, investing
activities, and financing activities. The net change from these three classifications

should equal the change in a company's cash and cash equivalents during the
reporting period. For instance, the cash flow statement for the calendar year 2013
will report the causes of the change in a company's cash and cash
equivalents between its balance sheets of December 31, 2012 and December 31,
2013.
In addition to the cash amounts being reported as operating, investing,
and financing activities, the cash flow statement must disclose other information,
including the amount of interest paid, the amount of income taxes paid, and any
significant investing and financing activities which did not require the use of cash.
The statement of cash flows is to be distributed along with a company's income
statement and balance sheet.

Financial analysis and planning

Financial analysis is an important part of the process of developing a
business plan, and then for monitoring the success of that plan.
Typical elements of financial analysis include:
1.Budgeting - creating a budget setting out planned cash flows in and out
of the business. By monitoring a cash flow budget it is possible to identify
any potential crisis points where liquidity will be poor. Budgets can also be
set out for income and expenditure by the business, as well as a capital
budget showing major capital spending e.g. on premises, equipment etc.
2.Profit and loss analysis - this involves the creation of a profit and loss
budget setting out expected future profits/losses for the business. This is
important in assessing the return on the business. Useful parts of

profitability analysis are:

gross profit margins - the gross profit of the business as a percentage of
sales.
operating profit margins - operating profit as a percentage of sales.

3.Solvency analysis - involves calculating the net current assets of a

business as shown in the balance sheet (i.e. current assets - current
liabilities).
4.Return on capital employed (ROCE) - this is a measure of the return
made on all of the capital employed in the business in a given period of
time.
5. Where a business has shareholders it is useful to analyse returns to
these shareholders in terms of returns for each invested in share capital.
Financial analysis is very important in planning because ultimately business
success is measured in terms of money. Investors in a business need to

feel that:
their money is secure
that their returns are comparable to what they can earn elsewhere
that planners have a good sense of the financial implications of their
actions.
Financial plan
Solvency refers to the ability of a business to be able to cover pressing
financial claims - e.g. to pay wages, bills from suppliers etc.
Capital employed refers to both shareholders (owners) capital and capital
raised from outside source such as banks.

In setting out a financial plan for a new business it is important to produce:

an income and expenditure budget
expected profit and loss account
indicators of profit ratios
cash flow estimates
a capital budget.
Sources of finance

Some sources of finance are short term and must be paid back
within a year. Other sources of finance are long term and can be
paid back over many years.
Internal sources of finance are funds found inside the business.
For example, profits can be kept back to finance expansion.
Alternatively the business can sell assets(items it owns) that are
no longer really needed to free up cash.
External sources of finance are found outside the business, eg
from creditors orbanks.
Short-term sources of external finance

Sources of external finance to cover the short term include:

An overdraft facility, where a bank allows a firm to take out

more money than it has in its bank account.
Trade credits, where suppliers deliver goods now and are willing
to wait for a number of days before payment.
Factoring, where firms sell their invoices to a factor such as a
bank. They do this for some cash right away, rather than waiting
28 days to be paid the full amount.
Long-term sources of external finance
Sources of external finance to cover the long term include:

Owners who invest money in the business. For sole traders and
partners this can be their savings. For companies, the funding
invested by shareholders is called share capital.
Loans from a bank or from family and friends.
Debentures are loans made to a company.

A mortgage, which is a special type of loan for buying property

where monthly payments are spread over a number of years.
Hire purchase or leasing, where monthly payments are made
for use of equipment such as a car. Leased equipment is rented
and not owned by the firm. Hired equipment is owned by the firm
after the final payment.
Grants from charities or the government to help businesses get
started, especially in areas of high unemployment.
Five Steps to Determine Project Feasibility
Is your project feasible?
The best way to find out whether your project is feasible is to complete a
Feasibility Study. This process helps you gain confidence that the solution
you need to build can be implemented on time and under budget. So heres
how to do it in 5 simple steps
Completing a Feasibility Study
A Feasibility Study needs to be completed as early in the Project Life Cycle
as possible. The best time to complete it is when you have identified a
range of different alternative solutions and you need to know which solution
is the most feasible to implement. Heres how to do it
Step 1: Research the Business Drivers
In most cases, your project is being driven by a problem in the business.
These problems are called business drivers and you need to have a clear
understanding of what they are, as part of your Feasibility Study.
For instance, the business driver might be that an IT system is outdated
and is causing customer complaints, or that two businesses need to merge
because of an acquisition. Regardless of the business driver, you need to
get to the bottom of it so you fully understand the reasons why the project
has been kicked off.

Find out why the business driver is important to the business, and why its
critical that the project delivers a solution to it within a specified timeframe.
Then find out what the impact will be to the business, if the project slips.
Step 2: Confirm the Alternative Solutions
Now you have a clear understanding of the business problem that the
project addresses, you need to understand the alternative solutions
available.
If its an IT system that is outdated, then your alternative solutions might
include redeveloping the existing system, replacing it or merging it with
another system.
Only with a clear understanding of the alternative solutions to the business
problem, can you progress with the Feasibility Study.
Step 3: Determine the Feasibility
You now need to identify the feasibility of each solution. The question to
ask of each alternative solution is can we deliver it on time and under
budget?
To answer this question, you need to use a variety of methods to assess
the feasibility of each solution. Here are some examples of ways you can
assess feasibility:

Research: Perform online research to see if other companies have

implemented the same solutions and how they got on.
Prototyping: Identify the part of the solution that has the highest risk, and
then build a sample of it to see if its possible to create.
Time-boxing: Complete some of the tasks in your project plan and measure
how long it took vs. planned. If you delivered it on time, then you know that
your planning is quite accurate.
Step 4: Choose a Preferred Solution
With the feasibility of each alternative solution known, the next step is to
select a preferred solution to be delivered by your project. Choose the

solution that; is most feasible to implement, has the lowest risk, and you
have the highest confidence of delivering.
Youve now chosen a solution to a known business problem, and you have
a high degree of confidence that you can deliver that solution on time and
under budget, as part of the project.
Step 5: Reassess at a lower level
Its now time to take your chosen solution and reassess its feasibility at a
lower level. List all of the tasks that are needed to complete the solution.
Then run those tasks by your team to see how long they think it will take to
complete them. Add all of the tasks and timeframes to a project plan to see
if you can do it all within the project deadline. Then ask your team to
identify the highest risk tasks and get them to investigate them further to
check that they are achievable. Use the techniques in Step 3 to give you a
very high degree of confidence that its practically achievable. Then
document all of the results in a Feasibility Study report.
After completing these 5 steps, get your Feasibility Study approved by your
manager so that everyone in the project team has a high degree of
confidence that the project can deliver successfully.
In finance, technical analysis is a security analysis methodology for
forecasting the direction of prices through the study of past market data,
primarily price and volume.[1] Behavioral economics and quantitative
analysis use many of the same tools of technical analysis,[2][3][4][5] which,
being an aspect of active management, stands in contradiction to much
of modern portfolio theory. The efficacy of both technical and fundamental
analysis is disputed by the efficient-market hypothesis which states that
stock market prices are essentially unpredictable.[6]
Financial analysis (also referred to as financial statement
analysis or accounting analysis or Analysis of finance) refers to an
assessment of the viability, stability and profitability of a business, subbusiness or project.

It is performed by professionals who prepare reports using ratios that make

use of information taken from financial statements and other reports. These
reports are usually presented to top management as one of their bases in
making business decisions. Financial analysis may determine if a business
will:

Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;
Acquire or rent/lease certain machineries and equipment in the
production of its goods;
Issue stocks or negotiate for a bank loan to increase its working capital;
Make decisions regarding investing or lending capital;
Make other decisions that allow management to make an informed
selection on various alternatives in the conduct of its business.

social analysis definition

Social analysis is the practice of systematically examining a social problem,
issue or trend, often with the aim of prompting changes in the situation
being analyzed.
A social problem is a situation that is viewed by some community members
as being undesirable. In a business context, examples of social problems
include outsourcing jobs to another country, customer data privacy and
wasting energy. Social analysis, which is topic-driven, can address such
issues through qualitative research or quantitative multivariate approaches.
Multivariate analysis is a field of statistical analysis and data analytics that
deals with variables and their relationships.
Social analysis frequently involves issues of equality and social justice, but
the insight gained from combining social analysis techniques and CRM
analytics can also help organizations create business strategies and
policies that are sensitive to particular social issues and likely to be

perceived by customers as having a positive social impact. For example,

after discovering through analysis of a customer survey that increased
efforts to develop renewable energy would be viewed in a positive light, an
oil company might decide to expand its investments in biogas, geothermal
energy and solar powerresearch.
Project implementation stages
Initiation phase
The initiation phase is the beginning of the project. In this phase, the
idea for the project is explored and elaborated. The goal of this
phase is to examine the feasibility of the project. In addition,
decisions are made concerning who is to carry out the project, which
party (or parties) will be involved and whether the project has an
adequate base of support among those who are involved.
Definition phase
After the project plan (which was developed in the initiation phase)
has been approved, the project enters the second phase: the
definition phase. In this phase, the requirements that are associated
with a project result are specified as clearly as possible. This
involves identifying the expectations that all of the involved parties
have with regard to the project result. How many files are to be
archived? Should the metadata conform to the Data Documentation
Initiative format, or will the Dublin Core (DC) format suffice? May
files be deposited in their original format, or will only those that
conform to the Preferred Standards be accepted? Must the depositor
of a dataset ensure that it has been processed adequately in the
archive, or is this the responsibility of the archivist? Which
guarantees will be made on the results of the project? The list of
questions goes on and on.
Design phase
The list of requirements that is developed in the definition phase can
be used to make design choices. In the design phase, one or more
designs are developed, with which the project result can apparently

be achieved. Depending on the subject of the project, the products

of the design phase can include dioramas, sketches, flow charts, site
trees, HTML screen designs, prototypes, photo impressions and
UML schemas. The project supervisors use these designs to choose
the definitive design that will be produced in the project. This is
followed by the development phase. As in the definition phase, once
the design has been chosen, it cannot be changed in a later stage of
the project.
Development phase
During the development phase, everything that will be needed to implement the
project is arranged. Potential suppliers or subcontractors are brought in, a schedule
is made, materials and tools are ordered, instructions are given to the personnel and
so forth. The development phase is complete when implementation is ready to
start. All matters must be clear for the parties that will carry out the
implementation.
In some projects, particularly smaller ones, a formal development phase is
probably not necessary. The important point is that it must be clear what must be
done in the implementation phase, by whom and when.
Implementation phase
The project takes shape during the implementation phase. This phase involves the
construction of the actual project result. Programmers are occupied with encoding,
designers are involved in developing graphic material, contractors are building, the
actual reorganisation takes place. It is during this phase that the project becomes
visible to outsiders, to whom it may appear that the project has just begun. The
implementation phase is the doing phase, and it is important to maintain the
momentum.
Follow up phase
Although it is extremely important, the follow-up phase is often
neglected. During this phase, everything is arranged that is
necessary to bring the project to a successful completion. Examples
of activities in the follow-up phase include writing handbooks,
providing instruction and training for users, setting up a help desk,
maintaining the result, evaluating the project itself, writing the
project report, holding a party to celebrate the result that has been

achieved, transferring to the directors and dismantling the project

team.
Project finance is the long-term financing of infrastructure and industrial
projects based upon the projected cash flows of the project rather than the
balance sheets of its sponsors. Usually, a project financing structure
involves a number of equity investors, known as 'sponsors', as well as a
'syndicate' of banks or other lending institutions that provide loans to the
operation. They are most commonly non-recourse loans, which
are secured by the project assets and paid entirely from project cash flow,
rather than from the general assets or creditworthiness of the project
sponsors, a decision in part supported by financial modeling.[1] The
financing is typically secured by all of the project assets, including the
revenue-producing contracts. Project lenders are given a lien on all of
these assets and are able to assume control of a project if the project
company has difficulties complying with the loan terms.
From investopedia : The financing of long-term infrastructure, industrial
projects and public services based upon a non-recourse or limited recourse
financial structure where project debt and equity used to finance the project
are paid back from the cashflow generated by the project.
Sources of venture capital
Following are various sources of venture capital :
1. The EXIM Bank. Export-Import Bank of India, set up in 1982, for the
purpose of financing, facilitating and promoting international trade of
India is the principal institution in the country for co-ordinating working of
institutions engaged in financing exports and imports.
EXIM Bank has made an entry into venture capital finance by investing in
venture capital Fund which is the India Technology venture Unit Scheme
promoted by Unit Trust of India (UTI). The objective of the fund is
investment in technology sectors like

(i) Information technology,

(ii) Internet
(iii) Media and entertainment
(iv) Telecommunications
(v) Biotechnology
(vi) Pharmaceuticals and (vii) Health care
EXIM Bank finances capital expenditure for setting up software
development facilities as also working capital, equity investment in
overseas ventures, direct equity participation in Indian ventures overseas,
export product development etc.
2. IDBIs venture Fund. IDBIs venture capital Fund (VCF) was started
in 1986 with an initial capital of Rs. 10 crore and is a part of technology
department of IDBI. It assists high technology, small and medium-sized
projects requiring funds between Rs. 0.5 to Rs. 25 million (Rs. 2.5 crore). It
is meant primarily to assist projects which promote commercial
applications for indigenously developed technology or which adopt
imported technology for wider applications. The entrepreneurs project
must employ technology that is new and untested in Indian conditions.
Financial assistance is provided right from pilot stage and covers almost
upto 90 percent of total cost with promoters stake to be at least 10 per cent
for ventures below Rs. 50 lakhs and 15 per cent for these above Rs. 50

lakhs. The assistance is provided in the form of unsecured loans involving

minimum legal formalities. IDBI sanctions funds in various fields like
electronics, food products, medical equipment, biotechnology, chemicals,
computer software etc.
3. ICICIs venture Fund. Industrial Credit and Investment Corporation
of India (ICICI) launched a venture capital scheme in 1986 to encourage
new technocrats in the private sector in new fields of technology with
inherent risk. It provided finances for the development and
commercialization of viable indigenous technologies. Under this scheme,
ICICI assists projects, with initial investment not exceeding Rs. 2 crores in
the form of equity or conditional loan with flexible charges and repayment
period or conventional loans. Two new schemes were launched by ICICI.
(i) India Fund
(ii) Venture capital Fund (VCF).
In 1988, ICICI floated a new company known as The Technology
Development and Information Company of India Limited (TDICI) to
design a separate scheme for financing technology in India.
ICICI also established with UTI in 1988, a venture capital fund with Rs. 20
crores subscribed equally by ICICI and UTI to set up technological ventures
which have potential for fast growth. In January 1990, ICICI and UTI have
jointly launched their second VF for Rs. 100 crores.
4. Technology Development and Information Company of India
Limited (TDICI). TDICI is the venture capital fund in India created by

government and operated through IDBI. This is also the largest venture
capital firm in India. It provides assistance to industries directly or through
venture funds which are managed by it for other institutions and venture
funds out of its own resources.
TDICI accepts and evaluates the promoters business plan by knowing his
management team, nature of his product, market conditions for his
product, competition, his investment requirement etc. TDICI goes through
the entrepreneurs business plan, if it finds the plan to be good, and the
promoter is clear about his business he gets, his work is almost done,
otherwise his project is dropped. TDICI also ventures two capital funds of
UTI.
TDICIs first venture capital fund of Rs. 200 million was subscribed equally
by ICICI and UTI. Its second venture fund of Rs. 1000 million has been
contributed by UTI, ICICI, other financial institutions, banks, World Bank
small, medium and large industrial companies hi India.
5. IFCIs venture capital. IFCI sponsored in 1975 Risk capital
Foundation (RCF), which has since been converted into a company known
as Risk capital and Technology Finance Corporation Limited (RCTFC) in
January 1988. RCTFC provides finance for high- tech projects in the form
of venture capital for technology upgradation and development. It also
assists these units which have proved to be innovative and possess the
requisite technological and managerial strengths. RCTCs assistance is
available in the form of short-term conventional loan or interest free

conditional loans allowing profit and risk-sharing with project sponsors, or

equity participation.
6. Gujrat venture Finance Limited (GVFL). Under venture capital
funds sponsored by state level financial institutions is GVFL promoted in
July 1990 to provide venture capital for the commercialization of new
technological developments and innovative products. It shares risk of
entrepreneurs by providing financial assistance in the form of equity and
quasi equity.
7. Punjab Infotech venture Fund (PIVF) is a Rs. 200 million, 10 year,
close-ended venture capital Fund conceptualized and funded by the Punjab
State Industrial Development Corporation (PSIDC), Punjab State Financial
Corporation (PFC), Punjab State Electronics Development & Production
Corporation Limited (PSED&PC) and Small Industries Development Bank
of India (SIDEI).
PIVF is dedicated to investing in companies in the Information Technology
Sector within the State of Punjab. The Funds investments in companies
will be through the route of equity and quasi equity instruments. The Fund
will seek to achieve its returns through dividends and capital gains at the
tune of divestment through an initial public offering or a negotiated sale of
its holding.
The Fund is being managed by Punjab venture capital Limited, an asset
management company, promoted by the PSIDC acting as the nodal agency
of the Government of Punjab.

5 Things Investors Want to Know Before Signing a Check

1. Financial performance. You need to know your numbers. Prove to potential

investors that your company has excellent financial performance, especially if you
are seeking funding from a bank. Venture capitalists will look for a potential of
high returns and a clear exit opportunity.
Prepare to answer questions about the financial stability of your company.
Investors will ask if your company shows signs of growth and if you have plans
such as issuing shares or borrowing money to stimulate growth. Your debt
repayment plan should also be properly presented. Prove your business is capable
of handling its financial obligations.
When pitching to investors based on your companys financial performance, its
advisable to show proof that your current assets are enough to cover current or
short-term liabilities. Expect investors to evaluate your revenue streams,
acquisition cost and turnover rates.
2. Background and experience in the industry. Investors dont want
entrepreneurs to make mistakes on their dime. Investors look for experienced
entrepreneurs and management teams with a track record of high performance and
leadership in the companys industry or in prior ventures. Most investors will
research your business experience and your background in the industry. Passion
and commitment should be evident to inspire confidence in investors and
stakeholders.
Investor fit is particularly important to angel investors compared to venture
capital fund managers. Angel investors place great importance on chemistry

between themselves and the entrepreneur because they generally take a more
hands-on approach in the businesses they invest in.
Tim Ferriss, an entrepreneur and angel investor, has mentioned that he looks for
founders who have ideally done something high stress when failure or rejection is
constant on a small or large scale almost everyday.
3. Company uniqueness. Your product or services need to be unique. Prove to
your investors, with concrete evidence, that your market potential is big enough to
make investing worthwhile.
Venture capitalists are influenced by product characteristics such as proprietary
features and competitive advantage. Investors look for features that distinguish you
from potential competitors and give you some sort of advantage, such as
intellectual property protection, exclusive licenses and exclusive marketing and
distribution relationships. (2,3,4)
4. Effective business model. Your company will start to display its strategic value
as soon as it begins to generate profits. Present the business model that you are
currently using and prove that it will help your company become more profitable.
Different types of investors seek different attributes from a business plan. Its
important to customize your business plan and pitch to each investor. For example,
venture capital fund managers and angel investors tend to put more emphasis on
both market and finance issues, so those are areas that you should focus on when
approaching these types of investors.

5. Large market size. Angel investors typically invest in solutions that address
major problems for significantly large target markets. On the other hand, venture
capitalists look at market characteristics such as significant growth and limited
competition when investing.
The larger and more stable customer base that your brand has, the stronger
competitive advantage you will have when pitching to investors. A larger and more
stable customer base will serve as proof that your company has a great impact to its
target market.
Investors look for companies that can grow quickly and manage this high growth
scale. Investors must see that the company can generate significant profits beyond
the initial product idea with adequate financial projections and a plan to include
multiple sources of revenue.

How to Write a Venture Capital

Proposal
Questions and Answers

Raising money to grow a business can be tricky. There are often several
sources of capital that a business can look to, and each has its unique
advantages. Businesses can look to banks for loans or lines of credit, or
consider going public via an IPO in order to raise money. One of the best
sources of money for a business is in the form of venture capital.

Banks are often hesitant to loan significant amounts of money to new

companies because they fear that the business may fail and the loan will not

be repaid. On the other hand, a venture capital firm is willing to look to the
future of the business and see its potential to make money in the long term.
Additionally, financing from a venture capital firm generally offers the
opportunity for long-term growth, something that banks generally cannot offer.

In obtaining venture capital, the business owners sell a portion of their

business to the venture capital firm in exchange for a sum of money. Venture
capitalists make money by investing in companies that they believe will be
profitable in the future and that will give them a good return on their
investment. Since venture capitalists invest their money in order to make more
money, they go through a lengthy and often expensive process of choosing
which businesses to invest in. Drafting an impressive venture capital proposal
is the first step in securing financing from a venture capital firm.

Steps

1
Write a business plan. The best way to write a venture capital proposal is to
start with an impressive business plan. This document will take some time to
complete, but having a well-thought out plan for how your business will run will
make it clear to investors that you understand your vision, which in turn will
make them more likely to invest in your company.

Edit your business plan to the essential points an investor would want
to know. A venture capital proposal is much shorter than a business plan, but
most of the information in your proposal will come directly from your business
plan.

Include an executive summary. Succinctly tell the reader who you are and
what you are asking for. This is the first section of your proposal and should
immediately grab the attention of the reader. Be as compelling as possible,
because if this section is not carefully written, the reader will likely not review
the rest of the document. This summary should not be longer than a page or
two.

Describe your business. Include the contact information for the business,
the general nature of the business, the history of the business, and where the
business is headed in the future. Since the firm will be buying a portion of your
company, they will want to ensure that the company will be profitable in the
long term. Explain who your competition is and why your business is so
unique that you can overcome your competition. Include information about the
market demand for your product or service, and include any applicable data
as an attachment if the firm would like more information.

Propose the terms of the financing deal. Tell the investor what you are
looking for and what you are offering in exchange. Think carefully about these
numbers, as setting them either too high or too low may turn off a potential
investor. You may consider leaving this section open for discussion should
you get a meeting with the firm. The number you come up with will be specific
to your companys needs and the venture capital firm you are directing your
proposal to.

Analyze the downsides of the investment. Anticipate any problems that the
investor may have regarding the investment. Examples include the company
having limited operating time prior to seeking investment, uncertainties in the

market, and anything that may go wrong for the business. Provide a detailed
outline of what the business would be worth if it needed to be liquidated. Try
not to spin your answers to these questions in your favor too much. Be honest
about the risks of the investment.

3
Submit your proposal to venture capital firms. Some firms have an online
process you must go through to submit your proposal, while others may
require you to send it in the mail. Contact each firm to which you will submit
your proposal in order to determine their submission procedures.

4
Wait for a response from the venture capital firm. Venture capital firms go
through an extensive process to determine whether a business is worth
investing in. Give them some time to go through this process before follow up
on your proposal. The firm may give you an estimate of when you should hear
back from them. If they do not, wait at least a few weeks before following up.

5
Set up a meeting with the firm. If a venture capital firm contacts you about
setting up a meeting, chances are good that they are willing to invest in your
business. Make sure you are clear about what you are looking for and
anticipate any questions that the investors will have for you. Most of those
answers will come from your business plan, so be sure you know exactly what
it says.

6
Negotiate the terms of the deal. The firm may want to invest in your
company but not on the exact terms you laid out in your proposal. Come into
the meeting knowing what your bottom line is and stick to it, but be flexible
within reason.

5 Steps to a Successful Vendor Selection Process in India

India, the outsourcing capital of the world offers services from software
development, to photo editing, to engineering and research to global
companies across the world. Today, you can outsource almost any service
to India. However, finding the right vendor in India for your business can be
a daunting task if you are new to outsourcing. The success of an
outsourcing project depends on how well you can manage the process
before and after signing the outsourcing contract.
While outsourcing to India, many companies opt for the lowest bidder
without undertaking a complete vendor selection process. When you do not
have the right vendor, you will soon experience bad customer support, poor
quality or even missed delivery dates. Going through all the phases of a
vendor selection process can ensure success in your outsourcing venture.

The first step towards selecting an Indian vendor is to analyze your

business requirements. After the task of searching and selecting a
prospective Indian vendor, you must develop a contract negotiation
strategy to avoid contract negotiation mistakes. Here are five steps to help
you choose the right offshore vendor from India.

1. Analyze your business requirements

It is important to first analyze your business needs before you even begin
to search for a vendor in India. Assemble a vendor selection and evaluation
team who would be given the responsibility of finding a suitable vendor
from India. Discuss with your management and vendor selection team
about what your company wants to outsource. Define in writing, the service
or the product that your company wants to outsource to India. Once your
company has finalized on what should be outsourced, you have to define
the business and technical requirements that the outsourced service
/product would require. Finally, decide on the requirements that the
prospective Indian vendor should have. Ask your management team to
analyze all the requirements and create a final document stating your
business and vendor requirements.

2. Search for a vendor

With clearly defined business and vendor requirement, your vendor
selection team would be able to easily find a suitable vendor in India, who
can deliver the service /product that you wish to outsource. Ask your team
to compile a list of possible Indian vendors, but remember that not all
vendors would meet your requirements. After conducting interviews and
researching on suitable vendors background, you will have to select a few
vendors from whom you would like more information. Your vendor selection
team can then write a Request for Information (RFI) and send it to the

selected vendors. The next step would be to evaluate the responses from
the vendors and create a short list of Indian vendors.

3. Write a Request for Proposal (RFP) & Request for Quotation (RFQ)
Now that you have analyzed your business requirements and shortlisted a
few Indian vendors that you wish to evaluate, you have to write a Request
for Quotation or a Request for Proposal. The Request for Proposal should
contain sections, such as, submission details, an introduction and
executive summary, an overview and background of the business, detailed
specifications, assumptions and constraints, terms and conditions and
selection criteria.

4. Evaluating the proposal & selecting the vendor

To begin with, conduct a preliminary review of all your vendors proposals.
The next step would be to state your business requirements and the
vendors requirements. Discuss with your management team and assign an
importance value for each requirement. Next, assign a performance value
for each requirement. Now all you have to do is calculate a total
performance score and choose the winning Indian vendor.

5. Creating a contract negotiation strategy

Creating a contract negotiation strategy is the final step in the Indian
vendor selection process. Rank your priorities along with alternatives.
Clearly define benchmarks and time constraints. Evaluate your risks and
liabilities. Also state the level of confidentiality required. Remember to
mention changes in the requirements. Understanding the difference
between what you want and what you need, from the outsourcing contract,
can help you create a better strategy.

What factors should I consider when selecting a vendor?

Key Factors to Consider

The following are several considerations for electronic health record (EHR)
vendor comparison thatRegional Extension Centers (RECs) have found useful.
Consider these factors when selecting anEHR system.

Understand if and how a vendor's product will accomplish the key goals of the
practice. Test-drive your specific needs with the vendor's product. Provide the
vendor with patient and office scenarios that they may use to customize their
product demonstration.

Clarify pricing, including costs for hardware, software, implementation

assistance, training, interfaces, and ongoing network support and maintenance
fees.

Define implementation support (amount, schedule, information on trainer(s) such

as their communication efficiency and experience with product and company).

Clarify roles, responsibilities, and costs for data migration strategy if desired.
Sometimes, being selective with which data or how much data to migrate can
influence the ease of transition.

Consider the following EHR functionalities/capabilities:

Server options (e.g., client server, application service provider (ASP), software
as a service (SaaS))

Ability to integrate with other products (e.g., practice management software,

billing systems, and public health interfaces)

Privacy and security capabilities

Ask about linking payments and incentive rewards to implementation milestones

and performance goals.

Consider the vendor's stability and/or market presence in region. Ask if the
vendor is able to provide local support and/or has a local presence.

Conduct a site visit. Pair up practice manager with practice manager, physician
with physician and ask about workflow changes.

Make sure the vendor's product is able to document meaningful use. See
what productsproviders are using to attest to meaningful use.

Consider whether you will replace your practice management system and how
you will handle the conversion or interface.

Ask about the estimated cost to connect to a Health Information Exchange.

Consider costs of using legal counsel for contract review verses open sources
through medical associations.

METHODS OF PRICE DETERMINANTS

Cost-plus pricing
This pricing method is designed to assure that fixed and variable costs are
covered and that profit is built in. To use cost-plus pricing add direct and
indirect costs to profit to arrive at your price. It is crucial that you calculate
all costs when using this method to set pricing because an omission will
lead to a reduction in profit.
Competitive pricing

If the market you are entering has an established price and differentiation
between products is difficult, you may need to use competitive pricing. If
you choose to set a different price in an industry with established pricing for
products that are difficult to differentiate between, be sure you can defend
the prices you are setting and that an awareness of price among your
target market does not make this out of the question.
Markup pricing
Usually used by retailers, it is calculated by adding a specific amount to the
cost of a product.
Demand Pricing
If you sell products to a variety of entities who purchase very different
volumes of goods from you, you may want to use demand pricing. For
example, a manufacturer who sells to retailers and wholesalers will give a
better deal to wholesalers for purchasing in greater quantity. Keep in mind
that according to the Robinson-Patman Act of 1939 you must charge the
same price to all customers for identical products. If you want to offer
different prices, you must establish pricing discounts available to any
customer who can buy in volume.

What are the direct and hidden costs in

material management?
A direct cost for material management would be the cost of the materials themselves.
A hidden cost would be the cost to ship the materials or to store the materials until
they are needed for production.
Market development is a growth strategy that identifies and develops new market segments for current
products

strategy targets non-buying customers in currently

targeted segments. It also targets new customers in new segments. (Winer)
A market development

Market development strategy entails expanding the potential market through new users or new uses.
New users can be defined as: new geographic segments, new demographic segments, new institutional
segments or new psychographic segments. Another way is to expand sales through new uses for the
product.

marketing manager has to think about the following questions before implementing a market
development strategy: Is it profitable? Will it require the introduction of new or modified products?
Is the customer and channel well enough researched and understood?
A

The marketing manager uses these four groups to give more focus to the market segment decision:
existing customers,

competitor customers, non-buying in current segments, new segments.

A market feasibility study determines the depth and condition of a particular

real estate market and its ability to support a particular development.
The key concern of a market feasibility study for multifamily development is a
project's ultimate marketability. Therefore, the market feasibility study must
determine the following:
1. What is the current condition of the market?
2. How will the market respond to the proposed project?

What Are the Steps to Set Up Small Scale Industry

Small scale industries have a large contribution in the growth of an
economy. If we take example of India, the fastest growing economy in the
world, the small scale ventures have gained a huge success quotient. Not
only these enterprises produce export quality goods, they have also
created
thousands
of
job
opportunities
as
well.
Another advantage of small scale enterprises is that they are easy to set up
and can fulfill ones dream to become an entrepreneur. However, there are
some important steps that you must follow to set up a small scale industrial

unit.

Learn

about

them

from

the

following

discussion.

First of all, you need to prepare the description for the small scale industry
you want to set up. You have to decide whether you wish to have a
corporation, proprietorship or partnership. Next, you need to describe the
product you wish to manufacture or the service you wish to offer. While
choosing the product or service you want to offer, you must conduct a good
market research and learn about the prevailing competition in the market.
The next step is to choose a location to set up your small scale industry.
Make sure you consider things like availability of raw materials, labor,
transportation services and other such things while choosing the location.
The next big step is to arrange for finance. If you dont have enough
finance, the best way is to borrow a loan. You may learn about financial aid
offered by the government of your state or country. However, you must
simultaneously plan on how you would repay the loan in future.
Production management is the next step, once you are able to start your
small scale industry. This includes allocating space for different operations
and choosing your production methods. Make sure that you follow the
practices for quality testing and keep on improving. You have to purchase
required machinery and hire employees and workers for different
departments.
Marketing and business advertising form the next big step of setting up a
small scale industry. Online business directories and various traditional
forms of advertising can be used to gain exposure for your business. You
have to decide prices for your products or services, keeping in mind the
profit
margin.
Planning in advance is a useful aspect of setting up a small scale venture.
Keep on assessing and improving your plan at every stage. All these steps
are the integral parts of the process to start up a small scale unit.

Electronic commerce, commonly written as e-commerce, is the trading or

facilitation of trading in products or services using computer networks, such
as the Internet. Electronic commerce draws on technologies such
as mobile commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic
data interchange (EDI), inventory management systems, and
automated data collection systems. Modern electronic commerce typically
uses the World Wide Web for at least one part of the transaction's life
cycle, although it may also use other technologies such as e-mail.

E-commerce businesses may employ some or all of the following:

Online shopping web sites for retail sales direct to consumers

Providing or participating in online marketplaces, which process thirdparty business-to-consumer or consumer-to-consumer sales

Business-to-business buying and selling

Gathering and using demographic data through web contacts and social
media

Business-to-business electronic data interchange

Marketing to prospective and established customers by e-mail or fax (for

example, with newsletters)

Engaging in pretail for launching new products and services

The major different kinds of e-commerce are: business-to-business (B2B);

business-to-consumer (B2C); business-to-government (B2G); consumerto-consumer (C2C); and mobile commerce (m-commerce).

E business vs e commerce
E-business and e-commerce are terms that are sometimes used interchangeably,
and sometimes they're used to differentiate one vendor's product from another.
But the terms are different, and that difference matters to today's companies.
READ NOWIn both cases, the e stands for "electronic networks" and describes the
application of electronic network technology - including Internet and electronic
data interchange (EDI) - to improve and change business processes.
E-commerce covers outward-facing processes that touch customers, suppliers
and external partners, including sales, marketing, order taking, delivery, customer
service, purchasing of raw materials and supplies for production and procurement
of indirect operating-expense items, such as office supplies. It involves new

business models and the potential to gain new revenue or lose some existing
revenue to new competitors.
It's ambitious but relatively easy to implement because it involves only three
types of integration: vertical integration of front-end Web site applications to
existing transaction systems; cross-business integration of a company with Web
sites of customers, suppliers or intermediaries such as Web-based marketplaces;
and integration of technology with modestly redesigned processes for order
handling, purchasing or customer service.
E-business includes e-commerce but also covers internal processes such as
production, inventory management, product development, risk management,
finance, knowledge management and human resources. E-business strategy is
more complex, more focused on internal processes, and aimed at cost savings and
improvements in efficiency, productivity and cost savings.
An e-business strategy is also more difficult to execute, with four directions of
integration: vertically, between Web front- and back-end systems; laterally,
between a company and its customers, business partners, suppliers or
intermediaries; horizontally, among e-commerce, enterprise resource planning
(ERP), customer relationship management (CRM), knowledge management and
supply-chain management systems; and downward through the enterprise, for
integration of new technologies with radically redesigned business processes. But
e-business has a higher payoff in the form of more efficient processes, lower costs
and potentially greater profits.
E-commerce and e-business both address these processes, as well as a technology
infrastructure of databases, application servers, security tools, systems
management and legacy systems. And both involve the creation of new value
chains between a company and its customers and suppliers, as well as within the
company itself.
All companies should have an e-commerce strategy. (Governments should have
an e-public service strategy.) Electronic networks in general and the Internet in

particular are too important for firms to ignore if they want to interact with
customers, suppliers or distribution partners.
But some companies need to move beyond e-commerce and form e-business
strategies - especially large companies that already have links to EDI networks or
have completed major ERP implementations. These companies have already
reaped some of the biggest benefits from e-commerce strategies. They're also
likely to experience organizational pain as conflicts develop among their ERP, EDI,
supply-chain management and e-commerce strategies. And last, they have
enough experience and knowledge in electronic-network technologies - and in
process redesign and integration - that they have a chance of being successful in
an e-business strategy.
Still, the coordination and organizational obstacles to developing an e-business
strategy are formidable. It involves major and potentially disruptive organizational
change. The risks of failure and the consequences from limited success are higher
in an e-business strategy than in an e-commerce strategy. Being a leader in ebusiness can contribute to long-term success, but the stresses and strains of
business transformation can cause near-term damage.
A wise company may decide to consolidate its gains and complete the work
involved in its existing and largely separate e-commerce, ERP, CRM or supplychain initiatives before making the big leap to becoming an e-business. Jumping
too soon can be as disastrous as moving too late.
eBusiness (e-Business), or Electronic Business, is the administration of
conducting business via the Internet. This would include the buying and
selling of goods and services, along with providing technical or customer
support through the Internet. e-Business is a term often used in conjunction
with e-commerce, but includes services in addition to the sale of goods.

The electronic auction (eAuction) is an e-business

between auctioneers and bidders, which takes place on an electronic

marketplace. It is an electronic commerce which occurs business to

business (B2B), business to consumer (B2C), or consumer-to-consumer
(C2C).

The auctioneer offers his goods, commodities or services on an auction

side on the internet. Interested parties can submit their bid for the product
to be auctioned in certain specified periods. The auction is transparent, all
interested parties are allowed to participate the auction in a timely
manner.[1][2][3]

The two major types of the electronic auction are forward auction in which
several buyers bid for one seller's goods and reverse auction in which
several sellers bid for one buyer's order.

Forward auctions take the form of a single seller offering an item for sale,
with buyers competing to secure the item by bidding the price upward (see
Figure 1). Forward auctions are far-better understood by the public at large

than reverse auctions as to how they operate, due primarily to the fact that
they are widely used at the consumer level. In fact, forward auctions
underlie everything from eBay and other online auction sites to auctions of
art, wine, and other collectibles. They are also widely used for auctioning
everything from autos, real estate, machinery, etc., where the goal is for the
seller to receive the most money possible for the item being offered at
auction. Thus, a forward auction should be utilized for sales of goods and
services of all types, whether conducted online, offline, or a hybrid of the
two.

This diagram shows the process of a reverse auction

This diagram shows the process of a forward auction

Reverse auctions are the other major form of auctions. In a reverse

auction, a single buyer makes potential sellers aware of their intent to buy a
specified good or service (see Figure 2). During the course of the actual
reverse auction event, the sellers bid against one another to secure the
buyers business, driving the price to be paid for the item downward. Thus,
the winning bidder is the seller who offers the lowest price. Reverse
auctions are most typically used for procurement by private
companies, public sector agencies, and non-profit organizations.

Here are the five key reasons researchers uncovered for why projects flop:

Employees don't accurately report when projects are failing: Many employees
put a positive spin on the project's status when they report to senior management,
due primarily to their being on the weaker side of a power relationship. Also, when
the organizational climate is not receptive to bad news, truthful reporting can be
inhibited. "An executive should 'trust, but verify,'" said Ronald Thompson,
professor of management at the Wake Forest University School of Business and
one of the study's authors. "Instead of taking an employee's status report at face
value, an executive should solicit the opinions of others who are close to the
project, obtaining views from different levels within the organization."
People misreport for many reasons and those reasons matter: While
executives tend to attribute misreporting to poor ethical behavior on the employee's
part, individual traits, work climate and cultural norms all play a role. For example,
some workers may just be optimistic about a fledging project, while others may

be risk takers. Still other employees may have cultural backgrounds that
traditionally reward individualism above collectivism. Charles Iacovou, a Wake
Forest University professor of management and one of the study's investigators,
said executives should spend more time considering the composition of their
project teams, especially project manager positions. "Of particular note are
personality traits, employees' perceptions of their work climate, and employees'
cultural backgrounds," Iacovou said. "Be especially wary of optimists and risk
takers."
[For a side-by-side comparison of the best project management software, visit
our sister site Top Ten Reviews.]
Audit teams help to proliferate misreporting: In one study of state government
managers who reported to an IT oversight board, the researchers discovered
several cases in which the use of an audit team led to growing distrust and
deception among the employees being evaluated. Workers reporting project status
information reacted to some auditors' queries by trying to thwart the auditors. The
auditors, in turn, concluded that the project participants were either incompetent or
deceptive, and they increased their scrutiny, which led to more defensiveness and
an even greater degree of misreporting.
Putting a senior executive in charge of a project may increase misreporting:
Conventional wisdom says to appoint a senior executive to oversee all major
projects, thus providing visibility and organizational support to marshal resources.
But research suggests that the stronger the perceived power of the project leader,
the less inclined subordinates are to report accurately. The study's authors believe
that the career aspirations of project managers and senior executives often skew
results toward the positive. Thompson said this is why companies may benefit
from having a project management office to help. "The PMO can provide a trained
leader that helps mentor other project mangers," Thompson said. "It provides a
resource for project managers to turn to if problems arise instead of running that
information up to a supervisor."
Executives often ignore bad news: A number of the examined studies found
situations where employees went to share concerns about a project with powerful
decision-makers, who had the ability to change the course of the project, or even
stop it, however, their opinions were not taken into consideration. Iacovou
said overconfidence is an occupational hazard in the executive suite and can lead to
instances where executives continue to escalate their commitment to a project,
despite negative news. "In many of the corporate disasters of the past 20 years,
overconfidence or overcommitment almost always played a role," Iacovou said.
"Executives should not only listen to a variety of stakeholders, but they should take
the warnings they receive seriously, or they risk creating a climate of silence in
which employees grow even more reluctant to report bad news."

The term special economic zone (SEZ) is commonly used as a

generic term to refer to only one modern economic zone. In these
zones business and trades laws differ from the rest of the country.
Broadly, SEZs are located within a country's national borders. The
aims of the zones include: increased trade, increased investment, job
creation and effective administration. To encourage businesses to set
up in the zone, financially libertarian policies are introduced. These
policies typically regard investing, taxation, trading,
quotas, customs and labour regulations. Additionally, companies may
be offered tax holidays.

The creation of special economic zones by the host country may be

motivated by the desire to attract foreign direct
investment (FDI).[1][2] The benefits a company gains by being in a
Special Economic Zone may mean it can produce and trade goods at
a globally competitive price.[1][3] The operating definition of an

economic zone is determined individually by AR7's of each country.

In some countries the zones have been criticized for being little more
than Chinese labor camps, where labor rights are denied for workers.