Case Study 1: Khana Khazana

Bhavik and Ratul were two students studying hotel management course in a city college. They
hailed from Kolkata a metropolitan city and Pune respectively. They became good friends during
the course of their education. Bhavik hailed from an upper class family with his parents in
influential Government jobs. Ratul hailed from a lower middle class family with his single parents
which means his mother depend on farming for their livelihood. They both shared a long ambition
to become successful in their life working independently.
They both were intelligent and were creative compared to others and both were intent on starting
a restaurant in one of their respective places by the name Khana Khazana. Bhavik was against the
idea of Ratul starting her clinic in a Pune. He felt that people of pune already have so many options
of restaurants that they wont explore new one. Bhavik had a strong view that people of pune are
more into fast food as majority of the population of pune are out-station students and the concept
which they have for their restaurant which is homemade food wont be accepted by the population
of pune. But Ratul was strong in his view that because he crowd is youth and most are away from
home so they will love to have homemade food.
Questions
Q 1. What are the characteristics of a good entrepreneur bhavik and ratul are missing because of
which it is taking time for them to come to conclusion about the venture?
Ans The characteristics which both are missing are as follow:
Characteristics of Entrepreneur

Facilitating Character
Self-Confidence
Work with Vision and Mission
High Degree of Endurance
Trouble Shooting Nature
Initiative and Enterprising Personality
Goal Setter
Calculated Risk-Taking Ability

Q 2. This business is example of which type of entrepreneurs?

Ans The case study is a classic example of business entrepreneurs. Business entrepreneurs are
individuals who conceive an idea for a new product or service and then create a business to
materialize their idea into reality. They tap both production and marketing resources in their search
to develop a new business opportunity. They may set up a big establishment or a small business
unit. Trading entrepreneur is one who undertakes trading activities and is not concerned with the
manufacturing work. He identifies potential markets, stimulates demand for his product line and
creates a desire and interest among buyers to go in for his product. He is engaged in both domestic
and overseas trade.
Case Study 2: Chiky Chiken
India has a cultivable land of 184 million hectares, which helps in producing various items. Despite
the boom in the service sectors (software and IT), agriculture is still considered as the backbone
of the Indian economy with more than half of the population associated with it. The percentage
share of agriculture in GDP was 18.5% in 2006-2007. Out of the agriculture sub sectors, livestock
is one of the major contributors. The contribution of livestock sector to agricultural GDP grew
from 22.51% in 1999-2000 to 24.72% in 20042005. The contribution of livestock output to the
country's GDP was 6% in 2003-2004.

The share of poultry in the livestock sector is significant compared to other sub-sectors like buffalo,
goat and sheep. Out of the total meat production in the country, poultry meat comprises of 25%.
By 2004, the annual growth rate of poultry was moving at 15%per annum whereas growth rates of
other meats were advancing at only 5%per annum.

The Indian poultry industry plays a prominent role in the agriculture sector contributing 2.5%to
the country's GDP. In just a few decades, the industry has transformed from a backyard activity to
a highly technology-driven industry. This rapid growth was aided by the development of the
contract farming model. Adopting this model, the Patna based Chiky chiken Poultry Farm Ltd.
Chiky Chiken stumbled upon its unique business model while trying to find a solution to the
problems it faced in the course of its operations. It has successfully established itself in the Indian
poultry industry and is currently the world's fourth largest player in the broiler segment. Its
operations are, however, centred in the eastern part of India. In 2008, Chiky chiken announced its
plans to expand across India along with its efforts to strengthen its backward and forward
integration processes.

Questions

Q1. Among the existing institutions for entrepreneurial development in India, Chicky chiken
should approach which institute?

Ans As Chiky Chiken plans is to explore other part of india the institute set up by IIC which is
EGB in order to guide entrepreneurs in identifying investment opportunities, assisting them in
selecting locations for the projects, preparing project profiles, assisting them to get financial
assistance.

EGB has been supplying information pertaining to the products that offer scope for manufacture,
statistical details relating to demand, capacity productions, sources of raw-materials, types of
equipments required, investment involved, sources of finance, etc. Information on, procedures
pertaining to obtaining letters of intent, import of capital equipment, export of finished products is
also furnished. EGB also renders assistance from banks/ financial institutions or for submitting
proposals for the letter of intent, etc., EGB also establishes direct contracts with engineering
graduates. Technically qualified personnel and small entrepreneurs to promote entrepreneurship
development.
Case 3: Martha Stewart
Ms Perfectionist", "Domestic doyenne" and a role model for any businesswoman, is the 'second'
most written about woman in the world. This well-known entrepreneur of the United States, who
turned the art of home-making and keeping into a billion dollar business - Martha Stewart Living
Omnimedia Inc (MSO), encountered hard times when she was convicted in a scandal. She was
convicted for her actions, which are considered to be less harmful in a corporate world that
witnessed more serious scandals. Her case called for a rethinking of certain basic notions in free-
market economies - ethics in business, the role of government regulation, and more importantly
the perils and promises of personal branding.
Coming from humble background, Martha Stewart owed her culinary and gardening skills to her
parentage in a working-class family in New Jersey in the 1940s and 1950s. She was one of the first
few women who entered the Wall Street in 1968 as a stockbroker with the New York Stock
Exchange. She took to catering business in the 1970s, and honed her skills in keeping kitchen,
arranging parties, designing interiors - the 'Martha Stewart way'. She made her way into publishing
with her first book, Entertaining in 1982, and produced a variety of books, videotapes, CDs, and
television specials. Martha launched her renowned magazine, Martha Stewart Living in
collaboration with Time Warner, in 1990, and a television series by the same name, in 1993. Her
regular appearance on television made her a household name in the US. The MSO expanded when
it went public on the New York Stock Exchange in 1999. The enormous edifice of the company
stood on four business segments Publishing, Television, Merchandising, and Internet/Direct
Commerce, with eight core content areas Home, Cooking and Entertaining, Gardening, Crafts,
Holiday, Weddings, Pet Keeping, and Baby and Kids.
At 62, Martha states, "I am an individual, but I'm a business; Martha Stewart the individual has
become Martha Stewart the brand."

Questions
Q1. What are the qualities of women entrepreneurs Martha Stewart haS and coming generation
women entrepreneurs should have?
Ans To be successful, women entrepreneurs must possess the following attributes:

1. Enthusiastic
2. Imaginative
3. Realistic
4. Intuitive
5. Optimistic
6. Enterprising
7. Developmental
8. Persevering
9. Patient
10. Self-motivated
11. Self-confident
12. Willing to take risks
13. Prepared to take challenges
14. Dynamic.

Even if a woman does not possess all these qualities willingness to take up business and develop
entrepreneurial activities will go a long way towards equipping her for business ventures.

Q2. Is there need of women entrepreneurs in India. Justify your answer.

Ans For a long time women were confined to the limits of the home. Gradually more and more
women entered professions and services. Now, finally, the women entrepreneurs have arrived.
Business acumen is no longer a mans prerogative. Women are rapidly emerging as smart and
dynamic entrepreneurs.

Women have entered almost all areas of business activity, cleaning powder you name it. Women
have already entered the field. And the Indian women has ventured in areas like cement
manufacturing, steel works, etc. in which most of her counterparts from the more developed
countries are yet to enter. In India, certainly women to mean business, women entrepreneurship is
required on the following grounds:

i. Society cannot afford to ignore this vast human resource with its immense potential.
ii. Favourable changes in the socio-economic scene such as advent of labour saving devices have
freed women from drudgery of long labour.
iii. Concept of small family and break up of traditional joint family system has resulted in
psychological liberation experienced by women.
iv. Increased aspirations to widen their horizon and extend their role.
Case 4: Rural entrepreneur
Year by year the population of world is increasing but resources are not increasing with the same
proportion. India is the second most populated country in the world and most of its population is
settle in villages or the rural part you can say. The gap between urban and rural sectors is increasing
exponentially. Success of new economic trends such as microfinance and increasing number of
companies in the rural sectors that there exists a large untapped market at the bottom of the
economic pyramid. In the current scenario, rural markets and self-help groups have gained never
before significance. Many institutes both profit and non-profit are focusing on rural
entrepreneurship.
Danapur is village near Patna, with a population of 250 families. It is far from all the amenities of
an urban area be it good transportation facility or 24 hour electricity because of which
infrastructure, education and employment opportunities are inadequate. The main source of
income in the village is agriculture which is around 1000 INR per month. As agriculture related
activities are seasonal the women in the village do knitting, sewing and allied activities when they
are not engaged in agricultural activities. The knitting work done by this women are exceptional
and can compete with high end designers.
Questions
Q1. Do this rural people need an entrepreneur who can help them to reach to right buyer. Justify
your answer.
Ans Yes, this hard working creative villagers need and entrepreneur. The need to promote
entrepreneurship in rural areas is vital in the context of generating gainful employment and
minimizing the ever widening disparities between rural and urban areas. To remove mass poverty,
widespread unemployment and urban employment and low productivity and to create prevalence
of subsistence production both m farm and non-farm sectors require the development of rural
entrepreneurship

Q2. What are the other business options available which this villagers can do when they are not
doing activites related to agriculture ?
Ans Rural folk would like to see returns in a very short period. Enterprises suggested for them
need to produce tangible results. Hence rural entrepreneurship could be promoted mainly on the
basis of the resources that are available in rural areas. Agriculture and agricultural based activities
are the main sources of employment. Some of the entrepreneurial opportunities available to rural
people as identified by the VIII plan are given below:

mineral based such as gas-based mini hydrocarbon plants,

marine based such as the growing of aqua culture in the sea coasts,
forest based, such as many units of wood industries
animal based, such as the meat, leather and dairy activities,
 poultry based such as industries for curing, freezing, grading, and canning of poultry and
eggs and manufacture of egg powder,
agro-based which the Union Ministry of Agriculture has developed for meeting local
village block demand and export purposes grouped into:
seed processing & marketing, food nursery
gardening, mushroom production
integrated pest control, fisheries,
animal husbandry, bamboo working
wheat flour & polished rice,
sugar, gur, khandasari, tobacco, cigarettes, bidis,
shoes, leather for making irrigation leather bags,
paper, cardboard, pencils, pen ink,
buckets, fruit juice, bricks, tiles,
khadi, handloom cloth, bleached,
Case Study 5: BiswaMoti Pvt Ltd(BM)
BM is interested in assessing the cash flows associated with replacement of an old machine by a
new machine. The old machine has a book value of ` 90,000 and it can be sold for ` 90,000. It has
a remaining life of 5 years after which the salvage value is expected to be nil. It is being depreciated
annually at the rate of 10% using written down value method. The new machine costs ` 4 lakhs. It
is expected to fetch ` 2.5 lakhs after 5 years when it will no longer be required. It will also be
depreciated annually @ 10% using W.d.v method. The new machine is expected to save ` 1 lakh
in manufacturing costs. Investment in working capital would remain unaffected. The tax rate
applicable to the firm is 50%.
You as a project analyst are required to work out the incremental cash flows associated with the
replacement of old machine and prepare a statement to be presented to the management for
consideration.

Answer

The above case refers to a replacement project. In such cases, one must take the following points
into consideration:

Comparison of new machine with the old machine from the overall cash flows point
of view;

Comparison of net impact of the replacement or retaining the old machine over
the cash flows;
Financing mix used for the replacement and its impact on the interest rates to
observe the effect on the profit after interest and tax.

At least two of the above factors should be applied here to analyse the position and present the
analysis for managerial consideration. The following cash flow statement will help present the
situation better.

Cash flows for the Replacement of machinery of Sai Enterprises

(Rs in crores)
Years 0 1 2 3 4 5
Net Investment (3.10)
in the machine
2. 1 1 1 1 1
Savings
in
manufact
uring
costs
3. 0.09 0.081 0.0729 0.0656 0.0590
Depreciat
ion on the
old
machine
4. 0.4 0.36 0.324 0.2916 0.2624
Depreciat
ion on the
new
machine
5. 0.31 0.279 0.2511 0.2259 0.2033
Incremen
tal
Depreciat
ion
6. 0.69 0.721 0.7489 0.7740 0.7966
Incremen
tal
taxable
profit
7. 0.345 0.3605 0.3744 0.3870 0.3983
Incremen
tal tax
8. 0.345 0.3605 0.3744 0.3870 0.3983
Incremen
tal profit
after tax
9. Net incremental salvage value 2.50
Years 0 1 2 3 4 5
(a) Initial investment (1) (3.10)
(b) 0.655 0.6395 0.6255 0.6129 0.6061
Operating
cash
flows
(5+8)
(c) (3.10) 0.655 0.6395 0.6255 0.6129 3.1061
Termin
al cash
flows
(a+b+c)

Working Notes:

1. Net investment (` 4 lakhs less ` 90,000) = ` 3.1 lakhs

2. Savings of the new machine are given in the problem, i.e. 1 lakh
3. Incremental depreciation is derived by considering depreciation of the new machine less
depreciation of the old machine.
4. Operating cash flows = Incremental depreciation + Incremental profit after tax.