enterpreneurship hndnew

7/30/2019 Enterpreneurship Hndnew

1/113

CHAPTER ONE

INTRODUCTION

The ultimate measure of a manIs not where he stands

In moments of comfort and convenience

But where he stands

At times of challenge and controversy.

- Martin Luther King.

The words entrepreneur, intrapreneur and entrepreneurship have

acquired special significance in the context of economic growth in

a rapidly changing socio-economic and socio-cultural climates,

particularly in industry, both in developed and developing

countries. Entrepreneurial development is a complex

phenomenon. Productive activity undertaken by him and

constant endeavor to sustain and improve it are the outward

expression of this process of development of his personality.

WHO IS AN ENTREPRENEUR?

An entrepreneur is a person with a dream, originality and daring, who acts as the

boss, who decides as to how the commercial organization shall run, who co-

ordinates all activities or other factors of production, who anticipates the future

trend of demand and prices of products.

An entrepreneur is one of the important segments of economic growth.

Basically he is a person responsible for setting up a business or an enterprise.

Infact, he is one who has the initiative, skill for innovation and who looks for high

achievements. He is a catalytic agent of change and works for the good of people.

7/30/2019 Enterpreneurship Hndnew

2/113

He puts up new green-field projects that create wealth, open up many employment

opportunities and leads to the growth of other sectors.

The entrepreneur displays courage to take risk of putting his money into an idea,

courage to face the competition and courage to take a leap into unknown futureand create new enterprises/ business. This creative process is the life blood of the

strong enterprise that leads to the growth and contributes to the national

development.

The entrepreneur will always work towards the creation and enhancement of

entrepreneurial society. The best entrepreneur in any developing country is not the

one who uses much capital but an individual who knows how to organize the

employment and training of his employees.

We can define entrepreneur as one who innovates, raises money, assembles inputs,

choose managers and sets the organization going with his ability to identify them.

ENTREPRENEURSHIP DEFINED:

Entrepreneurship is an elusive concept.

Entrepreneurship is based on purposeful and systematic innovation. It included

not only the independent businessman but also company directors and managers

who actually carry out innovative functions.

Schumpeter

In the above definition, entrepreneurship refers to the functions performed by an

entrepreneur in establishing an enterprise. Just as management is regarded as what

managers do, entrepreneurship may be regarded as what entrepreneurs do. In other

words, entrepreneurship is the act of being an entrepreneur.

Entrepreneurship is a process involving various actions to be undertaken to

establish an enterprise. It is thus, process of giving birth to a new enterprise.

Entrepreneurship is composite skill, the resultant of a mix of many qualities and

traits- these include tangible factors as imagination, readiness to take risks, ability

to bring together and put to use other factors of production, capital, labour, land, as

7/30/2019 Enterpreneurship Hndnew

3/113

also tangible factors such as the ability to mobilize scientific and technological

advances.

A practical approach is necessary to implement and mange a project by securing

the required licenses, approvals and finance from governmental and financialagencies. The personal incentive is to make profits from the successful

management of the project. A sense of cost consciousness is even more necessary

for the longterm success of the enterprise. However, both are different sides of the

same coin.

Entrepreneurship lies more in the ability to minimize the use of resources and put

them to maximum advantage. Without any awareness of quality and desire for

excellence, consumer acceptance cannot be achieved and sustained. Above all,

entrepreneurship today is the product of teamwork and the ability to create, build

and work as a team. The entrepreneur is the maestro of the business orchestra,

wielding his baton to which the band is played.

The basic two elements involved in entrepreneurship are as follows;-

INNOVATION

Innovation, i.e. doing something new or something different is a necessary

condition to be called a person as an entrepreneur. The entrepreneurs are

constantly on the look out to do something different and unique to meet the

requirements of the customers. They may or may not be inventors of new products

or new methods f production but they possess the ability to foresee the possibility

of making use of the inventions for their enterprises. In order to satisfy the

7/30/2019 Enterpreneurship Hndnew

4/113

changing preference of customers nowadays many enterprises have adopted the

technique of innovation.

RISK- BEARINGEntrepreneurship is the propensity of mind to take calculated risks with confidence

to achieve a predetermined business or Industrial objective. The capacity to take

risk independently and individually with a view to making profits and seizing the

opportunity to make more earnings in the market-oriented economy is the

dominant characteristic of modern entrepreneurship.

In fact he needs to be a risk taker, not risk avoider. His risk bearing ability enables

him even if he fails in one succeed. The Japanese proverb says Fall seven times,

stand up eight. Though the term entrepreneur is often used interchangeably with

entrepreneurship, yet they are conceptually different.

The relationship between the two is just like the two sides of the same coin.

Thus, entrepreneurship is concerned with the performance and co-ordination of the

entrepreneurial functions. This also means that entrepreneur precedes

entrepreneurship.

NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has

accepted the fact that small firms have a crucial role to play in the economic

development of the country. Small businesses are an essential part of our future

economic prosperity because of the following reasons-

EMPLOYMENT GENERATION:

Entrepreneurial development is looked at as a vehicle for employment generation

through promotion of small business. India, being far more developed and forward

looking country than some of the third world countries, can provide lead to

entrepreneurial development activities.

7/30/2019 Enterpreneurship Hndnew

5/113

However, India can benefit from the well- documented success experiences of

developed countries like USA, Japan and UK in the field of employment

generation and small business promotion.

Steady growth in consumer spending, expanding retail sales, a strong housingmarket, continued expansion of the service sector, low rates of inflation and of

labour cost increases and failing interest rates contributed to a healthy

environment for small business.

In India, the government policies, political and economic environment greatly

encourage the establishment of new and small enterprises. Self- employment and

small scale industry schemes have been further liberalized during the last decade.

The employment in the small-sector increased from 9.00 million people in 1984-

85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in

employment in this sector.

SMALL BUSINESS DYNAMISM:

Great dynamism is one of the qualities of the small and medium enterprises.

This quality of dynamism originates in the inherent nature of the small business.

The structure of small and medium enterprises is less complex than that of large

enterprises and therefore facilitates quicker and smoother communication and

decision- making. This allows for the greater flexibility and mobility of small

business management. Also, small enterprises, more often make it possible for

owners, who have a stronger entrepreneurial spirit than employed mangers, to

undertake risk and challenges.

BALANCED ECONOMIC DEVELOPMENT:

Small business promotion needs relatively low investment and

therefore can be easily undertaken in rural and semi-urban areas.

This in turn creates additional employment in these areas and

prevents migration of people from rural to urban areas. Since

majority of the people are living in the rural areas, therefore,

more of our development efforts should be directed towards this

7/30/2019 Enterpreneurship Hndnew

6/113

sector. Small enterprises use local resources and are best suited

to rural and underdeveloped sector. This in turn will also lead to

dispersal of industries, reduction in concentration of economic

power and balanced regional development.INNOVATIONS IN ENTERPRISES:

Business enterprises need to be innovative for survival and better performance. It

is believed that smaller firms have a relatively higher necessity and capability to

innovate. The smaller firms do not face th

e constraints imposed by large investment in existing technology. Thus they are

both free and compelled to inno