ENTREPRENEURSHIP

DEVELOPMENT
(UBU 5504)

UNIT I
• Defining Entrepreneurship
• Nature
• Role of Entrepreneurship in Economic Development
• Significance of Entrepreneurship for Indian Economy
• Entrepreneur-Meaning
• Classification of Entrepreneurs
• Entrepreneur vs Manager
• Qualities & Functions of an Entrepreneur
• Problems faced by Entrepreneur
• Risks in Entrepreneurship
• Intrapreneur-Meaning
• Entrepreneur vs Intrapreneur
 ENTREPRENEURSHIP

CONCEPT OF ENPRENEURSHIP
• Attempt to create value through recognition of
business, opportunity, risk taking through
communicative and management skills to
mobilize human, financial and material resources
necessary to bring project to success.
 DEFINITION-ENTREPRENEURSHIP

• Entrepreneurship is the creation or extraction of value.

• Entrepreneurship is viewed as change, generally entailing risk
beyond what is normally encountered in starting a business, which
may include other values than simply economic ones.
• Entrepreneurship as the process of designing, launching and
running a new business, which is often initially a small business,
or as the "capacity and willingness to develop, organize and
manage a business venture along with any of its risks to
make a profit."
 CHARACTERISTICS OF ENTREPRENEURSHIP
• 1.ECONOMIC AND DYNAMIC ACTIVITY: creation and operation with a
view of creating value/wealth by ensuring optimum utilisation of scarce
resources
• Performed in an uncertain business environment, regarded as a dynamic
force
• 2. RELATED TO INNOVATION: search for new ideas
• More efficient and effective systems evolved and adopted
• 3. PROFIT POTENTIAL: profit is the return to the entrepreneur for
taking on the risk
• 4. RISK BEARING: willingness to assume risk to implement new ideas
• Results may not be instantaneous and positive
• Patience to see the efforts bear fruit
• 5.VISIONARY: vision for future of his/her venture, he/she would just
be working aimlessly without reaching any point of success
• 6. LEADERSHIP: have vision
• Resources have people -entrepreneur hires to perform functions like
production, accounting
• Single person cannot perform all task
• Bring some people to do it
• Leader provides direction to the efforts of the employees
• 7. OPEN MINDED: every situation can be a business opportunity
• Utilize for the benefit of the organization
• 8. CONFIDENCE AND WELL INFORMED: need to be confident
about his ideas and skills
• Inspire confidence of people working for him as well as the other
stakeholders involved in his business
• Confidence comes from being well informed about the industry
and environment
• Legal and political policies enhance business and trade
opportunity while some hinder them
• Having knowledge about these can really help an entrepreneur make
right decision at the right time
 NATURE OF ENTREPRENEURSHIP
• 1. Long-term Involvement: commitment from an entrepreneur for a longer
period, may be 5 to 10 years.
• 2. Initiative: initiate to use the available resources and draw a plan of
action for all those who are involved in an enterprise
• 3. Goal Setting: set realistic and challenging goals
• 4. Risk-taking Ability: learn from failures and take risk at every stage
• 5. High Energy Level: managing resources and running an enterprises for
long hours of work which needs high energy
• 6. Problem Solver: creative problem solver to turn difficulties into
advantages
• 7.Team Builder: build the team, educate, keeps a high level of motivation
and provide an environment for creative and focused work-culture
• 8. Mental Ability and Clarity in Objectives: entrepreneur of high
intelligence with creative and positive thinking and a decision maker
with clear objectives in mind
• 9. Communication Skills: communicates effectively with financiers,
customers, employees and suppliers
• 10. Good Human Relations: tactful and warm relations is essential for
the success of an entrepreneur.
• Emotional stability is needed and motivate employees to put their
best performance at all levels in organisations
• 11. Decision Maker
• 12. Accepting Challenges
• I3. Innovators (next slide)
• 14. Organiser (next slide)
 13. INNOVATION

• New
• Unique
• New method of production
• Taste and prefer change
• Meet change demands
 14. ORGANISER

• Entrepreneur is one who combines land of one, labour of another and

capital of yet another and, thus produces a product.
• By selling the product, he pays interest on capital, rent on land and
wages to labours and what remains is the profit.
 EMERGENCE OF ENTREPRENEURSHIP-
ENTREPRENEURSHIP DURING PRE-INDEPENDENCE

• Handicraft
• Towns most religious
• Caste diversions
• Near rivers for transport
• Artisans (guilds were and are associations of artisans or
merchants who control the practice of their craft
in a particular town) brought together “guild
system” in perfection of art, durability, appeal to
individual
• Each is famous in some (Nagpur-silk, Ahmedabad-
Dupatta)
• Till 18th century India is queen of international state
• End of 18th century decrease in trade (disappearance of
kings, duties were high, low priced British goods in India,
change of taste)
• East India company made lot of changes
• Change in entrepreneur in mid 19th century
• Jam shed Tata is 1st entrepreneur
• Swedish movement-only for Indian goods
• After1st world war every industry should be registered.
 ENTREPRENEURSHIP DURING
POST-INDEPENDENCE

• 1st industrial policy formulated in 1948

• Importance to every state , development of industries was
given
• Private sector responsible for development
• 3 important measures by government are equal distribution
of power to private and public, encourage entire cities to
villages and entrepreneurship to all communities
• 3rd 5-year plans with incentive to entrepreneurial growth
• Family enterprise established
 ROLE OF ENTREPRENEURSHIP IN
ECONOMIC DEVELOPMENT

• Economy increased with growth in entrepreneurs

• Crucial in developing and developed nations
• Active entrepreneurs are introducers and
innovators
• Lack of funds and resources play a major role
• Start imitating
 ENTREPRENEURSHIP PROMOTES:

• 1. Capital promotion
• 2. Large scale employment
• 3. Balanced regional development
• 4. Concentration of economic power
• 5. Equal distribution of wealth and income
• 6. Effective resource mobilization and export trade in
the country
 SIGNIFICANCE OF ENTREPRENEURSHIP
FOR INDIAN ECONOMY
• 1. Creation of Employment
• 2. Innovation
• 3. Impact on Society and Community Development-employment is
large which promotes facilities like higher expenditure on education,
better sanitation, high level of ownership.
• 4. Increase the Standard of Living
• 5. Supports Research and Development-new products and services are
researched and tested before launching in the market
• 6. Development of a Nation: production of wealth by the creation of
knowledge, as well as sharing and distribution of that information
• This money is invested in infrastructure and other projects
• 7. Entrepreneurs are Philanthropists: entrepreneurs earn for themselves
and their employees, they get involved in donations and charities-support
in education, healthcare, culture and rural development, homeless
shelters, libraries
• 8. Entrepreneurs introduce changes in the Community: new company
hires who earn an income to spend at local stores.
• Generate more business
• Creates demand for schools, intern programs, workshops which provide
skill training
• Community gets highly educated and trained individuals
• Contribute to the upliftment of infrastructure of the society
• 9. Entrepreneurship leads to Economic Growth: new industries add
economic wealth as entrepreneurs invest funds to create new products
and services.
• Business earn profits and pay taxes; employees pay income tax
• Government utilizes additional income to stimulate the economy and
generate better facilities which leads to the increase in the country’s GDP
• 10. Entrepreneurs support other Entrepreneurs: some entrepreneurs
also become mentors and consultants
• Seasoned entrepreneurs can share the common mistakes, obstacles,
challenges and methods to overcome the same
• Make a newbie to save time which saves money and other crucial
resources
• Advises ways to arrange funds-obtain loans
• Interact with each other, brainstorm ideas, discuss the hurdles of
starting a business, hire employees, etc.
 ENTREPRENEUR-MEANING

• An entrepreneur is an individual who creates a new business, bearing most

of the risks and enjoying most of the rewards.
• An entrepreneur is a person who sets up a business with an aim to make
profit
• Entrepreneur-comes from French “entreprendre” meaning “to
undertake”
 EVOLUTION OF THE CONCEPT OF
ENTREPRENEUR

• Entrepreneur as a risk-bearer
• Entrepreneur as an organizer
• Entrepreneur as an innovator
 RISK BEARING

• Loss due to increase in competition, change in customer preference

and shortage of raw material.
 ORGANISER

• Entrepreneur is one who combines land of one, labour of another and

capital of yet another and, thus produces a product.
• By selling the product, he pays interest on capital, rent on land and
wages to labours and what remains is the profit.
 INNOVATION

• New
• Unique
• New method of production
• Taste and prefer change
• Meet change demands
 CHARACTERISTICS OF AN
ENTREPRENEUR
• 1. Hard work
• 2. Desire for high achievement
• 3. Highly optimistic
• 4. Independence
• 5. Foresight (changes in market, consumer attitude ,
technological developments)
• 6. Good organizer
• 7. Innovative
 ENTEPRENEUR &
ENTRENEURSHIP
• Person • Process
• Organizer • Organization
• Innovator • Innovation
• Risk-bearer • Risk-bearing
• Motivator • Motivation
• Creator • Creation
• Visualizer • Vision
• Leader • Leadership
• Imitator • Imitation
 TYPES/CLASSIFICATION OF
ENTREPRENEURS

• 1. Based on the Use of Technology

• 2. Based on the Type of Business
• 3. Based on Ownership
• 4. Based on Size of Enterprise
• 5. Based on Gender
• 6. Based on the Clarence Danhof Classification
• 7. Based on different Behaviourial Scientists
 1. BASED ON THE USE OF TECHNOLOGY

• Technical Entrepreneurs: entrepreneurs who establish technology-

based industries-IT industries
• Non-Technical Entrepreneurs: entrepreneurs who do not use science
and technology into their business
 2. BASED ON THE TYPE OF BUSINESS
• Trading Entrepreneur: carry out trading activities-wholesalers
• Manufacturing Entrepreneur: identify needs of customers and
manufacture products.
• Convert raw material into finished goods
• Agricultural Entrepreneur: entrepreneurs who take up activities related
to agriculture-cultivation, marketing of agricultural products
 3. BASED ON OWNERSHIP
• Private Entrepreneur: enterprise owned by individuals
• Bears the whole risk
• Sole owner of the enterprise
• State Entrepreneur: owned by a s state or government
• Joint Entrepreneur: jointly run by government and the private
individual
 4. BASED ON SIZE OF ENTERPRISE
• Small-Scale Entrepreneur: invested up to one crore rupees for the
plant and machinery
• Medium-Scale Entrepreneur: invested above one crore rupees for
the plant and machinery
• Large-Scale Entrepreneur: invested above five crore rupees for the
plant and machinery
 5. BASED ON GENDER

• Male Entrepreneurs: controlled by male

• Female Entrepreneurs: controlled by female
 6. BASED ON THE CLARENCE DANHOF
CLASSIFICATION

▪ 1. INNOVATING ENTREPRENEURS
▪ 2. IMITATIVE ENTREPRENEURS
▪ 3. FABIAN ENTREPRENEUR
▪ 4. DRONE ENTREPRENEUR
 1. INNOVATING ENTREPRENEURS

• Introduces new goods

• Inaugurates new method of production
• Discovers new market
• Recognizes the enterprise
 2. IMITATIVE ENTREPRENEURS

• Adopt successful innovations

• Imitate techniques and technology
 3. FABIAN ENTREPRENEURS

• Imitate only if it becomes perfect

• No loss for the company
 4. DRONE ENTREPRENEURS

• Refuse to adopt opportunities to change in production formulae

• Even if they suffer losses and not ready to change production methods
 7. BASED ON DIFFERENT BEHAVIOURIAL
SCIENTISTS

▪ 1. SOLO OPERATORS
▪ 2. ACTIVE PARTNERS
▪ 3. INVENTORS
▪ 4. CHALLENGERS
▪ 5. BUYERS
▪ 6. LIFETIMERS
 1. SOLO OPERATORS

• Work alone
• Employ few employees
 2. ACTIVE PARTNERS

• All of them actively participate in the operations of business

• Entrepreneurs who contribute funds but not participate in business are
simply called as “Partners”
 3. INVENTORS

• Invent new products

• Interest lies in research and innovative activities
 4. CHALLENGERS

• One challenge met, they begin to look for new challenges

 5. BUYERS

• Entrepreneurs who do not like to bear much risk

• Reduce risk, they buy ongoing one
 6. LIFETIMERS

• Integral part of life

• Family enterprise and businesses depend on personal skill fall in this
category
 DISTINCTION-ENTREPRENEUR AND
MANAGER
POINTS ENTREPRENEUR MANAGER
MOTIVE Start new venture Render his services

STATUS owner Servant in enterprise

RISK-BEARING All risks and uncertainty Does not bear any risk

REWARDS Profit which is uncertain Salary as reward. salary is

certain
INNOVATION According to changing needs Execute plans prepared by
entrepreneur
QUALIFICATIONS Possess qualities and Manager needs to possess
qualifications like high distinct qualifications of
achievement motive, sound knowledge in
originality in thinking, risk management theory and
bearing ability practice
 QUALITIES OF AN ENTREPRENEUR
• 1. DISCIPLINED: disciplined to take steps everyday towards the
achievement of their objectives
• 2. CONFIDENCE: confident with the knowledge-business succeed
• 3. OPEN MINDED: ability to look at everything around them
• Focus it toward their goals
• 4. SELF-STARTER: if something needs to be done, they should start it
themselves
• Not wait for someone to give them permission
• 5. COMPETITIVE: many company’s are formed because an entrepreneur
knows that they can do a job better than another
• Need to win at the businesses that they create
• Entrepreneur will highlight their own company’s record of success
• 6. CREATIVITY: come up with solutions
• New products to market-new industries
• 7.DETERMINATION: look at defeat as an opportunity for success
• Will try and try again until it does
• Successful entrepreneurs do not believe that something cannot be
done
• 8. STRONG PEOPLE SKILLS: strong communication skills to sell the
product and motivate employees
• Good at highlighting the benefits of any situation and coaching others to
their success
• 9. STRONG WORK ETHIC: first person to arrive at the office and the
last one to leave
• Mind is constantly on their work- in or out of the workplace
• 10. PASSION: genuinely love their work
• Willing to put in those extra hours to make the business succeed
• Reading and researching ways to make the business better
• Successful entrepreneurs want to see what the view is like at the top of
the business mountain
• Once they see it, they want to go together
• They know how to talk to their employees, and their businesses soar as a
result
 FUNCTIONS OF AN ENTREPRENEUR

• 1. Idea generation and scanning best suitable idea

• 2. Determination of business objectives
• 3. Product analysis and market research
• 4. Determination of form of ownership/organization
• 5. Completion of promotional formalities
• 6. Raising necessary funds
• 7. Procuring machine and material
• 8. Undertaking the business operation
• 9. Risk-bearing
• 10. Organization
• 11. Innovation
 PROBLEMS FACED BY ENTREPRENEUR

• 1. Selecting a Service or Product: Decide what to sell

• Identify a demand in their community they could meet
• Marketing firm may help to conduct market research to discover what
needs there are and which ones they have the resources to address
• 2. Developing a Sales Strategy: Entrepreneur may recognize an
opportunity, can research a best way to sell
• Hire a professional to create a marketing plan
• Assess the target audience and the strategy to reach them
• 3. Establishing Starting Funds:Traditional bank loan
• Plan to provide a product or service that has significant demand, can start
fundraising campaign
• Start targeting a small audience and slowly build to serve larger client
• 4. Maintaining a Budget: Business is unpredictable
• Carefully maintain a budget
• Prioritize marketing strategies-unique needs
• Assessing expenses may help entrepreneurs adjust their funds to better
prepare for changes
• 5.Sustaining Revenue: Charge a down payment to ensure they can afford
expenses until they receive full payment
• Send invoices and request payment as they complete projects
• 6. Staffing the Organization: Hire people who care about their
organization
• Attract candidates whose qualifications match the organization’s
specific needs
• Develop questions to assess- candidate fit to the organization- help
them in their career goals
• 7. Managing Employees: Entrepreneurs guide their employees on how to
best carry out the organization’s goals
• Develop clear, detailed instructions for each role
• Employees understand what they expect and what they’re working
toward
• 8. Expanding the Business: Figure out a way to address greater demand,
research new partners and reassess the role in the company
• Entrepreneur may revise existing processes to meet the company’s
needs
• 9. Managing Time: Create deadlines will help to prioritize their
obligations
• Roles has many responsibilities, entrepreneurs have several approaches
to manage time
• Create goals for themselves and others in the organization
• Assess which tasks are necessary and which they can delegate
• 10. Maintaining Confidence: Confidence to lead effectively
• Take appropriate decisions
• Set long-term and short-term goals to track and reflect on their
success
• Entrepreneur is more confident, feel more prepared to
address challenges
• 11. Collaborating with Partners: Consider partnering with
other professionals or businesses
• Will help to allocate leadership responsibilities and
increase funding
• Assess areas of improvement, whether partnership might
help to develop their skills and personalities
• Establish partnership with a lawyer to protect all parties
interests
 RISKS IN ENTREPRENEURSHIP
• 1. Financial Risk
• 2. Strategic Risk
• 3.Technology Risk
• 4. Market Risk
• 5. Compliance Risk
• 6. Reputational Risk
• 7. Operational Risk
• 8. Competitive Risk
 1.FINANCIAL RISK

• Need funds to transform idea into reality

• Risk-arranging funds
• Loans, capital arranged with the help of family and friends, own
savings
• Financial planning to be done so that they don’t go bankrupt
 2. STRATEGIC RISK

• Business needs a flawless plan

• Even a well-thought plan could be a failure
• Company manage to adapt to a changing environment and new
challenges
• Manage to sail through difficult times, whereas others fail
 3. TECHNOLOGY RISK

• Constantly upgrade and accept new technologies

• Reluctant to change the conventional ways of working and don’t invest
in new technologies can suffer
• Technology acceptance is the need of the hour
 4. MARKET RISK

• Economy is growing, customers might get attracted to purchase

luxurious goods
• Leads to an increase in demand for luxury products
• Economic depression, demand for such products decline, leading to a
severe risk faced by entrepreneurs
• Market research, survey and analysis can help entrepreneurs undertake
efficient entrepreneur risk management
 5. COMPLIANCE RISK

• Laws of the land is different

• A company has to abide by existing laws and adapt to the changing
legal environment in the future too
• Law framed in favour of or against an industry can change-success
 6. REPUTATIONAL RISK

• Company’s reputation gets damaged, a steep decline in revenue

follows
• Goodwill of the company declines among customers, which further
tarnishes its image
• Company unable to find talented employees who are reluctant to
work in a place that has no reputation
 7. OPERATIONAL RISK

• Entrepreneurial risk arises when a company unable to carry out routine

business activities efficiently
• Overall productivity of an enterprise declines
• Could be due to people failure or process failure
• External events like natural disasters can also impact the operational
efficiency of a company
 8. COMPETITIVE RISK

• Aware of the competitors

• Entrepreneurs able to get an innovative idea or product patented
before their competitors can take advantage of it
 INTRAPRENEUR-MEANING

• Top executive
• Converts ideas into products
• Leave organization and start own (innovative)
• Success in new & threat to old
 DIFFERENCES-ENTREPRENEUR
&INTRAPRENEUR

• INDEPENDENT • DEPENDENT
• FUNDS BY HIMSELF • NOT RAISED
• BEAR RISK • NOT FULLY BEAR RISK
• OPERATE FROM OUTSIDE • OPERATE WITHIN THE
ORGANISATION