Entrepreneurship is the act of being an entrepreneur. French word 'entrependre' and German word 'uternehmen' both referring to individuals who undertakes an 'endeavor' According to oxford dictionary entrepreneur is 'one who organizes and manages enterprise involving high risk'
Entrepreneurship is the act of being an entrepreneur. French word 'entrependre' and German word 'uternehmen' both referring to individuals who undertakes an 'endeavor' According to oxford dictionary entrepreneur is 'one who organizes and manages enterprise involving high risk'
Entrepreneurship is the act of being an entrepreneur. French word 'entrependre' and German word 'uternehmen' both referring to individuals who undertakes an 'endeavor' According to oxford dictionary entrepreneur is 'one who organizes and manages enterprise involving high risk'
Semester II 1 TOPICS 1. Definition : Entrepreneurship / Entrepreneur 2. Role of Entrepreneurship in Economic Development 3. Characteristics of Entrepreneurs 4. Types Of Entrepreneurs 5. Factors Influencing Entrepreneurship 6. The Entrepreneurial Process 7. Motivation Theories 8. Factors Motivating Entrepreneurs 9. Intrapreneurs 10. Ownership Structures / Forms Of Business 11. Role Of Government in Supporting Entrepreneurship
2 Entrepreneurship Meaning and Concept Entrepreneurship is the act of being an entrepreneur. French word Entrependre and German word uternehmen both referring to individuals who undertakes an endeavor. Hence, anyone who exhibits the characteristics of self-development, creativity, self-decision making and risk taking. According to oxford dictionary Entrepreneur is one who organizes and manages enterprise involving high risk. But researches indicates that entrepreneurs need not necessarily be high risk takers, however, they reduce risk and increase likelihood of success. Entrepreneurship : Definition 1 Entrepreneurship is the attempt to create value through recognition of business opportunity. It is the management of risk - taking appropriate to opportunity and mobilizing the necessary human, financial, managerial and material resources through communicative and management skill to bring a project to fruition.
4 Entrepreneurship : Definition 2 Entrepreneurship means the function of seeing investment and production processes, raising capital, hiring labour, arranging the supply of raw materials, finding site, introducing a new technique and commodities, discovering new sources of raw materials and selecting top managers for day to day operations of the enterprise.
5 Entrepreneurship : Definition 3 A.H. Cole defined Entrepreneurship as the purposeful activity of an individual or a group associated individuals undertaken to initiate, maintain or aggrandize a profit oriented business unit for the production or distribution of economic goals and services. According to Frederick Harbinson, entrepreneurship is the skill to build an organisation.
6 Entrepreneurship : Definition 4 Robert Ronstadt defined Entrepreneurship as: Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time and / or career commitment of providing value for some product or service. The product or service itself may not be new or unique but the value must be.
7 Entrepreneurship : Definition 5 Entrepreneurship is the ability to perceive an opportunity, the foresight to see scope for its exploitation, courage to undertake a task, an initiative and dare to take risks in the process of transformation.
8 Entrepreneur : Definition & Meaning Peter Drucker has defined Entrepreneur as a person who always searches for change, responds to it and exploits it as an opportunity. Entrepreneurs innovate.
The word Entrepreneur is derived from the French word Entreprendre meaning undertaker
9 Role of Entrepreneurship in Economic Development 1/2
1. Increase National Production 2. Balanced Regional Development 3. Dispersal Of Economic Power 4. Reinvestments of Profits 5. Employment Generation 6. Harnessing youth vigour 7. Capital Formation 8. Redistribution of Wealth and Political Power
10 Role of Entrepreneurship in Economic Development 2/2 9. Mobilisation of Capital and Skill 10. Backward and Forward Linkages 11. Promotes Export Trade 12. Social Welfare 13. Higher Productivity through innovation 14. Creates Competitiveness and Consumer oriented market 15. Transfer of Technology to Rural Areas 16. Entrepreneurship is a catalyst for economic development
11 Characteristics of Entrepreneurs 1/4
1. Hard Work 2. Commitment to Task 3. Choosing Moderate Risk 4. Seizing Opportunities 5. Sense of Efficacy 6. Objectivity 7. Open to Feedback 8. Independence 9. Hope of Success 10. Optimism in Novel Situations / Positive Response to Change 11. Attitude towards Money
12 Characteristics of Entrepreneurs 2/4
12. Proactive Management 13. Competition and Collaboration 14. Reinforcing Achievement Motivation / Desire for High Achievement 15. Flexible Authority Relationship 16. Sound Decision Making Ability 17. Good at Team Work and Team building 18. Perseverance 19. Vision 20. Leadership Skills 21. Self Confidence / Gut Feeling 22. Dedication and Determination
13 Characteristics of Entrepreneurs 3/4 23. Positive Attitude / Positive Response to Challenges 24. Honing of Business Skills 25. Open mindedness Towards New things - Acquiring New Technologies and Processes 26. Building up Strategic Relationships 27. Reward Sharing 28. Infinite Learning 29. Passionate about their Ventures 30. Creativity 31. Great deal of Energy for Survival 32. Foresight 33. Organising Skills
14 Characteristics of Entrepreneurs 4/4 34. Innovative 35. Entrepreneurs like to think they control their own lives 36. Flexibility and Ability to Adapt 37. Knowledge of Markets / Versatile Knowledge 38. Responsive to Suggestions 39. Take Initiative 40. Resourceful 41. Responsive to Criticism 42. Ability to tolerate Ambiguity 43. Value Addition
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Types of Entrepreneurs 1/6
A. Clarence Danhofs Classification of Entrepreneurs 1. Innovating Entrepreneurs Introduce new goods, new method of production, discovers new market and reorganises the enterprise (developed economy) 2. Imitative Entrepreneurs Do not innovate change themselves but only imitate techniques and technology and successful innovations (under developed economy) 3. Fabian Entrepreneurs Great caution and skepticism in experimenting with change, innovate only when loss may be caused 4. Drone Entrepreneurs Ready to suffer losses but not make changes in their existing production methods.
16 Types of Entrepreneurs 2/6 B. Behavioural Scientists Classification of Entrepreneurs
1. Solo Operators Essentially work alone, employ only if necessary 2. Active Partners They start or carry on an enterprise as a joint venture. Entrepreneurs who only contribute funds are simply called Partners 3. Inventors Invent new products, basically interested in research and innovative activities 4. Challengers Seek Challenges, attracted to industry because of the challenges it presents 5. Buyers Dont like bearing too much risk therefore buy the on going enterprise 6. Lifetimers Business as an integral part of life. Family enterprises and businesses that depend on exercising personal skill fall in this category
17 Types of Entrepreneurs 3/6 C. Classification On the Basis of Ownership 1. Founders or Pure Entrepreneurs 2. Second Generation Operators of Family Owned Business 3. Franchisees 4. Owner Managers
18 Types of Entrepreneurs 4/6 D. Classification On the Basis of Personality Traits and their style of Running the Business 1. The Achiever 2. The Induced Entrepreneur 3. The Idea Generator 4. The Real Manager 5. The Real Achievers
19 Types of Entrepreneurs 5/6 E. Classification Based on Type of Business 1. Industrial Entrepreneurs 2. Trading Entrepreneurs 3. Corporate Entrepreneurs 4. Agricultural Entrepreneur
20 Types of Entrepreneurs Others 6/6 1. Women Entrepreneurs - An SSI unit / industry related service or business enterprise managed by one or more women entrepreneurs in propriety concerns or in which she / they individually or jointly have a share capital of not less than 51% as a company / members of co-operative society is a Women Entrepreneurs Enterprise. 2. Copreneurs Both husband and wife start and run a business venture
21
Factors Influencing Entrepreneurship
I) Economic Factors
1. Capital 2. Raw Material 3. Labour 4. Market 5. Supportive Government Policies 6. Availability of Financial Assistance from various funding bodies 7. Ancillary Support 8. Availability of Technical Factors like premises, electricity etc.
22
Non - Economic Factors 1/3
A) Background Factors 1. Education, Training and Experience 2. Family, Role models and association with similar type of individuals 3. Financial Conditions
23 Non - Economic Factors 2/3 B) Motivational Factors Need for Achievement Personal Motives / Expectations Business Environment Recognition & Social Status (Status withdrawal can motivate entrepreneurial behaviour example Japan)
24 Non - Economic Factors 3/3 C) Social Conditions Legitimacy Of Entrepreneurship Marginality or Social Pressure Security
25 The Entrepreneurial Process
1. Identification And Opportunity Evaluation 2. Drawing Up Of A Business Plan 3. Persuade Others 4. Determination of the Required Resources 5. Creating the Venture 6. Managing the Enterprise 7. Adapt / Change with Time
26
Motivation Theories
Prominent among Motivation Theories relevant to Entrepreneurship are 1) Maslows Need Hierarchy Theory 2) McClellands Acquired Needs Theory
1) Maslows Need Hierarchy Theory PLEASE USE DIAGARM FROM Pg. 41 Ref. Book S.S.KHANKA According to Maslow, all human needs are classified into the five need clusters as shown in the following figure: 1. Physiological Needs 2. Safety and Security Needs 3. Social Needs 4. Esteem Needs 5. Self Actualisation
The needs are arranged in a lowest to highest hierarchy. The second need does not dominate unless the first is satisfied and the third need does not dominate unless the second is satisfied. This process goes on till the last need. This is because man is never satisfied. For entrepreneurs the social, esteem and self actualisation needs are major motivating factors.
27 Maslows Need Hierarchy Theory Diagram 28 Physiologi cal Needs Self Actualisation Needs Safety & Security Needs Social Needs Esteem and Status Needs 1 2 3 4 5 McClellands Acquired Needs Theory According to David McClelland a person acquires three types of needs as a result of ones own life experiences. 1. Need for Affiliation 2. Need for power 3. Need for Achievement In case of Entrepreneurs the Need for Achievement is very high and dominating.
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Factors Motivating Entrepreneurs
I) Internal Factors 1. Desire to do something new 2. Educational Background 3. Occupational Background or Experience II) External Factors 1. Government Assistance and Support 2. Availability of Labour and Raw Material 3. Encouragement from big business houses 4. Promising demand for the product
30 Intrapreneurs Talented people from the corporate world leave their jobs and start their own manufacturing business units because management is not receptive to their ideas. They become successful and pose a threat to previous companies. These entrepreneurs are called Intrapreneurs. A system and an organisation culture within a large organisation was needed that would allow these executives to operate like entrepreneurs. Gifford Pinchot suggested the creation of a system that would provide select executives a status within the corporation similar to that of an entrepreneur in a society. Such people are called intra corporate entrepreneurs or intrapreneurs.
31 Ownership Structures / Forms Of Business 1. Proprietorship / Personal Business The enterprise is owned and controlled by 1 person. Advantages Simple form of Organisation Owners freedom to take decisions High secrecy Tax Advantage Easy Dissolution Flexibility and directness of Control Disadvantages Limited Resources Limited Ability Unlimited Liability Limited life of Enterprise Form
32 Ownership Structures / Forms Of Business
2. Partnership Business A number of individuals associate together for running the business Advantages Easy Formation More Capital Available Combined Talent, Judgement and skill Diffusion of Risk Flexibility Tax Advantage Disadvantages Unlimited Liability Divided Authority Lack of Continuity Risk of Implied Authority
33 Ownership Structures / Forms Of Business
3. Limited or Joint Stock Company A limited Company or a joint Stock Company is a combination of individuals who subscribe the capital by taking shares of the Company Advantages Limited Liability Vast Capital Available Greater scope of expansion Transferability of shares Tax Relief Disadvantages Difficulty and cost of formation Reckless speculation encouraged Clash of interests between members and management Bureaucratic approach may creep in administration
34 Ownership Structures / Forms Of Business
4. Family Enterprise Advantages Commitment Dedication Loyalty Spirit of Entrepreneurship Financial strength Disadvantages Nepotism Favouritism Rigidity Conservatism
35 Ownership Structures / Forms Of Business 5. Company A company is an association of many persons, who contribute money or moneys worth to a common stock and employ it for a common purpose. The common stock so contributed is denoted in money and is the capital of the company. The persons who contribute it or to whom it belongs are members. The proportion of capital to which each member is entitled is his share. Advantages Limited Liability Perpetual Existence Professional Management Expansion Potential Transferability of shares Diffusion of Risk Disadvantages Lack of Secrecy Legal Restrictions Management mischiefs Lack of personal Interest
36 Ownership Structures / Forms Of Business
6. Co-operative A voluntary organisation of those who are economically weak to stand on their own legs. They come together not to earn profits but to improve their common economic interests through business propositions. The basic objectives of such organisations are self help and mutual help. Advantages Easy Formation Limited Liability Perpetual Existence Social Service Open Membership Tax Advantage State assistance Democratic Management Disadvantages Lack of Secrecy Lack of business acumen Lack of interest Corruption Lack of mutual interest
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Role Of Government
3 Examples given below:
1. C & SSI and DIC Direction for setting up Small scale units, Idea on product selection, raw materials, market survey, preparation of projects etc. 2. SISI Small Industries Service Institute Identification of products, guidance for project preparation, Vetting of projects, guidance for selection of plant and machinery, raw material, market survey, marketing and special training needs 3. IDBI Industrial Development Bank Of India Guidelines on large scale and small scale industry
38 The Tomato Seller
A Jobless man applied for the
position of 'office boy' at Microsoft. The HR manager interviewed him then watched him cleaning the floor as a test. 'You are employed' he said. Give me your e-mail address and I'll send you the application to fill in, as well as date when you may start. The man replied 'But I don't have a computer, neither an email'.
Contd
'I'm sorry', said the HR manager. If you
don't have an email, that means you do not exist. And who doesn't exist, cannot have the job.'
The man left with no hope at all. He didn't know what to do Contd
He had only $10 in his pocket. He then
decided to go to the supermarket and buy a 10Kg tomato crate. He then sold the tomatoes in a door to door round. In less than two hours, he succeeded to double his capital. He repeated the operation three times, and returned home with $60.
Contd
The man realized that he can survive by this
way, and started to go everyday earlier, and return late. Thus, his money doubled or tripled everyday.
Shortly, he bought a cart, then a truck, and then he had his own fleet of delivery vehicles.
Contd
5 years later, the man is one of the biggest food
retailers in the US ...
He started to plan his family's future, and
decided to have a life insurance.
He called an insurance broker, and chose a
protection plan.
When the conversation was concluded the
broker asked him his email.
Contd
The man replied,
'I don't have an email.'
The broker answered curiously, 'You don't have
an email, and yet have succeeded to build an empire. Can you imagine what you could have been if you had an e mail?!!'
The man thought for a while and replied, 'Yes,
I'd be an office boy at Microsoft!'
Morals Moral 1 Internet is not the solution to your life.
Moral 2
If you don't have Internet, and work hard, you can be a millionaire.
Moral 3
If you received this message by email, you are closer to being a office boy/girl,
than a millionaire..........
In an interesting article on Forbes titled The Smartest Unknown Indian Entrepreneur , Sramana Mitra profiles Sridhar Vembu, the founder and CEO of an Indian firm called AdventNet. The firm today, is a 100%, bootstrapped, $40-million-a-year revenue business that sends $ 1 million to the bank every month in profits. The Smartest Unknown Indian Entrepreneur Is an Entrepreneur born or made?
An entrepreneur may be born out of lack of employment opportunity Or an entrepreneur who lets go of employment opportunity to pursue a dream or passion Or someone who recognizes opportunity in a service or sector Is it a good idea? 5 questions to ask Is the number of potential customers, in other words the market, large and growing? Who is your customer and what is his or her problem, specifically, that you plan to solve? How are these people currently solving their problem, that is, what is your competition? How much better or cheaper are you than your potential customers' current solution, and can you maintain that advantage? And, most importantly: are you and your team suited to this task - do you have the right knowledge and network in this industry? Are you passionate about the problem or industry?
Is it an Idea or Perhaps it's a flash of inspiration; perhaps you've sat and brainstormed in a workshop - either way, ideas spring forth from an inner source. No analysis has been performed to determine the quality of the idea. In fact, the basic rule to getting the creativity flowing in a brainstorming session is 'there's no such thing as a bad idea'. And during idea-generation, that's true; but in fact, few are really good business ideas. So the goal is to generate as many as possible to provide the raw material for the next stage: opportunity evaluation
an Opportunity Opportunities, on the other hand, are ideas that have been through an analytical wringer. Take an idea, punch it, pull it, ask the right questions, and if it holds up - it's an opportunity: a chance to build a viable venture. END THANK YOU 51