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ENTERPRENEURSHIP ENTERPRENEURSHIP DEVELOPMENTDEVELOPMENT

BA9264

UNIT 1UNIT 11

KV Institute of Managem

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Entrepreneurship conceptEntrepreneurship concept

The word ‘entrepreneur’ has been taken from the French language ‘enterprendre, which means “between-taker”

and “go-between” i.e., ‘To undertake’. It refers to the managerial functions performed by an individual in

establishing an enterprise.

Innovation and risk-bearing are regarded as the two basic elements involved in ‘Entrepreneurship’. It involves

application of knowledge, skills and competencies by an individual called ‘Entrepreneur’.

The Entrepreneur develops the concept of ‘Entrepreneurship’ by creating value, generating wealth, employment

and social recognition

According to Joseph Schumpeter, ‘an entrepreneur is an innovator and develops untried technology’.

According to Peter Drucker, ‘He is an energetic individual who maximizes opportunities’.

According to International Labor Organization (ILO), ‘Entrepreneurs are those people who have the ability to

see and evaluate business opportunities, together with the necessary resources to take advantage of them and to

initiate appropriate action to ensure success.

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ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Entrepreneurs play a vital role in the society in promoting industrial and economic development. An

economic system of country determines the nature & scope of entrepreneurship. Entrepreneurship can

bring out drastic changes in the very structure of the economy.

Entrepreneurship can promote capital formation by mobilizing the idle saving of the people; create

immediate and large scale employment by establishing small scale enterprises; promote balanced

regional development by establishing small-scale enterprises in rural, remote and less developed

regions; reduce the concentration of economic power and promote equitable wealth, income, power

etc. in the interest of the country; encourage effective resource mobilization of capital & skill by

establishing industries in backward and forward linkages in the country.

The importance of Entrepreneurship can be experienced through increase in National income, positive

changes in the structure of business and society, arrival of new products, new services, new business

ideas, better standard of living, filling of knowledge & social needs, dispersal of economic power,

enhancement of welfare amenities and innovative production methods.

There is an increasing need identified for entrepreneurs in developing countries like India. They help in

promoting country’s export business and enhance economic development of the country. Therefore

Entrepreneurs are considered as “Change Agents” in the process of industrial and economic

development of an economy. 3


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FACTORS AFFECTING ‘ENTREPRENEURSHIP

“Internal factors” - Low risk bearing capacity, lack of motivation, lack of technical

knowledge, lack of training, locational disadvantages, high cost inputs, poor capacity

of utilization, poor quality controls, inadequate working capital, delay in payment of

customers, delay in loan arrangements, pricing policies, market expansion, customer

preferences etc.

“External factors” - Government policies, shortage of power, business trends,

changes in population, economic changes, competitive pressures, industry trends,

changes in buying habits, technological developments, trade unions, global markets,

etc. 4


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ENTREPRENEURIAL PROCESS

FOUR STAGES:

(1) Identifying & evaluating the potential opportunities

(2) Develop a well-defined Business Plan based on relevant facts & figures relating to the

type of venture to be undertaken

(3) Determine the required type and amount of resources for the business so that the

source of availability can also be found

(4) Manage the enterprise with all the resources gathered & acquired and use them

according to the pre-determined business plan.

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PROBLEMS OF ENTREPRENEURSHIP

1. Financial or credit support may not be adequate

2. Poor investment promotion

3. Lack of consultancy & counseling services

4. Inadequate infra structural facilities

5. Lack of technical & non-technical training

6. Usage of outdated technology into operations

7. Lack of cooperation & coordination

8. Difficulty in preparing project feasibility reports and evaluation

9. Absence of scientific and industrial research facilities

10. Need for developing their marketing & communication skills.6


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ENTREPRENEURSHIP AS A CAREER It is the process of creating something different with value by devoting adequate time, effort,

risk and money to obtain rewards & satisfaction. To become an ‘Entrepreneur’ the following prerequisites are needed: - (a) Opportunity to

create one’s own destiny, (b) Opportunity to make a difference, (c) Opportunity to reach one’s full potential, (d) Opportunity to contribute to society (e) Opportunity to do what one enjoys.

The Entrepreneurial career provides self-actualization, unlimited scope, self-employment, high flexibility in working environment, generation of new ideas, satisfaction obtained through converting one’s creativity into reality. Self-Motivation, Desire for change, Perceiving ability, Gaining command over the resources and a mind-set for idea generation are the essential entrepreneurial traits.

A keen self-interest, inspiration from others, family background, need for the career, motivation from the environment, government support etc can induce an individual to enter into the entrepreneurship career.

The entrepreneur must perform the following roles & responsibilities: Risk-Bearing, Organizing, Coordinating, Innovating & Decision-Making. However, it depends on the opportunities for the self-generated career options during the long time period.

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ENTREPRENEURSHIP AS A CAREER The Positive aspects – being the Boss in his own business, enjoying unlimited power,

freedom to think & do, a good command over the resources, maximum utilization of

opportunities, generating employment for others, great achievement motivation &

increasing achievement satisfaction, contributing significantly to the development of

economy & society.

The Negative aspects– Hard work, continuous commitments, long working hours, facing

challenges & frustrations, dependency on others to execute his ideas, risk of failure,

experiencing stress and family will be generally ignored.

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ENTREPRENEURSHIP MANAGEMENTENTREPRENEURSHIP MANAGEMENT As a career, it is basically concerned with the development and coordination of entrepreneurial

functions. The rewards can be high; the risks are undoubtedly high too. They must have the drive,

creativity and the desire to be their own boss

There is a significant Growth in entrepreneurship in India during the years. The evolution of

entrepreneurship in India is found even as early as Rig-Veda, when metal handicraft existed in the

country. Over the years, entrepreneurship has passed through several upheavals. The important ones

include decline of Indian Handicraft Industry towards the end of the 18 th century, advent of the East

India Company, Swadeshi Campaign, the First World War, partition of undivided India, inauguration

of the planned development in the Country etc.

‘The economy is the effect for which entrepreneurship is the cause”. The role of entrepreneur in

economic development indicates promotion of capital formation, creation of immediate large scale

employment, promotion of balances regional development, effective mobilization of capital and skill,

induction of backward & forward linkages etc.9


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THE FUNCTIONS OF ENTREPRENEURS’

The “Primary functions” of an entrepreneur are planning, organizing, decision-making, managerial,

innovation & risk-bearing.

The specific functions like idea generation, determining the objectives, raise of funds, procurement of raw

materials, procurement of machinery, market research, determining the form of enterprise, manpower

recruitment & project implementation are considered to be the “Entrepreneurial functions”.

Management of shares & investments, dealing with Public, acquiring & Assembly of factory,

engineering, new product development, looking out for parallel opportunities, customer relations,

marketing management are said to be the “Economic functions”.

There “Other functions” like diversification of production, expansion of the enterprise, maintaining

cordial employer & employee relations, tackling labour problems and coordination with outside agencies.

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ENTREPRENEURIAL PERSONALITY The common traits of an entrepreneur are optimism, self-made, confident, dynamic, analytical,

committed, consistent, strategic thinking, good communicative abilities, interpersonal skills,

innovative ideas, good presence of mind during the crisis situations, goal oriented, systematic

planning, technical knowledge, tactfulness to manage the resources, high tolerance, urge to know,

ability to identify the business opportunities etc.

The factors that usually influence the entrepreneurial personality may be the personal strength &

weakness, family situations, business environment, economic conditions, etc.

Entrepreneur is an individual who has possession of a new enterprise, venture or idea and assumes

significant accountability for the inherent risks and the outcome.

Entrepreneur is an ambitious leader who combines land, labour and capital to often create and

market new goods or services.

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TYPES OF ENTREPRENEURS:

Individuals who procure the finished products from the manufacturers and sell these to the customers

directly or through a retailer are called ‘Trading Entrepreneurs’

Entrepreneurs who convert raw materials into finished goods using the resources & technology are called

‘Manufacturing Entrepreneurs’

Individuals who start-up an enterprise in a backward or rural area and develop the villages through

industrialization using the available natural resources are called ‘Rural Entrepreneurs’. Rural industries

being labour intensive have high potential in employment generation. The industries in villages and

backward areas generate good employment opportunities, develop industrialization, reduce the regional

disparities in the resources, women development, protect the Indian heritage and also motivate village

republics.

Limitations : causing atmospheric pollution, creating health hazards, usage of primitive technology, lack of

warehousing facilities, inadequate infrastructure, lack of promotional strategy, poor quality of raw materials,

high cost of production etc.

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Individuals who start a business venture to solve a social problem or to serve the society or want to

create an impact on society through their business activities are called ‘Social Entrepreneurs’.

Social entrepreneurship is application of entrepreneurial attributes combined with the drive to solve

the social issues. People undertaking social entrepreneurship has been increasing in our country and

they wish to establish a new equilibrium that results in enduring social benefits for a better future for

everyone. Social entrepreneurs are ambitious, missionaries, strategic, resourceful and result oriented.

The Grameen Bank (GB), Bangladesh Rural Advancement Committee (BRAC), The Self-employed

Women’s Association (SEWA)are some of the reputed organizations related with social

entrepreneurship.

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‘Technical Entrepreneurs’ use new & innovative technology in their enterprise for their

production processes

‘Non-technical Entrepreneurs’ are concerned with use of alternative and imitative methods of

business operations in their enterprise.

An entrepreneur who has made investment in plant & machinery up to Rs 1.00 Crore is called

‘Small-scale Entrepreneur’

The entrepreneur who has made investment in plant & machinery above Rs 1.00 Crore but below

Rs 5.00 Crore is called ‘Medium-scale Entrepreneur’

The entrepreneur who has made investment in plant & machinery more than Rs 5.00 Crore is

called ‘Large scale Entrepreneur.

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‘First Generation Entrepreneur’ is one who starts an industrial unit through innovation by

combining different technologies to produce & market the products & services.

‘Modern Entrepreneur’ is one who undertakes those ventures which go well along with the

changing demand in the current market.

‘Classical Entrepreneur’ is a stereo-typed entrepreneur, who is is concerned with the customers

and market needs and aims to maximize his economic returns.

‘Innovating Entrepreneurs’ are one who introduce new goods inaugurate new methods of

production, discover new markets and recognize the enterprise

‘Imitative Entrepreneurs’ adopt successful innovations of others and imitate their technology

into business

‘Fabian Entrepreneurs’ are very cautious and do not want to experiment any change in their

business operations

‘Drone Entrepreneurs’ adopt opportunities to make changes in production process at any cost

and ready to bear the risk. 15


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WOMEN ENTREPRENEUR

A woman who owns and controls an enterprise through her risk bearing, innovation

and leadership abilities is called a ‘Woman Entrepreneur’.

She employs more of women than men in her enterprise for performing the functions

of business. Women have emerged to invest their unaccounted strength in

administrative & managerial activities to integrate into a process of industrial

development. Women entrepreneurs have been on the Indian Business scene for quite

some time now and have achieved remarkable success.

Kamal Singh, an Entrepreneur from Rajasthan quotes that “A Women entrepreneur is

a confident, innovative and creative woman capable of achieving self-economic

independence individually or in collaboration, generates employment opportunities for

others through initiating, establishing and running the enterprise by keeping pace with

her personal, family and social life”. 16


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WOMEN ENTREPRENEURSHIP IN INDIA In India, Women are commonly found entering into businesses like Jams, Squashes, Baking, Pickles,

Pappads, Masala powder, Perfumeries, Electronics, Energy, Engineering, Agro-based items, Cosmetics,

Garments etc. More number of Woman entrepreneurs is found in the states of Gujarat, Rajasthan and

Kerala. Now the number is found to be increasing in Maharashtra and Tamilnadu also.

Strengths: Women tend to possess desire to achieve, hard working, creative, change agents, self-

motivated and also when trained they become most suitable for the career.

Weakness: to raise funds, obtain financial assistance through the institutions, lack of self-confidence

during crisis, lack of sustainable family support, unable to mobilize the resources into business, not

eligible for wide travel, lack of adequate training in technical skills, male domination, risk bearing ability,

emotional maturity in the work place are considered as their limitations.

Several National & International Organizations have come forward to encourage and train the women

into entrepreneurship career. They realize the need & importance of women entrepreneurs and take

efforts to develop them. UNIDO, NAYE, FICCI, Nationalized Banks, Government of India SFC, etc.,

are some of the significant sources that play a vital role in promoting women entrepreneurship both in

rural & urban areas.

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ENTREPRENEUR VS MANAGER:

(1) Main motive of an Entrepreneur is to start a venture by setting up an enterprise but the Manager’s motive

is to render services to the enterprise

(2) Entrepreneur is the owner but Manager is the employee appointed by the Entrepreneur

(3) Entrepreneur assumes all the risk as the owner of the enterprise but Manager does not bear any risk in the

enterprise

(4) Profit is the reward for the Entrepreneur and salary is the reward received by the Manager

(5) Entrepreneur acts as an innovator but Manager executes the innovative ideas of his employer

(6) Entrepreneur needs specific qualities but for a Manager both qualification and administrative skills are

needed.

“A Manager can become an Entrepreneur but an Entrepreneur can only perform the managerial functions”.

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ENTREPRENEUR VS INTRAPRENEUR: (1) Entrepreneur is independent in his operations but Intrapreneur is dependent on the

entrepreneur

(2) Entrepreneur raises funds required for his business but fund are not raised by the

Intrapreneur

(3) Entrepreneur bears the risk but Intrapreneur does not bear the full risk in the enterprise

(4) Entrepreneur operates from outside the organization but Intrapreneur operates from within

the organization.

“An Intrapreneur acts like an Entrepreneur within an already established organization but an Entrepreneur cannot take up the role of an Intrapreneur”.

Eg: - Indra Nooyi of Pepsi Co. is a successful Intrapreneur and her significant role as a CEO of the reputed MNC has been highly appreciated over the world.

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CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR

Entrepreneur is a key player in economic progress. They are considered as the business leader and not as simple

owner of capital. They have the skills and talent who perceive business opportunities and promptly enclose them

for exploitation.

Basic characteristics of successful entrepreneurs are risk taking ability, locus of control, flexibility in nature,

analytical skills, business communication skill, self-confidence, openness to change, hard work, desire for high

achievement, highly optimistic, independence, foresight, energetic, accepting of constructive criticism, vision with

leadership skills, search for new ideas, ability to mobilize resources, good organizer, coordinator and innovator.

Other characteristics of entrepreneurship are Idea generation, an opportunist, social & business etiquettes,

presentation skills, accepting challenges, purposeful activity, building organization, skillful management, gap filling

function, systematic in planning & execution, committed to work, assertiveness, creativity & innovativeness, good

negotiate skills, Interpersonal competency, self-efficacy, leadership traits, recognizing the importance of Business

Relationships and an open mind to receive any kind of information, suggestions, opinions, changes etc.20


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SUCCESSFUL ENTREPRENEURS Dhirubhai Ambani of Reliance Industries

Azim Premji of Wipro

Narayanmurthy of Infosys Technologies Ltd,

Kiran Mazumdar Shaw of Biocon India Group

Verghese Kurien of Amul, Deepak Parekh of HDFC etc.

Subash Chandra of Zee Television is a famous business personality, who is often noted for his attitude of

grabbing the opportunities to reach full business potential.

Shri Hari Shankar Singhania, the famous entrepreneur believes that there is no substitute for hard work and

one must focus to achieve his vision

Sunil Mittal of Bharati Telecom presents an excellent example of need for high achievement; NarayanMurthy is

known for his excellence business foresight

Dhirubhai Ambani, Tatas, Birlas & Kirloskars are popular for their innovative qualities.

Azim Premji’s 10 golden rules are: Dare to dream, Set clear goals, Never lose your Zest and curiosity in learning,

strive for excellence, build self-confidence, learn to work in teams, take care of yourself, persevere, have a

broader social vision and never let success go to your head

Henry Ford cited that ‘Bringing people together is beginning, keeping people together is progress and working

with people is Success’.21


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SUCCESSFUL ENTREPRENEURS Dr.Kiran Mazumdar Shah quotes from her experience that the essential qualities for successful

entrepreneurship are: spirit of challenge, sense of conviction, resourcefulness, ethos of persistence,

ability to manage failure, problem solving approach, ability to spot and leverage opportunity, building

core competence and excellence, uncompromising work ethic and building a strong organizational

DNA through differentiation.

Michael Dell, the owner of Dell Computer Corporation, is the super-rich business personality and he is

in the list of the wealthiest people in the United States. It is said that he is an opportunist who strive

hard to reap impressive profits.

Sudha Narayanmurthy, wife of the well-known entrepreneur Mr.N.R.Narayanmurthy says that ‘We

have a responsibility to give back to the society, Wealth is only a means to an end and we are just

trustees of that wealth’. She finds an opportunity to contribute to the society through her

entrepreneurial traits.

The Japanese proverb says that “Fallen seven times, stand up eight”, which means the entrepreneurs

must be considered their failures in business as stepping stones for the forthcoming years to sustain and

succeed in business. 22


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KNOWLEDGE OF ENTREPRENEURSHIP

Entrepreneurship is the process, Entrepreneur is the person, Enterprise is an object and Knowledge &

Skills are the two managerial weapons that can be used effectively to convert an individual’s business

ideas into the consumers’ needs.

An Entrepreneur requires knowledge in the areas of Finance, Banking, Insurance, Shares &

Commodities trading, Economics, Business environment, Politics & Government regulations, Culture &

Society, Legal aspects of Business, Marketing, Advertisement, Media relations, Administrative activities,

Human relations management, Technological applications, Export & Import management, Foreign

Exchange, Global Business Strategy, types of business, Production process, Sales & Marketing,

Accounting methods & procedures, Auditing practices, Inventory Management, Total Quality

Management, Distributor & Dealer Network, Agency & Franchising contracts etc.

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KNOWLEDGE OF ENTREPRENEURSHIP

‘Entrepreneurship’ is the attempt to create value through recognition of business opportunity,

the management of risk-taking appropriate to the opportunity, and through the communicative

and management skills to mobilize human, financial, material resources necessary to bring a

project to fruition.

lack of appropriate knowledge can lead the entrepreneur to face financial crisis, human

resource becoming out of control, poor quality in production, losing the market position,

sustaining the competition, etc.

Business knowledge from Books, from others, travel, exposure, experience, environment etc.

Also one must upgrade the knowledge, especially in technology to make effective operation.

Ultimately they should apply both technical & non-technical knowledge during their day to day

operations. 24


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ENTREPRENEURIAL SKILLS

Innovation & risk bearing are the two basic skills required to become a successful entrepreneur.

The managerial skills essential for an entrepreneur are Planning, Organizing, Staffing, Directing,

Controlling, Decision-making, Problem solving, Conflict Management, Persuading, Negotiating,

Communication, Leadership, Presentation, Preparing business plans, project reports, filing returns with

Tax authorities etc.

‘Entrepreneurship’ is the purposeful activity of an individual or a group of associated individuals,

undertaken to initiate, maintain profit by production or distribution of economic goods and services.

Entrepreneurs need adequate skills to meet certain specific challenges while performing multi-

tasking in their career. They may have to suffer when unable to persuade the employees, customers,

suppliers; unrecognized by the business society; lack of need for achievement, struggling to bear the

risk, dominated by the competitors, government interference, gender issues etc.

The entrepreneurial skills can be acquired through training, mentoring, coaching, etc., from both

internal and external sources. 25


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