enterpreneurship development.docx

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BBA IIIRD YEAR (2013)UNIT I

Concept:

Entrepreneur plays a vital role in the economic

development of a country. He generates employment,

income, production and contributes towards the

overall development of economy.

It is an initiative, dedication, skill, tolerance,

confidence, courage, enthusiasm, sense of

responsibility, honesty which makes one a successful

entrepreneur.

Definition Of Entrepreneur:

The Oxford Advanced Learners Dictionary defines

entrepreneur as a person who makes money by

starting or running businesses, especially when this

involves taking financial risks.

J.E.Stepanek states regarding entrepreneur, it is a

person who has capacity to take risk, ability to

organize and desire to diversify and make innovations

in the enterprise.


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Higgines writes, an entrepreneur is a person who

performs the function of seeing investment and

production opportunity, undertakes a new productionprocess, raising capital,hiring labour, arranging the

supply of raw materials, finding site, introducing a

new technique and commodities, discovering new

sources of raw materials and selecting top managers

for day to day operation of entrepreneur.

ENTREPRENEURSHIP

Concept: Entrepreneurship means degree of

intelligence to run a business. It means application of

ones ability, experience, innovations, intelligence,

initiative creativity in order to prove oneself a

successful entrepreneur.

Definition: Benjamin Higgins defines

entrepreneurship as Entrepreneurship means the

function of foreseeing investment and production

opportunity, organizing an enterprise to undertake a

new production process, raising capital, hiring labour,

arranging for the supply of raw materials and

selecting top managers for the day to day operations

of the entreprise.


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Entrepreneur and Entrepreneurship (Difference)

Entrepreneurship & entrepreneur are interchangeably

used. They are different.

Entrepreneur Entrepreneurship

Innovator Innovation

Initiator Initiative

Creator Creation

Risk Taker Risk Taking

Motivator Motivation

Leader Leadership

Organiser Organisation

Programmer Action

Visualiser Vision

Decision taker Decision taking

Manager Management

The above comparison reveals that entrepreneur

refers to a person and entrepreneurship refers to

a process. Entrepreneurship refers to the

functions of creating something new, organizing

and coordinating and undertaking risk and

handling economic uncertainty.


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ROLE OF ENTREPRENEUR:

Various definitions of entrepreneur/entrepreneurship

refers to the role of an entrepreneur.Schempeterrefers to innovation as a role of entrepreneur

others as Cantillou, JB Say and others say that risk

bearing is the main role of an entrepreneur.

Modern view is that an entrepreneur has to

perform many functions-planning, decisionmaking, risk-taking, innovation, achieving

skill,organizing, motivating, leading and

managing overall affairs of the organization.

Role of Entrepreneur in Economic Development:

An Entrepreneur occupies an important place in the

whole process of economic development. Anentrepreneur identifies an opportunity, makes

investment, invests all efforts to get rewards out

of it which ultimately lead to improvement of

economy.


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The entrepreneur is the innovating individual who

introduces something new in the economy, a new

method of production not yet tested byexperience in the branch of manufacturing

concern, a production with which consumers are

not yet familiar, a new market not yet exploited.

It means an entrepreneur does something new,

something unique.

TYPES OF ENTREPRENEURS

1.Innovating Entrepreneurs2.Adaptive or Immitative Entrepreneurs3.Drone Entrepreneurs4.Fabian Entrepreneurs

1.Innovating Entrepreneurs: Innovation is themost important function which speaks of the

quality of entrepreneueship. Innovation means

to create something new. Innovation means

implementation of invention in the production

process. An entrepreneur who happens to be in

search of introducing something new in order


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to ensure the survival in the age of competition

is called Innovating Entrepreneur. These

types of entrepreneurs are very much helpfulfor their country because they bring about a

renovation in lifestyle.

2.Adaptive or Immitative Entrepreneurs:Immitative entrepreneurs are those who follow

the policy of wait and watch. They observe the

results of innovations already launched by the

innovative entrepreneurs.On observing the

positive results implement the same in their

enterprises. These types of entrepreneurs are

found in developing countries. Immitative

entrepreneurs have the capability to know and

apply the principles of successful innovations.

These entrepreneurs are very much helpful in

less developed countries as they contribute

significantly in the growth of enterprise and

entrepreneurial culture in these countries. Alsothey generate ample employment avenues for

countries and therefore they are treated as the

agent of the economic development.

3.Drone Entrepreneurs: These are theentrepreneurs who are not ready to respond to


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changes. They feel comfortable with their old

fashioned technology of production. As a

result, they suffer losses. So, they dontcontribute towards the economy of a nation.

4.Fabian Entrepreneurs: These entrepreneurs arevery much sceptical in their approach in

adopting or innovating new technology in their

enterprise. They are not adaptable to the

changing environment. They love to remain in

the existing business with age old techniques

of production. They only adapt to new

technologies when they feel it is necessary

otherwise our business will collapse.

QUALITIES OF ENTREPRENEURS

The qualities of a good entrepreneur.

1. Are you a good decision taker: The ability tomake good decisions is the key to be asuccessful entrepreneur. Entrepreneurs of

most profit-making organizations are always

faced with a wide range of important

decisions in the areas of pricing, product

choice, cost control, capital investment and


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so on. Entrepreneurs decide such matters as

what goals, opportunities they will pursue,

what resources they will use and so on. Howgood their decisions are will determine the

quality of an entrepreneur.

2. Are you a real guide: Entrepreneur shouldhave the quality of guiding others. He should

be in a position to issue right instructions to

the right persons on right time.An

entrepreneur should possess a quality to

teach his workers and guide them

3. Are you emotionally stable: An entrepreneurshould not be moved by emotions or

sentiments. He should analyse the problem

rationally and take a decision without bias.

He should not have short temper.

4. Are you sociable: A sociable entrepreneurcan easily mingle with workers. Workers

should be encouraged to discuss theirproblems and difficulties. Entrepreneur

should give patient hearing to them.

5. Have you mental vigour: An entrepreneurshould be mentally strong. He should have a

capacity to work for long hours than others.


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6. Using feed back: An entrepreneur should bein a position to assess the impacts of

decisions. Observation of the effects ofactivities/decisions is called feed back.

Personal likes/dislikes are to be ignored.

7. Are you realistic: An entrepreneur should notbe emotional in nature. Personal likes and

dislikes should not be counted while reaching

the factual position.

8. Do you have desire to be a winner: It meansthat one should invest all efforts to turn the

dreams into reality, to adjust in changing

environment.

9. Do you have quality of stick to: One shouldbe in position to fight against all difficulties,

problems, challenges that may arise from

time to time. One should not get

discouraged.

10. Are you risk-taker: An entrepreneur is a risk-taker, not a gambler. All the decisions being

taken by an entrepreneur are supposed to be

sound & justified & not blind.

11. Have you ability to find and exploreopportunity: Conditions are changing fast


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especially under the slogan of free trade.

What is fit today may be misfit tomorrow.

Therefore, an entrepreneur has to be insearch of new & new opportunities, finding

new opportunities is a continuous process. It

means that an entrepreneur should be

research minded, knowledgeable,

experienced.

12. Have you technical knowledge about the job:An entrepreneur to be successful should

possess a thorough knowledge of the unit.

Besides, he should know the current

development along with technical knowledge

& expected future changes.

13. Are you a motivator: An entrepreneur shouldknow the motivation techniques & how to

use them. He should have the qualities to

influence his employees & people.

FUNCTIONS OF ENTREPRENEUR

Functions of an entrepreneur include all activities

being performed from the stage of generation of idea


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till the implementation of the same. The basic

function of entrepreneur is to search for an

appropriate business idea having good investmentopportunities. It is complicated function in the sense

that an entrepreneur comes across many investment

opportunities. To choose the best one requires

ingenuity, skill, foresight. He has to perform many

other functions viz. Planning, decision-making, risk-

taking, innovation, organizing, motivating, leading &

managing overall affairs of the enterprise.

Arthur H. Cole lists the functions of an entrepreneur

as under:

1.Generation of ideas.

2.Determination of objectives & change of objectives

as required from time to time.

3.Securing of adequate financial resources.

4.The requisition of efficient technological

equipment & adoption of changes in technology.

5.To develop market for the products.

6.To maintain good relations with authorities & with

society at large.


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The functions of an entrepreneur can be classified in

brief, as under:

1.Decision-making2.Planning3.Organising4.Financing5.Marketing6.Innovating7.Risk-taking8.Researching9.Managing overall affairs of the concern.

ENTREPRENEUR SKILLS

1.Technical Skill: An entrepreneur should havecomplete knowledge about the processes

involved in the production of goods/services. He

should have complete knowledge about the

technology being used in the unit.This skill is of

great importance at the supervisory level.

2.Managerial Skill: An entrepreneur should havemanagerial skill in order to get the things done

effectively. He should have motivational skill in


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order to develop interest & team spirit among

employees. All qualities of leadership should be

possessed by him in order to create a conduciveenvironment in which people feel secure &

motivated. Managerial skill also includes the

knowledge about the laws governing the unit,

decision taking capacity, planning, coordinating &

controlling efficiency. This skill is helpful in

frequent interactions with subordinates.

3.Drawing Skills: An entrepreneur is also adesigner. He should have skill to decide how

things being manufactured in the unit such as

shoes, clothes etc. will look or work by making

drawings, plans or patterns. He should not only

identify the problem but should have a skill to

give practical solution to problem.

4.Conceptual Skill: This skill relates to frameworkwithin which needs are assessed & accordingly

plans are reframed to satisfy the needs.Therefore, an entrepreneur should have ability to

understand the significant element in the

situation.He should have ability to predict the

expected changes in the situation & take steps on

appropriate time to welcome & adjust under


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those changes with all success.This all requires

experience, exposure, wits & full information

about the environment entrepreneur is workingin.

FACTORS AFFECTING ENTREPRENEUR GROWTH

It is the environment prevailing in the country that

encourages or discourages the entrepreneurs.

Environmental Factors

Economic Social Cultural Personality Institutional External

Factors Factors Factors Factors Factors Factors

Economic Factors: The economic factors that affect

the growth of entrepreneurship are:

(a) Capital formation(b) Infrastructural facilities(c) Great risks(d) Non-availability of labour & skills(a) Capital Formation: Capital Formation is

considered as an important factor in the

economic development of a country. Capital


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formation can accelerate the pace of

development through fuller utilization of

available resources. Entrepreneurs require tostore large stock of inventories to provide

adequate industrial supplies.

(b) Infrastructural Facilities: The infrastructuralfacilities like communication,transport, power,

irrigation facilities, technical & economic

information etc.also affects the growth of

entrepreneurs.

(c) Great Risks: Risks in business are greater in aless developed country than in a developed

nation. Three reasons are related to this

situation:

(i) There is the lack of reliable information oncost, size of the market, conditions of

demand etc.

(ii) The market for goods & services is small.(iii) The entrepreneurs are faced with situations

where the capacity of their plant & the size

of their investments are placed at the mercy

of unforeseeable events.Entrepreneurs have

a tendency to prefer short-term investments

to long-term industrial ventures.


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(d) Non-availability of labour & skills:Entrepreneurs, often find difficulty to securesufficient labour. They are forced to make

elaborate & costly arrangements to recruit the

necessary labour.When labour is not trained they

lacks industrial skills. The traditional skills of the

workmen, are highly insufficient for modern

industrial jobs.

2. Social Factors: Social factors can go a long way in

encouraging entrepreneurship. In fact it was a highly

helpful society that made the Industrial Revolution aglorious success in Europe. A society that is rational in

decision-making would be favourable to

entrepreneurial growth.

3. Cultural Factors: Entrepreneurial growth requires

proper motives like profit-making, acquisition ofprestige & attainment of social status. Ambitious &

talented men would take risks & innovate if these

motives are strong. The strength of these motives

depends upon the culture of the society.


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4. Personality Factors: This leads to the emergence of

planning as means of achieving economic progress in

which the state has to play a pivotal role.5. Psychological & Sociological Factors: Psychosocial

theories of entrepreneurship stress the motives or

goals of the entrepreneur.

6.External Factors:

(a) Industrial Estates: The programme of industrial

estates was launched with a view to offer all facilities

to entrepreneurs at one place. The land & other

facilities are offered at subsidized rates in Industrial

Estates. These estates have helped in creating

employment opportunities, raising efficiency of the

units. The modernized industrial estates can give

boost to entrepreneurship.

(b) Raw Materials: Abundant stock & regular supply of

raw materials also affect the growth of

entrepreneurship. The better arrangements for

regular supply of raw materials, the more would be

influence on entrepreneurial emergence.

Establishment of raw material banks could prove

motivational factors for potential entrepreneurs.


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(c) Machinery on hire purchase: Replacement of

outdated & installation of modern technology ensures

the survival of unit & production with quality & lowcost. Arrangements made by the government for

supply of modern technology on hire purchase basis

can motivate technocrats & other potential

entrepreneurs even from backward areas for the

establishment of units & give a boost to

entrepreneurship.

(d) Attitude of large scale units: Encouragement from

large scale units also contribute to the growth of

entrepreneurship. Large business units can be the big

buyers of SSI products & boost small scale

entrepreneurship.

(e) Political conditions/Government policy: Heavy

stress on rapid industrialization, control on imports

encourage exports, expansion in domestic demand.

This also contribute to entrepreneurial growth.

WOMEN ENTREPRENEURSHIP

Women entrepreneurship may be defined as women

with intelligence, initiatives, innovations, experience,


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managerial efficiency, qualities of leadership, vision,

skill, capability to take decisions, risk. According to

the policy of Industries Reforms (1997), amended in1999, women entrepreneurs mean, A Small Scale

Industrial Unit/Industry related service or business

enterprise managed by one or more women

entrepreneurs in proprietary concerns or where she/

they individually or jointly have share capital of not

less than 5 percent as

partners/shareholders/directors of private limited

company/members of cooperative society.

DEFINITION

Any woman or group of women which innovates,imitates or adapts an economic activity may be called

woman entrepreneurship._________Frederick

Harbison

ROLE OF WOMEN ENTREPRENEUR

Involvement of women in the field of industries is a

recent development. With the spread of education

among females & increase in the number of women

working outside homes especially in urban area, the

thinking & role of women has altogether changed.

The democratic nature of constitution & steps taken


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in various five year plans for the empowerment of

women contributed a lot towards the change in the

position of women in India. Factors like politicalconsciousness, spread of formal & informal

education, development in the field of transport,

roads, communication, socio-cultural awakening

created an environment where we see the women

folk coming forward as industrialists,economists,

politicians, social reformers, scientists, pilots,

engineers etc. Efforts put in by the Government

agencies to organise Entrepreneurial Development

Programmes to develop awareness among women

regarding the potentialities of various industries in

the local area added a lot towards women

entrepreneurship. As a result of these steps, we see

the women coming forward for the establishment of

industries on modern lines.

PROBLEMS FACED BY WOMEN ENTREPRENEURS

Women entrepreneurs face many problems in their

efforts to develop their enterprises.

The main problems faced by the women

entrepreneurs are as :


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1.Shortage of finance: Women entrepreneursalways suffer from inadequate financial resources

& working capital. The complicated procedure ofbank loans also create lot of problems in getting

the required finance. Women entrepreneurs even

face problems in getting requisite working capital

for financing day-to-day business activities.

Women entrepreneurs have to depend upon

their personal savings & loans from family

friends. Most of the women entrepreneurs fail

due to lack of proper financing facilities, because

finance is the life blood of every business activity.

2.Marketing problems: Women entrepreneursoften depend upon the middlemen for marketing

their products.They exploit the women

entrepreneurs. Women entrepreneurs also find it

difficult to study the market trend. A lot of

money is needed for advertisement in these days

of stiff competition from male entrepreneurs.Women entrepreneurs also lack energy & extra

efforts needed to be invest & to win the

confidence of customers & popularise the

products.


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3.Shortage of raw materials: The shortage ofrequired raw-materials is also one of the big

problems faced by women entrepreneurs.Women entrepreneurs find it difficult to procure

the required raw materials & other necessary

inputs for production in sufficient quantity &

quality.

4.Stiff competition: Women entrepreneurs have toface severe competition from organised

industries & male entrepreneurs having vast

experience in a globalised market.

5.Limited managerial ability: Womenentrepreneurs may not be expert in each & every

function of the enterprise. She will not be able to

devote sufficient time for all types of activities.

6.High cost of production: The high cost ofproduction is another problem which undermines

the efficiency & restricts the development of

women entrepreneurs. It is necessary to increaseefficiency, expand productive capacity to reduce

the cost of production.

7.Lack of entrepreneurial aptitude: One of thebiggest problems of women is the lack of

entrepreneurial aptitude. They have no


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entrepreneurial bent of mind. The basic

characteristics of an entrepreneur such as

innovation, risk bearing etc. are absent in awomen entrepreneur.

8.Low risk-taking ability: Women entrepreneurssuffer from the problem of low risk taking ability

as compared to their male counterparts.

Inferiority complex, unplanned growth, lack of

infrastructure,hesitationin taking quick decisions

also increases the rate of risk & chances of loss.

9.Family responsibilities: One of the main duty of awoman in India is to look after the children &

other family members. A very little time & energy

is left for business activities. A married woman

entrepreneur has to make a perfect balance

between domestic activities & business activities.

The woman entrepreneur cannot succeed

without the support & approval of husband. Their

success in this regard also depend uponsupporting husband & family.

10. Social attitudes: One of the biggest problemsof a woman entrepreneur is the social attitude in

which she has to live & work. There is

discrimination against women in India despite


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constitutional equality. Women do not get equal

treatment in a male-dominated Indian society &

male ego puts barriers in their progress.11. Lack of education: The education level

among women in India is very low. Majority of

women are not aware about the technological

developments, marketing knowledge etc. due to

lack of education. Illiteracy further creates

problems in setting up & smooth running of

enterprises.

12. Lack of entrepreneurial training: Largenumber of women have no proper & sufficient

technical & professional training to set-up a new

venture.

13. Legal formalities: Women entrepreneurs findit extremely difficult in complying with various

legal formalities in obtaining licences etc.

14. Travelling: Women entrepreneurs cannottravel from one place to another as freely as mendo. Women have some peculiar problems like

staying out in the nights at distant places etc.


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