MANAGEMENT & ENTREPRENEURSHIP (21EE61) MODULE – 3

SYLLABUS:

Social Responsibilities of Business - Meaning, Social Responsibilities of Business towards different

groups, Social audit, Business ethics and Corporate Governance.
Entrepreneurship: Definition of Entrepreneur, Importance of Entrepreneurship, concepts of Entrepreneurship,
Characteristics of successful Entrepreneur, Classification of Entrepreneurs, Intrapreneur An Emerging Class,
Comparison between Entrepreneur and Intrapreneur, Myths of Entrepreneurship, Entrepreneurial Development
models, Entrepreneurial development cycle, Problems faced by Entrepreneurs.

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MEANING OF SOCIAL RESPONSIBILITIES OF BUSINESS

Social responsibility is the idea that businesses should balance profit-making activities
with activities that benefit society. It involves developing businesses with a positive
relationship to the society in which they operate. It is a concept whereby organizations serve
the interests of society by taking responsibility for the impact of their activities on customer,
employees, shareholders, communities and the environment in all aspects of their
organizations.

Social responsibility is an ethical framework and suggests that an entity, be it an organization

or individual, has an obligation to act for the benefit of society at large. Social responsibility
is a duty every individual has to perform so as to maintain a balance between the economy and
the ecosystems.

Social responsibility means sustaining the equilibrium between the two. It pertains not only to
business organizations but also to everyone whose any action impacts the environment. This
responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by
performing activities that directly advance social goals.

Example: “Starbucks Corporation and Ben & Jerry's Homemade Holdings Inc.” have blended
social responsibility into the core of their operations. Both companies purchase Fair Trade
Certified ingredients to manufacture their products and actively support sustainable farming
in the regions where they source ingredients. Conversely, big-box retailer Target Corporation,
also well known for its social responsibility programs, has donated more than $1 billion in
grants to the communities in which the stores operate, including education grants, since 2010.

MEANING / DEFINITIONS OF CSR:

CSR is a concept whereby organizations serve the interests of society by taking responsibility
for the impact of their activities on customers, employees, shareholders, communities, and the
environment in all aspects of their operations.
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship,
social performance, or sustainable responsible business/ Responsible Business) is a form of
corporate self- regulation integrated into a business model.

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Notable examples of social responsibilities in India are as follows:

1. ITC - contract with farmers, helping poor people, donating books.
2. INFOSYS - share there 1% of profit every year for NIRMALA project.
3. LARSEN & TURBO LIMITED - Training institutes for semi-skilled labour.
4. NESTLE INDIA - Environmental awareness, drinking water facilities for rural areas.
5. DABUR - undertaken many rural areas for development.

REASONS FOR SOCIAL RESPONSIBILITIES

1. Consumerism
2. Trade Union
3. Public Opinion
4. Enlightened self interest
5. Professionalization
6. Trusteeship

SOCIAL RESPONSIBILITIES OF BUSINESS TOWARDS DIFFERENT GROUPS

There are basically 4 types of social responsibilities, they are as follows:
1. Responsibilities towards Consumers & community.
2. Responsibilities towards Employees & workers
3. Responsibilities towards Shareholders &other businesses
4. Responsibilities towards State

SOCIAL AUDIT
It is a way of measuring, understanding, reporting and ultimately improving an organizations
social and ethical performance.
Example: Infosys Foundation established in 1996. Areas of companies are healthcare,
education, culture, rural development and IT.

FEATURES OF SOCIAL AUDIT

1. Systematic evaluation
2. Measure social performance
3. Conducted on regular intervals
4. Wide coverage
5. Supplement to social responsibility
6. Acts as a guide
7. Different from commercial audit
8. Voluntary in character

NEED FOR SOCIAL AUDIT

1. Social consciousness
2. Monitor unethical practice
3. Social accountability
4. Informative system
5. Evaluating performance

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OBJECTIVE OF SOCIAL AUDIT: Principal objectives & Secondary objectives.

Principal Objectives of Social Audit are as follows:
1. The extension, development and improvement of the company’s business and building
up of its financial independence.
2. The payment of a fair and regular dividend to the shareholders.
3. The payment of fair wages under the best possible conditions to the worker.
4. The reduction of prices to the consumers.

Secondary Objectives of Social Audit

1. Provision of a bonus to the workers.
2. Assist in promoting the amenities of the locality.
3. Assist in developing the industry in which the firm is a member.
4. Promote education, research and development in the techniques of the industry.

BUSINESS ETHICS
• It is a set of standards worked out from human reason and experience by which human
actions are determined as ultimately right or wrong, food or evil.
• It is the study of proper business policies and practices regarding potentially
controversial issues such as corporate governance, insider trading, bribery,
discrimination.
BASIC PRINCIPLES OF BUSINESS ETHICS
1. Honesty- Ethical executives are honest and truthful in all their dealings and they do not
deliberately mislead or deceive others by misrepresentations, overstatements, partial
truths, selective omissions, or any other means.
2. Integrity- Ethical executives demonstrate personal integrity and the courage of their
convictions by doing what they think is right even when there is great pressure to do
otherwise; they are principled, honorable and upright; they will fight for their beliefs.
They will not sacrifice principle for expediency, be hypocritical, or unscrupulous.
3. Promise-Keeping & Trustworthiness - Ethical executives are worthy of trust. They
are candid and forthcoming in supplying relevant information and correcting
misapprehensions of fact, and they make every reasonable effort to fulfill the letter and
spirit of their promises and commitments. They do not interpret agreements in an
unreasonably technical or legalistic manner in order to rationalize non-compliance or
create justifications for escaping their commitments.
4. Loyalty - Ethical executives are worthy of trust, demonstrate fidelity and loyalty to
persons and institutions by friendship in adversity, support and devotion to duty; they
do not use or disclose information learned in confidence for personal advantage. They
safeguard the ability to make independent professional judgments by scrupulously
avoiding undue influences and conflicts of interest. They are loyal to their companies
and colleagues and if they decide to accept other employment, they provide reasonable
notice, respect the proprietary information of their former employer, and refuse to
engage in any activities that take undue advantage of their previous positions.
5. Fairness - Ethical executives and fair and just in all dealings; they do not exercise power
arbitrarily, and do not use overreaching nor indecent means to gain or maintain any
advantage nor take undue advantage of another’s mistakes or difficulties. Fair persons
manifest a commitment to justice, the equal treatment of individuals, tolerance for and
acceptance of diversity, they are open-minded; they are willing to admit they are wrong
and, where appropriate, change their positions and beliefs.
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6. Concerns for Others - Ethical executives are caring, compassionate, benevolent and
kind; they like the Golden Rule ‘help those in needs, and seek to accomplish their
business objectives in a manner that causes the least harm and the greatest positive
good’.
7. Respect for Others - Ethical executives demonstrate respect for the human dignity,
autonomy, privacy, rights, and interests of all those who have a stake in their decisions;
they are courteous and treat all people with equal respect and dignity regardless of sex,
race or national origin.
8. Law Abiding - Ethical executives abide by laws, rules and regulations relating to their
business activities
9. Commitments to Excellence - Ethical executives pursue excellence in performing their
duties, are well informed and prepared, and constantly endeavour to increase their
proficiency in all areas of responsibility.
10. Leadership - Ethical executives are conscious of the responsibilities and opportunities
of their position of leadership and seek to be positive ethical role models by their own
conduct and by helping to create an environment in which principled reasoning and
ethical decision making are highly prized.
11. Reputation & Morale - Ethical executives seek to protect and build the company’s
good reputation and the morale of its employees by engaging in no conduct that might
undermine respect and by taking whatever actions are necessary to correct or prevent
inappropriate conduct of others.
12. Accountability - Ethical executives acknowledge and accept personal accountability
for the ethical quality of their decisions and omissions to themselves, their colleagues,
their companies, and their communities.

CORPORATE GOVERNANCE
Corporate – It is defined as a business or organization formed by a group of people and it has
rights and liabilities separate from those of the individuals involved.
Governance - It is defined as the Act of governing. It relates to decisions that define
expectations, grant power, or verify performance. In the case of a business or non - profit
organization, governance relates to consistent management, cohesive policies, and guidance,
process and decision rights for a given area of responsibilities.
Corporate Governance - is the system by which companies are directed and controlled by
the management in the best interest of the shareholders and others ensuring greater
transparency and better and timely financial reporting. It refers to combination of laws, rules
and regulations, procedures and voluntary practices to enable the companies to maximize the
shareholders long term value. In simple words, corpora governance is a set of relationship
between a company’s management, board, shareholders and stakeholders.

The main feature of the corporate governance is to manage the company by the
Board of Directors and not by the owners.

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OBJECTIVES OF CORPORATE GOVERNANCE

1. To mitigate conflicts of interest
2. To ensure that the assets of the company are used efficiently and productively and in the
best interest of its shareholders and stakeholders.
3. To create a trust in the corporate and its abilities
4. To improve efficiency of capital market
5. To promote a healthy environment for long term investment

NEED FOR CORPORATE GOVERNANCE

1. Wide Spread of Shareholders: Today a company has a very large number of
shareholders spread all over the nation and even the world; and a majority of
shareholders being unorganized and having an indifferent attitude towards corporate
affairs. The idea of shareholders’ democracy remains confined only to the law and the
Articles of Association; which requires a practical implementation through a code of
conduct of corporate governance.
2. Corporate Scams or Scandals: Corporate scams (or frauds) in the recent years of the
past have shaken public confidence in corporate management. The event of Harshad
Mehta scandal, which is perhaps, one biggest scandal, is in the heart and mind of all,
connected with corporate shareholding or otherwise being educated and socially
conscious.
3. Changing Ownership Structure: The pattern of corporate ownership has changed
considerably, in the present-day-times; with institutional investors (foreign as well
Indian) and mutual funds becoming largest shareholders in large corporate private
sector. These investors have become the greatest challenge to corporate managements,
forcing the latter to abide by some established code of corporate governance to build up
its image in society.
4. Greater Expectations of Society of the Corporate Sector: Society of today holds
greater expectations of the corporate sector in terms of reasonable price, better quality,
pollution control, best utilization of resources etc. To meet social expectations, there is
a need for a code of corporate governance, for the best management of company in
economic and social terms.
5. Hostile Take-Overs: Hostile take-overs of corporations witnessed in several countries,
put a question mark on the efficiency of managements of take-over companies. This
factor also points out to the need for corporate governance, in the form of an efficient
code of conduct for corporate managements.
6. Huge Increase in Top Management Compensation: It has been observed in both
developing and developed economies that there has been a great increase in the
monetary payments (compensation) packages of top level corporate executives. There
is no justification for exorbitant payments to top ranking managers, out of corporate
funds, which are a property of shareholders and society.
7. Globalization: Desire of more and more Indian companies to get listed on international
stock exchanges also focuses on a need for corporate governance. In fact, corporate
governance has become a buzzword in the corporate sector. There is no doubt that
international capital market recognizes only companies well-managed according to
standard codes of corporate governance.

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IMPORTANCE OF CORPORATE GOVERNANCE

1. Changing Ownership Structure: In recent years, the ownership structure of companies
has changed a lot. Public financial institutions, mutual funds, etc. are the single largest
shareholder in most of the large companies. So, they have effective control on the
management of the companies. They force the management to use corporate
governance. That is, they put pressure on the management to become more efficient,
transparent, accountable, etc. The also ask the management to make consumer-friendly
policies, to protect all social groups and to protect the environment. So, the changing
ownership structure has resulted in corporate governance.
2. Importance of Social Responsibility: Today, social responsibility is given a lot of
importance. The Board of Directors have to protect the rights of the customers,
employees, shareholders, suppliers, local communities, etc. This is possible only if they
use corporate governance.
3. Growing Number of Scams: In recent years, many scams, frauds and corrupt practices
have taken place. Misuse and misappropriation of public money are happening every
day in India and worldwide. It is happening in the stock market, banks, financial
institutions, companies and government offices. In order to avoid these scams and
financial irregularities, many companies have started corporate governance.
4. Indifference on the part of Shareholders: In general, shareholders are inactive in the
management of their companies. They only attend the Annual general meeting. Postal
ballot is still absent in India. Proxies are not allowed to speak in the meetings.
Shareholders associations are not strong. Therefore, directors misuse their power for
their own benefits. So, there is a need for corporate governance to protect all the
stakeholders of the company.
5. Globalization: Today most big companies are selling their goods in the global market.
So, they have to attract foreign investor and foreign customers. They also have to follow
foreign rules and regulations. All this requires corporate governance. Without Corporate
governance, it is impossible to enter, survive and succeed the global market.
6. Takeovers and Mergers: Today, there are many takeovers and mergers in the business
world. Corporate governance is required to protect the interest of all the parties during
takeovers and mergers.
7. SEBI: Securities and Exchange Board of India (SEBI) has made corporate governance
compulsory for certain companies. This is done to protect the interest of the investors
and other stakeholders.

ISSUES IN CORPORATE GOVERNANCE

1. Distinguishing the roles of board and management
2. Composition of the board and related issues.
3. Separation of the roles of CEO and Chairperson.
4. Should the board have committees
5. Appointments to the board and directors election
6. Director and executives remuneration
7. Disclosure and audit
8. Protection of shareholder rights and their expectations
9. Dialogue with institutional shareholder
10. Should invest have a say in making a company CSR

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MODULE 3 (Part B)
ENTREPRENEUR
An entrepreneur has been defined as, "a person who starts, organises and manages
any enterprise, especially a business, usually with considerable initiative and risk;
running a small business with all the risk and reward of any given business process”.
Entrepreneurs tend to be good at perceiving new business opportunities and they often
exhibit positive biases in their perception (i.e., a bias towards finding new possibilities
and seeing unmet market needs) and a pro-risk-taking attitude that makes them more
likely to exploit the opportunity. An entrepreneur may be in control of a commercial
undertaking, directing the factors of production – the human, financial and material
resources – that are required to exploit a business opportunity. Entrepreneurs act as
managers and oversee the launch and growth of an enterprise.

The word “entrepreneur” is derived from the French verb enterprendre, which
means ‘to undertake’. This refers to those who “undertake” the risk of new
enterprises. An enterprise is created by an entrepreneur. The process of creation is
called “entrepreneurship”. Entrepreneurship is a process of actions of an entrepreneur
who is a person always in search of something new and exploits such ideas into gainful
opportunities by accepting the risk and uncertainty with the enterprise.

Entrepreneurship is the process of designing, launching and running a new business,

which is more often than not, initially a small business, offering a product, process or
service for sale or hire. The people who create these businesses are called
entrepreneurs. Entrepreneurship has been described as the "capacity and willingness
to develop, organise and manage a business venture along with any of its risks in order
to make a profit".

Entrepreneurship is a role played by or the task performed by the entrepreneur. The

central task of the entrepreneur is to take moderate risk and invest money to earn profits
by exploiting an opportunity. For this he must posses far-sightedness to perceive an
opportunity so that he can exploit it well in time. Although an entrepreneur has to
perform diverse functions yet he must manifest many qualities in himself to be a good
entrepreneur.

Entrepreneurship is the process by which either an individual or a team identifies a

business opportunity and acquires and deploys the necessary resources required for its
exploitation.

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DEFINITION OF ENTREPRENEUR
According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not
necessarily motivated by profit but regard it as a standard for measuring achievement
or success.

According to Richard Cantillon - An entrepreneur is a person who pays a certain price

for a product to resell it at an uncertain price, thereby making decisions about obtaining
and using the resources while consequently admitting the risk of enterprise.

Entrepreneurship can be defined as the propensity of mind to take calculated risks with
confidence to achieve a pre-determined business or industrial objective. That points out
the risk-taking ability coupled with decision making.

CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR

1. Vision - One of your responsibilities as founder and head of your company is
deciding where your business should go. That requires vision. Without it, your boat
will be lost at sea. Are you the type of person who looks ahead and can see the big
picture?

2. Knowledge - Entrepreneurs realise that every event and situation is a business

opportunity. Ideas are constantly being generated about workflows and efficiency,
people skills and potential new businesses. They have the ability to look at
everything around them and focus it toward their goals.

3. Desire to succeed - It's easy in this fast paced, constant info-in-your-face world to
get distracted. This is especially true for start-ups, that often get side-tracked by
shiny object syndrome (i.e. products and services that promise fast results), or
bogged down in unimportant busy work. Successful entrepreneurs are focused on
what will bring results.

4. Independence - An Entrepreneurs needs independence in work and decision

making. They don’t follow the rules of them but make their own rules and destiny.
5. Optimism - It's difficult to succeed at anything if you don't believe in a good
outcome. Entrepreneurs are dreamers and believe their ideas are possible, even
when they seem unattainable.

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6. Value addition - Entrepreneurs do now follow the conventional rules of thumb.

They have a constant desire to introduce something new to the existing business.
They create something new to society.

7. Leadership - Entrepreneurs will take an initiative in the company to start up any

programs because it helps them to understand the problem between employees and
also help for them to gain more and more knowledge.

8. Hardworking - Entrepreneurs enjoy what they do. They believe in themselves and
are confident and dedicated to their project. Occasionally, they may show
stubbornness in their intense focus on and faith in their idea. But the flip side is
their demonstrated discipline and dedication.

9. Desire to have control over their fate - Entrepreneurs should have ability to change
the mind set from negative to positive when they feel they are in wrong directions.

10. Risk taking ability - Launching any entrepreneurial venture is risky. Are you
willing to assume that risk? You can reduce your risk by thoroughly researching
your business concept, industry and market. You can also test your concept on a
small scale. Can you get a letter of intent from prospective customers to purchase?
If so, do you think customers would actually go through with their transaction?

11. Motivation - Entrepreneurs are enthusiastic, optimistic and future-oriented. They

believe they’ll be successful and are willing to risk their resources in pursuit of
profit. They have high energy levels and are sometimes impatient. They are always
thinking about their business and how to increase their market share.

12. Creativity and Persuasiveness - Successful entrepreneurs have the creative capacity
to recognise and pursue opportunities. They possess strong selling skills and are
both persuasive and persistent.
13. Economic and dynamic activity:Entrepreneurship is an economic activity because
it involves the creation and operation of an enterprise with a view to creating value
or wealth by ensuring optimum utilisation of scarce resources. Since this value
creation activity is performed continuously in the midst of uncertain business
environment, therefore, entrepreneurship is regarded as a dynamic force.

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IMPORTANCE OF ENTREPRENEURSHIP
1. Development of managerial capabilities: The biggest significance of
entrepreneurship lies in the fact that it helps in identifying and developing
managerial capabilities of entrepreneurs. An entrepreneur studies a problem,
identifies its alternatives, compares the alternatives in terms of cost and benefits
implications, and finally chooses the best alternative. This exercise helps in
sharpening the decision making skills of an entrepreneur. Besides, these
managerial capabilities are used by entrepreneurs in creating new technologies and
products in place of older technologies and products resulting in higher
performance.

2. Creation of organisations: Entrepreneurship results into creation of organisations

when entrepreneurs assemble and coordinate physical, human and financial
resources and direct them towards achievement of objectives through managerial
skills.

3. Improving standards of living:By creating productive organisations,

entrepreneurship helps in making a wide variety of goods and services available to
the society which results into higher standards of living for the people.Possession
of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc. are
pointers to the rising living standards of people, and all this is due to the efforts of
entrepreneurs.

4. Means of economic development: Entrepreneurship involves creation and use of

innovative ideas, maximisation of output from given resources, development of
managerial skills, etc., and all these factors are so essential for the economic
development of a country.

5. A Creation of job opportunitiesEntrepreneurship firms contributed a large share of

new jobs. It provides entry-level jobs so necessary fur training or gaining
experience for unskilled workers. The small enterprises arc the only sector that
generates large portion of total employment every year. Moreover,
entrepreneurial ventures prepare and supply experienced labor to the large
industries.

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6. InnovationEntrepreneurship is the incubator of the innovation. Innovation creates

disequilibria in the present state of order.It goes beyond discovery and does
implementation and commercialisation, of innovations. “Leap frog” innovation,
research, and development are being contributed by entrepreneurship.Thus,
entrepreneurship nurses innovation that provides new ventures, product,
technology , market, quality of good etc. to the economy that increase Gross
Domestic Products and standard of living of the people.

7. Enhances standard of living - Standard of living is a concept built on increasing

amount of consumption of variety of goods and services over a particular period
by a household.So it depends on availability of diversified products in the market.
Entrepreneurship provides enormous kinds product of various natures by their
innovation.Besides, it increases the income of the people who are employed in the
entrepreneurial enterprises. That also capable employed persons to consumer more
goods and services. In effect entrepreneurship enhances the standard of living of
the people of a country.

8. Promotes research and development - Entrepreneurship is innovation and hence the

innovated ideas of goods and services have to be tested by experimentation.
Therefore, entrepreneurship provides funds for research and development with
universities and research institutions. This promotes the general development o:’
research and development in the economy. Entrepreneurship is the pioneer zeal that
provides events in our civilisation. We are indebted to it for having prosperity in
every arena of human life- economic, technological and cultural. The above
discussion in a nutshell enumerates that tremendous’ contributions of
entrepreneurship.

Entrepreneurial Process:
Entrepreneurship is a process, a journey, not the destination; a means, not an end. All
the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway),
Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla,
Jamshedji Tata and others all went through this process.

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To establish and run an enterprise it is divided into three parts – the entrepreneurial job,
the promotion, and the operation. Entrepreneurial job is restricted to two steps, i.e.,
generation of an idea and preparation of feasibility report. In this article, we shall
restrict ourselves to only these two aspects of entrepreneurial process.

Idea Generation:
To generate an idea, the entrepreneurial process has to pass through three stages:
a. Germination:
This is like seeding process, not like planting seed. It is more like the natural
seeding. Most creative ideas can be linked to an individual’s interest or curiosity
about a specific problem or area of study.

b. Preparation:
Once the seed of interest curiosity has taken the shape of a focused idea, creative people
start a search for answers to the problems. Inventors will go on for setting up
laboratories; designers will think of engineering new product ideas and marketers will

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study consumer buying habits.

c. Incubation:
This is a stage where the entrepreneurial process enters the subconscious
intellectualisation. The sub-conscious mind joins the unrelated ideas so as to find a
resolution.

2. Feasibility study:
Feasibility study is done to see if the idea can be commercially viable.
It passes through two steps:
a. Illumination:
After the generation of idea, this is the stage when the idea is thought of as a realistic
creation. The stage of idea blossoming is critical because ideas by themselves have no
meaning.
b. Verification:
This is the last thing to verify the idea as realistic and useful for application.
Verification is concerned about practicality to implement an idea and explore its
usefulness to the society and the entrepreneur.

CONCEPTS OF ENTREPRENEURSHIP
Entrepreneurship is the tendency of a person to organise the business of his own and to
run it profitably, using all the qualities of leadership, decisions making and managerial
caliber etc. The term “entrepreneur” is often used interchangeably with
“entrepreneurship”. But conceptually they are different. In a way, entrepreneur
precedes entrepreneurship. It is concerned with the development and co-ordination of
entrepreneurial functions.

Entrepreneurship is an abstraction and entrepreneurs are tangible persons. Well

designed and controlled research studies on entrepreneurship are very few. If we view
entrepreneurship as opposed to management, it becomes still more difficult to define
entrepreneurship.

Entrepreneurship is a role played by or the task performed by the entrepreneur. The

central task of the entrepreneur is to take moderate risk and invest money to earn profits
by exploiting an opportunity. For this he must posses far-sightedness to perceive an
opportunity so that he can exploit it well in time. Although an entrepreneur has to
perform diverse functions yet he must manifest many qualities in himself to be a good

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entrepreneur.

Entrepreneurship can be defined as the propensity of mind to take calculated risks with
confidence to achieve a pre-determined business or industrial objective. That points out
the risk taking ability coupled with decision making.

The word ‘entrepreneurship’ typically means to undertake. It owes its origin to the
western societies. But even in the west, it has undergone changes from time to time. In
the early 16th century, the term was used to denote army leaders. In the 18lh century,
it was used to denote a dealer who buys and cells goods at uncertain prices. Towards
1961, Schumpeter, used the term innovator, for an entrepreneur. Two centuries before,
the concept of entrepreneurship was shady. It is only in the recent years that
entrepreneurship has been recognised widely all over the world like in USA, Germany,
Japan and in the developing countries like ours. Gunnar Myrdal rightly pointed out that
Asian societies lack entrepreneurship not because they lack money or raw materials but
because of their attitudes. Till recently, in the west, the entrepreneurship is mainly an
attribute of an efficient manager. But the success achieved by entrepreneurs in
developing countries demolishes the contention that entrepreneur is a rare animal and
an elusive character. In India, the definition of ‘an entrepreneur being the one who
undertakes to organise, own and run a business’ has been accepted in a National
Seminar on Entrepreneurship organised in Delhi in 1975. Still there has been no
consensus on the definition of entrepreneurship and qualities of entrepreneurship.

CLASSIFICATIONS OF ENTREPRENEURSHIP
Entrepreneurs according to the type of business.
Business entrepreneur: Business entrepreneurs are individuals who conceive an idea
for a new product or service and then create a business to materialize their idea into
reality. They may set up a big establishment or a small business unit. They are called
small business entrepreneurs when found in small business units such as printing press,
textile processing house, advertising agency, readymade garments or confectionery.
Trading Entrepreneur: The trading entrepreneur is one who undertakes trading
activities and is not concerned with the manufacturing work. He identifies potential
markets, stimulates demand for his product line and creates a desire and interest among
buyers to go in for his product line and creates a desire and interests among buyers to
go in for his product line and creates a desire and interests and buyers to go in for his
product. He is engaged in both domestic and overseas trade. Britain,
due to geographical limitations has developed trade through trading entrepreneurs.

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Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who

identifies the potential needs of customers and tailors a product or service to meet the
marketing needs. He is product- oriented man who starts in an industrial unit because
of the possibility of some new product.

Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his

innovative skill in organising and managing corporate undertaking. A corporate
undertaking is is a form of business organisation which is registered under some statue
or act which gives it a separate legal entity. A trust registered under Trust act or
company registered under the companies act is examples of corporate undertakings. A
corporate entrepreneur is thus an individual who plans, develops and manages a
corporate body.
Agricultural Entrepreneur: Agricultural entrepreneur are those entrepreneurs who
undertake agricultural activities as raising and marketing of crops, fertilisers and other
inputs of agriculture. They are motivated to raise agricultural through mechanisation,
irrigation and application of technologies for dry land agriculture products.

Entrepreneurs and stages of Development:

First-generation entrepreneur: A first generation entrepreneur is one who starts an
industrial unit by innovative skills. He is essentially an innovator, combining different
technologies to produce a marketable product or service.
Modern entrepreneur: A modern entrepreneur is one who undertakes those ventures
which go well along with the changing demand in the market. They undertake those
ventures which suit the current marketing needs.
Classical entrepreneur: A classical entrepreneur is one who is concerned with the
customers and marketing needs through the development of the self supporting venture.
He is a stereotype entrepreneur whose aim is to maximize his economic returns at a
level consistent with the survival of the firm with or without an element of growth.

Based on Gender:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are
called ‘men entrepreneurs.

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2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and controlled by a woman
or women having a minimum financial interest of 51 per cent of the capital and giving
at least 51 per cent of employment generated in the enterprises to women.

Based on the Size of Enterprise:

1. Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery up to Rs 1.00
crore is called ‘small-scale entrepreneur.
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery above Rs 1.00
crore but below Rs 5.00 crore is called ‘medium-scale entrepreneur.
3. Large-Scale entrepreneur:
The entrepreneur who has made investment in plant and machinery more than Rs
5.00 crore is called ‘large-scale entrepreneur.

TYPES OF ENTREPRENEURS
1. Innovating Entrepreneurs:
Innovating entrepreneurs are one who introduce new goods, inaugurate new method of
production, discover new market and reorganise the enterprise. It is important to note
that such entrepreneurs can work only when a certain level of development is already
achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
These are characterised by readiness to adopt successful innovations inaugurated by
innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such
types of entrepreneurs are particularly suitable for the underdeveloped regions for
bringing a mushroom drive of imitation of new combinations of factors of production
already available in developed regions.
3. Fabian Entrepreneurs:
Fabian entrepreneurs are characterised by very great caution and skepticism in
experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.
4. Drone Entrepreneurs:
These are characterised by a refusal to adopt opportunities to make changes in
production formulae even at the cost of severely reduced returns relative to other like

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producers. Such entrepreneurs may even suffer from losses but they are not ready to
make changes in their existing production methods.

INTRAPRENEUR
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who
uses entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a
special idea or project, and they are instructed to develop the project like an
entrepreneur would. Intrapreneurs usually have the resources and capabilities of the
firm at their disposal.

Intrapreneurship is acting like an entrepreneur within a larger organisation.

Intraprenuers are usually highly self-motivated, proactive and action-oriented people
who are comfortable with taking the initiative, even within the boundaries of an
organisation, in pursuit of an innovative product or service. The intrapreneur has the
comfort of knowing that failure does not have a personal cost as it does for an
entrepreneur, since the organisation absorbs losses arising from failure.

An intrapreneur is an employee who is given the authority and support to create a new
product without having to be concerned about whether or not the product will actually
become a source of revenue for the company. Unlike an entrepreneur, who faces
personal risk when a product fails to produce revenue, an intrepreneur will continue to
receive a salary even if the product fails to make it to production.

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MANAGEMENT & ENTREPRENEURSHIP (21EE61) MODULE – 3

DIFFERENCE BETWEEN INTRAPRENEUR AND ENTREPRENEUR.

INTRAPRENEUR ENTREPRENEUR
Intrapreneurship is the entrepreneurship Entrepreneurship is the dynamic process
within an existing organization. of creating incremental wealth.

To increase competitive strength and To innovate something new of socio

market sustainability of the economic value.
organization.

Enhance rewarding capacity of the Innovation, financial gain tad

organization and autonomy. independence.

Direct participation, which is more that Direct and total participation in the
delegation of authority. process of innovation. _

Hears moderate risk. Bears all types of risk.

Organizational employee expecting Free and sovereign person doesn’t bother
freedom in work. with status.

Keeps risky projects secret unless it is Recognizes mistake and failures so as to

prepared due to high concern for failure take new innovative efforts.
and mistakes.

Collaborative decisions to execute Independent decisions to execute dreams.

dreams.

Organization and intrapreneur himself. Customers and entrepreneur himself.

May not have or a little professional Professional or small business family

post. heritage.

Authority structure delineates the Basic relationship based on interaction

relation. and negotiation.

Self-imposed or organtzauonally There is no time bound.

stipulated time limits.

Technology and market. Increasing sales and sustaining

competition.

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Follows self-style beyond given structure. Adaptive self-style considering Structure

as inhabitants.

Strong self-confidence and hope for Strong commitment to self-initiated

achieving goals. efforts and goals.

Operates from inside the organization. Operates from outside the organization.

CHARACTERISTICS OF INTRAPRENEUR
Entrepreneurs bridge gap between inventors and managers.
They have vision and courage to realise it.
They can imagine what business prospects will follow from the way customers
respond to their innovators
They have ability to plan necessary steps for actualisation of the idea
They have high need for achievement
They take moderate risk
They are dedicated to there work that they take it up

MYTHS OF ENTREPRENEURSHIP

1. Entrepreneurs tend to carefully seek the best risk/reward action.

2. Entrepreneurs Are Born
3. Entrepreneurs Are Mainly Motivated to Get Rich
4. Entrepreneurs Give Little Attention to Their Personal Life
5. Entrepreneurs Are Often High-Tech Wizards
6. Entrepreneurs Are Loners and Introverts
7. Entrepreneurs Are Job Hoppers
8. Entrepreneurs Finance Their Business with Venture Capital
9. Entrepreneurs Are Often Ruthless or Deceptive
10. Entrepreneurs Have Limited Dedication
11. If my product or service is good, I’ll be successful
12. Entrepreneurship will give me back complete control over my schedule
13. Never give away your product or service: It’ll dilute your brand
14. Early on, I need to do it all myself.
15. The more clients, the better
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MANAGEMENT & ENTREPRENEURSHIP (21EE61) MODULE – 3
16. It takes a lot of money to finance a new business
17. Venture capitalists are a good place to go for startup money
18. Most business angels are rich.
19. Startups can’t be financed with debt
20. Banks don’t lend money to startups
21. Most entrepreneurs start businesses in attractive industries
22. The growth of a startup depends more on an entrepreneur’s talent than on the
business he chooses
23. Most entrepreneurs are successful financially
24. It takes a lot of Money To Start a Successful Business
25. I will Be Happier in Life as an Entrepreneur
26. I will not have a Boss When I Become an Entrepreneur
27. I will Have More Freedom and Work-Life Balance
DIFFERENCE BETWEEN ENTREPRENEUR AND ENTREPRENEURSHIP

ENTREPRENEUR ENTREPRENEURSHIP
Person Process
Visualiser Vision
Creator Creation
Organiser Organisation
Innovator Innovation
Technician TEchnology
Initiator Initiative
Decision maker Decision
Planner Planning
Leader Leadership
Motivator Motivation
Programmer Action
Risk taker Risk taking
Communicator Communication
Administrator Administration

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 MANAGEMENT & ENTREPRENEURSHIP (21EE61) MODULE – 3
ENTREPRENEURIAL DEVELOPMENT CYCLE

Stimulatory
1 Entrepreneurial Education.
2 Planned publicity for entrepreneurial opportunities.
3 Identification of potential entrepreneurs through scientific methods.
4 Motivational training to new entrepreneurs.
5 Help and guidance in selecting products and preparing project reports. J
6.Making available techno-economic information and product profits.
6 Evolving locally suitable new products and processes.
7 Availability of local agencies with trained personnel for entrepreneurial
counselling and promotions.
8 Organising entrepreneurial forum.

Support
1 Registration of unit
2 Arranging finance
3 Providing land, shed, power, water etc
4 Guidance for selecting and obtaining machinery
5 Supply of scarce raw materials
6 Getting licenses/import licenses
7 Providing common facilities
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8 Granting tax relief or other subsidy
9 Offering management consultancy
10 Help marketing product

Sustaining
1 Help modernisation
2 Help diversification/ expansion/substitute production
3 Defining repayment/interest
4 Define repayment/interest
5 Diagnostic industrial extension/consultancy source
6 Production units’ legislation/policy change reservation/Creating new avenues
for marketing
7 Oath testing and improving services
8 Need-based control facilities centre

Entrepreneurship development cycle contributes to the development of

entrepreneurs.
It consist of 3 stages.

1st Stage:
In this initial stage, for the development of entrepreneurial, education is provided
to them. Then they provide different opportunities through planned publicity.
Than identification of potential entrepreneurs is done through scientific method
.Special training is provided to them to motivate them. They also help and guide
them to select product and preparing project reports. They also make available
Techno-Economic Information and Product Profits to them as well as Local
agencies with trained personnel to them. It creates an entrepreneurial forum. And
helps them to recognise entrepreneurial skills.

2nd Stage:-
After getting educated, motivated and trained, in this stage financing, marketing
and other steps are performed by entrepreneurs. Here, registration of unit is done
along with arrangement of finance. It also provides land, shed, power, water,
scarce raw materials, different information, common facilities etc to them. They
guide entrepreneurs for selecting and obtaining machinery, for importing the
licenses and also for marketing the product.

3rd Stage:-
After marketing the product in market n above stage, this stage helps in

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MANAGEMENT & ENTREPRENEURSHIP (21EE61) MODULE – 3
modernisation, accepting diversification, expansion and substitute production.
Additional financing is done for full capacity utilisation. There is differing
repayment or interest. There is a diagnostic and different industrial extension or
consultancy source. There is Production unit’s legislation that is policy can be
change. Product is copyright and patent or reserved and creating new avenues
for marketing. After this quality is tested and try to improve the services and to
provide best quality product in the market. Needs-Based Centres are provided
with common facilities.
In this way entrepreneurial cycle contributes to the development of entrepreneurs
step by step. Initially by providing education, training, motivation then by
making proper allocation of resource and finance and proper marketing of the
product and then by accepting modernisation, changing policies, new
technologies advancement.
It leads to a successful, well trained, motivated entrepreneur.

PROBLEMS FACED BY ENTREPRENEURS IN INDIA

1. Bureaucracy
2. Corruption
3. Labour ( Skilled labour)
4. Regional Sentiments
5. Grey Market and Counterfeit Goods
6. Social Capital
7. Cash flow management
8. Hiring employees
9. Time management
10. Delegating tasks
11. Choosing what to sell
12. Marketing strategy
13. Capital
14. Business growth
15. Strapped budget
16. Self-doubt
17. Less Stability
18. High Rates of Risk
19. Taxes and Overhead
20. Teambuilding
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21. Loneliness
22. Inability to market their business

VTU QUESTIONS
1. Explain briefly the importance of entrepreneurship
2. Give the detailed classification of entrepreneurs
3. Explain the stages in entrepreneurial process.
4. What is social responsibility of business and explain social audit and corporate governors?
5. Discuss the problems faced by entrepreneurs.
6. Discuss briefly characteristics of successful entrepreneurs.
7. Differentiate between entrepreneur and intrapreneur
8. What is social audit? list the merits and demerits of internal and external auditing.
9. Define business ethics. Discuss the factors that affect business ethics.
10.List and explain three entrepreneur development model.

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