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Unit – 1
Introduction to Entrepreneurship
Enterprise
It is an entity, organisation, or undertaking that is created for commercial purposes.
It is focused on providing goods and services.
An enterprise is composed of individuals and physical assets with a common goal of generating
profits.
Entrepreneur
The word entrepreneur is derived from the French word ‘Entreprendre’ which means to
undertake.
Entrepreneur is an individual who creates an enterprise.
According to Encyclopedia Americana (1988), “An entrepreneur is a businessman who assumes
the risk of bringing together the means of production including capital, labour and material and
receives his reward in profit from the market value of his product”.
Entrepreneurship
It is an act of establishing an enterprise.
Benjamin Higgins has defined entrepreneurship as, “The function of foreseeing investment and
production opportunity, organising an enterprise to undertake a new production process, raising
capital, hiring labour, arranging for the supply of raw materials, and selecting managers for the
day-to-day operation of the enterprise”.
Intrapreneur
According to Gifford Pinchot (1985), “Intrapreneur is an entrepreneur within an already
established organisation”.
Difference between Entrepreneur and Intrapreneur
Basis of Comparison Entrepreneur Intrapreneur
Meaning Starts own business with new Employed in a company who is
idea / concept in-charge of innovations in
products, processes, services etc.
Resources Own resources Provided by the company
Capital Raised by him Financed by the company
Risk Borne by the himself Borne by the company
Dependency Independent Dependent
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Eg: Initiative of intrapreneurs includes Google’s Gmail, Google News, Sony Play station etc.
Characteristics of an entrepreneur
* Success of an enterprise depends on the efficiency of an entrepreneur. Characteristics of an
entrepreneur include:
1. Creativity
It refers to the ability of an entrepreneur to bring new ways to run a business.
It is bringing something new into existence.
2. Innovation
Innovation is the ability of an entrepreneur to provide things in a novel manner.
It is adding value to products or services.
It is the result of continuous generation of new thoughts and ideas.
Eg: Improving the design of the product, new method to reduce cost of production.
3. Dynamism
An entrepreneur should be able to convert a new idea into a successful innovation.
4. Flexibility
Flexibility helps an entrepreneur to adapt to the changing marketplace, strategies of competitors,
and preferences of customers.
It helps an entrepreneur to make necessary changes in the products and services as per the market
conditions.
5. Leadership
It is one of the most indispensable qualities of an entrepreneur.
As a leader, an entrepreneur should motivate, guide and inspire his employees to achieve the
organisation’s goal.
He should be able to handle the problems effectively.
6. Teambuilding
An entrepreneur should have the ability to build a team. A team is a group of people working for a
common purpose.
Most successful entrepreneurs have highly qualified, well-motivated teams that help handle the
business growth and development.
7. Interpersonal skills
Entrepreneurs have to interact with raw material suppliers, customers, bankers, etc., for different
activities. Hence, they should have interpersonal skills.
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8. Communication skills
Entrepreneurs should possess good communication skill, both written and oral to run the
enterprise efficiently.
9. Risk taking
Entrepreneurs take decisions under uncertainty and thus take risk.
They undertake calculated risk which has a reasonable chance to win.
10. Tolerance
Entrepreneurs experience setbacks. They should not become disappointed or depressed by
failures. They should learn from failures for future success.
11. Self-confidence
Entrepreneurs must have self-confidence to accomplish the task.
They must take decisions on their own under risky and uncertain situations and stick to it even if
there are initial setbacks.
Classification of Entrepreneurs
* Entrepreneurs are classified as follows:
1. Innovative entrepreneurs
These entrepreneurs introduce new ideas, new technology of production, open new markets and
create new organisations.
They are very helpful for the country because they bring about a transformation in lifestyle.
Eg: Apple iPhones
2. Adoptive or Imitative entrepreneurs
These entrepreneurs imitate the existing entrepreneurs and set up their enterprise in the same
manner.
Instead of innovating, they imitate the technology and methods innovated by others.
In developing countries they contribute to the economic development by generating employment
opportunities.
Eg: Flipkart, Amazon; Swiggy, Uber, Zomato
3. Fabian entrepreneurs
Such entrepreneurs are sceptical in adopting or innovating new technology in their enterprise.
They are not adaptable to the changing environment.
These entrepreneurs use the same old techniques of production.
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They adopt new technologies only when they realise that failure to adopt will lead to collapse of
the enterprise.
Eg: Kodak Analog Cameras, Nokia
4. Drone entrepreneurs
These entrepreneurs are conservative or orthodox in outlook.
They never like to get rid of their traditional business and traditional machineries or systems.
Such entrepreneurs are laggards who refuse to adopt changes.
Eg: Nirma washing powder
5. Social entrepreneur
A social entrepreneur is a person who establishes an enterprise with the aim of solving social
problems or effecting social change.
Eg: Hanumappa Sudarshan, a doctor by education, is the founder of Karuna Trust which works to
transform badly run government primary health centres. He won the Indian Social Entrepreneur
award for the Year 2014.
6. E-entrepreneurs
An e-entrepreneur is an individual who uses an electronic platform to offer products and services.
Eg: Amazon
7. Mompreneurs
A homemaker entrepreneur is a mompreneur.
It gives them flexibility to take care of their home and manage the business.
Functions of an entrepreneur
*The main functions of the entrepreneurs are:
1. Idea generation
Idea generation precisely implies product selection and project identification.
Ideas can be generated through environmental scanning and market survey.
2. Determination of objectives
An entrepreneur should be clear with the nature and type of business.
3. Raising of funds
Fund raising is the most important function of an entrepreneur.
All the activities of a business depend upon finance and its proper management.
It is the responsibility of an entrepreneur to raise funds.
He should be aware of different sources of funds and formalities to raise funds.
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4. Procurement of raw materials
An entrepreneur has to identify cheap and regular sources of supply of raw materials to reduce
cost of production.
5. Procurement of machinery
The entrepreneur has to procure machineries and equipments for the company. He has to decide
on the technology to be used and capacity of the machinery to be procured.
6. Market research
Entrepreneur has to undertake market research to know the demand for the product, supply,
price etc., while starting an enterprise.
7. Determination of form of enterprise
An entrepreneur has to decide the form of enterprise based on the nature of the product, volume
of investment etc.
The chief forms of organisations are sole proprietorship, partnership, joint stock company and
cooperative society.
8. Recruitment of manpower
Entrepreneur has to estimate the manpower need in the organisation, lay down selection
procedure, compensation and rules of training and development.
9. Implementation of the project
The entrepreneur has to work on the implementation schedule or action plan of the project.
The identified project has to be implemented in a time-bound manner to minimize cost.
Importance of entrepreneurship
* The significance of entrepreneurs are given as under:
Economic growth and development
Employment opportunities
Improved standard of living
Increased revenue for the government
Increased exports
Earns foreign exchange
Dynamism in industry
