ENTREPRENEURSHIP DEVELOPMENT-ppt

Prepared by
BISWAJIT SAHOO

ENTERPRENEURSHIP DEVELOPMENT
Entrepreneurship is the act of being an entrepreneur, which can be defined as "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods"

UNDERSTANDING ENTREPENEURSHIP
The word entrepreneur, initially has been taken from the French language where it meant to designate an organizer of musical or other entertainments In the early 16th century, it was applied to those who were engaged in military expeditions

It was extended to cover civil engineering activities in the 17th century.

Only in 18th century the word used to refer to the present economic aspects The term entrepreneur is used in various views. These views are broadly classified into three groups, such as, risk-bearer, organizer and innovator.

CONCEPT OF ENTREPRENEURSHIP
Entrepreneurship is an attempt to create value through recognition of business Opportunity, the management of risk taking appropriate to the opportunity and through the communicative and management skills to mobilise human, financial and material resources necessary to bring a project to fruition.

BASIC Elements of Entrepreneurship

Identifying Opportunities Innovation Risk bearing capability Management

VIEWS OF ENTREPRENEURSHIP

Risk bearer Organizer Innovation

Risk-bearer
Richard Cantilion, an Irish man living in Franch, was the first who introduced the term entrepreneur; mean it, as risk-bearing function in economics in the early 18th century. He defined entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. According to him a farmer, who pays out contractual incomes which are certain to the landlords and labourers and sells at prices that are uncertain

Organizer
Jeam-Baptiste Say, an aristocratic industrialist, with his unpleasant practical experiences developed the concept of entrepreneur a little further which survived for almost two centuries His definition associates entrepreneur with the functions of coordination, organization and supervision. An entrepreneur is one who combines the 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 interest on capital, rent of land, and wages to labourers and what remains is his/her profit. thus, Say has made a clear distinction between the role of the capitalist as a financer and the entrepreneur as an organizer.

Innovator
Joseph A. Schumpeter, for the first time in 1934, assigned a crucial role of innovation to the entrepreneur in his book, Theory of Economic Development. Schumpeter considered economic development as a discrete dynamic change brought by entrepreneur by instituting new combinations of production, i.e., innovations. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity Schumpeter also made a distinction between an inventor and an innovator. An inventor is one who discovers new methods and new materials. And an innovator utilizes inventions and discoveries in order to make new combinations.

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

Entrepreneurship promotes capital formation by mobilising the idle saving of the public. It provides large scale employment. It promotes balanced regional development. It stimulates the equitable redistribution of wealth, income and political power in the interest of the country. It encourages effective resource mobilisation of capital and skill. It stimulates the process of economic development in the country. It also promote countrys export trade.

MOTIVATION FOR ECONOMIC DEVELOPMENT AND ENTREPRENEURIAL ACHIEVEMENT Motivation may be defined as the process that motivates a person into action and induces him to continue the course of action for the achievement of goals. The basic elements of the process of motivation are: - motive - behavior - goal

MOTIVATING FACTORS
1. Internal Factors : (i) Desire to do something new (ii) Educational Background (iii) Occupational Background & Strength 2. External Factors : (i) Demand for the product (ii) Availability of labour & raw material (iii) Cost and competition (iv) Government assistance and support.

ACHIEVEMENT MOTIVATION
The need for achievement plays an important role in making an entrepreneur as successful. It is an inner spirit that activates an entrepreneur to strive for success. Need for achievement is the desire to do well. The need for achievement contributes to entrepreneurial success.

ENTERPRISE AND SOCIETY

Free Enterprise System Legal and Ethical Issues

Free enterprise system

A free enterprise system encourages individuals to start and operate their own business in a competitive market without government involvement. In India, it is mainly a free enterprise system.

Business ownership
The free enterprise system encourages individuals to own businesses. The characteristics of a free enterprise system are freedom of ownership, freedom to compete, freedom to make a profit, and freedom to take risks.

Freedom of Ownership
Intellectual property rights include: Patents Trademarks Copyrights Trade secrets

Freedom of Ownership
A patent on an invention gives the patent holder exclusive rights to that idea or invention.

Anyone who wanted to manufacture the product within twenty years would have to pay the patent holder for its use through a licensing agreement.

Freedom of Ownership
A trademark is a word, name, symbol, sound, or color that identifies a good or service and that cannot be used by anyone but the owner. A trademark can be renewed indefinitely as long as it is being used by a business

Freedom of Ownership
A copyright involves anything that is authored by an individual and it gives the author the exclusive right to reproduce or sell the work. Such works can be: Writings (books, articles, etc.) Music and artwork

Competition
The struggle for customers is called competition . It forces businesses to produce better quality goods and services at reasonable prices. There are two basic ways businesses compete: Price competition Non-price competition

Competition
Price competition focuses on the sale of a product. Non-price competition has businesses competing in areas other than prices, such as:

Quality of the products and reputation

Service and financing

Competition
A monopoly is exclusive control over a product or the means of producing it.

Monopolies are not permitted in a free enterprise system because they prevent competition.

Risk
Business risk is the potential for loss or failure. Some risks include: Starting up

Being sued
Natural disasters and competition

Profit
Profit is the money earned from conducting business after all costs and expenses have been paid. Profits help the economy because they encourage: Competition and product development Production efficiency

Profit
An unprofitable business faces many problems like: Employee layoffs Loss of investors money

The government is also hurt by unprofitable businesses because of the resulting rise in unemployment and the decrease in tax revenue.

Profit
Profitable businesses supply: Jobs Better benefits Higher morale More tax money

Supply and Demand

Supply is the amount of goods producers are willing to make and sell.
The law of supply is that price and quantity supplied move in the same direction.

Supply and Demand

Demand refers to consumer willingness and ability to buy products. The law of demand is that price and demand move in opposite directions.

Supply and Demand

When supply and demand interact, these conditions are created:
Surplus: Supply exceeds demand Shortage: Demand exceeds supply Equilibrium: Supply equals demand

Business Opportunities
Profit and non-profit organization. Public and private sectors

Types of Business
To classify businesses in a free enterprise system, one will need to know the different ways of classifying businesses:

By size and scope

By purpose

By place within the industry

Size and Scope

A small business is operated by one or a few individuals, generally fewer than 100.
A business that sells its products only in its own country is considered a domestic business . Its opportunities for growth are limited to customers within that country.

Size and Scope

A global business sells its products in more than one country. The Internet, along with faster transportation and financial transfers, makes it easier to do business globally.

Purpose
A for-profit business seeks to make a profit from its operations. A nonprofit organization uses the money it makes to fund the cause identified in its charter. These business raise money through: Gifts and donations Selling goods or services

Purpose
Government-financed agencies are part of the public sector . These agencies include: Public schools and libraries

Military agencies
Social agencies

Regulatory agencies

Purpose
Business not associated with government agencies are part of the private sector .

Industry and Markets

Business are often classified by the: Industry they represent Products they sell Market they target

Industry and Markets

An industry consists of a group of establishments primarily engaged in producing or handling the same product or group of products or in rendering the same services.

Derived demand is based on, or derived from, the demand for consumer goods and services. Industrial companies try to increase their business by studying consumer trends.

Industry and Markets

Industrial businesses include: Extractors: Businesses that take something from the earth or sea

Construction: Builders of houses, office buildings, or factories

Manufacturing: Producers of goods

Industry and Markets

Wholesalers : Businesses that obtain goods from manufacturers and resell them to industrial users, other wholesalers, and retailers. Retailers : Businesses that buy goods from wholesalers or manufacturers and resell them to the consumer.

The Functions of Business

There are four main functions involved in an organizations operation:
Production or procurement Marketing Management Finance

The Functions of Business

Production is the process of creating, expanding, manufacturing, or improving on goods or services. Procurement involves buying and reselling goods that have already been produced.

The Functions of Business

The Functions of Business

The five rights of merchandising are having: 1.the right goods 2.at the right time 3.in the right place 4.at the right price

5.in the right amount

Marketing
All activities, from the time a product leaves the producer until it reaches the final consumer, are considered marketing activities. These activities support the buying and selling functions.

Management
Management is the process of achieving company goals by the effective use of resources through: Planning Organizing: Scheduling, delegating, and other specific operations. Controlling: Overseeing and analyzing operating budgets and suggesting more efficient measures for a company.

Finance and Accounting

Finance is the function of business that involves money management. Accounting is the discipline that keeps track of a companys financial situation. A balance sheet reports a companys:

Assets Liabilities Owners equity

ETHICAL ISSUES IN BUSINESS

Ethical issues in business concerns mainly on: Product policies Marketing communications Pricing approaches Distribution practices Marketing research

Ethical issues in product policies

Organizations are legally obliged to supply products and services which are safe, efficacious and fit for the purpose for which they are intended. Consumers themselves must take some responsibility for acting hazardously or misusing the product.

Ethical issues in marketing communications

Ethical advertisements should be legal, decent, honest and truthful such that they: should not cause serious or widespread offence should not cause undue harm or distress should contain nothing that might provoke antisocial or violent behavior should contain nothing that is likely to result in the physical, mental or moral harm of children

Ethical issues in pricing

Four main types of pricing practices where ethical problems are likely to arise : Excessive pricing: the price deemed to be somewhat excessively high. Price fixing: fixing price more than market rate. Predatory pricing: fixing price less than market rate. Deceptive pricing: true cost is deliberately obscured to mislead consumers.

Ethical issues in distribution practices

Consumers rights violation can happen in two ways: Target markets are composed of consumers who are deemed vulnerable such as children, the elderly, the poor, the sick and the marketers take advantage of their vulnerability to satisfy their own ends. Certain groups of consumers are discriminated against and excluded from being able to gain access to products that are necessary for them to achieve a reasonable quality of life.

Ethical issues in market research

Possible threats posed to the consumers right to privacy. Many consumers are unaware of the regulations to protect them. Use of genetic testing results by insurance companies.

Entrepreneurial Traits and Skills

some entrepreneurs run their business successfully being called as successful entrepreneurs while others do not. Some qualities like knowledge, skill or personality profile make them success which are called traits or skills.

Entrepreneurial Traits and Skills

A competence/trait is an underlying characteristic of a person which leads to his/her effective or superior performance in an job. A job competence is a good combination of ones underlying characteristics such as ones knowledge, skill, motive, etc., These may be unconscious aspects of the person.

Entrepreneurial Traits and Skills

What is Knowledge? What is Skill? What is Motive?

What is Knowledge?
knowledge means collection and retention of information in ones mind Knowledge is necessary for performing a task but not sufficient people possessing more knowledge have miserably failed while actually performing the task skills to translate the knowledge into action/practice. also required.

What is Skill?
Skill is the ability to demonstrate a system and sequence of behaviour which results in something observable, something that one can see Skill, the planning ability can properly identify the sequence of action to be performed to win the (cricket) match. Remember, while knowledge of playing cricket could be acquired by reading, talking or so on, skill to actually play cricket can be acquired by practice i.e. playing on a number of occasions.

What is Motive?
Motive is an urge to achieve ones goal, what McClelland terms Achievement Motivation. Thus, in order to perform any task effectively and successfully including establishing and running a industrial unit, a person (entrepreneur) needs to possess a set of knowledge labeled as competences or traits.