1.

CONCEPT OF ENTREPRENEURSHIP
A. Introduction
Changing business scenario is governed by 3 driving forces
Competition, change and Customer
Economic reforms in India were initiated to move the economy to higher growth plane by
relying more on market oriented processes.
Primary objective of a country like India is to achieve rapid, balanced and sustained rate
of economic growth.
12 trends affecting the direction of economic growth are.
Technology as a reservoir
Competition in domestic and international markets
Role of inventions
Government as stimulator
Entrepreneurial and Intrapreneurial development.
Innovative capital formation
Active financial sector
Progressive management
Quality as a goal
Supremacy of the customer
Collaborative relationships
Man is crucial to economic development than other economic factors
Industrialization is one of the important means to usher economic and social
transformation in developing countries.
Industrialization results fro interaction of technological change, innovation,
entrepreneurial growth, specialization and trade.
Entrepreneurs are the backbone of a nations progress.
They organize the factors of production, create wealth and generate employment.

B. Concept of entrepreneur
Derived from French word Entreprendre-To undertake.
New encyclopedia Britannica
Entrepreneur is an individual who bears the risk of operating a business in face of
uncertainty about the future conditions.
Joseph A Schumpeter
The Entrepreneur in an advanced economy is an individual who introduces something
new in the economyA method of production not yet tested by experience in the branch of manufature
A product which the consumers are not yet familiar
A new source of raw material
New market
An Entrepreneur is one who innovates, raises money, assembles inputs, chooses
managers and sets an organization going with his ability.
Innovation occurs.
1. Introduction of new quality in a product
2. A new product.
3. Discovery of fresh demand or a fresh source of supply.
4. Changes in the organization and management.
An Entrepreneur in a developing country is one who starts an industry (Old or new),
undertakes risks, bears uncertainties and also performs managerial functions like
decision-making and coordination.
Ricardo
Entrepreneurial ability is an independent factor of production and profit is reward for
entrepreneurial ability.
Peter Drucker.
Entrepreneurs are innovators. Entrepreneur is one who always searches for changes,
responds to it as an opportunity.
According to Drucker 3 conditions to be fulfilled
1. Innovation has to be market driven
2. Innovation is work.
3. Innovation must be built on the strength to succeed.
New concept of Entrepreneur
One who detects and evaluates a new situation in his environment and directs the making
of such adjustments in the economic systems as he deems necessary.
He conceives the idea of an enterprise displays considerable grit, initiative and
determination in bringing his project to fruition and in this process performs following
functions

1.
2.
3.
4.
5.
6.
7.

Perceives opportunities for profitable investment

Explores the prospects o\f starting such a manufacturing enterprise.
Obtains necessary industrial licenses.
Arranges initial capital.
Provides personal guarantee to financial institutions.
Promises to meet the shortfalls in the capital.
Supplies technical know-how.

Social Responsibility is a part of entrepreneurial outlook of life.

Key elements of Entrepreneur
Risk taking
Vision
Values
Character
Innovation
Organising skill
Ethics
All this leading to operational excellence.

C. Concept of Entrepreneurship.
Process undertaken by the entrepreneur to establish a business.
Resultant mix of many qualities and traits like imagination, readiness to take risk and
ability to bring together and put to use the factors of production
Entrepreneurship. is the propensity of the mind to take calculated risks with confidence to
achieve a pre determined business or industrial objective.
It is the risk taking ability of an individual coupled with correct decision making.
CONCEPT OF ENTREPRENEURSHIP.

Entrepreneur

Entrepreneurship.

Enterprise

Person

Process of action

Object

A.H Cole
Entrepreneurship is a purposeful activity of an individual or group of individuals
undertaken to initiate, maintain or increase profits by production or distribution of
economic goods or services.
Peter Drucker
Entrepreneurship is neither science nor art. It is a practice and has a knowledge base.
Knowledge in Entrepreneurship is a means to an end that is by practice.
B C Tandon.
Entrepreneurship means function of creating something new, organizing and
coordinating, undertaking risks and handling economic uncertainty.
Thus
Entrepreneurship. Is the process of creating something new with value by devoting
necessary time an effort, assuming the accompanying financial, psychic and social risk
and receiving the resultant rewards of monetary and personal satisfaction and
independence.

EMERGENCE OF THE ENTREPRENEURIAL CLASS

During earlier times Indias prosperity attracted communities across boundaries

Strategies adopted by Mughals and Turkish

Turk Mughals settled down in India and shared the prosperity. . They bought
currency with them and disrupted the barter system

Strategy of the British

Wanted to offload surplus supply due to Industrial Revolution in India to balance
the demand and supply situation in U.K
Managed to acquire power and became the ruler.
Banned manufacturing in India. Sent all raw materials (cotton, oilseeds etc) to UK
for conversion and value addition thus transferring wealth to UK

18th Century
Indian Industry remained non started. Major thrust was on cash crops neglecting
food grains resulting in severe famine.Indian Economy was dominated by British
economy.

1920
World war prevented transfer of raw materials to Manchester. British decided to
manufacture in India itself . Initiated the first Indian Industry. The Mumbai Textile
Mills

1930s to mid 1940s

Mahatma Gandhi directed his captains to set the basic Infrastrure for Industrial
and Economic development. Theses are the founder entrepreneurs of India. They
developed various areas of basic infrastructure.
a)JRD Tata: Aviation, steel, railway, post & telegraph, power, roads, textile etc
b)G.D Birla-Textgile, vehicles, power, cement, chemicals, heavy industries,
aluminum, cement etc
c) S. L Kirloskar-Machine tools, farm equipments, pumps etc
d) Jamnalal Baja-Two wheelers, 3 wheelers etc

Independence 1947
British went back leaving the business to their employees/agents/market
intermediaries.

Late 1960s
Nationalisation of banks and Insurance companies made available huge funds for
SSI and entrepreneurial developemt.It made investment available to common man
challenging business monopoly

1970s to mid 1985

Emergence of new generation entrepreneurs because of funds and supporting govt
policies.
Technocrats , artisans , rural craftsman, educated, uneducated youngsters created
the greatest ever SSI development.
Resulted in excellent interdependence of SSI ands organized sector creating
highest ever growth rate of 8.9% and very high addition to GDP.
Organised sector could expand, diversify without any direct investment and SSI
could share the prosperity.

Mid 1980s
Indian industry remained protected by license raj, permits, quotas, monopolistic
market resulting into losing export and entry of cheaper better goods in gray
market(Germany & Japan) resulting in worse BOP Situation and industrial
sickness. Closure of several industries in organized sector.

1990s
Liberalisation sets reforms rolling by scrapping export regulations.Delicensing,
making import and export simpler, direct FDI in all sectors, concessions for
technical know-how and collaboration. Indian entrepreneurship started.

Mid 1990s
Third generation of entrepreneurs Rahul Baja, Mahindra, Ambani, Ratan Tata,
Kumarmangalam Birla proved their competencies in managing various large
companies

2000
Indian Entrepreneurship took great leap in the global market entering in to service
Industry (IT, BPO, Bio Technology, hospitality etc)
India established leadership in several areasBajaj-Largest manufacture of 2 wheelers
Ambuja cement-cheapest manufacturing of cement
Job market is changing; Companies are passing through highly unstable phase. It
may call for drastic changes in their business form that will lead to change in the
employee pool. Jobs and remuneration eill be more result based. Thos will
demand high enterprising capabilities and entrepreneurship attitude.

THEORIES OF ENTREPRENEURSHIP
Theory of High Achievement
3 Basic Needs

Need for
achievement

Need for affiliation

Need for
recognition

McClelland identified 2 characteristics of Entrepreneurship.

1. Doing things in a new and better way
2. Decision making under uncertainty
Achievement orientation is defined as tendency to strive for success in situation involving
an evaluation of ones performance in relation to some standards of excellence.
Need for achievement is needed for successful entrepreneurs.
People with high achievement are not motivated by money alone. Money is just a
measure of success for them. Highly successful entrepreneurs have high need for
achievement. They do things that make them stand out and what to achieve things not
done before.
They strive hard to achieve. Take failures as learning experience and bounce back
Dynamic Entrepreneurship Innovation theory or Schumpeters theory of creative
destruction
Was not widely accepted in 1930,s as dominance of sellers market
Theory was only mere fancy till 19990 when mega corporates failed due to over
emphasis on operation which worked well in past.
The theory advocates discontinuance of anything organsiation/product/service/philosophy
which has worked well in past.
Advocates change by creative destruction in response to market condition
Theory advocates the age of discontinuity and more on formulating the right questions
and then the right answers for survival.

CHARACTERISTICS OF ENTREPRENEURS

Decision
Making

Accepting Challenges

Organisation
Skillful management

Risk Taking
Innovation

Entrepreneurship

Characteristics
1. Mental Ability2. Clear objectives
3. Business secrecy
4. Human relations ability
5. Communication ability
6. Technical knowledge
7. Long term involvement
8. High energy levels
9. Administrative ability
10. Need for Independence
11. Dignity of labour
12. Social consciousness
QUALITIES OF AN ENTREPRENEUR
Hardworking
Energetic
Resourceful
Visualizes change
Planner and believes in systematic work
Motivation towards achievement
Creative
Clarity
Confidence
Dreamer
Instinct

Making the enterprise a

success

FUNCTIONS OF AN ENTREPRENEUR

Risk Taking
Reduces
uncertainties by
initiative and skill
judgment

Bears losses

Business
decision

Managerial
Functions

Function of
innovation

Location

Formulate
production
plans

New goods

Techniques
of
production

Organises
personnel

New markets

Changes in
Business

Arrange
finance

New source
of raw
material

ROLE OF CULTURE IN ENTREPRENEURIAL DEVELOPMENT

Perception that starting new venture is desirable stems from an Individuals

culture, subculture family and peers
A culture that values an individual who creates an enterprise will spawn more
venture formations
American Culture-independence, individual opportunities, making money
More individuals plan new enterprises in these supportive environments.

REWARDS AND MOTIVATION OIF ENTREPRENEUR

Independence
Money
Job Satisfaction

CHANGE IN LIFESTYLE
Decision to leave secure career is not easy
R & D and marketing, main areas for new venture
Role of disruption-Retirement, relocation, been fired, completion of educational
degree.

TYPES OF ENTREPRENEURS
Business Entrepreneur
Trading Entrepreneur
According to type of
Business

Industrial Entrepreneur
Corporate Entrepreneur
Agricultural Entrepreneur

According to use of
technology

Technical Entrepreneur
Non Technical Entrepreneur
Professional Entrepreneur

According to
motivation

Pure Entrepreneur
Induced Entrepreneur
Motivated Entrepreneur
Spontaneous Entrepreneur

According to
Growth

Growth Entrepreneur
Super Growth Entrepreneur

According to stages
of development

1st Generation Entrepreneur

Modern Entrepreneur
Classical Entrepreneur

Others

Innovating Entrepreneur
Imitative

Entrepreneurial Process
Stage 1. Change in socio economic environment in the country leading to want of new
goods and services
Stage 2. Starting a new Venture
Stage 3. Intrapreneurship
Stage 4. Coordinating various activities to achieve entrepreneurial goal
Or.

Identify and evaluate the opportunity

Developing the business plan
Determine resources required
Manage the enterprise

Entrepreneurial decision process

Change from Present

lifestyle-work
Environment and
Distruptions

Form New
Enterprise
Desirable
Cultural
Sub cultural
Family
Teachers
peers
Possible
Government
Background
Marketing
Financing
Role Models