Unit-1

Entrepreneur:

1. Entrepreneur is derived from a French word 'Entreprendre, i.e.. 'individuals who were
undertakers', meaning who undertook the risk of new enterprise.

2. According to Adam Smith, "Entrepreneur is an individual who forms an organisation for

commercial purpose."

3. According to Carl Menger, "Entrepreneur is a change agent who transforms resources

into useful goods and services thus, creates the circumstances leading to industry growth."

4. According to Peter Drucker. "An entrepreneur is one who always searches for change,
responds to it and exploits it as an opportunity."

5. According to Joseph Schumpeter, "Entrepreneurs are innovators who use the process of
shattering the status quo of the existing products and services to set new products, and
services. An entrepreneur is one who innovates, raises money, collects input, organizes
talent, provides leadership and sets the organizations

B. Characteristics of an Entrepreneur:

1 An entrepreneur is always optimistic

2. He has a desire to succeed

3. He possesses risk taking ability

4 An entrepreneur contains managerial skills

5 He has leadership qualities.

6 He is always ready to fulfill his commitment

7 Urge to learn new things

8 Future and result oriented.

9 An entrepreneur always has a vision

10 He needs independence in his work.

11. An entrepreneur is cooperative and has quality control capacity.

12. He has a desire to do something new.

13 Always innovative.
A. Entrepreneurship:

1. According to Schumpeter, entrepreneurship is a creative activity.

2. Entrepreneurship is the propensity of mind to take calculated risks with confidence to

achieve a predetermined business or industrial objective

3. In the words of A.H. Cole, entrepreneurship is the purposeful activity of an individual or a

group of associated individuals, undertaken to initiate maintain or organize a profit oriented
business unit for the production or distribution of economic goods and services.

4. Entrepreneurship means the function of creating something new, organizing and

coordinating and undertaking risk and handling economic uncertainty.

5. Higgins defines "Entrepreneurship is the function of seeing investment and production

opportunity, organizing an enterprise to undertake a new production process, raising
capital, hiring labour, arranging for the supply of raw materials and selecting top managers
for the day-to-day operation of the enterprise."

6. Entrepreneurship is doing things that are generally not done in the ordinary course of
business. Innovation may be in:

i Introducing of a new manufacturing process that has not been tested and commercially
exploited.

ii. Introducing of new product with which the consumers are not familiar or introducing a
new quality in an existing product.

iii. Locating a new source of rav material or semi finished product that was not exploited
earlier.

iv. Opening a new market where the company products were not sold earlier.

v. Developing a new combination of means of products

C. Features of Entrepreneurship:

1. The main features of entrepreneurship are as follows:

i. Economic: It involves the creation and operation of an enterprise.

ii. Creative: It involves innovative process.

iii. Purposeful: It is a goal-oriented activity seeking to earn profits.

iv. Risk Bearing: Risk is an inherent and inseparable element of entrepreneurship.

v. Organization: It involves organization building capabilities..

vi. Human Relations: Ability to work with other people and signing responsibility is a key to
success.

vii. Flexibility: Flexibility is the hallmark of a successful entrepreneur

viii. Innovation: Entrepreneurship is an innovative function.

ix. Skills: It calls for special skills to handle the situation as it unfolds.

x. Values: It is an attempt to create value recognition of business opportunities to bring a

project to fruition.

2. Thus, entrepreneurship is a multi-dimensional concept. It is an art as well as a science.

D. Phases of Entrepreneurship Development:

Broadly, entrepreneurship development consists of the three following phases

1. Initial Phase: Creation of awareness of entrepreneurial opportunities based on survey

2.Development Phase: Implementation of training programmes to develop motivation and

management skills.

3. Support Phase: Infrastructural support of counselling and assistances to establish a new

enterprise and to develop existing units.
S.No. Entrepreneur Entrepreneurship
1. The entrepreneur is the bearer of the Entrepreneurship is defined as the carrying
"mechanism for change". out of new combination called enterprise.

2. Entrepreneur is someone who specializes This appears as a personal quality that

in making judgmental decisions about enables certain individuals to make decisions
the coordination of scarce resources. with far reaching consequences.
3. An entrepreneur is one who always Entrepreneurship is the pursuit of a
searches for change, responds to it and discontinuous opportunity involving the
exploits it as an opportunity. creation of an organization.
Scope of Entrepreneurship:

1. Entrepreneurship has ability to extend from the closed system of an enterprise.

2. Entrepreneurship provides jobs for the society and this develops communities

3. Entrepreneurship provides a lot more solutions to the society than mere creation of
business.

4. Entrepreneurship promotes the new business and provides opportunities to improve the
new business sectors.

Need of Entrepreneurship:

1. Passion, Perseverance and Persistence:

i.Passion is a strong and uncontrollable emotion which is based into something that is higher
to achieve than what the person is carrying within himself

ii. Perseverance is a mature emotion which comes through experiences gathered and
analyzed.

iii. While persistence is the sail that will row the boat of an entrepreneur through the
toughest of climate

2. Big Dreamer: Dreaming big further strengthens an entrepreneur with his ability to dream
and see the wide picture. This is actually the very first step which sets the path to self-
discovery
3. Learning: Learning is never to stop irrespective of age and thus arming oneself with
education does play a vital role in forming leadership qualities when needed.

4. Good Listener: The ability to contribute will only come once we have abundance in
ourselves, and this comes by absorbing the words of others.

5. Financing Partner: Choosing a financing partner who understands the business needs is
very much essential. This is as critical as choosing the business which the entrepreneur
wants to pursue.
The Factors Affecting Entrepreneurial Development are:

1. Economic factors 2. Non-economic factors

3. Psychological factors 4. Governmental actions

1. Economic Factors:

i. Capital: The availability of the capital helps the entrepreneur to bring together various
resources like land, machine and raw material to combine them and produce goods. Thus,
capital is known as lubricant to process of production.

ii. Labour: The quality and skilled labour is another factor which affects entrepreneurial
development.

iii. Raw Materials: Before establishing any industrial activity, the availability of raw material
is the primary need. Therefore it affects entrepreneurial development.

iv. Market: It's necessary to find the ideal target market for your idea. service or product if
you have hope of opening an enterprise.

2. Non-economic Factors:

i. Social Mobility: It involves the degree of mobility in both social and geographical aspects
And the nature of mobility channel within the system of enterprise.

ii. Marginality: Individuals or groups on the perimeters of given social system provide the
ideas to assume the entrepreneurial roles.

iii. Security: If an entrepreneur is fearful of losing assets or being subjected to various

negative sanctions, their actions become less entrepreneurially.

3. Psychological Factors:

i. Need Achievement: Characteristics which indicates high need of achievement is the major
determinant of entrepreneurship development A

ii. Withdrawal of Status Respect: There may be some kind of events that lead an
entrepreneur to the loss of status.

4. Governmental Actions: The government actions, and the failure of the governmental
acts, influence the both economic and non-economic factors for entrepreneurship.

1. The term 'motivation' has been derived from the word motive.

2. Motive is defined as inner state of our mind that activates and directs our mind to reach
at our goals.
3. Motivation thus defined as the process which makes person to get into action and
induces him to continue the course of action for the achievements of goals.

4. According to Dalton E. McFarland, "motivation refers to the way in which urges, drives,
desires, striving, aspirations or needs direct, control or explain the behaviour of human
beings

5. Process of motivation can be understood Motive

by the diagram below:

Goal Behaviour

The motivating factors that inspire entrepreneurs are classified as follows:

1. Entrepreneurial Ambitions:

I. To make money

II. To continue family business

III. To secure self employment

IV. To fulfill desire of self

V. To gain social prestige

2. Compelling Reasons:

L Unemployment

ii. Dissatisfaction with job

ii. Make use of idle funds

IV. Make use of professional skills

3. Facilitating Factors:

i. Success stories of entrepreneurs

ii. Previous association with job

iii. Property inheritance

iv. Influence of others.

McClelland's Achievement Motivational Theory:

David McClelland is most noted for describing three types of motivational need, which he
identified in his 1961 book, The Achieving Society:

1. Achievement motivation (n-ach).

2. Authority/power motivation (n-pow)

3. Affiliation motivation (n-affil)

These needs are found to varying degrees in all workers, and this mix of motivational needs
characterizes a person's style and behaviour, both in terms of being motivated and in the
management and motivating others.

1. The Need for Achievement (n-ach):

i. The n-ach person is 'achievement motivated' and therefore seeks achievement,

attainment of realistic but challenging goals.

ii. There is a strong need for feedback as to achievement and progress and a need for a
sense of accomplishment.

2. The Need for Authority and Power (n-pow):

i. The n-pow person is authority motivated. This produces a need to be influential, effective
and to make an impact

ii. There is a strong need to lead and for their ideas to prevail

iii. There is also motivation and need towards increasing personal status and prestige

3. The Need for Affiliation (n-affil):

i. The n-affil person is 'affiliation motivated, and has a need for friendly relationships and is
motivated towards interaction with other people

ii. The affiliation driver produces motivation and needs to be liked and held in popular
regard.

iii. These People are team players.

Conceptual Model of Entrepreneurship

Kao has developed a conceptual model of entrepreneurship which presented below.

1. The Entrepreneurial Personality:

i. The personality of an entrepreneur is made up of the person, his skills style.

ii. The entrepreneur is central to entrepreneurship because without the key individual who
makes the thing happen in an enterprise, there will be no positive result.

2. The Entrepreneurial Task:

i. The main task of an entrepreneur is to identify and exploit those opportunities that may
come from any sources.

ii. He should have the ability to perceive opportunities where normal person do not.

3. The Entrepreneurial Environment:

i. Entrepreneurship is controlled by the environment in many ways The world surrounding

organisation may help or hinder the growth of entrepreneurship.
ii.The entrepreneurial environment is made of several elements such as есonomic,
socialcultural, politicolegal and other

4. The Organisational Context:

i. The organisational context is the immediate setting in which creative and entrepreneurial
work takes place

ii. It includes the organisation structure and the systems, the definition of work roles, group
culture etc

Difference between Entrepreneur and Intrapreneur

Basis Entrepreneur Intrapreneur

Meaning An entrepreneur is an Intrapreneur is an

individual having a new individual having
and exclusive idea to entrepreneurial skills
 Basis Entrepreneur Intrapreneur

who works at a
establish something
previously established
new.
company.

An intrapreneur’s
An entrepreneur’s
motive is to grow the
Motive motive is to bring
business and make it
change to the world.
better.

Intrapreneurs are
Entrepreneurs are innovative in nature but
Nature
innovative in nature. less than
entrepreneurs.

Intrapreneurs are willing

Entrepreneurs are
Risk Factor to take risks but less
willing to take risks.
than entrepreneurs.

Intrapreneur’s goals are

Entrepreneurs focus on to get appraisals,
Goals
long-term profits. appreciation, and
promotions.

Entrepreneurs face low Intrapreneur faces high

Competition competition for their competition in the
business. market.

Intrapreneurs are
Entrepreneurs are
Position employees of a
founders of a company.
company.

Entrepreneurs operate
Intrapreneurs use
Approach to Operate activities using
entrepreneurial skills.
innovative methods.

Types of Entrepreneurs:

1. On the Basis of Economic Development:

i. Innovating Entrepreneurs: Entrepreneurs falling in this class are generally aggressive in

experimentation and in putting attractive possibilities into practice.
ii. Adoptive or Imitative Entrepreneur: The imitative entrepreneurs copy or adopt suitable
innovations made by the innovative entrepreneurs.

iii. Fabian Entrepreneur: They love to remain in the existing business with the age-old
technique of production.

iv. Drone Entrepreneur: Drone entrepreneurs are those who refuse to adopt and use
opportunities to make changes in production.

2. On the Basis of Type of Business:

i. Business Entrepreneurs: They are the entrepreneurs who conceive an idea for a new
product or service and then create a business to convert their idea into reality.

ii. Trading Entrepreneur: These entrepreneurs undertake trading activities and are not
concerned with the manufacturing work.

iii. Industrial Entrepreneur: These entrepreneurs are essentially manufacturer who

identifies the needs of customers and creates products or services to serve them.

iv. Corporate Entrepreneur: These entrepreneurs used their innovative skill in organizing
and managing a corporate undertaking

v. Agricultural Entrepreneur: Agricultural entrepreneurs are those who undertake

agricultural activities as through mechanization. irrigation and application of technologies to
produce the crop.

3. According to the Use of Technology:

i. Technical Entrepreneurs: These entrepreneurs may enter business to commercially

exploit their inventions and discoveries.

ii. Non-technical Entrepreneur: They are concerned only with developing alternative
marketing and promotional strategies for their product or service

iii. Professional Entrepreneur: Entrepreneur who is interested in establishing a business but

does not have interest in managing it after establishment

4. According to Motivation:

i. Pure Entrepreneur: A pure entrepreneur is the one who is motivated by psychological

economical, ethical considerations.

ii. Induced Entrepreneur : This type of entrepreneur is one who Induced to take up an
entrepreneurial task due to the policy reform the government.
iii. Motivated Entrepreneur: They come into being because of t possibility of making and
marketing some new products for the use consumers

Entrepreneurial Development Programmes (EDPs):

1. Entrepreneurship Development Programme (EDP) is a program which helps in developing

entrepreneurial abilities among individuals.

2. In other words, it refers to development and polishing of entrepreneurial skills into a

person needed to establish an enterprise.

3. EDP is an effective way to develop entrepreneurs which can help in accelerating the pace
of socio-economic development, balanced regional. growth, and exploitation of locally
available "esources.

4. In recent times, EDP has become a professional task which extensively encourages the
development of funded and private businesses.

Following are the main objectives of EDPs:

1. To make people having good understanding with law.

2. To develop and strengthen entrepreneurial quality, i.e., motivation or need for

achievement.

3. To develop small and medium scale enterprises in order to generate employment and
widen the scope of industrial ownership

4. To industrialize rural and backward sections of the society.

5. To understand the merits and demerits of becoming an entrepreneur

6. To investigate the environmental set-up relating to small industries a small businesses.

7. To design project for manufacturing a product and creating services

EDPa consist of three phases, which are given below:

1. Pre-Training Phase: This step is introductory phase in which the entrepreneurship

development programmes are launched. Various activities are performed in this phase are
described below:

i. Identification of suitable location where the operations can be initiated, like a city.

ii. Selection of a course coordinator or project leader to coordinate the EDP activities.

iii. Organisation of basic infrastructural facilities related to the programme.

iv. Conducting the environmental scanning or industrial survey in order to look for better
business opportunities.

v. Developing various plans associated with the programme.

vi. Looking for the assistance of various entrepreneurial agencies such as DIC, SISI, NSIC,
SIDO, etc.

vii. Conducting industrial motivational campaigns to increase the number of applications.

2. Training Phase:

i The main function of any EDP is to impart training to future entrepreneurs and guiding
them for establishing the enterprise.

ii. The normal duration of the entrepreneurship development programme is 4-6 weeks and
it is usually a full time course.

iii. The objectives, training inputs and the centre of focus are explained in the programme.

3. Post-Training Phase: This phase is also referred as the phase of follow-up assistance. In
this phase, the candidates who have completed their programme successfully are provided
post-training assistance and other activities which includes,

i. Review the pre-training work

ii. Review the process of training programme

iii. Review past training approach