Question

1. What is the advantage to a conglomerate?

2. What are the qualities of an entrepreneur?

3. What is insider trading?

4. What is a SWOT analysis?

   
   

Answer 1

1. Conglomerate diversification is nothing but the strategy where the business add new products or service that is different from the company's existing products or service.

The advantage to a conglomerate is that it help in reducing the investment risk and helps in creating capital market resulting in growth. Conglomerate can acquire companies who has discounted shares and thus shows growth in earning.

2. Entrepreneur refers to the person who start a business with the goal to make profit by taking financial risk.

Entrepreneurship is the process of setting up business and take financial risk in order to make profits. Owning a business can be good and a new entrepreneur can make his or her business successful by his or commitment to perform the task, planning and executing appropriately and making strategies in order to be successful in the long run.

Entrepreneurship is considered as creative destruction by Joseph Schumpeter because it has the following characteristics: -

• Need for achievement – This is an important psychological characteristic that is very important for entrepreneur. This include taking personal responsibility at work, focus on performance as well as take risk, creating high performance work teams, etc. High need for achievement will make the individual to manage their business effectively in order to meet their business goals.
• Internal locus of control – An entrepreneur has the ability to control its work environment through his or her actions or behavior. A person can manage his or her business effectively if he or she manages the business environment appropriately.
• Coping up with uncertainties – An entrepreneur has the ability to deal with challenging situation, adapt to change and make strategies to deal with uncertainties. They can handle multiple assignments irrespective of their difficulty level.
• Risk-taking ability – Entrepreneur has the ability to take risk and are more aggressive in terms of making business decisions.
• Work-style – An entrepreneur’s orientation towards work depends on his or her abilities, interest, values, talents and knowledge. So a person will want to accomplish the goals based on these factors by creative thinking, overcoming obstacles and take risks.
• Demographic and background factors – Parent’s occupation, parent’s socio-economic status and birth order of entrepreneur are important demographic and background factors that makes the entrepreneur different from others.

3. Insider trading is the process by which securities of a publicly-traded company is purchased or sold by someone who has access to material, nonpublic information about security.

4. SWOT analysis refers to identifying the strengths, weaknesses, opportunities and threats of industries. When there are too many competitors in the market, companies perform SWOT analysis to identify their strengths, weaknesses, opportunities and threats so that they can come up with different strategies to give healthy competition in the market.

The advantages of SWOT analysis are: -

• This is an important technique for strategic planning within an organization.
• It helps the organization to identify the weaknesses so that organization can work on those to reverse it.
• Organization will be able to overcome its threats.
• Core competences of the firm can be identified with the help of this technique.
• Objectives can be set effectively for strategic planning.
• Past, present and future data can help the organization to be competitive by planning its future based on the data collected.
• It helps in building organization's strengths.

The disadvantages of SWOT analysis are: -

• Increase in price, government policies, raw materials, economic factors, etc. may limit the organization from effectively conducting SWOT analysis.
• Internal factors like unskilled labor, poor quality control, inefficient research and development facility, etc. may limit the organization from effectively conducting SWOT analysis.
• The data collected may not be accurate and it depends on the participants of the study who are likely to create a biased result.
• The data become outdated quickly.