CHAPTER – 2 ENTREPRENEURSHIP

The process undertaken by an entrepreneur to augment his business interests gave birth to “ENTREPRENEURSHIP”.

THE CONCEPT OF ENTREPRENEURSHIP Entrepreneur Entrepreneurship Enterprise

Person

Process of action

Object

Introduction

Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who undertakes an endeavor".

• Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods.

The most obvious form of entrepreneurship is that of starting new businesses; however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity.

• According to Robert L Schwarz, what is the basis for entrepreneurship characteristics can be described as follows: “The entrepreneur is essentially a visualizer and an actualizer. He can visualize something, and when he visualizes it he sees exactly how to make it happen.” • The concept of entrepreneurship was first established in the 1700s, and the meaning has evolved ever since. Many simply equate it with starting one's own business. Most economists believe it is more than that. • To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. • Others emphasize the entrepreneur's role as an innovator who markets his innovation. • Still other economists say that entrepreneurs develop new goods or processes that the market demands and are not currently being supplied. • Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. • Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. • The word is derived from the French word ‘Entrependne’ and the German word ‘Uternchmen’ both of which refers to individuals who are undertakers i.e. who can undertake ‘risk’ by setting up a new enterprise.

They are contractors who bear the risk of profit as well as loss. They are soldiers of fortune, adventurers or merchants. The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population. SCHUMPETER'S VIEW OF ENTREPRENEURSHIP Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an emphasis on innovation, such as: 1. New products 2. New production methods 3. New markets 4. New forms of organization Wealth is created when such innovation results in new demand. From this viewpoint, one can define the function of the entrepreneur as one of combining various input factors in an innovative manner to generate value to the customer with the hope that this value will exceed the cost of the input factors, thus generating superior returns that result in the creation of wealth. Entrepreneurship vs. Small Business Many people use the terms "entrepreneur" and "small business owner" synonymously. While they may have much in common, there are significant differences between the entrepreneurial venture and the small business. Entrepreneurial ventures differ from small businesses in these ways: 1. Amount of wealth creation ‐ rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit.

2. Speed of wealth creation ‐ while a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for example, within 5 years. 3. Risk ‐ the risk of an entrepreneurial venture must be high; otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity no longer would exist. 4. Innovation ‐ entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it. • DEFINITION OF ENTREPRENEURSHIP According to A.H. Cole “Entrepreneurship is the purposeful activity of an individual or group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods or services”. According to Peter .P. Drucker “Entrepreneurship is neither a science nor an art. It is a practice. It is knowledge base. Knowledge in entrepreneurship is a means to an end, that is ,by the practice”. Schumpeter “Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions.” NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has accepted the fact that small firms have a crucial role to play in the economic development of the country. Small businesses are an essential part of our future economic prosperity because of the following reasonsEMPLOYMENT GENERATION: Entrepreneurial development is looked at as a vehicle for employment generation through promotion of small business. India, being far more developed and forward looking country than some of the third world countries, can provide lead to entrepreneurial development activities. However, India can benefit from the well- documented success experiences of developed countries like USA, Japan and UK in the field of employment generation and small business promotion. Steady growth in consumer spending, expanding retail sales, a strong housing market, continued expansion of the service sector, low rates of inflation and of labour cost increases and failing interest rates contributed to a healthy environment for small business. In India, the government policies, political and economic environment greatly encourage the establishment of new and small enterprises. Self- employment and small scale industry schemes have been further liberalized during the last decade. The employment in the small-sector increased from 9.00 million people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in employment in this sector. SMALL BUSINESS DYNAMISM: Great dynamism is one of the qualities of the small and medium enterprises. This quality of dynamism originates in the inherent nature of the small business. The structure of small and medium enterprises is less complex than that of large enterprises and therefore facilitates quicker and smoother communication and decision- making. This allows for the greater flexibility and mobility of small business management. Also, small enterprises, more often make it possible for owners, who have a stronger entrepreneurial spirit

than employed mangers, to undertake risk and challenges. BALANCED ECONOMIC DEVELOPMENT: Small business promotion needs relatively low investment and therefore can be easily undertaken in rural and semiurban areas. This in turn creates additional employment in these areas and prevents migration of people from rural to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts should be directed towards this sector. Small enterprises use local resources and are best suited to rural and underdeveloped sector. This in turn will also lead to dispersal of industries, reduction in concentration of economic power and balanced regional development. INNOVATIONS IN ENTERPRISES: Business enterprises need to be innovative for survival and better performance. It is believed that smaller firms have a relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate. Entrepreneurship development is accelerating the pace of small firm’s growth in India. An increased number of small firms are expected to result in more innovations and make the Indian industry compete in the international market.

STEPS IN THE PROCESS OF ENTREPRENEURSHIP: 1. Identifying opportunities 2. Establish vision

3. Persuade others 4. Gather resources (Capital, land and manpower) 5. Organize these resources to develop new product 6. Create the product 7. Adapt according to market changes.

FACTORS INFLUENCING ENTERPRENURESHIP The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and economic factors. FAMILY TRADITION: Individuals who for some reason, initiate, establish maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of their families and society and accept certain values and norms from these sources. RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of entrepreneurship. PSYCHOLOGICAL FACTORS: The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship among individuals. On the other hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship. POLITICAL FACTORS: The political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes free market, individual freedom and private enterprise, will promote entrepreneurship.

ECONOMIC POLICIES: The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct influence on entrepreneurship. In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw materials, transportation cost etc. FACTORS AFFECTING ENTREPRENEURIAL GROWTH 1. ECONOMIC FACTORS a) Lack of adequate overhead facilities: Profitable innovations require basic facilities like transportation, communication power supply etc. They reduce cost of production and increase profit. b) Non availability of capital Inventions are capital oriented. In less developed countries most capital equipment have to be imported which involves foreign exchange which acts as a difficult problem. c) Great risk Risk is high in case of less developed countries as there is lack of reliable information, markets for good and services is small etc. d) Non availability of labor and skills Though there is abundant labor supply there is generally scarcity of skills at all levels.’ 2. SOCIAL FACTORS

A society that is rational in decision making would be favorable for decision making. Education, research and training is given less importance in less developed countries therefore there is very little vertical mobility of labor. 3. CULTURAL FACTORS Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of entrepreneurship. 4. PERSONALITY FACTORS In less developed countries the entrepreneur is looked upon with suspicion. Public opinion in the less developed nations sees in the entrepreneur only a profit maker and exploited. 5. MOTIVATION Motivation is the act of stimulating someone or oneself to get a desired course of action, to push the right button to get the desired results. MOTIVATING FACTORS 1. Education background 2. Occupational experience 3. Family background 4. Desire to work independently in manufacturing line 5. Assistance from financial institution 6. Availability of technology 7. Other factors FACTORS INFLUENCING ENTREPRENEURSHIP 1. Family Tradition. 2. Religious, Social And Cultural Factors. 3. Psychological Factors. 4. Political Factors.

5. Economic Policies.

CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA Entrepreneurship developed only in the beginning of the 19th century and though the base for industrialization had been laid a century ago. The following be the main reasons, which could be responsible for lack of initiative and entrepreneurial spirit among the Indians. 1. Caste System: - This decided occupation for members from each caste. The altitudes were restrictive and therefore there were no changes of accumulating wealth and promoting production. 2. Agriculture: - Agriculture was the main occupation. Farmers and cultivators were always in the clutches of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on enjoyment and luxury and never risked money in industry. Banking and commercial system was also absent so even if there were savings, they could not be utilized for productive use. 3. Educational System: - Talented young men were prepared to take white collared jobs or join government or professional services. Many were attracted towards politics. The result was that very few young men got attracted towards becoming efficient, industrialists, technicians, managers etc. 4. Colonial Rules: - The British rulers adopted discriminatory policy Rich Indian businessman had special connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking services catered to the needs of some rich Indian businessman, Britishers in India did also not encourage Industrialization. 5. Managing Agents: - There were just a handful of people who were known to be having managerial skills. On common basis, these agents would lend their skills to

some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filled their pockets with big chunks of the companies’ profits and took full advantage of Indian industrialists till the managing agency system was abolished in 1970. 6. Joint Family System: - Younger members of the family always depended on the Head who never gave any kind of independence or encouraged units other than family business ones. A number of young men were discouraged from diversifying from family business and doing something new and different. 7. Religious attitude: - Indians were very religious mi9nded. They gave more time to religion than to earning material wealth. Religion got priority over business. Some religions even condemned excess earnings and indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious Indians. 8. Mindset: - The mindset of the average Indian was never entrepreneurial. Our religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial activities. 9. Recognition by the society: - In earlier days, the heroes India were the social reformers and the politicians. Now it is the era of sportsmen, models and film stars. It is sad that successful or the struggling entrepreneurs have never been recognized as heroes. Entrepreneurial activity did not get due importance in the India society. 10. Family Background: - Empirical studies have shown that a good number of entrepreneurs come from families with industrial backgrounds. Unfortunately, only a few entrepreneurial communities in India made entrepreneurial contribution. These communities could also not make headway in the entrepreneurial field on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development could only take place after independence in India.

STAGES OF EVOLUTION OF ENTREPRENEURSHIP The evolutionary process of entrepreneurship activities may be divided into the following broad stages: 1. Hunting Stage: - The primary stage of the evolution of the economic life of man was hunting stage. Wants were limited and very few in numbers. The family members themselves satisfied problems of food, clothing and shelter. Producers were the consumers also. Robinson Crusoe, living in the deserted island, satisfying his own requirements had no knowledge of business. People in some parts of Africa and India still lead this type of life. In this stage problems of production and distribution were not complexed since wants were simple and limited. 2. Pastoral Stage: - With the progress of mankind gradually mental understanding developed and people started realizing that instead of killing animals, they should breed and rear them. Thus cattle breeding encouraged the use of milk, and they had to think in terms of grazing areas for their cattle. The surplus milk, meat and other related products were spared of exchange. This stage can be termed as the first stage of economic development and the beginning of commerce. 3. Agricultural Stage: - In search of grazing areas, they further realized that they should grow plants as food for animals. They started testing some grain products and slowly developed a taste in plants and the land was used for cultivation. Groups of persons started living together on their agricultural fields, which were subsequently converted into small villages with their farms. Free exchange of goods was started and the activities were also divided to the extent of division of labor at the village level to complement the needs of each other. Initially each village was selfsufficient, but later they began small trading activities on barter basis. 4. Handicraft Stage: - In the agricultural stage, people started learning the use of cloth made of cotton products, and they developed the segments of the workers for

different activities. Cottage scale setup was developed at the village level to nearby villages, and in exchange they brought requirements either to consume themselves or for their village friends. Since the demand for gold coins, silver coins, skin and hide etc increased the activities of cobblers, gold smiths, and blacksmiths, laborers also rapidly increased, and caste system was also formed on the basis of activities they did. Everybody selected their job according to their own choice and taste. 5. Present Industrial Stage: - The use of mechanical devices and the commonly acceptable form of monetary system accelerated the growth of entrepreneurship activities. The progress of science and the increase in the means of transportation and communication enabled to travel widely and the markets were developed in the country and abroad.

IMPORTANCE OF ENTREPRENEURSHIP The importance of entrepreneurship to any economy is like that of entrepreneurship in any community. Entrepreneurial activity and the resultant financial gain are always of benefit to a country. If you have entrepreneurial skills then you will recognize a genuine opportunity when you come across one. Now the reasons why entrepreneurship holds a dominant position in the society? The following reasons are responsible for the same:‐

1) Provides employment to huge mass of people:‐ people often hold a view that all those who do not get employed anywhere jump into entrepreneurship, a real contrast to this is that 76% of establishments of new business in the year 2003 were due to an aspiration to chase openings. This emphasizes the fact that entrepreneurship is not at all an encumbrance to an economy. What’s more is that approximately 34 million of fresh employment opportunities were created by entrepreneurs from the period of 1980. This data makes it clear that entrepreneurship heads nation towards better opportunities, which is a significant input to an economy. 2) Contributed towards research and development system:‐ almost 2/3% of all innovations are due to the entrepreneurs. Without the boom of inventions the world would have been a much dry place to live in. Inventions provide an easier way of getting things done through better and standardized technology. 3) Creates wealth for nation and for individuals as well:‐ all individuals who search business opportunities usually, create wealth by entering into entrepreneurship. The wealth created by the same play a considerable role in the development of nation. The business as well as the entrepreneur contributes in some or other way to the economy, may be in the form of products or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, and inventions are also a great help to the nation. 4) Sky‐scraping heights of apparent prospects:‐ the individual gets maximum scope for growth and opportunity if he enters into entrepreneurship. He not only earns, the right term would be he learns while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skills he develops while owning his enterprise are his assets for life time which usually, lacks when a person is under employment. The individual goes through a grooming process when he

becomes an entrepreneur. In this way it not only benefits him but also the economy as a whole. 5) It is a challenging opportunity for the people:‐ although entrepreneurship is a challenging task but in most of the cases the rewards it gives are much more than what one anticipates. It does not only reward an entrepreneur at financial levels but also on individual level. It provides self satisfaction to the entrepreneur. 6) Entrepreneurship provides self sufficiency:‐ the entrepreneur not only become self sufficient but also provide great standards of living to its employees. It provides opportunity to a number of people working in the organization. The basic factors which become a cause of happiness may be liberty, monetary rewards, and the feeling of contentment that one gets after doing the job. Therefore the contribution of entrepreneurs makes the economy an improved place to live in.

IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY • The nature of a developing economy is quite different from a developed economy. • The developing economy can be an agricultural country moving towards the • industrialization or it may be the one where in the industry may be in its infancy lacking advance technology. • The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and fast developing communication technology. The globalization of industry and commerce is bringing a vast change in various aspects of life.

• Economic development of a country is the outcome of purposeful human activity. • The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and fast developing communication technology. The globalization of industry and commerce is bringing a vast change in various aspects of life. • Economic development of a country is the outcome of purposeful human activity. • Economic development is a highly dynamic process characterized by the pattern of demand shifts, new products are needed, appear for the production of goods within a country. • A developing country needs entrepreneurs who are competent to perceive new opportunities and are willing to incur the necessary risk in exploiting them. • A developing economy is required to be brought out of the vicious circle of low income and poverty. • Entrepreneur can break this vicious circle. • Entrepreneurs and helping government can change a developing economy in developed economy. Entrepreneurship and economic growth / development: economic

development of any region is the outcome of purposeful human activities. According to Schumpter, the economic development consists of employing resources in a different way bringing in new factors of production or combination of the factors. The entrepreneur looks for innovative ideas and puts them into effect for economic development. The entrepreneur occupies a crucial place in the

process of economic development by acting as a trigger head to give spark to economic activities. Some of the development activities are as follows: 1.increase in the income. 2. Brings change in the structure of business and society. 3. Wealth creation. 4. New products, services and business. 5. Generation of employment. 6. Increase in the standard of living. ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT The industrial health of a society depends on the level of entrepreneurship existing in it. A country might remain backward not because of lack of natural resources or dearth of capital [as it is many times believed] but because of lack of entrepreneurial talents or it inability to tap the latent entrepreneurial talents existing in that society. Entrepreneurs historically have altered the direction of national economies, industry or markets- Japan, Singapore, Korea, Taiwan to name a few. 1.4.1 ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT Entrepreneurship is basically concerned with creating wealth through production of goods and services. This results in a process of upward change whereby the real per capita income of a country rises overtime or in other words economic development takes place. Thus ntrepreneurial development is the key to economic development. In fact it is one of the most critical inputs in the economic development of a region. It speeds up the process of activating factors of production leading to a higher rate of economic growth, dispersal of economic activities and development of backward regions. If a region is unable to throw up a sufficient number of entrepreneurs then alien entrepreneurs usually step in to provide goods and services needed by the people. However the profits earned by these entrepreneurs are usually not ploughed back but repatriated to their place oforigin. As a result development in that region cannot take place. Dr. M.M.Akhori

refers to this practice as ‘The Leech Effect’. The above reiterates the importance of entrepreneurship development for fuelling economic growth of a region. Entrepreneurship begets and also injects entrepreneurship by starting a chain reaction when the entrepreneur continuously tries to improve the quality of existing goods and services and add new ones. E.g. when computers came into the market there was continuous improvement in the models, their functions etc. like first generation computers, personal computers, laptops, palmtops etc. Not only had this fostered the development of the software industry, computer education institutes, computer maintenance and stationery units etc. but also other industries like banking, railways, education, travel, films, medical and legal transcriptions, business process outsourcing [BPOs] etc. In this manner by harnessing the entrepreneurial talent a society comes out of traditional lethargy to modern industrial culture. India needs entrepreneurs to capitalize on new opportunities and to create wealth and new jobs. 1.4.2 ENTREPRENEURSHIP AND EDUCATION Towards the end of the sixties, two significant contributions were made in the field of entrepreneurship .One was that there is a positive linkage between entrepreneurship and economic development and the other was regarding the emergence of a strong hypothesis that entrepreneurship can be developed through planned efforts1. Consequently planners realized that absence of a strong entrepreneurial base acts as a serious handicap in the industrial development of a region. The identification and development of first generation entrepreneurs through Entrepreneurial Development Programmes is an important strategy. There is a growing realization that presence of resources and favourable government policies cannot automatically manufacture economic development. It is the entrepreneurial spirit of the people, which can transform the economy of that

region. Both the quantity and quality of entrepreneurs are of utmost significance for achieving the goal of economic development. The myth that entrepreneurs are born with some innate traits is fortunately no longer held. You will learn more about this in the lesson on motivation. Many research studies have brought out that entrepreneurship can be taught and learned. Entrepreneurship is a discipline and like all disciplines it has models, processes and case studies, which can help an individual to study this subject. The necessary competencies required of a successful entrepreneur can be acquired through training and development. Numerous courses in entrepreneurship are being taught all over the world in schools and colleges, seminars and conferences are being organized and EDPs are being conducted. The thinking today is why just create managers why not create people who can absorb managers. One can acquire the traits and learn the skills for becoming an entrepreneur e.g. a person can learn to be achievement oriented, selfconfident, perseverant etc. which are all part of the characteristics of a successful entrepreneur. Usually the model used for entrepreneurial education has three phases: Stimulatory Phase- This phase involves planned publicity for opportunities, motivation training and help and guidance in selection of product or service. Support Phase- This provides help in registration of units, arrangement of finance as well as land, sheds, power, water, common facility centres etc. Help is also provided in marketing of products. Sustenance Phase- Once the enterprise is set up then help is provided for modernization, diversification, additional finance etc.

Difference Between ENTREPRENEUR Person Visualizer Creator Organizer Innovator Planner Leader. ENTREPRENEURSHIP Process Vision Creation Organisation Innovation Planning Leadership.

ROLE OF ETHICS AND SOCIAL RESPONSIBILITY IN CONTEXT OF ENTREPRENEURSHIP

• An entrepreneur must take risks with his or her own capital in order to sell and deliver products and services while expanding greater energy than the average businessperson in order to innovate. • A manager’s attitudes concerning corporate responsibility are related to the organizational climate perceived to be supportive of laws and professional codes of ethics. • On the other hand, entrepreneurs with a relative with a relatively new company who have few role models usually develop an internal ethical code. • Entrepreneurs tend to depend on their own personal value systems much more than other manager when determining ethically appropriate course of action. • Ethics refer to the “study of whatever is right ands good for human being”, business ethics concerns itself with the investigation of business practices in light of human values. • Ethics is the broad field of study exploring the general nature of morals and the specific moral choices to be made by the individuals in his relationship with others. • Business ethic is the study of behavior and morals in a business situation. • Business ethics is “any business decision that creates value for customer by matching quality and price.” • Although the English word ethics is generally recognized as stemming from the Greek ethos, meaning “custom and usage”, it is more properly identified as originating from swedhethos, in which the concepts of individual morality and behavioral habits are related and identified as an essential quality of existence. ETHICAL DECISIONS:

1. Provide the customer with valid data about the product and service. 2. Enable the customer to make a free and informed choice, and 3. Generate customer commitment to the product and the organization that provides it. VIOLATIONS OF THESE THREE RULES PRODUCE UNETHICAL BEHAVIOR : 1. Invalid and false data, 2. Coerced and manipulated decisions, and 3. low integrity and poor reputation for the firm. In summary the ethics and responsibilities of entrepreneurs are: 1. Support law and professional code: The entrepreneurs have to follow the rules and regulations of the country. They should also follow the code of conduct prepared by their professional association. 2. Follow business ethics: Ethics refers to what is right and good for the human beings and society. The business practices should be developed and used which will be favorable for the human values and norms. 3. Involve in pedagogical Inquiry: The entrepreneurs have to inquire about the theoretical and empirical aspect of entrepreneurship. They should involve in research and development studies to find out the techniques and ideas of good entrepreneurship. 4. Environmental Research: The entrepreneurs should involve in external environmental research and collect the data of different variables. It will help new entrepreneurs for finding out the feasibility of their undertaking. 5. Imparting ethical insight to the business students: The entrepreneurs should help the academicians while imparting the ethical insights to the students. They

should provide financial support to the students who involve in entrepreneurial research. 6. Create Employment: Entrepreneurs should create and develop new opportunities for job to the people of the country. They should try to reduce the unemployment problem of the country. 7. Mobilization of the idle resources: The natural resources of the country should be mobilized. While mobilizing the natural resources, the optimum use of such resources should be confirmed so that they can be conserved for future generations. 8. Increase favorable attitude of people: The earning of the enterprise should facilitate the society’s people. It should share its benefit with the society in the form of community development programs, health and sanitation programs, opening of schools and colleges etc.

ENTREPRENEURIAL DEVELOPMENT

INTRODUCTION

Do you know that there are millions of unemployed youth in the country and by the time you graduate, this number would have increased substantially? Do you want to be part of that group which keeps knocking from pillar to post, checking with employment exchanges, relatives, friends, and neighbours and still not able to 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 assistance and 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 the world. Or you could be like Dhiru bhai Ambani who started life as a clerk in a French 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 the Forbes list of the richest Asians. Lakshmi Mittal, the steel giant, Satbir Bhatia of Hotmail fame and Narayan Murthy of Infosys are some other names in the endless list you could choose from. And let us remind you that this 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.

ENTREPRENEURSHIP AS A CAREER OPTION After finishing your graduation you will be at the crossroads of life. You will face the 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 and improving their standard of living. You can choose your career from two broad categories of options – Wage Employment or Entrepreneurship. The term ‘career’ signifies a continuous, ever evolving, ever expanding opportunity for personal as well as business growth and development. We may define entrepreneurship as a

career in your own business [YOB] rather than wage employment [JOB] .If you opt for a job then you will work for others. In case you opt for entrepreneurship you will be your own boss. In case of wage employment one is engaged in routine work carried on for others for 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 Government Service or the Public Sector or the Private sector. Some of the main differences between entrepreneurship and wage employment career options are as underWAGE EMPLOYMENT 1. Work for Others 2. Follow Instructions 3. Routine Job 4. Earning is fixed, never negative 5. Does not create wealth ENTREPRENEURSHIP 1. Own Boss 2. Make own plans 3. Creative activity 4. Can be negative sometimes,generally surplus 5. Creates Wealth, contributes to GDP 6. Can choose from• Government service • Public Sector, • Private Sector 6. Can choose from• Industry • Trade • Service Enterprise

In the context of employment generation the three terms- Income generation, Selfemployment and Entrepreneurship are often used interchangeably. Income generation is the initial stage in the entrepreneurial process in which one tries 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 his money 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 to an individual’s fulltime involvement in his own occupation. e.g. a person who starts a tea shop and remains happy and satisfied and has no plans to add on any other 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 wherein after setting up a venture one looks for diversification and growth. We will learn more about entrepreneurship a little latter in the lesson. An entrepreneur is always in search of new challenges. An entrepreneur is not a routine businessman he 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-down or change his business if he anticipates losses but an entrepreneur will try again after

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 not entrepreneurs. If seen on a continuum, income generation, self-employment and entrepreneurship can be considered as the initial, middle and final stages of the entrepreneurial growth process. Income generating experience encourages selfemployment, which in turn facilitates graduating into entrepreneurship.

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