ENTREPRENEURSHIP

What is Entrepreneurship?
 CONCEPT OF ENTREPRENEUR
• The word "Entrepreneur" is derived from the
French verb 'entrepredre'.
• It means 'to undertake'.
• In the early 18th century French economist
Richard Cantillon used the term entrepreneur
to business.
– one who takes the risk of starting a new
organization or introducing a new idea, product or
service to society.
• According to J.B. Say,
• “An Entrepreneur is the economic agent who
– unites all means of production; land of one, the labour
of another and the capital of yet another and thus
produces a product.
– By selling the product in the market he pays rent of
land, wages to labour, interest on capital and what
remains is his profit".
• Thus an Entrepreneur is an organizer who
combines various factors of production to
produce a socially viable product.
• Joseph Schumpeter,
• "An entrepreneur in an advanced economy is
– an individual who introduces something new in the
economy,
– a method of production not yet tested by experience
in the branch of manufacture concerned,
– a product with which consumers are not yet familiar,
– a new source of raw material or of new market and
the like"
 Higgins
• Entrepreneurship is meant the function of
– foreseeing investment and production
opportunities,
– organizing an enterprise to undertake a new
production process
• raising capital, hiring labour, arranging the supply of
raw materials, finding site, introducing a new
technique, discovering new resources or raw materials
and selecting top managers for day to day operations of
the enterprise.
 Industry 4.0
• Industry 4.0 is a name for
the current trend
of automation and data
exchange in manufacturing
technologies.
• It includes cyber-physical
systems, the Internet of
things, cloud computing
and cognitive computing.

• Cyber-physical systems monitor physical processes, create a virtual copy of the

physical world and make decentralized decisions.
• Over the internet of things, cyber-physical systems communicate and cooperate
with each other and with humans in real-time both internally and across
organizational services offered and used by participants of the value chain
 FIVE CORE ELEMENTS OF
ENTREPRENEURSHIP
• Entrepreneur’s task is evaluating rise for cutting across
accepted boundaries, breaking rules and doing things in a
different manner
• To identify opportunities that no one has earlier noticed
• The entrepreneurs have an ability to apply the creativity to
business problems
• Entrepreneur focus on creating value by doing things in a
cheaper, better and faster manner.
• They have a sound belief in their ability to change the
status quo- the way the things are being done presently.
BASIS FOR
BUSINESSMAN ENTREPRENEUR
COMPARISON
Meaning A businessman is someone An entrepreneur is a person
who sets up a business who starts an enterprise with
with an existing idea a new idea or concept,
offering products and undertaking commercial
services to the customers. activities.

Market Position Market Player Market Leader

Nature Calculative Intuitive
Market Creates place in existing Creates new market
markets
Risk factor Less Comparatively high
Methods applied for Conventional Unconventional
doing things
Approach Holistic Atomistic
Orientation Profit People
Competition Very high Low
 ENTREPRENEUR PHILOSOPHY

• Success of an entrepreneur depends on ones

willingness to accept responsibility for one’s own
work
• Pursue goals related to ones skills and abilities
 Common Myths about entrepreneurs
1. Entrepreneurs are born not made
2. Entrepreneurs are doers not thinkers
3. Entrepreneurs are always inventors
4. Entrepreneurs are academic and social misfits
5. Entrepreneurs must fit the profile
6. All that entrepreneurs need is money
7. All entrepreneurs need is luck
8. Entrepreneurship is unstructured and chaotic
9. Most entrepreneurial initiatives fail
10. Entrepreneurs are extreme risk takers.. The gamblers
 ENTREPRENEURIAL TRAITS
A trait, on the other hand, is a feature of an individual which is inherited.
Trait is something that is genetically determined and is present within an individual right from
birth and does not change over a period of time.
• Trouble-shooter
• Mental Ability
• Long-term involvement
• Motivation
• Self-confidence • Resourcefulness
• Perseverance, determination • Imagination
• High energy level • Commitment
• Initiative • Aggressiveness
• Goal-setter • Efficiency
• Clear Objectives • Ability to trust workers
• Business Secrecy • Honesty
• Human Relations Ability • Integrity
• Effective Communication • Positive response to challenges
• Decision making • Creativity
• Risk-bearing • Foresight
• Responsibility
 CHARACTERISTICS OF ENTREPRENEURSHIP
A Characteristic refers to the distinctive qualities that make up an individual.
Development of character depends upon one’s interaction with the socio-economic
environment in which an individual grows up or spends time as a part of their profession.
Character is something that is learnt by experiential learning

1. Need for achievement

2. Need for influencing others
3. Innovation
4. Sense of efficacy
5. Calculated risk taking
6. Ability to create enterprise
7. Organising function
8. Openness to feed back and learning from experience
9. Need for independence
10. Hope for success
11. Belief that they can change the environment
12. Time orientation
13. Concern for the society
14. Dignity of labour
15. Saving for the future
 Importance of Entrepreneur in Economic Development

• Employment Generation
• National Income
• Dispersal of Economic Power
• Balanced Regional Development
• Harnessing locally available resources
• Reducing Unrest and Social Tension Amongst youth
• Innovations in Enterprises
• Improvement in Living Standards
• Economic Independence
ENTREPRENEURIAL MOTIVATION:
CONCEPT AND NEED
 MOTIVES FOR ENTREPRENEUR
1. Entrepreneurial ambitions
(a) To make money
(b) To continue family business
(c) To secure self-employment/independent living
(d) To fulfill desire of self/wife/parents
(e) To gain social prestige
(f) Other ambitions- making of a decent living, self-employment of children, desire to do something creative,
provide employment to others.
2. Compelling reasons
(a) Unemployment
(b) Dissatisfaction with the job so far held or occupation pursued
(c) Make use of idle funds
(d) Make use of technical/professional skills.
(e) Others – maintenance of large families, revival of sick unit started by father, etc.
3. Facilitating factors
(a) Success stories of entrepreneurs
(b) Previous association (experience in the same or other line of activity)
(c) Previous employment in the same or other line of activity
(d) Property inherited/self acquired/wife's
(e) Advice or influence (encouragement) of family members/relatives/ friends.
(f) Others– association as apprentices and sleeping partners.
 THEORIES OF MOTIVATION
• Maslow's Need Hierarchy Theory
• McClelland's Acquired Needs Theory.
Maslow proposed that human needs can be arranged
in a particular order from the lower to the higher
McClelland's Acquired Needs Theory
 ENTREPRENEURIAL SCHOOLS OF THOUGHT
ENVIRONMENTAL

FINANCIAL/CAPITAL
MACRO

DISPLACEMENT
ENTREPRENEURSHIP

ENTREPRENEURIAL TRAIT

MICRO VENTURE OPPORTUNITY

STRATEGIC FORMULATION
 Why Consider Entrepreneurship?

• Putting Your Own Ideas to Work

• You Are Your Own Boss
• Choosing the Location
• Large Earning Potential
• Choose Your Working Hours
• Get Involved in the Operations of Your
Business
• Make Your Business a Family Asset
 Is Entrepreneurship Appropriate For You?

• What Do You Love Doing? Or Love Doing In Your Job?

• Are You Excited About Your Idea?
• Is it Different Enough?
• Would it Pain You if You Never Pursued the Idea?
• Is it Worth Giving Something Else Up?
• What Have Your Life Experiences Been?
• How Strong is the Feedback?
ENTREPRENEURSHIP AS CAREER OPTION
What is the difference between Entrepreneur and Entrepreneurship?
CLASSIFICATION/TYPES OF ENTREPRENEURS
 Clarence Danhof Classification
• Innovative:
– entrepreneurs sense the opportunities for introduction new ideas new technology, new markets and
creating new organizations.
– Example: Uber, Make my Trip etc

• Imitative/ Adoptive:
– Imitative entrepreneur is also known as adoptive entrepreneur. He simply adopts successful
innovation introduced by other innovators
– Example: Sony corporation invests in innovations- meituan copies the innovations and spreads in
the markets with its production and marketing strategies
• Fabian:
– The Fabian entrepreneur is timid and cautious. He imitates other innovations only if he is certain
that failure to do so may damage his business
– Example: Fabian are more applicable in the Indian rural agriculture environment, where traditional
acquired land is passed down to their successors, the new Landlord try to run their business in a pre-
historic manner with traditional methods of book keeping and less changes.
• Drone:
– These entrepreneurs are conservative or orthodox in outlook. They never like to get rid of their
traditional business and traditional machinery or systems of the business
– Example: There is a “Beeree” (Old fashion tobacco making process) producer Co-operative that uses
employee to make the tobacco by hand. Even though it is a dying industry but it does not stop them.
 Arthur H. Cole Classification

1. Empirical:
▪ He is an entrepreneur hardly introduces anything revolutionary
and follows the principle of rule of thumb.
2. Rational:
▪ The rational entrepreneur is well informed about the
general economic conditions and introduces changes which
look more revolutionary.
3. Cognitive:
▪ Cognitive entrepreneur is well informed, draws upon the advice
and services of experts and introduces changes that reflect
complete break from the existing scheme of enterprise.
 What are Micro, Small & Medium Enterprises ?

Definitions of Micro, Small & Medium Enterprises In accordance with the

provision of Micro, Small & Medium Enterprises Development (MSMED)
Act, 2006

Manufacturing Sector Enterprises

• Investment in plant & machinery
• Micro Enterprises : Does not exceed 25 lakh rupees
• Small Enterprises : >25 lakh rupees upto 5 crore rupees
• Medium Enterprises : > 5 crore rupees upto 10 crore rupees

Service Sector Enterprises

• Investment in equipments
• Micro Enterprises : Does not exceed 10 lakh rupees
• Small Enterprises : >10 lakh rupees upto 2 crore rupees
• Medium Enterprises : > 2 crore rupees upto 5 crore rupees
• According to the government’s new definition, businesses
with revenue (turnover) of as much as
– Micro Enterprises : Does not exceed Rs. 5 crore
– Small Enterprises : >Rs. 5 cr upto Rs. 75 crore
– Medium Enterprises : > Rs 75 crore upto Rs. 250 crore
 Other types of entrepreneurs
• Solo operators:
– These entrepreneurs prefer to set up their business individually
• Active partners:
– Entrepreneurs of this type jointly put their efforts to build enterprise pooling together their own
resources. They actively participate in managing the daily routine of the business concern.
• Inventors:
– These entrepreneurs primarily involve themselves in Research and Development (R and D)
activities
• Challengers:
– Entrepreneurs of this type take challenges to establish business venture as mark of achievement
• Buyers (entrepreneurs):
– These entrepreneurs explore opportunities to purchase the existing units which may be seized or
are in running condition
• Life timers:
– These entrepreneurs believe that business is the part and parcel of their life.
• Intrapreneur
– Those who are employed in large corporations who
are given autonomy and resources to use their
competencies to explore new opportunities while
staying with the job
• Ultrapreneur
– New type of entrepreneurs who challenge the old
notion that entrepreneurs are born, not made.
– New products and services are conceived created
tested, produced and marketed very quickly with
great speed
FUNCTIONS OF ENTERPRENEUR
Innovation

Earning
Risk Taking
profit

Managing Decision
enterprise making

Planning Raising
production finance

Establishing
enterprise
 The Entrepreneurial Process
Stages Activity Detailed Activities
1 Conducting opportunity analysis • State the vision
• Conduct market analysis and research
• Evaluate the competition
• Research pricing and sales strategies
2 Developing Plan and setting up of • Set goals and objectives
the company • Start writing the plan
• Investigate new processes and technologies
• Determine pricing, market and distribution
channels
• Set up the company
3 Acquiring financial partners • Secure early stage funding
/Sources of Funding • Secure growth funding
4 Determining the resources • Starting business operations
required and Implementing the • Prepare the organisation for growth
Plan • Develop an e business strategy for managing
financial operations
5 Scaling and harvesting the Venture • Determine value of licences, patents and
copyrights
• Discuss options and alternatives
• Sell or merge
START UP DEVELOPMENT PHASES