BSEB Inter Entrepreneurship flashcards

36 cards. Read the term and the definition here. The deck at the top of this page is optional.

Creative destruction

Schumpeter's term for the process in which new products, methods or markets make existing firms and technologies obsolete, so innovation simultaneously destroys old value and creates new value.

Intrapreneur

An employee who develops a new product, service or process inside an existing organisation, using the firm's resources while bearing limited personal financial risk compared with an independent founder.

Residual profit

The surplus left after paying rent for land, wages for labour and interest for capital. It is the reward of the entrepreneur, and it is negative when the venture makes a loss.

Entrepreneurial process stages

The standard sequence is idea and motivation, opportunity identification, feasibility study and business plan, resource arrangement, enterprise launch, and growth or consolidation. Each stage gates entry to the next.

Opportunity screening criteria

An idea qualifies as an opportunity only if it creates customer value, can be delivered at a profit, offers a sufficiently long window of returns, and fits the capability of the founding team.

TAM, SAM, SOM

Total addressable market is overall demand for the category; serviceable available market is the part reachable with your model and geography; serviceable obtainable market is the share realistically won in about three years.

Opportunity cost of venturing

The value of the founder's next-best alternative, typically salary forgone plus returns on capital used. A venture must beat this benchmark to be economically rational, not merely feasible.

Value chain gap

An inefficiency or missing link in the sequence from raw material to end customer, such as absent cold storage or slow payment. Such gaps are a recognised structural source of venture opportunity.

PESTEL analysis

A scan of Political, Economic, Social, Technological, Environmental and Legal forces outside the firm's control, used to identify opportunities and threats before committing resources to a venture.

Porter's Five Forces

Industry profitability is shaped by rivalry among existing firms, threat of new entrants, threat of substitutes, supplier bargaining power and buyer bargaining power. Strong combined pressure implies thin margins.

Delphi technique

A forecasting method that collects anonymous expert opinions over several rounds, feeding back summarised group responses each time, until views converge. It avoids dominance by senior or vocal participants.

SWOT matrix

A two-by-two grid crossing internal strengths and weaknesses, which the firm controls, with external opportunities and threats, which it does not. Strategy pairs strengths with opportunities and defends weaknesses against threats.

Break-even quantity

Fixed cost divided by contribution per unit, where contribution is selling price minus variable cost per unit. Output below this level produces a loss; output above it produces profit.

P/V ratio

Contribution divided by sales, expressed as a percentage. It shows how much of each sales rupee remains to cover fixed costs, and break-even sales equals fixed cost divided by the P/V ratio.

Margin of safety

Actual sales minus break-even sales, divided by actual sales. It measures how far sales can fall before the firm makes a loss, so a shrinking margin signals rising risk.

Project cost components

Total project cost combines fixed capital for land, building and machinery, the margin money for working capital, preliminary and preoperative expenses, and a provision for contingencies.

Debt service coverage ratio

Cash available for debt service divided by the debt service due in the period, covering both interest and principal repayment. Lenders use a ratio above one as the minimum comfort level.

LLP vs private limited

Both give limited liability. An LLP needs at least two designated partners and has lighter audit and compliance duties; a private limited company needs shareholders and directors and carries heavier statutory compliance.

POSDCORB

Gulick's enumeration of management functions: Planning, Organising, Staffing, Directing, Coordinating, Reporting and Budgeting. It is used as a checklist that no management function has been omitted.

Span of control

The number of subordinates reporting directly to one manager. A narrow span creates a tall hierarchy with close supervision; a wide span creates a flat structure with faster decisions and less supervision.

Delegation triangle

Effective delegation requires responsibility for the task, matching authority to act, and accountability for results. Authority must equal responsibility; accountability cannot be delegated away by the superior.

Penetration pricing

Setting a low launch price to win market share quickly. It works only when unit costs fall with volume and the firm can survive thin early margins; otherwise it destroys cash.

Marketing mix 4P

The four controllable marketing variables: product, covering quality and features; price; place, meaning channel and distribution; and promotion, covering advertising, sales promotion, personal selling and publicity.

Customer acquisition cost

Total selling and promotion spending divided by the number of new customers acquired in the period. Comparing it with customer lifetime value shows whether growth is profitable or merely expensive.

Accounting equation

Assets equal liabilities plus owner's equity. Every transaction changes at least two elements while keeping the equation balanced, which is the underlying logic of double-entry bookkeeping.

Working capital gap

Current assets minus current liabilities. The positive gap is the portion of stock and receivables not financed by trade credit and must be funded by the promoter or a bank cash credit limit.

Term loan vs cash credit

A term loan funds fixed assets and is repaid in instalments over years. Cash credit funds stock and receivables, is sanctioned for a year and renewed, and is secured by hypothecation.

Current ratio

Current assets divided by current liabilities. It measures short-term solvency; a ratio near two is conventionally comfortable, but a very high ratio may indicate idle stock or poor collection.

Economic order quantity

The order size that minimises the sum of ordering cost and inventory holding cost, computed as the square root of twice annual demand times ordering cost divided by holding cost per unit.

ABC inventory analysis

Classifying stock by annual consumption value: A items are few but high value and get tight control, B items moderate control, C items many and low value with simple periodic review.

Job description vs specification

Job description lists duties, responsibilities and reporting relationships of the post; job specification lists the qualifications, skills and experience the holder must have. Both come from job analysis.

CGTMSE credit guarantee

A government-backed scheme in which a trust guarantees a portion of collateral-free loans given by member lending institutions to eligible micro and small enterprises, reducing lender risk.

Udyam registration

The online MSME registration that replaced Udyog Aadhaar. It classifies an enterprise as micro, small or medium and is the gateway to subsidy, credit and tender-preference benefits.

Mudra loan categories

Loans to non-corporate micro enterprises are grouped as Shishu, Kishore and Tarun by ticket size, with each successive stage covering a larger loan amount for a growing business.

Triple bottom line

Judging enterprise performance on three simultaneous results: social impact on people, environmental impact on the planet, and financial return. A social enterprise reports all three, not profit alone.

Social enterprise surplus use

A social enterprise earns revenue through trade but reinvests surplus in its mission rather than distributing it to owners. This distinguishes it from both a charity and a profit-maximising firm.