ENTREPRENEURSHIP DEVELOPMENT & PROJECT MANAGEMENT

1 Define entrepreneurship? (2 mark)

Schumpeter: “Entrepreneurship is based on purposeful and systematic innovation. It included not

only the independent business man but also company directors and managers who actually carry out
innovative functions”.

2 Who is an entrepreneur?(2 mark)

F.H.KNIGHT“ Entrepreneur is a person or a group of persons who bears risk and uncertainty”.

Peter F Drucker “ An entrepreneur is one who always searches for change, responds to it, and
exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they
exploit change as an opportunity for a different business or services”.

3 What is enterprise?(2 mark)

An enterprise is a project, a willingness to take on a new project, an undertaking or business venture.

Eg. A new start-up business venture.

4. What is motivation?(2 mark)

Motivation is something that urges a person to move or behave. Motivation is the inner state of
mind that causes an individual to behave in such a way that can ensure achievement of some goals.

According to Dalton Farland, “Motivation refers to the way in which urges, drives, desires, strivings,
aspirations 0r needs direct, control or explain the behavior of human beings.”

5. Describe the basic elements in motivation?( 2 mark)

There are three basic elements in the process of motivation. (i) Motive (ii) Behavior (iii) Goals

6. What do you mean by economic development?(2 mark)

Economic Development is programs, policies or activities that seek to improve the economic well-
being and quality of life for a community.

7. What is entrepreneurial growth?( 2 mark)

The term entrepreneurial growth means organization plans to achieve its objective to grow and
expand a business to its quality.

8. Define innovation( 2 mark).

“ Innovation is the creation, development and implementation of a new product, process or service,
with the aim of improving efficiency, effectiveness or competitive advantage.”

9. What do you mean by risk-bearing?( 2 mark)

 Risk bearing refers to having or sharing responsibility for accepting the losses if projects go wrong.

Entrepreneurs profit depends on his risk taking behavior.

10. State the importance of organizing in entrepreneurship ( 2 mark)

Organising involves assigning tasks, grouping tasks into departments, delegating authority, and
allocating resources across the organization. For the successful entrepreneurship proper organizing is
very essential.

SECTION B

11. Explain the characterstics of entrepreneurship?(5 mark)

i). Economic activity.

Entrepreneurship is a continuous economic process which recognizes the need for change. An
entrepreneur is a key person to initiate any change.

ii). Innovative activity.

According to Peter Drucker “ Innovation is the means by which the entrepreneur either
creates new wealth –producing resources or endows existing resources with enhanced potential for
creating wealth.” Whenever a new idea occurs, entrepreneurship is essential to convert the idea into
practical application.

iii). Creative and Purposeful Activity

Entrepreneurship is a purposeful activity consist of idea generation, preparation, incubation,

illumination and verification. Introducing new and creative ideas is the purpose of entrepreneurship.

iv). Organising Activity.

Entrepreneurship is an organizing activity which brings together various factors of production

and ensures the continuing management.

v). Risk- bearing Activity.

Entrepreneurship is a risk-bearing activity consist of introducing new ideas, organizing , co-

ordinating, supervising and undertaking risk, and handling economic activity.

12. What are the characteristics of an Entrepreneur?( 5 mark)

An analytical study on the successful entrepreneurs like Tata, Birla, Modi, Kirloskar, Dalmia and
others reveals that certain characteristics are necessary for the successful entrepreneurship. Following
are the characteristics of an entrepreneur.

1. Hard work- An entrepreneur’s tireless, tedious and laborious work will enable him to lead his
business to success.

2. Desire for high achievements: Achievement motive enables an entrepreneur to overcome the
obstacles and anxieties, to encounter misfortunes, to devise remedial actions and to run the business
successfully
3. Optimism: The successful entrepreneurs are not anxious, they are optimistic and think that the
situations will become favourable to business in the future.

4. Independence: A successful entrepreneur should be independent in matters regarding his

business.

5. Foresight: An entrepreneur must have the ability to foresee the future changes and vigilant about
the business environment.

6. Organising ability: A successful entrepreneur should have the ability to mobilise the factors of
production- land, labour, and capital required for starting an enterprise and then to produce goods.

7. Innovative skill: An entrepreneur should have innovative ability to produce goods to satisfy the
consumers changing demands for the products.

8. Mental ability: An entrepreneur should possess intelligence and analytical mind to evaluate the
business situation for making innovations.

9. Ability to guard business secrets: The fundamental aspects of successful entrepreneurship is the
ability to maintain business secrecy.

10. Decision making: The entrepreneur should have the capacity to analyse the various aspects of
business and take correct decisions according to the situation.

11. Ability to maintain human relations: An entrepreneur has to deal with a number of persons like
customers, suppliers, govt. officials, employees etc,. He should be tactful in dealing with them.

12. Initiative and risk bearing: He should have the initiative and drive to venture into new areas and
to accept responsibility. He should also possess the caliber to take the risks associated with his
business.

Q NO:13 Distinguish between entrepreneur and manager.( 5 mark ).

The terms Manager and Entrepreneur are often used synonymously. But in the strict sense, an
entrepreneur is different from a manager.

A) Entrepreneur’s main motive is to start a venture, whereas manager’s main motive is to render
services in an enterprise.

B) Entrepreneur’s are the owners of the business.. whereas manager is an employee of the business

C) Entrepreneurs assumes all the risk and uncertainties but manager does not bear any risk involved
in the business.

D) The reward of the entrepreneur is profit, but the reward of the manager is salary.

E) An entrepreneur acts as an innovator but manager is simply an executor of the business.

F) An entrepreneur should possess certain distinct qualities but a manager needs to possess distinct
qualification.
G) The role of entrepreneur demands different types of personal skills but a manager depends more
on human relations

Q NO:14 Distinguish between entrepreneur and entrepreneurship (5 mark).

Following are the distinction between the terms ‘entrepreneur’ and ‘ entrepreneurship’.

Entrepreneur refers to Entrepreneurship refers to

1.Person 1. Process
2. Visualiser 2.Vision
3.Creator 3. Creation
4. Organiser 4.Organisation
5.Innovator 5.Innovation
6. Risk bearer 6. Risk bearing
7. Leader 7. Leadership
8. Administrator 8. Administration
9. Motivator 9. Motivation
10. Imitator 10. Imitation
11. Communicator 11. Communication
12. Initiator 12.Initiative

Q NO: 15 Explain the motivating factors of entrepreneurship ?( 5 mark)

There are several motivating factors leading to entrepreneurship. R A Sharma, in his book
‘Entrepreneurial change in Indian Industry’ has classified all the factors motivating the entrepreneurs in
two types- they are

(i) Internal factors and (ii) External factors.

Internal factors

a). Desire to do something new,

b). Educational background, and

c). Occupational background or experience.

External factors

a). Government assistance and support,

b). Availability of labour and raw materials,

c). Encouragement from big business concerns, and

d). Promising demand for the product.

Q NO:16 Explain the skills of an entrepreneur.( 5 mark)

“ Entrepreneurs are not born, but they are created”. They can learn and improve their skills through
various training programmes for entrepreneurs. The following skills are required for an entrepreneur.
1. Conceptual: An entrepreneur identifies problems and begins to work in their solution faster than
other people.

2. Technical: An entrepreneur should have reasonable level of technical knowledge.

3. Human Relations: An entrepreneur should maintain a good relations with his customers, public
and his employees.

4. Communication: Attractive communication ability is the secret of the success of entrepreneurs.

5. Decision- making: It means the ability to choose the correct alternative from a numbers of
alternatives.

6. Managerial: An entrepreneur should have the skill to manage the men and other factors of
production.

7. Time and management: An entrepreneur must possess this skill to manage the time so that he can
increase efficiency and productivity

8. Stress Management: Entrepreneur must be able to adopt various mechanisms to control the level
of stress for the successful life in the modern society.

9. Personality and Individual skill: Impressive personality and individual skills are inevitable for
entrepreneurs since they have to work with officers, engineers, labourers, customers, investors, Govt.
officers etc.

10. Pioneering: Entrepreneurs have the skill to explore new opportunities, new methods of production
and new markets. Thus, they are pioneers in their own field.

11. Unification and Organisation: Entrepreneurs are in contact with many unions and organisations.
He has to arrange many things in many ways and arrange many things in many ways and unite all of
them for a common goal.

12. Computer Knowledge:

Q NO: 17. Describe the barriers to entrepreneurship ?( 5 mark)

The most important factor for entrepreneurial growth is the presence of favourable business
environment. The interaction between the entrepreneur and his environment is an ongoing process,
some of the environmental factors which hinder entrepreneurship are given below:

1. Sudden changes in Government policy.

2. Outbreak of war or regional conflicts.

3. Sudden political changes.

4. Red tapism and corruption among Government agencies.

5. Hostile attitude of the Government towards industry.

6. Ideological social conflicts

 7. Unreliable supply of power, materials, finance, labour and other inputs.

8. Rise in the cost of inputs.

9. Infavourable market fluctuations

10. N0n- co-operative attitude of banks and financial institution

11. Legal constraints and regulations

12. Inhibitions due to parents

13. Time pressures and di

14. Social stigma

15. Monopoly and protectionism

Q NO:18 Describe the qualities required for a successful entrepreneur. (5 mark).

For the successful completion of any job, the organizer should possess certain qualities. The basic
qualities of successful entrepreneurs are the following.

1. Knowledge. A good entrepreneur should have sufficient knowledge for performing things and skills
to translate the knowledge into practice.

2. Skills.- Skill means ability to practice knowledge. Skill can be acquired only through practice. Both
knowledge and skill are required to perform a task.

3. Motive - Motive an urge to achieve the goals.

4. Mental ability.

5. Clear Objectives.

6. Guarding of business secrets.

7. Capacity to interest with people

8. Effective Communication.

9. Ability to mobilise resources.

10. Technical knowledge

11. Risk-bearing Capacity.

12. Organisational and Administrative Capacities.

13. Looking for opportunities

14. Persistence

15. Self Confidence

16. Efficient Supervision

17. Motivation.

18. Employees well-wisher

19. Hard working mentality.

20. Effective strategist

21. Imagination and Initiative

22. Willingness to change

SECTION –C

Q NO:19. What are the functions of an entrepreneur?

‘’ Entrepreneur is a person or a group of persons who bears risk and uncertainity.” An entrepreneur
is enriched with certain inborn qualities. In short, an entrepreneur is a person

The main entrepreneurial functions are

a) Innovation

b) Risk-bearing

c) Organising and

d) Others.

Innovation.

According to Schumpeter, the basic function of an entrepreneur is innovation. Innovation can be

described as the commercialization of an invention. Invention means the process of finding out new
things. The innovation may take the following forms.

- Introduction of a new product

- Introduction of a new method of production.
- Finding new markets for the product.
- Finding new and cheaper sources of supply of raw materials.
- Making alterations in the organization and management.

Risk-bearing

Risk is inherent in business. “No risk, no business” or “no risk, no gain” are the common maxims
associated with business. Richard Cantillon has opinion that the most important function of an
entrepreneur is the risk and uncertainty bearing. The success of an entrepreneur depends mainly
on predicting the uncertainties and thereby minimizing losses. An entrepreneur must be vigilant
about the unexpected risks inherent in it.

Organising and Managing the Enterprise.

“ Organising “ in Economics means bringing together of various factors of production. Proper

organizing will help to reduce cost of production and thereby achieve organizational objective
 maximization of profit. The entrepreneur can delegate his authorities to his subordinates, so that
proper management is also necessary.

Other Functions.

A) Exploring market opportunities.

Marketing of products in the competitive market is a tough function. In the case of new
entrepreneurs, they can seek the advice of experts for exploring market opportunities.

B) Mobilisation of production resources.

Production resources are limited. The resources mobilized by the entrepreneur must be
sufficient to produce quality goods which can be compete with other products in the market.

C) Managing Finance.

Finance is the life blood of business. Entrepreneur should decide the sources of funds, if any
shortage of funds entrepreneur , borrowings may be made from financial institutions or from
govt. agencies engaged in industrial finance.

D) Managing Production Process

Efficient management of the production process helps the entrepreneur in the reduction of
cost of production, improvement of quality of products, better utilization of factors of production,
minimization of wastages and profitable employment of labour force.

E) Dealing with Governmental matters

The entrepreneur has to deal with many governmental matters like industrial licencing , sales
tax and income tax. Proper advice from experts in the concerned field can be sought by the
entrepreneur.

. F) Maintaining Management- Employee relations.

Entrepreneur has to maintain proper management- employee relations, otherwise it will

cause employee unrest and dissatisfaction.

Q NO:20 Describe the major entrepreneurial traits ( 15 marks)

Answer same as question number 18.

Q NO: 21 Enumerate and explain the factors affecting entrepreneurial growth?

The development of a nation depends on the development of entrepreneurship. The emergence

and development of entrepreneurship is not a spontaneous phenomenon. It depends on several
economic, social, political and psychological factors. A careful analysis of these factors reveals that they
can be broadly classified under three major heads. Viz, economic factors, non-economic factors and
government actions.

1. ECONOMIC FACTORS

a) Lack of adequate infrastructural facilities.

b) Non-availability of capital

c) Presence of high risk.

d) Non-availability of Technical know-how and skills

e) Non-availability of skilled labour

f) Absence of the subject as a programme in academic curriculum.

g) Lengthy and cumbersome procedure to start business

II. NON-ECONOMIC FACTORS

The influence of economic factors on entrepreneurial emergence largely depends on non-economic

factors in the society. They may be classified as social, cultural, psychological and personal factors.

A) SOCIAL FACTORS

1. Rational Behaviour

2. Legitimacy of entrepreneurship

3. Social mobility

4. Social marginality

5. Security

B) PSYCHOLOGICAL FACTORS

1. Need Achievement

2. Withdrawal of Status Respect

C) CULTURAL FACTORS

Entrepreneurial growth requires proper motives like profit making, acquisition of prestige, and
attainment of social status. The strength of these motives depends up on the culture of the society. If
its culture is economically or monetarily oriented, entrepreneurship will be applauded and praised.

D) PERSONALITY FACTORS

The personality factors also have an influence in entrepreneurship. In less developed countries
entrepreneur is looked upon with suspicion. It seriously affect the personality of the entrepreneur.

iii) GOVERNMENT ACTIONS

The actions of the government can influence both economic factors and non-economic factors for
entrepreneurship development. The supportive actions of the Government appear as the most
conducive setting for entrepreneurial development.

Economic factors, non-economic factors and Govt. Actions are the major factors affecting
entrepreneurial growth.