EP CHAPTER-1 NOTES CLASS 12 CBSE

EP NOTES CLASS 12 CBSE 

Problem identification

A problem is a roadblock in a situation, something that sets up a conflict and forces you to find a solution. When

an entrepreneur identifies such a roadblock, he/she is said to have identified the problem.

Objectives of problem identification:

1. It should clearly state the problem
2. Identify the target group facing the problem
3. Find the market acceptability of the solution to the problem.

Uses of problem Identification

It helps the entrepreneur to:

1. Bring out new products in the market

2. Understand the problems and needs of the market

3. Be creative

4. Increase employment generation

5. Increase national income (of the country)

Idea generation

The process of creating, developing, and communicating ideas which are abstract, concrete, or visual. It

includes the process of constructing through the idea, innovating the concept,

developing the process, and bringing the concept to reality.

Some business ideas come from a careful analysis of market trends and consumer needs; others come from

serendipity.

Idea fields

The process of generation of ideas can be streamlined by developing an awareness for different "idea fields".

This will help the entrepreneur in enlarging the scope of thinking, at the same time structuring the ideas

according to convenient frames of reference.

Idea Fields can be described as: 'Convenient frames of reference for streamlining the process of generation of

ideas.'

Various sources of idea fields

a) Natural sources

Ideas can be generated based on natural resources. A product or service may be desired

from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun and

human resource. A further exercise with a field may generate many useful product ideas.

b) Existing products or services:

Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who

create or invent products. There is a constant and consistent effort on the part of all entrepreneurs to improve

the products and services already existing in the markets. Often, a company will improve or change its existing

products. It can make a substantial difference in the success of the company and even take it in a whole new

direction. There are a number of pros to changing or improving your existing product line, including:

1. Keep up with the competition: If you provide services or products in an industry that is constantly

changing, it's important to stay aware of the latest in industry trends so you can continue to be

competitive. In this case, it would be advantageous to update the products to reflect the latest in

technology.

2. Increase sales: The main reason people will change and improve their existing product line is to

increase their sales and ultimately, their revenue. By adding to the product line, you can take your

company in a new direction by increasing sales. Let's take the example of the tutoring business. While

you may have a good number of clients, they are all math students. Just as many students will need

extra help in other disciplines. Expanding the existing service will only result in increased profits.

3. Working on existing product and service can generate a number of ideas to improve them or to provide

cheaper substitutes or to bring about a reduction in price.

c) Market driven or demand driven ideas

It is also possible to generate ideas by conducting a market research. This will yields valuable data about trends

of supply, demand and consumer preferences.

Market research is any organized effort to gather information about target markets or

customers. It is a very important component of business strategy. Marketing research is concerned specifically

about marketing processes, while market research is concerned specifically with markets.

Market research is a key factor to maintain competitiveness over competitors. Market

research provides important information to identify and analyze the market need, market

size and competition.

Idea generation is knowledgeable, creative and systematic. It develops from

knowledge of the consumer, the market, the technology and the general environment, and

it creates newness in product, production and marketing. It systematically develops

product ideas to satisfy the aim of the project and therefore the business strategy.

d) Trading related ideas

Trade, in simple terms, is buying goods and services and selling them to consumers at a profit. It is easier to

launch and less risky than other types of businesses.

It is necessary for a prospective trader to be aware of the trends in an economy.

With the opening of the market to international companies, large size departmental stores,

chain shops and umbrella markets have become omnipresent; competition has become

intense and to survive in the market, new entrants will have to acquire skills, competencies

and knowledge required to launch, manage and expand business opportunities.

e) Service sector ideas

Service sector is the most growing field these days, the world over, thanks to emerging knowledge societies and

advancements in Information and Technology. So, new opportunities can be identified by understanding the

linkages to different business activities.

The list of opportunities ready for the taking in the food and other service areas is rather

long. Amongst the most interesting ones in the food sector are the following:

Indian fast food/finger food; Sandwich and salad parlours; Ice-cream and juice/beverage parlours; Indian

"desserts" and "snack food" chains; Speciality tourism; Personal grooming salons; Career counselling centres;

Chain of repair and maintenance services for electrical/electronic products.

India's low labour–related service costs can provide a cost-effective solution to the

millions, while generating good returns on investment for the entrepreneur.

Creative efforts

Creativity is a key component for an entrepreneur. Apart from applying creativity to spot and harness

opportunities, it can also be applied to develop new products and services. A very useful concept to bear in

mind is that, most often creative products and services

are born as a result of problem solving.

There are basically five ways in which creative ideas can be generated:

1. Develop a new product or service.

2. Improve an existing product or service

3. Find a new process or resource for manufacturing a product.

4. Find new markets for existing products or services.

5. Find a new use of an existing product or service.

Questions:

1. Explain various sources that lead to emergence of basic ideas.

2. What is meant by problem identification? State any two objectives and also give an example of problem

identification.