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Entrepreneurship Management{BBA 5TH SEM}

Entrepreneurship Management{BBA 5TH SEM}

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Entrepreneurship
: the word is derived from the French word ‘Entrependne’ andthe German word ‘Uternchmen’ both of which refers to individuals who areundertakers i.e. who can undertake ‘risk’ by setting up a new enterprise. They arecontractors who bear the risk of profit as well as loss. They are soldiers of fortune,adventurers or merchants.
Benefits of Entrepreneu
:
1
. provides opportunities for self expression andrealization of one’s own passion of doing something new and different.
2
. Offer opportunities for growth and self development.
3
. Monetary rewards are more.
4
.he has the power of decision making.
5
. Rewards of working for oneself is highlysatisfying and motivating.
6
. Contributes to the development of the community asone generates employment for others.
7
. Entrepreneur initiates and constituteschange in the economic development and structure of business.
Characteristics ENTPSHP
: 1. Hardworking 2. Desire for high achievement 3.Highly optimistic 4. Independent 5. Have excellent foresight 6. Good organizers 7.Innovative 8. Excellent communication skills 9. Excellent technical knowledge 10.Have very clear objectives 11. High risk taking capability.
Types of risk faced by entrepreneur 
: 1. Financial risk 2. Family and social risk 3.Career risk 4. Psychological risk.
Roles of entrepreneur:
1. Combining factor of production 2. Risk acceptance. 3.maximizing shareholders’ return 4. Using market information for opportunities.
Steps in the process of entrepreneurship:
1. Identifying opportunities 2.Establish vision 3. Persuade others 4. Gather resources (Capital, land andmanpower) 5. Organize these resources to develop new product 6. Create theproduct 7. Adapt according to market changes.
Difference between Entrepreneur and Entrepreneurship
:Entrepreneurship: 1. process 2. organized form of initiation 3. risk taking activity 4.innovative process 5. crux of leadership 6. decision making activity 7. planningprocess of a new enterprise 8. Result of a vision 9. initiating activity of setting upan enterprise.Entrepreneur: 1. person 2. organizer 3. risk taker 4. innovator 5. leader 6. decisionmaker 7. good planner 8. a visualize 9. initiator.
Types of entrepreneurs
: 1. Based on ownership {a. Pure entrepreneur b. Secondgeneration business owned entrepreneur c. Franchisee d. Owner manager} 2.Based on personality Traits {a. Personal achievers b. Induced entrepreneurs c.expert idea generators d. Real manager e. Real achievers} 3. Based on type of business {a. Business enterprise entrepreneur b. Trading entrepreneur c.Industrial entrepreneur d. corporate entrepreneur e. Agricultural entrepreneur} 4.Based on use of technology {a. Technical Entrepreneur b. Non-technicalentrepreneur} 5. Based on Motivation {a. Pure entrepreneur b. Inducedentrepreneur c. Spontaneous entrepreneur d. motivated entrepreneur} 6. Basedon growth {a. Growth entrepreneur b. Super-growth entrepreneur}7. Based onstages of development {a. First generation entrepreneur b. Modern entrepreneur c.Classical entrepreneur d. Women entrepreneur} 8. Other kinds of entrepreneurs{a. Innovative entrepreneur b. Initiative entrepreneur c. Fabian entrepreneur d.Drone entrepreneur}
Schumpter’s innovation theory
: John Schumpter an economist was the first toput human agents at the centre of the process of economic development. To himan entrepreneur is an ‘innovator’ i.e. he has the potential to do things in a new way.This economic development is not a spontaneous or automatic process. It must bedeliberately and actively promoted by some agency within the system. According toSchumpter, there are five different ways to act as an entrepreneur: 1. Introductionof better quality or new product or services. 2. Introduction of new productiontechnology. 3. Discovery of new market. 4. Discovery of new sources of supply of raw materials. 5. New form of organization structure in industry. -- Theentrepreneur provides leadership. By nature, he is neither a technician nor afinancer. Entrepreneurship is not a profession nor it is the permanent occupation.Psychologically entrepreneurs are not motivated by profits or rewards. The profitscome out of the economic progress. Such kind of entrepreneurs are mostlymotivated by the desire to establish a personal kingdom and the will to conquer.
Criticism
: 1. Conceived in the context of industrial revolution. 2. Modeled on bigprivate enterprises and not applicable to developing countries.
McClelland’s need for achievement theory
: David McClelland an American,psychologist in 1960 gave the concept of need for achievement. It is the need for achievement (also known as n-Ach) which provides drive to the entrepreneur to setup a new enterprise, to achieve goals or targets, to innovate, to identify problemsand opportunities, to take risk and most importantly to run the businesssuccessfully. The entrepreneurs strive for personal satisfaction rather than profitsor rewards. They have a desire to do something new or something of better qualitythat has been done before, high achievement differentiate themselves from othersby their desire to do something better, they seek situations where they can attainpersonal responsibility for finding solutions to the problems. High achievers are notgamblers. They take up reasonably challenging goals. They dislike succeeding bychance rather they like to take calculated amount of risks, they prefer the challengeof working for a problem and accepting personal responsibility for success or failure, rather than learning outcomes to chances or action of others.R. A. Sharma categorized the factors that motivate entrepreneurs into two types: 1.Internal factors: a. Desire to achieve something. b. Educational background. c.Experience. 2. External factors: a. Government assistance and support. b. Easyavailability of raw materials and cheap labor. c. Encouragement from big businesshouses. d. Promising demands for the product.
Hoselitz’s theory of entrepreneurship based on managerial skills andleadership
: According to him, a person desirous of becoming an industrialentrepreneur, must have additional personality traits extending beyond a desire togather wealth in addition of being motivated by an expectation of profit. He musthave managerial and leadership abilities. Financial skills have secondary role.There are 3 types of business leaders (merchant money lenders, manager typeleader, entrepreneur type leader).
Harbison’s theory of entrepreneurship as an organization building function
:According to F. Harbison, organization building is the most important and criticalskill needed for industrial development. Entrepreneurship is the skill which isessential to build an organization. The crux of entrepreneurship consists in theability to multiply oneself by effectively delegating responsibilities to others, he laysmore emphasis on managerial skills and creativity and harnesses innovative ideasfor use in organization. To him, entrepreneur is an organization builder and if organization is absent, it cannot stimulate economic growth.
Entrepreneurial motivation
: The term motivation has been derived from the word‘motive’ which means drive i.e. motivation is the drive and efforts to achieve goals.There may be several reasons as to why an entrepreneur may undertake risk andstart a new enterprise. It may be financial scarcity, family or social status, or dissatisfaction from present life. Classifying entrepreneurial motivation accordingto
Maslow’s need theory
, they would fall in the category of the higher order needs (sociological, esteem and self actualization needs) but this does not meanthat the lower order needs of physiological and safety needs don’t contribute toentrepreneurial motivation. If we categorize the same in McClelland’s theory of needs, the entrepreneur would generally be labeled as an individual with a highneed for achievement, moderate need of power and low need for affiliation.Researchers have pointed out varied ranges of entrepreneurial motivation likeneed for achievement, dissatisfaction from present job, work and family situationsetc. but most of them have agreed that need for achievement is the most importantmotivation for an entrepreneur.
Objectives of Government policy measures
:
1
. create immediate employmentopportunities on a massive scale at low cost.
2
. to meet the demands of thecustomer by producing simpler goods at low cost.
3
. help in modernization oresources which may otherwise remain unutilized.
4
. helps in increasing theincome and the standard of living of village entrepreneurs.
5
. to make exportorientation of small industries and help in export promotion.
Industrial policy measures
:
1948
: supported deve of cottage and SSI and playeda big role for overall development of country. advocated that healthy expansion of cottage and SSI depends on a number of factors like provision of raw materials,cheap power and labor, technical advice and organized marketing of products.
1956
: it supported development of cottage and SSI by restricting the volume of production, differential rates of taxation and exercising direct subsidies.
1977
: Itsupported development of cottage and SSI and their promotion and dispersal insmall towns and rural areas. Industrious centers and tiny industry sectors wereestablished.
1980
: objectives: 1. Deve and boosting of economy. 2. Making steadyflow of capital to SSI. 3. Encouraging markets to satisfy the needs of customers. 4.Creating various provisions for subsidies and facilities to SSI units. 5. Organizingappropriate training programs to strengthen the quality of entrepreneurs. 6.Providing preferential treatment for industries in backward regions.
1990
: It wasestablished for creating agro-based small industries in particular. Major objectives:1. explore employment opportunities by promotion of SSI in backward regions. 2.disperse fruits of industries in rural areas order to improve quality and standard of living. 3. enhance the export feasibility of nation. For this purpose a new schemeknown as the central investment subsidy was introduced exclusively for SSI unit.
1991
: it was announced by the government of India to promote and develop tinyindustries. essence of this policy lies in the growth of small sector with specialreference to village and cottage industries. The major objective of the policy was tomake easy provision of funds by simplifying the credit plan of nationalized banks.
Relevance of EDP
: 1. EDP proved that entrepreneurs can be made and are notborn. 2. EDP are expected to bring about economic and social change in behavior of entrepreneur. 3. EDP can convert ordinary persons to risk takers, innovatorsand above all business leaders. 4. EDP can develop individuals to become theeconomic leaders upon whom the economic wellbeing of the society depends. 5.helps the people sense innovativeness and as a result the trainees are expectedto produce things that common people have never dreamt of. 6. helps theentrepreneurs create conditions for env improvement. 7. EDP are expected tocreate the sense of social responsibility in the minds of budding entrepreneurs.
Entrepreneurship and economic growth / development
: economic developmentof any region is the outcome of purposeful human activities. According toSchumpter, the economic development consists of employing resources in adifferent way bringing in new factors of production or combination of the factors.The entrepreneur looks for innovative ideas and puts them into effect for economicdevelopment. The entrepreneur occupies a crucial place in the process of economic development by acting as a trigger head to give spark to economicactivities. Some of the development activities are as follows: 1.increase in theincome. 2. Brings change in the structure of business and society. 3. Wealthcreation. 4. New products, services and business. 5. Generation of employment. 6.Increase in the standard of living.
Entrepreneurial development program (EDP)
: it is designed to help a person instrengthening and fulfilling his entrepreneurial motives and in acquiring skills andcapabilities necessary to play his role effectively and efficiently.
Entrepreneurial development in India
: Stage 1 (emergence of entrepreneurialclasses; pre-independence period): During British era, large portion of Indiaconsisted of villages which were self sufficient. The villages and economy wereconstituted by farmers, craftsmen and gram-panchayats. They produced variousproducts and provided services. They represented the culture and possessed thecharacteristics of an entrepreneur. The barter system mainly prevailed in theeconomy. The art, sculptures, crafts, textile, spices and minerals attracted world-wide attention. Village craftsmen used to receive patronages from kings for their work. Exports of these were also done throughout the world. Stage 2 (Decline of entrepreneurship during the British rule; pre-independence period): During thisperiod, Indian entrepreneurship received a huge blow because of themechanization in the British industries which initiated the industrialization processin Britain. Moreover, the British industries that required raw materials were suppliedby India. The raw materials received from India were then converted into machinemade cheap products that flooded the Indian markets pushing out the handmade(more expensive) products which contributed in the complete destruction of theIndian handicraft industry. Stage 3 (Post independence growth of entrepreneurship): Post independence, the Indian economy was full of interestingdevelopments in the field of entrepreneurial development. It was conditioned byvarious economic, social and political factors. The industrial policy (1947)introduced government’s help in starting, supporting and maintaining small andmedium scale industries.
Objectives of EDP
: 1. promote development of small and medium scale industriesthat encourages self employment among potential entrepreneurs. 2. To provide, inthe rural areas, special programs designed to stimulate new ventures andencourage expansion of existing activities of small and medium scale industries. 3.generate employment and self employment opportunities in the society. – Theseobjectives focused to help achieve the following objectives: 1. Develop andstrengthen their quality and motivation. 2. Analyze environment related to small andmedium scale industries. 3. Select the project or product. 4. Formulate the projects.5. Understand the procedure of setting up of small and medium scale industries. 6.Acquire quality management skills.
 
Libenstein’s gap filling or input completing theory
: theory was postulated in1968. He identified two broad categories of entrepreneurial activities: 1. Routineentrepreneurship: it is associated with the managerial functions of theentrepreneurs. 2. New entrepreneurship: Schumpter’s kind of innovation.Entrepreneurship consists of filling gaps in knowledge about the productionfunction. The gaps here represent deficiencies. The gap in production functionexists because some of the inputs like leadership and motivation are vague in their nature. Hence, the output cannot be exactly measured. The entrepreneur movesfor work to fill up these gaps. His function is input completing. According toLibenstein, entrepreneur is an individual or a group of individuals having these 4characteristics: 1. Establishment of connection between different markets. 2.Capability to identify and make up the market deficiencies i.e. gap filling activities.3. Input completion. 4. Creation or expansion of inputs transforming entities likebusiness firms. The supply of entrepreneurs is governed by: 1. Input completioncapacity. 2. Motivational capacity. 3. Investment criteria. 4. Training.
Hagen’s theory of entrepreneurship as a function of status withdrawal
:Everett Hagen considered the process of change in a society as transition toeconomic growth on the basis of the analysis of traditional societies. Hediscovered that the position of authority is based not on ability but on status.Persons of status in societies have authoritarian personalities. Since traditionalsocieties are stable, strong forces are needed to disrupt them. According toHagen, such disruption is necessary for the emergence of creative personalitiessuch kind of personalities emerge when members of social group experiencestatus withdrawal i.e. displacement from their established positions by some other groups. On account of displacement of status, the affected group may give any of the following responses: 1. Ret realism: the group continues to work in the societybut remains indifferent to its work. 2. Ritualism: the group develops defensemechanism and begins to act with the ways acceptable to the society but withoutthe hope of improvement. 3. Reformism: the group develops rebellion power andattempts to establish a new society. 4. Innovation: The group members focus oncreativity and develop the possibility of setting up a new enterprise.Hagen’s works are based on experiences of the back ward areas of Asia and LatinAmerica, hence, in his theory he has identified status withdrawal to be the primefactor of becoming an entrepreneur.
Max Weber’s theory of entrepreneurship as a function of religious beliefs
:Max Weber analyzed religion and its impact upon the enterprise culture. The spiritof capitalism is a set of attitude towards acquisition of money and the activitiesnecessary to achieve the goal. This spirit of capitalism can be generated onlywhen mental attitude of the society is favorable to capitalism. Such an attitude isprevalent in the society and professional culture as well as protestant culture buthad been singularly absent in Hinduism culture with its belief in karma andimmunity to external values and influences. The spirit of capitalism infuses beliefswhich lead to systematic and intensive exertion in occupational pursuits andsystematic ordering of means and documentation of assets. The Hindu ethicalideas are more directed towards individuals than the society as a whole.
Criticism
: Tripathy has criticized Weber’s theory and assumptions as simplistic.Hinduism according to him is a collective name for many beliefs. Rapid growth of entrepreneurs in India after independence is a proof that Hinduism is not averse tothe spirit of capitalism and that Weberian model is inadequate for explainingentrepreneurship in Indian context.
Linkage of innovation and creativity on entrepreneurship
: innovation isdifferent from invention and invention is the discovery of new methods whereasinnovation is the utilization of invention to produce better quality of products. Theimportance of innovation and creativity has risen from the increased competitionamongst the corporates. Successful entrepreneurs are realizing that creativity,innovation and implemental value addition are necessary ingredients to survive inthe rising competition. (Now write Schumpter model)
Difference between Entrepreneur and Manager 
:Entrepreneur: 1. undertakes the combination of resources to introduce change inproduction. 2. launches a new enterprise, main function is to change the factor combinations to increase productivity and profits. 3. takes calculated risks bydefining and confining risk. operates in uncertain environment and gains are alsouncertain and irregular. 4. Profits constitute the rewards of an entrepreneur (Profit /loss). 5. Innovation is the essence of entrepreneurship. It consists of bringing aboutchanges in the factor combination to maximize profits. 6. skills are different frommanager (innovator, creator and capable risk taking. 7. a relatively independentperson who owns the enterprise.Manager: 1. combines the resources to produce. 2. operates in an enterprise anddeals with the daily affairs. 3. has a low risk taking tolerance. does not participate inuncertainty. Failure means little more than looking for a job. 4. gets his reward asfixed and regular remuneration. rewards are never negative. 5. main function of manager is to translate the entrepreneur’s idea into practice, he simply executesthe ideas prepared by the entrepreneur. 6. they are professionally trained personswho apply conceptual skills and theories for running enterprise. 7. He is a salariedemployee who works under the instructions of the entrepreneur.
Innovation
: Innovation is the successor of creativity. When a series of actions andthoughts which create new ideas are given the shape of a physical objective or service, the action is called innovation.
Types
: 1. Invention 2. Extension 3. Duplication 4. Synthesis.
Internal and External sources of innovation
: 1. Unexpected occurrences. 2.Incongruities. 3. Process needs. 4. Demographic changes. 5. Market changes. 6.Knowledge based concepts.
Creativity
: it is the process of developing a new or original product, service or ideathat makes a socially recognized contribution, hence creativity is the ability to bringsomething new into existence.
Stages of creativity process
: 1. Inception 2. Preparation 3. Incubation 4. Ideageneration 5. Idea validation 6. Outcome assessment.
Intrapreneurship
: It refers to the entrepreneurial activities that acquireorganization’s sanction and commitment of resources for the sole objective of innovative results. It aims at boosting the entrepreneurial activities and spirit withthe limits of the organization. Thus creating a development oriented environment. Itcenters around restructuring and reemergence of the firm’s capacity to developinnovative skills and new ideas.
Characteristics
: 1. They bridge the gap between the investors and managers.They like new ideas and turn them into profitable ventures. 2. They have proper vision and courage to accomplish what they think. 3. They can imagine whatbusiness realities will follow from the way customers respond to their innovations.4. They have the ability to plan necessary steps for the actualization of their ideas.5. They have high need for achievement and can take moderate calculated risks.
Role of EDP
:
A
. Stimulatory Roles: 1. Entrepreneurial education. 2. Publicity for identifying opportunities. 3. Identification of potential entrepreneurs throughvarious scientific methods. 4. Motivational training for new entrepreneurs. 5.Guides in selecting products and project report formulation. 6. Availability of localprofessional agencies with trained personnel for training and development of newentrepreneurs.
B
. Supporting Roles: 1. Registration of units. 2. Arranging sourcesof finance. 3. Providing factors of production. 4. Guidance for selecting andidentifying suitable machinery. 5. Supply of scarce raw materials. 6. Providingcommon facilities.
C
. Sustaining Roles: 1. Helps in modernization. 2. Helps indiversification or expansion. 3. Helps in assisting with additional finance for sustained growth of enterprise. 4. Help in maintaining quality through Total QualityManagement (TQM).
D
. Socio-Economic Roles: 1. Augmenting or introducing thequalities of a person to become an entrepreneur. 2. Providing and utilizing rawmaterials for building entrepreneurship. 3. Helps in regional development. 4.Creating employment opportunities in small scale industries. 5. Ensuring equaldistribution of national income and wealth in different regions.
Entrepreneurship development institutions
:
A
.
NIESBUD
(National Institute for Entrepreneurship and Small scale Business Development): Location: New Delhi.Activities: 1. Helps in evolving model syllabus for training several groups. 2.Provides effective training strategies, methodologies, tools etc. 3. Helps inconducting training programs for trainers and entrepreneurs. 4. Helps insupporting and facilitating central and state government institutions. 5. Help indeveloping entrepreneurial culture in the society.
B
.
EDII
(EntrepreneurshipDevelopment Institution of India): Location: Ahmedabad, Gujarat. Activities:1.conducts research, training and institutions building activities for encouragingparticipation of backward regions and special target groups in entrepreneurship. 2.Its EDP consists of: a. Practical training and work experience. B. Identifying andselecting potential entrepreneurs. C. Product selection and project reportformulation. D. Training for motivation. E. Business management training. Theprogram run by EDII is said to be the largest, most comprehensive, organized andsuccessful EDP in the country.
C
.
NISIET
(National Institute for Small ScaleIndustry Extension and Training): Location: Hyderabad. Activities: 1. imparttraining to the persons engaged in small industry service institute sector. 2.undertake EDP and MDP for entrepreneurs. 3. undertake research studies relatingto small scale industries. 4. provide small and medium scale enterprises. Conductsshort term courses in business management, industrial management,management services and export management for benefit of entrepreneurs and anenterprises as a whole.
D
. Small Institute for Service Sector Industry: Location: 28offices across country. Activities: 1. Provide assistance to trade related activities.2. undertake consultancy services. 3. Helps prepare projects and profit report for SSI. 4. Organizing various EDPs and MDPs.
Business plan
: it is an outline of business which deals with all the aspects of thebusiness such as finance, assets, staff, products and services, market etc. it guidesthe entrepreneur by identifying and solving suitable problems and is also used infinding applications. A business plan sets out how the owner of the businessintends to achieve his objectives.
Functions
: 1. Enables the entrepreneur to think through the business in a logicaland structured way and sets out the stages in the achievement of the businessobjectives. 2. Helps the entrepreneur to plot, progress against the plan. 3. Ensuresthe resources needed to carry out the plan. 4. Ensures that the entrepreneur hasgone through the crucial aspects of the venture. 5. It is a means for making all theemployees of the business aware of their function. 6. It is an important documentfor discussion with prospective investors and leaders of finance. 7. If themanagement intends to start a new phase of growth, the business plan is animportant tool to articulate the activities with the ideas alongside suitable manpower in the place.
Project
: a project is a course of planned actions intended or considered for implementation. It is a scheme to be performed within a definite time and estimatedcost.
Characteristics
: 1. Diversity in actions. 2. Planned activities. 3. Management. 4.Profitability. 5. Controlling. 6. Transferability of resources.
Sources of business ideas
: 1. Present and potential customers. 2. Existingcompanies. 3. Raw material providers. 4. Distributors and retailers. 5. Researchers.6. Existing employees.
Factors in preparation of project
:
1
. Environmental protection.
2
. Economy inproduction.
3
. Objective orientation: A. upgradation and optimum use of availabletechnology. B. removal of poverty. C. generation of massive employmentopportunities to create higher purchasing power and raise the standard of living.
4
.Adequate provisions: A. use of non-conventional energy. B. good quality of control.C. safety and protection in operation. D. Consideration of water. E. Use of naturalgas and coal. F. partial replacement of old or obsolete plant and machineries. G.better production system. H. Renewal of existing plant and machinery.
5
. Socialwelfare.
Objectives of a successful project report
: 1. A project should be appropriatelyarranged with an executive summary, a table, of contents and its chapters in thecorrect order. 2. A project report should have an impressive and bright attractiveappearance. 3. It should give a sense of what one and his company wants toaccomplish. 4. It should explain in qualitative and quantitative terms the benefits tothe user of the company’s products or services. 5. It should provide hard evidenceof the marketability of the company’s products and services and also should justifyfinancial means and channels of selling the product. 6. It should describe themanufacturing and operating process and its process and its associated cost. 7. Itshould portray the management as an experienced team with appropriate businessskills. 8. It should contain believable financial projections with the key data anddocumentation.

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