Introduction To Entrepreneurship

INTRODUCTION
TO
ENTREPRENEURSHIP
By Abhishek Duttagupta

Objectives
• Definition of Entrepreneur
• Entrepreneurial Traits
• Entrepreneur vs. Manager
• Entrepreneur vs. Intrapreneur
• The Entrepreneurial decision process
• Role of Entrepreneurship in Economic Development
• Ethics and Social responsibility of Entrepreneurs
• Opportunities for Entrepreneurs in India and Abroad
• Woman as Entrepreneur

Concept of Entrepreneurship
• Various views about an ‘Entrepreneur’:
• as a risk bearer
• as an organizer
• as an innovator
• Entrepreneurship is related to:
• coordination, innovation and performance of the
entrepreneur.
• a system of creating new business.
• referred to the various activities, done for the establishment
and operation of an enterprise.

Definition of Entrepreneurship
• “Entrepreneurship is the purposeful activity of an individual or a
group of associated individuals, undertaken to initiate, maintain or
aggrandize profit by production or distribution of economic goods
and services”
- A. H. Cole
• “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.”
- Joseph A. Schumpeter

Definition of Entrepreneurship
• “Entrepreneurs are people who have the abilities to see and
evaluate business opportunities , together with the necessary
resources to take advantage of them, and to ensure appropriate
action to ensure success.”
- International Labour Organization
• “An entrepreneur is a person who starts a new venture, taking the
initiative and risk associated with it and does so by crating
something new to provide value to customers.”
- David Holt

Other Definitions of Entrepreneurship
• “Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently control.”
- Stevenson & Jarillo
• “Entrepreneurship is the art of turning an idea into a business.”
- Fred Wilson

EntrepreneurialTraits
• Innovation
- does something new and different, seeking to do
something different and unique, try to meet the changing
requirements of customers.
• Risk – Bearing
- must be able to assume the risk involved in the enterprise,
needs to be a risk taker not an avoider, should have ability of
risk bearing .

EntrepreneurialTraits (Contd..)
• Passion for the Business
- This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.
• Product/Customer Focus
- An entrepreneur’s keen focus on products and customers
typically stems from the fact that most entrepreneurs are, at
heart, craftspeople.
• Execution Intelligence
- The ability to fashion a solid business idea into a viable
business is a key characteristic of successful entrepreneurs.

EntrepreneurialTraits (Contd..)
• Achievement motivated
• Alert to opportunities
• Creative
• Decisive
• Energetic
• Has a strong work ethic
• Is a networker
• Initiative Taker
• Lengthy attention span
• Optimistic disposition
• Persuasive
• Responsive to criticism
• Self-confident & Self-starter
• Tenacious
• Tolerant of ambiguity
• Visionary

Entrepreneurs v/s Managers
• Entrepreneur refers to a person who creates an enterprise, by
taking financial risk in order to get profit.
• Manager is an individual who takes the responsibility of controlling
and administering the organization.
BASIS FOR COMPARISON ENTREPRENEUR MANAGER
Focus Business startup Ongoing operations
Primary motivation Achievement Power
Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse

Intrapreneurs
• An Intrapreneur is someone within a company that takes risks in an
effort to solve a given problem and is usually is in charge of undertaking
innovations in product, service, process etc.
• Organizations want to form:
• Product Champions: people who take ownership of a product from
concept to market.
• Skunkworks: a group of intrapreneurs kept separate from the rest of
the organization.
• New Venture Division: allows a division to act as its own smaller
company.
• Rewards for Innovation: link innovation by workers to valued
rewards.

Entrepreneurs v/s Intrapreneurs

The Entrepreneurial Decision Process
An
Entrepreneur
Possibilities
to Become
An
Entrepreneur
Desire to
Become An
Entrepreneur
Reasons For
Changing
The Present
Status
The Present
Status
• Entrepreneurial decision process -
– Entails a movement from something to something.
– Movement from a present lifestyle to forming a new
enterprise .

Steps in the Entrepreneurial Process
Discovery
Concept
Development
Resourcing Actualization Harvesting
• Once the decision to become an entrepreneur is taken, the
entrepreneurial process begins.
• The 5 stages of entrepreneurial process are –
1. Discovery
2. Concept Development
3. Resourcing
4. Actualization
5. Harvesting

Steps in the Entrepreneurial Process (Contd..)
1. Discovery: The stage in which the entrepreneur generates ideas,
recognizes opportunities, and studies the market.
2. Concept Development: Develop a business plan: a detailed proposal
describing the business idea.
3. Resourcing: The stage in which the entrepreneur identifies and
acquires the financial, human, and capital resources needed for the
venture startup, etc.
4. Actualization: The stage in which the entrepreneur operates the
business and utilizes resources to achieve its goals/objectives.
5. Harvesting: The stage in which the entrepreneur decides on business’s
future growth/ development, or demise.

Role Of Entrepreneurship In Economic Development
• Entrepreneurship is one of the most important input in the
economic development of a country.
• The entrepreneur acts as a trigger head to give spark to economic
activities by his entrepreneurial decisions.
• The entrepreneur plays a pivotal role not only in the development
of industrial sector of a country but also in the development of farm
and service sector.
• The crucial role played by the entrepreneurs in the development of
the Western countries has made the people of underdeveloped
countries too much conscious of the significance of
entrepreneurship for economic development.

1. Promotes Capital Formation
2. Creates Large-Scale Employment Opportunities
3. Promotes Balanced Regional Development
4. Reduces Concentration of Economic Power
5. Wealth Creation and Distribution
6. Increasing Gross National Product and Per Capita Income
7. Improvement in the Standard of Living
8. Promotes Country's Export Trade
9. Induces Backward and Forward Linkages
10. Facilitates Overall Development

• Promotes Capital Formation
• Entrepreneurs promote capital formation by mobilizing the idle savings of
public.
• They employ their own as well as borrowed resources for setting up their
enterprises.
• Creates Large-Scale Employment Opportunities
• Entrepreneurs provide immediate large-scale employment to the
unemployed which is a chronic problem of underdeveloped nations.

• Promotes Balanced Regional Development
• Entrepreneurs help to remove regional disparities through setting up of
industries in less developed and backward areas.
• The growth of industries and business in these areas lead to a large
number of public benefits like road transport, health, education,
entertainment, etc.
• Reduces Concentration of Economic Power
• Industrial development normally lead to concentration of economic power
in the hands of a few individuals which results in the growth of
monopolies.
• In order to redress this problem a large number of entrepreneurs need to
be developed.

• Wealth Creation and Distribution
• It stimulates equitable redistribution of wealth and income in the interest
of the country to more people and geographic areas, thus giving benefit to
larger sections of the society.
• Increasing Gross National Product and Per Capita Income
• Entrepreneurs are always on the look out for opportunities.
• They explore and exploit opportunities,, encourage effective resource
mobilization of capital and skill, bring in new products and services and
develops markets for growth of the economy.
• In this way, they help increasing gross national product as well as per
capita income of the people in a country.

• Improvement in the Standard of Living
• Increase in the standard of living of the people is a characteristic feature of
economic development of the country.
• Entrepreneurs play a key role in increasing the standard of living of the
people by adopting latest innovations in the production of wide variety of
goods and services in large scale that too at a lower cost.
• Promotes Country's Export Trade
• Entrepreneurs help in promoting a country's export-trade, which is an
important ingredient of economic development.

• Induces Backward and Forward Linkages
• Entrepreneurs like to work in an environment of change and try to
maximize profits by innovation.
• When an enterprise is established in accordance with the changing
technology, it induces backward and forward linkages which stimulate the
process of economic development in the country.
• Facilitates Overall Development
• Entrepreneurs act as catalytic agent for change which results in chain
reaction by multiplying their entrepreneurial activities, thus creating an
environment of enthusiasm and conveying an impetus for overall
development of the area

Ethics & Social Responsibility Of Entrepreneurs

What Are Ethics?
• Individual values form the basis of ethics, a set of moral principles
that govern decisions and actions.
• To act ethically is to behave in ways that are in keeping with certain
values.
• Universal values are values that are shared by all cultures
throughout history.
• Business ethics are moral principles applied to business issues and
actions.
• Entrepreneurs have considerable influence on their company’s
business ethics.

Why Practice Business Ethics?
• The main reason for behaving ethically, in business or in any area of
life is simply that it’s the right thing to do.
• Three practical reasons why you should practice business ethics:
• Customers are more confident when buying goods and services
from an ethical company.
• An ethical workplace motivates employees.
• Ethical behavior also prevents legal problems.

Establishing an EthicalWorkplace
• Universal values establish a strong foundation for society and are
also a good basis for running your business.
• To deter unethical behavior, companies try to create transparency, or
openness and accountability in business decisions and actions.
• To enhance transparency, companies today are using social media,
which are interactive electronic forms of communication such as
blogs and message boards.

Ethical Issues for Entrepreneurs
• When faced with an ethical decision, it’s best to rely on your own strong
personal values to help guide your response.
• Intellectual property is artistic and industrial creations of the mind.
• Copyright is the exclusive right to perform, display, copy, or
distribute an artistic work.
• A patent is the exclusive right to make, use, or sell a device or
process.
• A trademark is a symbol that indicates that the use of a brand or
brand name is legally protected and cannot be used by other
businesses.
• A conflict of interest exists when personal considerations and
professional obligations interfere with each other.
• Confidentiality involves respecting the privacy of others.

Corporate Social Responsibility
• Corporate social responsibility means that businesses act in ways
that balance profit and growth with the good of society.
• Corporate social responsibility often translates into profits. This
advantage for business is sometimes described as “doing well by
doing good.”
• One type of socially-responsible corporate behavior is ethical
sourcing, which means buying from suppliers who provide safe
working conditions and respect workers’ rights

ResponsibilityToThe Individuals
• Corporate social responsibility affects employees, customers,
investors, and creditors.
• Entrepreneurs have legal obligations to provide a safe workplace and
fair employment policies.
• Business owners are bound by law to treat customers fairly.
• Acting responsibly toward suppliers or vendors results in making the
best choices of materials and using them wisely.
• Investors and creditors provide the money to start and run a
business. They must believe in both the idea behind the business
and the entrepreneur.

ResponsibilityToThe Environment
• Sustainable Design - Sustainable products meet the planet’s
current needs while preserving resources for future generations.
• Alternative Energy - Researchers are working to make fossil-fuel
alternatives such as solar, wind, and hydrogen power more
efficient.
• Organics - Organic produce, grains, and meats make up a small
but steadily growing segment of the food market.
• Fair Trade - This is a way of doing business based on principles of
social and environmental responsibility and promoting
sustainable growth.

The Energy-EfficientWorkplace
• Creating an energy-efficient workplace saves money and can draw
customers.
• Five ways that a business can lower its expenses, while also helping
the environment include:
• Getting into the recycling loop.
• Doing business electronically.
• Buying supplies in bulk.
• Replacing incandescent light bulbs with fluorescent ones.
• Using environmentally friendly transportation.

Responsibility to the Community
• Businesses support disadvantaged and needy people, either for
financial gain or because "It's the right thing to do."
• Cause-related marketing is a partnership between a business and a
nonprofit group for the benefit of both. It increases sales for the
business and raises money and awareness for the nonprofit group.
• Sponsorship is when a business sponsors a community event or
service in exchange for advertising.
• With facilitated giving, a business makes it easier for customers to
contribute to a cause.
• Philanthropy occurs when business leaders donate money and other
resources for socially beneficial causes.

Opportunities for Entrepreneurs
• There is tremendous interest in entrepreneurship all around the
world.
• India is at a threshold of startup boom, as we are world’s third
fastest growing startup eco-system.
• With 3,100 startups, India is closely behind UK with 4,000 startups
and catching up to US which has 41,500 startups.
• E-commerce, in the past few years, has been the flag bearer for
entrepreneurship in India with Flipkart, Snapdeal, Zomato,
bookmyshow etc. becoming giants in the field within a few years of
formation.

Opportunities for Entrepreneurs
• A lot of big venture capitalist firms have shown interest in making
investments in India.
• Sequoia Capital, the most active venture capital firm of this quarter
in the Asia Pacific region has made 13 of its 32 investments in India.
• Another global venture capital firm, Tiger Global, has made 9 of its
20 investments in India.
• Major initiatives taken by the government regarding improving the
entrepreneurial scenario in the manufacturing sector of the country
has helped immensely.

Woman as Entrepreneur
• A Woman Entrepreneur is a woman or group of women who
initiate, organize and run a business enterprise.
• Government of India has defined women entrepreneurs as
owning and controlling an enterprise with a woman having a
minimum financial interest of 51% of the capital and giving at
least 51% of the employment generated in the enterprise to
women.
• “Women entrepreneurship is based on women participation in
equity and employment of a business enterprise.”

PROBLEMS OF WOMEN ENTREPRENEURS
Problem specific
to women
entrepreneur
Male dominated
society
Low risk taking
ability
Lack of
education
Lack of business
information
Family
problems

Growth Of Women Entrepreneur’s In India
• As per 1991 census, only 1,85,900 women were recorded out
of 41,31,112 self employed persons in the country.
• Majority of them are engaged in the unorganized sector like
agriculture, agro based industries, handicrafts, handlooms, and
cottage based industries.
• In 1995-96, there were 2,95,680 women entrepreneurs
claiming 11.2% of the total 26,40,000 entrepreneurs in India.
• As per recent reports, there are 80,50,000 women
entrepreneurs out of the total 5,85,00,000 entrepreneurs in
India (Roughly approx. 14%).

Growth Of Women Entrepreneur’s
• 21st century is the century of telecom, IT and financial
institutions and women’s expertise in all these industries has
made them emerge as a force to reckon with.
• Many of these industries are headed and guided by women as
pioneers and mavericks and have built successful enterprises.
• But still in relation to the women population the trend has not
been spectacular.
• While the Indian startup scene is currently tilted towards the
men, Indian women have the potential and passion to catch up
to them and transform entrepreneurship into a level playing
field in India.

Introduction To Entrepreneurship

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