Kuvempu university Institute of Management Studies Jnana Sahyadri, Shankaraghatta.

Subject: Entrepreneurial Development and Small Business Management Presented by Dr. R Hiremani Naik M.com , PhD Reader and Chairman Institute of Management Studies Kuvempu university Shankaraghatta.

Entrepreneurship Development:
Concept of entrepreneurship origin in early 16th century in French word; enterprend it means to undertake people engaged in leading military expedition. They were give more importance to expanding the territory entrepreneur is combination of many things. F.H Knight described the entrepreneur as the bearer of risk under uncertainty. Entrepreneur is a new economic functionary endowed with knowledge, judgment, foresight confidence in his own judgment and having capacity for ruling others.

Definitions of Entrepreneur
1. According to Adam Smith described entrepreneur as a person who only provides capital without taking active part in the leading role in an enterprise. 2. According to Richard Cantillon Entrepreneur is an agent who buys factors of production at certain prices in order to combine them in to a product with a view to selling it at uncertain prices in future

Definitions of entrepreneurs (conti.,)

3. According to Schumpeter entrepreneurs is an innovator whose function is to carry out new combinations of means of production . He introduces something new in to the economy: a. A new good b. Finds a new market c. Conquers a new source of supply of raw materials and d. Carries out a new organization of an industry.

Types of Entrepreneurs
1. 2. 3. 4. Innovative entrepreneurs Imitating entrepreneurs Fabian entrepreneurs Drone entrepreneurs

1. Innovative Entrepreneurs: entrepreneurs who carry out new combinations of means of production fall in this category. Such entrepreneurs will emerge only after a certain level of development is attained.

Types of Entrepreneurs (conti.,)

2. Imitating entrepreneurs: imitating entrepreneurs are different from innovation. They adopt the technology and products already developed to serve their own interest. They found in large numbers in newly industrializing economies. However the fillip they provide to the process of economic growth is considered to be stronger than that provided by innovations.

Types of Entrepreneurs (conti.,)

3. Fabian Entrepreneurs: Fabian entrepreneurs are a peculiar type of entrepreneur. They are very cautions and skeptical in adopting and implementing any changes. They stick to custom religion, traditions. Past experience and following the foot steps of their ancestors. They are risk averse and imitate new changes only when it is clear that their survival is in danger without doing so. 4. Drone Entrepreneurs : The characteristics of Drone Entrepreneurs are that they are very conventional and not in favour of adopting any new changes in their enterprise. They bear loss rather than make changes in their production process. They struggle to exist but not grow.

Functions of entrepreneurs
1. 2. 3. 4. Perceiving market opportunities Purchasing inputs Gaining command over scare resources Marketing of the products and responding to competition 5. Managing human relations within the firm 6. Managing customer and supplier relations 7. Managing finance 8. Managing production 9. Industry engineering 10. Upgrading process and product

Features of entrepreneurs
1. 2. 3. 4. 5. 6. 7. 8. Economic activities Innovative activities The creation of new goods The introduction of new method of production Opening of new market A function of high achievement Creating to purposeful activities Entrepreneurship is risk bearing

Intrapreneur
According to Donald Myers Intrapreneur is one who champions an innovation within the corporations but is not assuming financial risk of the business. According to H. Holt Intrapreneur is a person who pursues an innovation becoming a champion for its development but does so from within the security of his or her organizational position.

Functions of entrepreneur
1. 2. 3. 4. Assumption of risk Business decisions Managerial function Function of innovation

Assumption of Risk: the entrepreneur assumes all possible risks of business. A business risk also involves the risk due to the possibility of changes in the tastes of consumers, techniques of production and new inventions. Such risks are not insurable. If they materialize, the entrepreneur has to bear the loss himself.

Functions of entrepreneur
2. Business decisions : The entrepreneur has to decide the nature and type of goods to be produced. He enters the particular industry which offers name the best prospects and products and produces whatever commodities he thinks will pay him the most and employs those methods of production which seem to him the most profitable. He effects suitable changes in the size of the business, its location, techniques of production and does everything that is needed for the development of his business.

Functions of entrepreneur
3. Managerial Function: The entrepreneur performs the managerial functions though the managerial functions are different from entrepreneurial functions. He formulates production plan, arranges finance, purchases raw materials, provides production facilities, organizes sales and assumes the task of personal management. In a large establishment, these management functions are delegated to the paid managerial personnel.

Functions of entrepreneur
4. Function of Innovation: An important function of an entrepreneur is innovation He conceives that idea for the improvement in the quality of production line. He considers the economic viability and technological feasibility in bringing about improved quality. The introduction of different kinds of electronic gadgets is an example of such an innovation of new products.

Theories of Entrepreneruship
Drucker s views of Entrepreneur: Peter Drucker defines an entrepreneur as one who always searches for change, responds to it, and exploits it as an opportunity. Entrepreneurs innovate. Mr. Peter Drucker has aptly observed that, innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation.

Druckers views of entrepreneur

Systematic innovation, according to him, consists in the purposeful and organised search for changes and in the systematic analysis of the opportunities such changes might offer scope for economic and social innovation. According to Drucker, three conditions have to be fulfilled: 1. Innovation is work. It requires knowledge. It requires ingenuity. It makes great demands on diligence, persistence and commitment.

Druckers views of entrepreneur

2. To succeed, innovation must build on their strengths. 3. Innovation always has to be close to the market, focused on the market, indeed marketdriven. Specially, systematic innovation means monitoring six sources for innovative opportunity. The first three sources lie within the enterprise, whether it be a business or a public service institution or within an industry or service sector.

Druckers views of entrepreneur

They are , therefore, visible primarily to people within that industry or services sector. They are basically symptoms. But they are highly reliable indicators of changes that have already occurred or can be made to occur with little effort. These four sources areas are: The unexpected the unexpected success, the unexpected failure, the unexpected outside event. The incongruity- between reality as it actually is and reality as it is assumed to be or as it ought to be.

Druckers views of entrepreneur

Innovation in industry structure or market structure that catches everyone unawares. The second set of sources for innovative opportunity, a set of three, involves changes outside the enterprise or industry: a. Demographic (population changes) b. Changes in perception, mood and meaning. c. New knowledge, both scientific and non scientific.

Druckers views of entrepreneur

Principles of innovations According to Drucker, the principles of innovation requires a few dos and a few don ts. He also enumerates what he calls conditions The Dos 1. Purposeful, systematic innovation begins with an analysis of opportunities. It begins with thinking through what he has called the sources of innovative principles.

Druckers views of entrepreneur

Principles of innovation: 2. Innovation is both conceptual and perceptual. The second imperative of innovation is to go out to look, to ask, and to listen. 3. An innovation to be effective has to be simple and it has to be focused. It should do only one thing, otherwise it confuses. If it is not simple, it won t work. 4. A successful innovation aims at leadership

Druckers views of entrepreneur

Principles of innovation The Don ts 1. The fist is simply not to try to be clear. Innovations have to be handled by ordinary human beings. 2. Do not diversify. Innovations that stray from a core are likely to become diffuse. They remain ideas and do not become innovations. 3. Finally, do not try to innovate for the future. Innovate for the present.

Walker s views on enterpreneur

According to Francis A. Walker, the true entrepreneur is one who is endowed with more than average capacities in the task of organizing and coordinating the various other factors of production. He should be pioneer, a caption of industry. The supply of such entrepreneurship is however quite limited and enterprise in general consists of several grades of organizational skill and capability. The more efficient entrepreneurs receive a surplus reward over and above the managerial wages and this sum constitutes true profile ascribable to superior talent.

Factors influencing Entrepreneureship

1. Economic factors 2. Political factors 3. Psychological factors 4. Organizational factors 5.Educational factors 6. Industrial Estate

Psychological Inputs to develop entrepreneurial personality

Need for Achievement Moderate Risk Responsibility Task performance Thinking High level of aspiration Organizational Skill Decision Making

Mistakes made by the Entreprenurs

Lack of management Lack of Knowledge Wrong decision making Strategic plan Lack of Experience Poor financial control Poor Location Improper inventory control Incorrect pricing Uncontrolled growth

Entrepreneurial Development Programmes

Meaning It is a programme designed to help an individual in acquiring skills and capabilities necessary for playing his entrepreneur role effectively. Objectives: 1. Develop the Entrepreneurs 2. Necessary skills and knowledge 3. Managerial skills 4. To provide post-training assistence

5. To Develop this Industrialization 6. To Small scale as well as large scale organization 7. To have a Rural and backward areas balance 8. To generate self employment 9. To improve their managerial skills

Phases of EDP
Pre-Training Training Post-Training

Pre-Training
Selection of training Creation of infrastructure facilities Syllabus Faculty Inauguration Publicity Finding interest area of training

Training Programme
Technical knowledge and skills Achievement motivation training Support system and the procedure Market survey Managerial skill Project preparation