8/6/2019 unit-3 ent.

1/50

8/6/2019 unit-3 ent.

2/50

8/6/2019 unit-3 ent.

3/50

With increasing business opportunities and facilitating

business environment, scope for New Venture Creation

increases.In the current technology driven era, access to data /

information has become easy, thus increasing awareness

levels and aspiration levels of individuals considerably.

Thus growing business opportunities on one side and well

informed and motivated individuals on the other side will be theright mix for creating more and more enterprises.

5/20/2011 3

8/6/2019 unit-3 ent.

4/50

The word entrepreneur is derived from the Frenchverb entreprendre, which means to undertake.This means those who undertook the risk of newenterprise. Hence, the process of creating a new

enterprise can also be called asEntrepreneurship and the persons who creates itan Entrepreneur.

5/20/2011 4

8/6/2019 unit-3 ent.

5/50

Entrepreneurship also can be defined as a

process of creating of wealth (ethically) for one or

more persons, using ones (teams) competence /

skill-set through creation of an enterprise afterevaluating market opportunities along with the

risks involved.

5/20/2011 5

8/6/2019 unit-3 ent.

6/50

1. Entrepreneur is the one who innovates, and introduces something new in the economy.. Joseph Schumpeter

2. He shifts economic resources out of an area of lower and into an areaof higher productivity and greater yield. .. J.B.Say(French Economist)

3. He searches for change, responds to it and exploits opportunities.Innovation is the specific tool of an entrepreneur. Prof.Peter F.Drucker

4. He is a critical factor in economic development and integral part ofeconomic transformation. William Diamond

5. He is a person who is able to look at the environment, identify opportunities To improve

environment, marshall resources, and implement action to maximize those opportunities..Robert E. Nelson

6. He is an agent who buys means of production at a certain price in order tocombine them into a product that is going to sell at prices that are certainat the moment at which he commits himself to his costs. Cantillon

5/20/2011 6

8/6/2019 unit-3 ent.

7/50

` Idea generation and scanning of the best suitable

idea.

` Determination of the business objective

` Product analysis and market research` Determination of form of ownership/organization.

` Completion of promotion formalities

` Raising necessary funds.

8/6/2019 unit-3 ent.

8/50

` Procuring machine and material.

` Recruitment of men.

` Undertaking the business operation.

8/6/2019 unit-3 ent.

9/50

9

According to Kilby in a developing country even the

imitator entrepreneurs are very important and the

entrepreneurial role encompasses the following:

Perception of market opportunities

Gaining command over scarce resources

Purchasing inputs

Marketing the products

Dealing with bureaucrats

Functions of Entrepreneur contd

8/6/2019 unit-3 ent.

10/50

8/6/2019 unit-3 ent.

11/50

11

Functions of Entrepreneur

Innovation

Risk and uncertainty bearing

Organization building

8/6/2019 unit-3 ent.

12/50

Sl.

No.

Core

Competencies

Entrepreneurial Activities

1. Initiative Does things before asked for or forced by events, and

acts to extend the business to new areas, products, or

services.

2. Perceiving

Opportunities

Identifies business opportunities and mobilises necessary

resources to make good an opportunity.

3. Persistence Takes repeated or different actions to overcome

obstacles.

4. InformationGathering

Consults experts for business and technical advice. Seeksinformation on clients or suppliers needs. Personality

undertakes market research and makes use of personal

contacts or information network to obtain useful

information

12

8/6/2019 unit-3 ent.

13/50

Sl.

No.

Core

Competencies

Entrepreneurial Activities

5. Concern for

quality work

States desire to produce or sell a better quality product or

service. His performance compares favourably with that

of others.

6. Commitment to

contractual

obligations

Makes a personal sacrifice or expends extraordinary

effort to complete a job. Accepts full responsibility in

completing a job contract on schedule. Pitches in with

workers, or works in their place, to get job done. Shows

utmost concern to satisfy customer.

7. Efficiency

orientation

Finds ways and means to do things faster, better, and

economically.

8. Planning Various inter-related jobs are synchronised according to

plan.

13

8/6/2019 unit-3 ent.

14/50

Sl.

No.

Core

Competencies

Entrepreneurial Activities

9. Problem Solving Conceives new ideas and finds innovative solutions.

10. Self confidence Makes decisions on his own and sticks to them in spite

of initial setbacks.

11. Expertise Possesses technical expertise in area of business, finance,

marketing, and so on.

12. Self-critical Aware of personal limitations but tries to improve upon

them by learning from his past mistakes, or experience ofothers and is never complacent with success.

13. Persuasion Persuades customers and financiers to patronize his

business.

14

8/6/2019 unit-3 ent.

15/50

Sl.

No.

Core

Competencies

Entrepreneurial Activities

14. Use of influence

strategies

Develops business contracts. Retains influential people

as agents. Restricts dissemination of information in his

possession.

15. Assertiveness Instructs, reprimands, or disciplines for failing to

perform.

16. Monitoring Develops a reporting system to ensure that work is

completed and that it meets quality norms.

17. Credibility Demonstrated honesty in dealing with employees,

suppliers, and customers even if it means a loss of

business.

15

8/6/2019 unit-3 ent.

16/50

Sl.

No.

Core

Competencies

Entrepreneurial Activities

18. Concern for

employee welfare

Expresses concern for employees by responding

promptly to their grievances.

19. Impersonal

relationship

Places long-term good will above short-term gain in a

business relationship

20. Expansion of

capital base

Reinvests a greater portion of profits to expand capital

base of the firm.

21. Building product

image

Concerned about the image of his product among

customers. Does everything possible to establish a

niche for his product in the market.

16

8/6/2019 unit-3 ent.

17/50

Some of the common characteristics that

most of the successful entrepreneurs

possess are:

1.Creativity 7. Problem Solving

2.Innovation 8. Goal orientation

3.Optimistic 9.Risk Taking and

4.Leadership Decision Making5.Team Building ability

6.Achievement Motivation 10. Commitment

5/20/2011 17

8/6/2019 unit-3 ent.

18/50

1. Creativity is the ability to bring something new intoexistence. Ideas evolve through creative process.

2. Innovation is key tool of entrepreneurs. It is an act thatendows resources with a new capacity to create wealth.

3. Optimistic :The successful entrepreneurs are notdisturbed by the present problems faced by him. Theyare optimistic for future that the situation will becomefavorable to business in future.

4. Leadership is the ability of the person to get the workdone by the subordinates.

8/6/2019 unit-3 ent.

19/50

4. Team Building An entrepreneur should have ability tobuild a team. A team is a group of individuals with acommon purpose, that is focused and aligned toachieve a specific task. A good team will be able toshare knowledge, core competency and goals.

5. Achievement Motivation Entrepreneurs normallyhave high need for achievement motivation and areguided by their inner self, motivating their behaviourtowards accomplishment.

6. Problem Solving Entrepreneurs normally solve theproblems and normally do not avoid.

8/6/2019 unit-3 ent.

20/50

7.Orientation is achievement of targets and objectivesfor the successful performance of an entrepreneurs,both long term and short term.

8.Risk taking and Decision-making Entrepreneurs have to

make decisions under conditions of uncertainty and therefore,are ready to bear risk, but never gamble with results. A goodentrepreneur normally avoids excessively high or low risksituations.

9. Commitment One of the subtle qualities of an

entrepreneur is his / her will power. Strong determinationwith sound thinking fortifies the power. It is this determinationthat makes the entrepreneur work for 7X24 around the year.

8/6/2019 unit-3 ent.

21/50

` OPTIMUM UTILISATION OF RESOURCES- Resourcesare put to proper use by Entrepreneurs. They combinevarious resources Land, Labour, Capital, andOrganisation to produce goods.

` GENERATION OF EMPLOYMENT- providesemployment, reducing unemployment problem.

` IMPROVEMENT IN STANDARD OF LIVING OF

PEOPLE- by providing quality goods & services.

8/6/2019 unit-3 ent.

22/50

` HELP AGRI SECTOR- providing high yielding

variety of seeds, fertiliser, pesticides, agricultural

implements etc many entrepreneurs buy

agricultural produce for further processing.

` PROMOTE INTERNATIONAL TRADE- exporting

goods mfg by them help govt to earn Foreign

exchange.

8/6/2019 unit-3 ent.

23/50

` BALANCED REGIONAL DEVELOPMENT- Government

incentives encourage entrepreneurs to establish industry

units in rural & backward areas- create employment

opportunities in industrially backward areas.

` NEW/ IMPROVED GOODS & SERVICES: for the

benefit of customers- by regulating taking market

research.

8/6/2019 unit-3 ent.

24/50

` HELP COMMUNITY AT LARGE- by providing welfareactivities- adopting villages, schools, stating educationalinstitutes, healthcare services, sports.

` CAPITAL FORMATION- pooling the savings of people byissuing shares/ debentures- offering more returnscomparatively.

` DISTRIBUTION OF INCOME & WEALTH- by establishing

in rural / backward areas, not only balance regionaldevelopment but also redistribution of income & wealth.

8/6/2019 unit-3 ent.

25/50

` According to

x Type of business

x

Use of technologyx Motivation

x Growth

x Stages of development

x Area

x Age and genderx Scale of operation

x others

5/20/2011 25

8/6/2019 unit-3 ent.

26/50

8/6/2019 unit-3 ent.

27/50

U e f Tech l gy

Technical entrepreneur: Production oriented, possesses innovative

skills in manufacturing, quality control etc.

Non technical entrepreneur: Develops marketing, distribution

facilities and strategies

Professional entrepreneur: Uses the proceeds from sale of one

business to start another one. Brimming with ideas to start new venture.

8/6/2019 unit-3 ent.

28/50

M tivati

Pure entrepreneur: Psychological and economic rewards

motivate him

Induced entrepreneur: Incentives, concessions, benefits

offered by government for entrepreneurs motivates him

Spontaneous entrepreneur: Born entrepreneurs with

inborn traits of confidence, vision, initiative

8/6/2019 unit-3 ent.

29/50

GrowthGrowth entrepreneur: One who enters a sector with a

high growth rate; is a positive thinker

Super growth entrepreneur: One who enters abusiness and shows a quick, steep and upward growth

curve

8/6/2019 unit-3 ent.

30/50

y INNOVATIVE ENTREPRENEUR: he is the one who

introduces a new product or a new method of

production or opens a new market or explore new

source of supply of raw material or carry out a new

type of organization. as per the Schumpeter innovativeentrepreneur are real entrepreneur.

y IMITATIVE/ ADOPTIVE ENTREPRENEUR: are those

who imitate the successful entrepreneurs in

techniques innovated by others.

8/6/2019 unit-3 ent.

31/50

` Urban entrepreneurs

` Rural entrepreneurs

5/20/2011 31

8/6/2019 unit-3 ent.

32/50

` Young entrepreneur

` Old entrepreneur

` Male entrepreneur

` Female entrepreneur

5/20/2011 32

8/6/2019 unit-3 ent.

33/50

` Small scale entrepreneur

` Medium scale entrepreneur

` Large entrepreneur

5/20/2011 33

8/6/2019 unit-3 ent.

34/50

` It is a process undertaken by an entrepreneur to

augment his business interests

` entrepreneurship is the process of creating

something new with value by devoting thenecessary time and effort, assuming the all

financial, psychic, and social risk and receiving

the resulting reward of monetary and personal

satisfaction and independence.

5/20/2011 34

8/6/2019 unit-3 ent.

35/50

` Key to Economic Development

` Key to New Product / Process development

` Many innovations have completely changed the

way even we think !` Market opportunities and entrepreneurship are

co-related (assuming there is a facilitating

environment)

5/20/2011 35

8/6/2019 unit-3 ent.

36/50

` Early period

` Middle ages

` 17th century

` 18th and 19th century` 20th century

5/20/2011 36

8/6/2019 unit-3 ent.

37/50

` Early period:

An early example of entrepreneurship is known to be

the example of Marco polo who tried to trade routes to

the far east. He used to sign a contract with a venture

capitalists to sell his goods. The capitalist was the riskbearer, the merchant-adventure took the role of

trading, bearing all physical and other risks. The profit

were shared by the capitalist and merchant

5/20/2011 37

8/6/2019 unit-3 ent.

38/50

` In the Middle ages, the term entrepreneur was

referred to a person who was managing

large projects. he was not taking any risk but

managing the projects using the availableresources.

` During 17th century, amalamagation of risk with

entrepreneur had evolved. A person used

to enter into a contractual agreement with Govt. toperform a service or to supply some goods.

8/6/2019 unit-3 ent.

39/50

this involved some risk since the contract price was

fixed and profit or loss was borne by the

entrepreneur.

`

As a result of industrialization during 18th

centurythe person with capital is differentiated from the

person who needs capital.

` During this, the entrepreneur were not

distinguished from manager but in the middle of20th century, the notion of an entrepreneur as an

innovator was established

8/6/2019 unit-3 ent.

40/50

40

(1) Identification and evaluation of the opportunity,

(2) Development of the business plan,

(3) Determination of the required resources,

(4) Management of the resulting enterprise.

An entrepreneur must find, evaluate, and develop an

opportunity by overcoming the forces that resist the

creation of something new. The process has four

distinct phases:

Step i E trepre e rial

Proce contd

8/6/2019 unit-3 ent.

41/50

41

Identification and

evaluation of the

opportunity

Development of

the business plan

Determination of

the requiredresources

Management of

the resultingenterprise

Steps in Entrepreneurial Process

8/6/2019 unit-3 ent.

42/50

Opportunity assessment

Real and perceived value of opportunity

Risk and returns of opportunity

opportunity versus personal skill and goals

Competitive environment

5/20/2011 42

8/6/2019 unit-3 ent.

43/50

8/6/2019 unit-3 ent.

44/50

` Preparation of the business plan Title of the project, table of contents and executive

summary

Description of business and industry

Technology plan Financial plan

Organizational plan

Production and operation plan

Marketing and distribution plan

Summary of plan

5/20/2011 44

8/6/2019 unit-3 ent.

45/50

` Determining resources needed

` Deterring existing resources

` Identify the gap and available supplier

` Develop access to needed resources

8/6/2019 unit-3 ent.

46/50

` Develop management style

` Understand key variable for success

` Identify problems

` Implement control system` Develop growth strategy

8/6/2019 unit-3 ent.

47/50

` Inadequate technical knowledge` Inadequate Finance` Legal systems` Bureaucratic Structure` Infrastructure` Management deficiency` Inadequate understanding of Risks involved` Lack of capital

` Unstable and unpredictable market

5/20/2011 47

8/6/2019 unit-3 ent.

48/50

As the companies become big, the working becomes moremechanized and rules driven. Hence, bigger theorganization, lesser will be scope for innovation.

Managers who possess qualities of entrepreneurs areencouraged by corporate to initiate new programmes /projects which may later develop into a new product /service that could be commercialized.

This process of creating entrepreneurs inside theorganization is known as intrapreneurship. However, in

this model the entrepreneurial manager is free fromfinancial risks.

5/20/2011 48

8/6/2019 unit-3 ent.

49/50

` New business venturingx New business within the organization.

` Innovationsx New product, improvement, methodology

` Self-renewalx Renewal of main ideas

` Proactivenessx Initiative, risk taking, competitiveness

5/20/2011 49

8/6/2019 unit-3 ent.

50/50