ENTERPRENEURSHIP DEVELOPMENT BA9264
KV Institute of Management UNIT 1 Entrepreneurship concept
The word entrepreneur has been taken from the French language enterprendre, which means between-takerand go-between i.e., To undertake.It refers to the managerial functions performed by an individual inestablishing an enterprise. Innovation and risk-bearing are regarded as the two basic elements involved in Entrepreneurship. It involvesapplication of knowledge, skills and competencies by an individual called Entrepreneur. The Entrepreneur develops the concept of Entrepreneurship by creating value, generating wealth, employmentand 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 tosee and evaluate business opportunities, together with the necessary resources to take advantage of them and toinitiate appropriate action to ensure success. KV Institute of Management Entrepreneurship and economic development
Entrepreneurs play a vital role in the society in promoting industrial and economic development.Aneconomic system of country determines the nature & scope of entrepreneurship.Entrepreneurship canbring out drastic changes in the very structure of the economy. Entrepreneurship can promote capital formation by mobilizing the idle saving of the people; createimmediate and large scale employment by establishing small scale enterprises; promote balancedregional development by establishing small-scale enterprises in rural, remote and less developedregions;reduce the concentration of economic power and promote equitable wealth, income, poweretc. in the interest of the country; encourage effective resource mobilization of capital & skill byestablishing industries in backward and forward linkages in the country. The importance of Entrepreneurship can be experienced through increase in National income, positivechanges in the structure of business and society, arrival of new products, new services, new businessideas, 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 inpromoting countrys export business and enhance economic development of the country. ThereforeEntrepreneurs are considered as Change Agents in the process of industrial and economicdevelopment of an economy. KV Institute of Management Factors affecting Entrepreneurship
Internal factors - Low risk bearing capacity, lack of motivation, lack of technicalknowledge, lack of training, locational disadvantages, high cost inputs, poor capacityof utilization, poor quality controls, inadequate working capital, delay in payment ofcustomers, delay in loan arrangements, pricing policies, market expansion, customerpreferences 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. KV Institute of Management Entrepreneurial Process
FOUR STAGES: Identifying & evaluating the potential opportunities Develop a well-defined Business Plan based on relevant facts & figures relating tothe type of venture to be undertaken Determine the required type and amount of resources for the business so that thesource of availability can also be found Manage the enterprise with all the resources gathered & acquired and use themaccording to the pre-determined business plan. KV Institute of Management Problems of Entrepreneurship
Financial or credit support may not be adequate Poor investment promotion Lack of consultancy & counseling services Inadequate infra structural facilities Lack of technical & non-technical training Usage of outdated technology into operations Lack of cooperation & coordination Difficulty in preparing project feasibility reports and evaluation Absence of scientific and industrialresearch facilities Need for developing their marketing & communication skills. KV Institute of Management 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 tocreate ones own destiny, (b) Opportunity to make a difference, (c) Opportunity to reachones full potential, (d) Opportunity to contribute to society (e) Opportunity to do what oneenjoys. The Entrepreneurial career provides self-actualization, unlimited scope, self-employment,high flexibility in working environment, generation of new ideas, satisfaction obtainedthrough converting ones creativity into reality. Self-Motivation, Desire for change,Perceiving ability, Gaining command over the resources and a mind-set for idea generationare 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 enterinto the entrepreneurship career. The entrepreneur must perform the following roles & responsibilities: Risk-Bearing,Organizing, Coordinating, Innovating & Decision-Making.However, it depends on theopportunities for the self-generated career options during the long time period. KV Institute of Management 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 ofopportunities, generating employment for others, great achievement motivation &increasing achievement satisfaction, contributing significantly to the development ofeconomy & society. The Negative aspects Hard work, continuous commitments, long working hours, facingchallenges & frustrations, dependency on others to execute his ideas, risk of failure,experiencing stress and family will be generally ignored. KV Institute of Management Entrepreneurship Management
As a career, it is basically concerned with the development and coordination of entrepreneurialfunctions.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 ofentrepreneurship in India is found even as early as Rig-Veda, when metal handicraft existed in thecountry.Over the years, entrepreneurship has passed through several upheavals.The important onesinclude decline of Indian Handicraft Industry towards the end of the 18th century, advent of the EastIndia Company, Swadeshi Campaign, the First World War, partition of undivided India, inaugurationof the planned development in the Country etc. The economy is the effect for which entrepreneurship is the cause. The role of entrepreneur ineconomic development indicates promotion of capital formation, creation of immediate large scaleemployment, promotion of balances regional development, effective mobilization of capital and skill,induction of backward & forward linkages etc. KV Institute of Management 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 rawmaterials, procurement of machinery, market research, determining the form of enterprise, manpowerrecruitment & 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, marketingmanagement are said to be the Economic functions. There Other functions like diversification of production, expansion of the enterprise, maintainingcordial employer & employee relations, tackling labour problems and coordination with outside agencies. KV Institute of Management 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, systematicplanning, 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 assumessignificant accountability for the inherent risks and the outcome. Entrepreneur is an ambitious leader who combines land, labour and capital to often create andmarket new goods or services. KV Institute of Management Types of Entrepreneurs:
Individuals who procure the finished products from the manufacturers and sell these to the customersdirectly or through a retailer are called Trading Entrepreneurs Entrepreneurs who convert raw materials into finished goods using the resources & technology are calledManufacturing Entrepreneurs Individuals who start-up an enterprise in a backward or rural area and develop the villages throughindustrialization using the available natural resources are called Rural Entrepreneurs.Rural industriesbeing labour intensive have high potential in employment generation.The industries in villages andbackward areas generate good employment opportunities, develop industrialization, reduce the regionaldisparities in the resources, women development, protect the Indian heritage and also motivate villagerepublics. Limitations : causing atmospheric pollution, creating health hazards, usage of primitive technology, lack ofwarehousing facilities, inadequate infrastructure, lack of promotional strategy, poor quality of raw materials,high cost of production etc. KV Institute of Management Individuals who start a business venture to solve a social problem or to serve the society or want tocreate an impact on society through their business activities are called Social Entrepreneurs. Social entrepreneurship is application of entrepreneurial attributes combined with the drive to solvethe social issues.People undertaking social entrepreneurship has been increasing in our country andthey wish to establish a new equilibrium that results in enduring social benefits for a better future foreveryone. Social entrepreneurs are ambitious, missionaries, strategic, resourceful and result oriented. The Grameen Bank (GB), Bangladesh Rural Advancement Committee (BRAC), The Self-employedWomens Association (SEWA)are some of the reputed organizations related with socialentrepreneurship. KV Institute of Management Technical Entrepreneurs use new & innovative technology in their enterprise for theirproduction processes Non-technical Entrepreneurs are concerned with use of alternative and imitative methods ofbusiness operations in their enterprise. An entrepreneur who has made investment in plant & machinery up to Rs 1.00 Crore is calledSmall-scale Entrepreneur The entrepreneur who has made investment in plant & machinery above Rs 1.00 Crore but belowRs 5.00 Crore is called Medium-scale Entrepreneur The entrepreneur who has made investment in plant & machinery more than Rs 5.00 Crore iscalled Large scale Entrepreneur. KV Institute of Management First Generation Entrepreneur is one who starts an industrial unit through innovation bycombining different technologies to produce & market the products & services. Modern Entrepreneur is one who undertakes those ventures which go well along with thechanging demand in the current market. Classical Entrepreneur is a stereo-typed entrepreneur, who is is concerned with the customersand market needs and aims to maximize his economic returns. Innovating Entrepreneurs are one who introduce new goods inaugurate new methods ofproduction, discover new markets and recognize the enterprise Imitative Entrepreneurs adopt successful innovations of others and imitate their technologyinto business Fabian Entrepreneurs are very cautious and do not want to experiment any change in theirbusiness operations Drone Entrepreneurs adopt opportunities to make changes in production process at any costand ready to bear the risk. KV Institute of Management Women Entrepreneur A woman who owns and controls an enterprise through her risk bearing, innovationand leadership abilities is called a Woman Entrepreneur. She employs more of women than men in her enterprise for performing the functionsof business. Women have emerged to invest their unaccounted strength inadministrative & managerial activities to integrate into a process of industrialdevelopment. Women entrepreneurs have been on the Indian Business scene for quitesome time now and have achieved remarkable success. Kamal Singh, an Entrepreneur from Rajasthan quotes that A Women entrepreneur is aconfident, innovative and creative woman capable of achieving self-economicindependence individually or in collaboration, generates employment opportunities forothers through initiating, establishing and running the enterprise by keeping pace withher personal, family and social life. KV Institute of Management 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 andKerala.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-confidenceduring crisis, lack of sustainable family support, unable to mobilize the resources into business, noteligible 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 womeninto entrepreneurship career.They realize the need & importance of women entrepreneurs and takeefforts 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 bothin rural & urban areas. KV Institute of Management Entrepreneur Vs Manager:
(1) Main motive of an Entrepreneur is to start a venture by setting up an enterprise but the Managers motiveis 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 theenterprise (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 areneeded. A Manager can become an Entrepreneur but an Entrepreneur canonly perform the managerial functions. KV Institute of Management Entrepreneur Vs Intrapreneur:
(1) Entrepreneur is independent in his operations but Intrapreneur is dependent on theentrepreneur (2) Entrepreneur raises funds required for his business but fund are not raised by theIntrapreneur (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 withinthe organization. An Intrapreneur acts like an Entrepreneur within an already establishedorganization but an Entrepreneur cannot take up the role of an Intrapreneur. Eg: - Indra Nooyi of Pepsi Co. is a successful Intrapreneur and her significant roleas a CEO of the reputed MNC has been highly appreciated over the world. KV Institute of Management Characteristics of Successful Entrepreneur
Entrepreneur is a key player in economic progress.They are considered as the business leader and not as simpleowner of capital. They have the skills and talent who perceive business opportunities and promptly enclose themfor 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 highachievement, highly optimistic, independence, foresight, energetic, accepting of constructive criticism, vision withleadership 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 fillingfunction, systematic in planning & execution, committed to work, assertiveness,creativity & innovativeness, goodnegotiate skills, Interpersonal competency, self-efficacy, leadership traits, recognizing the importance of BusinessRelationshipsand an open mind to receive any kind of information, suggestions, opinions, changes etc. KV Institute of Management 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 ofgrabbing the opportunities to reach full business potential. Shri Hari Shankar Singhania, the famous entrepreneur believes that there is no substitute for hard work andone must focus to achieve his vision Sunil Mittal of Bharati Telecom presents an excellent example of need for high achievement; NarayanMurthy isknown for his excellence business foresight Dhirubhai Ambani, Tatas, Birlas & Kirloskars are popular for their innovative qualities. Azim Premjis 10 golden rules are: Dare to dream, Set clear goals, Never lose your Zest and curiosity inlearning, 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 workingwith people is Success. KV Institute of Management successful entrepreneurs
Dr.Kiran Mazumdar Shah quotes from her experience that the essential qualities for successfulentrepreneurship are: spirit of challenge, sense of conviction, resourcefulness, ethos of persistence,ability to manage failure, problem solving approach, ability to spot and leverage opportunity, buildingcore competence and excellence, uncompromising work ethic and building a strong organizational DNAthrough differentiation. Michael Dell, the owner of Dell Computer Corporation, is the super-rich business personality and he isin the list of the wealthiest people in the United States.It is said that he is an opportunist who strivehard to reap impressive profits. Sudha Narayanmurthy, wife of the well-known entrepreneur Mr.N.R.Narayanmurthy says that Wehave a responsibility to give back to the society, Wealth is only a means to an end and we are justtrustees of that wealth.She finds an opportunity to contribute to the society through her entrepreneurialtraits. The Japanese proverb says that Fallen seven times, stand up eight, which means the entrepreneursmust be considered their failures in business as stepping stones for the forthcoming years to sustain andsucceed in business. KV Institute of Management 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 individuals businessideas 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, ForeignExchange, Global Business Strategy, types of business, Production process, Sales & Marketing,Accounting methods & procedures, Auditing practices, Inventory Management, Total QualityManagement, Distributor & Dealer Network, Agency & Franchising contracts etc. KV Institute of Management 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 andmanagement skills to mobilize human, financial, material resources necessary to bring a project tofruition. lack of appropriate knowledge can lead the entrepreneur to face financial crisis, human resourcebecoming out of control, poor quality in production, losing the market position, sustaining thecompetition, 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 dayoperations. KV Institute of Management 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 withTax 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 therisk, dominated by the competitors, government interference, gender issues etc. The entrepreneurial skills can be acquired through training, mentoring, coaching, etc., from bothinternal and external sources. KV Institute of Management