LESSON- 1ENTREPRENEUR ANDENTREPRENEURSHIP

Dr. Jyotsna Sethi

STRUCTURE

1.0

Introduction1.1

Objectives1.2

Entrepreneurship as a Career Option1.3

Concepts and Definitions1.3.1 Entrepreneur 1.3.2 Entrepreneurship1.3.3 Enterprise1.3.4 Difference between Entrepreneur and Entrepreneurship1.4

Role of Entrepreneurship in Economic Development1.4.1 Entrepreneurship and Economic Development1.4.2Entrepreneurship and Education1.5

Functions of an Entrepreneur 1.6

Innovation1.7

Risk and Uncertainty Bearing1.8

Organization1.9

Functions Performed by an Imitator Entrepreneur 1.10Entrepreneur vs. Manager Relationship1.11 Summary1.12 Glossary1.13 Self-Assessment Questions1.14 Further Readings

1.0

INTRODUCTION

Do you know that there are millions of unemployed youth in the country and bythe time you graduate, this number would have increased substantially? Do youwant to be part of that group which keeps knocking from pillar to post, checkingwith employment exchanges, relatives, friends, and neighbours and still not ableto get a job to their liking and then settle for a second or third rate job?You can also choose to be like Mr. Patel of Nirma who was a chemist’s assistanceand has a Rs. 2500 crore company today. Did you know that the original Mr.Bata was a cobbler? And now has stores in more than 30 countries all over theworld. Or you could be like Dhiru bhai Ambani who started life as a clerk in aFrench company in Aden. He was not born into a business family nor did he possess an MBA degree and yet, he is a household name in India and figures in

2the Forbes list of the richest Asians. Lakshmi Mittal, the steel giant, Satbir Bhatiaof Hotmail fame and Narayan Murthy of Infosys are some other names in theendless list you could choose from.If your answer is yes then you can definitely opt for a career in entrepreneurship.This book will help you to understand the process of setting up a small business,running it successfully and seeing it grow. And let us remind you that this career opportunity is not only for boys but also for girls - all those girls who think smart,are ready to act and script the story of their own life - like Shehnaz Hussain or Ritu Kumar or Kiran Majumdar Shaw.

1.1

OBJECTIVES

After going through this lesson you should be able to:

•

Inculcate the Desire to take up Entrepreneurship as a Career

•

Differentiate between Wage employment, Self-employment andEntrepreneurship

•

Define and know the Meaning of the terms Entrepreneur,Entrepreneurship and Enterprise

•

Learn about the Functions performed by an Entrepreneur

•

Understand the Role of Entrepreneurship in Economic Development

•

Differentiate the roles of an Entrepreneur and a Manager

1.2

ENTREPRENEURSHIP AS A CAREER OPTION

After finishing your graduation you will be at the crossroads of life. You will facethe dilemma of choosing what you have to do in life. The vast majority of human beings direct their activities towards earning a living, generating wealth andimproving their standard of living. You can choose your career from two broadcategories of options – Wage Employment or Entrepreneurship. The term ‘career’signifies a continuous, ever evolving, ever expanding opportunity for personal aswell as business growth and development. We may define entrepreneurship as acareer in your own business [YOB] rather than wage employment [JOB] .If youopt for a job then you will work for others. In case you opt for entrepreneurshipyou will be your own boss.In case of wage employment one is engaged in routine work carried on for othersfor which he receives salary or wages. He has to follow instructions and execute plans laid down by his superior. One can choose to be employed in GovernmentService or the Public Sector or the Private sector. Some of the main differences between entrepreneurship and wage employment career options are as under-

Wage Employment Entrepreneurship

Work for OthersFollow InstructionsRoutine JobEarning is fixed, never negativeDoes not create wealthCan choose from-Government servicePublic Sector Private Sector Own BossMake own plansCreative activityCan be negative sometimes,generally surplusCreates Wealth, contributes toGDPCan choose from-IndustryTrade or Service Enterprise

Fig 1.1 –

Difference between Wage Employment and Entrepreneurship

In the context of employment generation the three terms- Income generation, Self-employment and Entrepreneurship are often used interchangeably.

Income generation

is the initial stage in the entrepreneurial process in which onetries to generate surplus or profit. They are often taken on part- time or casual basis to supplement income e.g. a man with some surplus money might put hismoney in a fixed deposit account in a bank or a chit -fund to earn some interest.

Self-employment

is the second stage in the entrepreneurial process and refers toan individual’s fulltime involvement in his own occupation. e.g. a person whostarts a tea shop and remains happy and satisfied and has no plans to add on anyother items like samosas, buns, soft drinks etc. or to grow in any other manner[e.g. supplying tea/coffee/sandwiches to others in the vicinity].

Entrepreneurship

is the terminal stage of the entrepreneurial process whereinafter setting up a venture one looks for diversification and growth. We will learnmore about entrepreneurship a little latter in the lesson. An entrepreneur isalways in search of new challenges. An entrepreneur is not a routine businessmanhe might not have resources but he will have ideas. He is innovative and creative.He can convert a threat into an opportunity. Small businessmen might shut-downor change his business if he anticipates losses but an entrepreneur will try againafter analyzing the situation. On the other hand an entrepreneur can leave a perfectly running business to start another venture if he so desires.Functionally all entrepreneurs are self-employed and income generating persons but the reverse is not true- all self-employed and income generating persons are