UNIT 1

ENTREPRENEURSHIP
• Foundations of
Entrepreneurship:

• Nature of Entrepreneurship,
social & cultural factors in
nurturing entrepreneurship.
Institutional support for
promoting entrepreneurship
in India, role of Universities &
Colleges, CSIR labs. Case
study of incubation
• Every class, you should have the entrepreneurship magazine along with the
regular business magazine.

• A news paper for news analysis is the preferred.

• Formals (no jeans, T-Shirts, sports shoes)

• Formal gadgets (Pen, hanky, king size note book with motivating cover etc)

Assignments

1) Two page hand written “Challenging journey of an entrepreneur” (

Minimum 8 words in a line and minimum 20 lines in a A4 sheet).
2) Business plan for a new start up .

Group Activities

1) What business would you start if given Rs 10 Lacks to you? Prepare a

business plan
2) Presentation about a entrepreneurship article from any of the magazines.
 What Is An Entrepreneur?

ENTREPRENEUR

A vision-driven individual who

assumes significant personal and
financial risk to start or expand a
business.
 What Is An Entrepreneur?

ENTREPRENEURSHIP

The pursuit of opportunity through

innovation, creativity and hard work
without regard for
the resources currently controlled.
 Entrepreneurship
• Entrepreneurship: a way of thinking,
reasoning, and acting that is:
– opportunity obsessed
– holistic in approach
– and leadership balanced

(This definition of entrepreneurship has evolved over the past two

decades from research at Babson College and the Harvard Business
School and has recently been enhanced by Stephen Spinelli, Jr., and
John H. Muller, Jr., Term Chair at Babson College.)
 Who is an Entrepreneur?
Situational more than personality

Flexibility Ability

Age
Distribution
for
Starting Company

20 25 30 35 40 45

Age
 Who is an Entrepreneur?
Manager’s Opportunities
Future Goals
Change Status Quo

Satisfied
Possible Entrepreneur
manager

Perceived
Capability
Frustrated Classic
Blocked manager bureaucrat
Burch's Entrep. Personality Traits
1.A desire to achieve
 Conquer problems, create successful venture
2.Hard work
 Their workload is very hard to match
3.Nurturing quality
4.Acceptance of responsibility
 Morally, legally and mentally accountable
5.Reward orientation
 Want be rewarded for their efforts
Burch's Entrep. Personality Traits
6.Optimism
 Anything is possible
7.Orientation to excellence
 Pride in something first class
8.Organization
 They are wholly "take charge" people
9.Profit orientation
 Profit primarily a gauge of performance
An entrepreneur is a job-giver and not a job-seeker. This means
that he is his own boss. The characteristics which make him
his own boss are given below:

(a)Strong achievement orientation.

(b)Unwavering determination and commitment.
(c)Self-reliance and independence.
(d)Hunger for success.
(e)Self-confidence and self-faith.
(f)Sustained enthusiasm.
(g)Single-mindedness.
(h)Strong reality orientation.
(i)Willingness to accept responsibility.
(j)Courage.
(k)Ability to survive defeat.
(l)Become wealthy and stay humble.
 Failure? So what!
• Failure seen differently in America & Europe.
– In Europe it is a major set-back
– U.S. expected (required even!)
– Canada - in between but tending to U.S.
• “Our” System:
– Many entrepreneurs had been "blue collar"
– Many come from families of entrepreneurs
– Many are immigrants or their children
– But, there are no "rules" that ensure success
• Universally, entrepreneurs shake off failure!
 Failure as “Learning Process”
• Ignore it, then start again
– Some find it easy to blame someone else
• In public, always optimistic
– Especially with funders
– Agonise over what went wrong in private
• Willingness to disregard the rules
– Start from first principles.
• Ability to "bend, not break" rules of life
 The Timmons Model of the
Entrepreneurial Process
Communication

Opportunity Resources
(2) (4)
Business Plan
Fits and gaps
Ambiguity Exogenous forces

Creativity Leadership
Team
(3)
Uncertainty Capital markets

Founder
(1)
 Entrepreneurship
• II. DEFINITION OF ENTREPRENEUR
A. Almost all definitions of entrepreneurship include:
1. Initiative taking.
2. The organizing and reorganizing or social/economic mechanisms to turn
resources and situations to
practical account.
3. The acceptance of risk or failure.
B. To an economist, an entrepreneur is one who brings resources, labor,
materials, and other assets
into combinations that make their value greater than before, and one who
introduces changes,
innovations, and a new order.
C. Entrepreneurship is the dynamic process of creating wealth.
• Our definition of entrepreneurship involves four aspects:
1. Entrepreneurship involves the creation process—creating something
new of value to the entrepreneur
and to the audience.
2. It requires the devotion of the necessary time and effort.
3. It involves assuming the necessary risks.
4. The rewards of being an entrepreneur are independence, personal
satisfaction, and monetary reward.

• E. The entrepreneurial experience is filled with enthusiasm, frustration,

anxiety, and hard work.
1. For many reasons there is a high failure rate among business owners.
2. The financial and emotional risk can be very high.
 Nature of Entrepreneurship
• The distinctive features of entrepreneurship are
as follows
1. Innovation : a)new products; b)new methods of
production; c)new markets; d)new sources of
raw material; or e)new forms of organisation.
2. Motivation :
3. Risk taking
4. Organisation building
5. Managerial skills and leadership
 ROLE OF ENTREPRENEURSHIP IN
ECONOMIC DEVELOPMENT
1. Capital formation
2. Improvement in per capita income
3. Improvement in living standards
4. Economic independence
5. Backward and forward linkages
6. Generation of Employment
7. Harnessing Locally Available Resources and
Entrepreneurship
8. Balanced Regional Growth
9. Reducing Unrest and Social Tension Amongst Youth
10. Innovations in Enterprises
 Historical Development
• The term entrepreneur comes from the French and translates
“between-taker” or “go-between.”
o In the Middle Ages the term entrepreneur was used to describe
both an actor and a person who
managed large production projects, not a risk taker.
o The concept of risk was tied to entrepreneurship by the 17th
century.
o By the 18th century the entrepreneur was distinguished from the
capital provider.
o In the late 19th and early 20th centuries, entrepreneurs were
usually not distinguished from
managers.
o At the middle of the 20th century, the notion of an entrepreneur as
an innovator was established.
 The entrepreneurial decision process.
Two work environments tend to be good for spawning new enterprises: research and development and
marketing.
o The decision to start a new business occurs when an individual perceives that forming the venture
is both desirable and possible.
+ American culture places a high value on being your own boss, being a success, and making money.
+ Influences include mothers and fathers, teachers, and peers.
o Several factors determine the possibility of forming a new company.
+ The government provides the infrastructure to help a new venture.
+ The entrepreneur must have the necessary background.
+ The market must be large enough and the entrepreneur must have the marketing know-how to put it all
together.
+ Financial resources must be available.
 Concept of Entrepreneurship
1. It has assumed super importance for accelerating economic growth both in
developed and developing countries.

2. It promotes capital formation and creates wealth in country.

3. It is hope and dreams of millions of individuals around the world.

4. It reduces unemployment and poverty and it is a pathway to prosper.

5. Entrepreneurship is the process of exploring the opportunities in the market

place and arranging resources required to exploit these opportunities for long
term gain.

6. It is the process of planning, organising, opportunities and assuming. Thus it is a

risk of business enterprise.

7. It may be distinguished as an ability to take risk independently to make utmost

earnings in the market.

8. It is a creative and innovative skill and adapting response to environment.

 Financial Bootstrapping
• Financial bootstrapping is a collection of methods used to minimize the amount
of outside debt and equity financing needed from banks and investors.
• While bootstrapping involves a risk for the founders, the absence of any other
stakeholder gives the founders more freedom to develop the company. Many
successful companies including Dell Computers and Facebook were founded this
way.

Different types of bootstrapping:

1. Owner financing
2. Sweat equity (Sweat equity is a party's contribution to a project in the form of
effort -- as opposed to financial equity, which is a contribution in the form of
capital )
3. Minimization of the accounts receivable
4. Joint utilization
5. Delaying payment
6. Minimizing inventory
7. Subsidy finance
8. Personal Debt
 Social & cultural factors in nurturing
entrepreneurship
•
1. The perception that starting a new company is desirable results from an individual’s culture,
family, teachers, and peers.
a. American culture places a high value on being your own boss, being a success, and making money.
b. In some cultures making money is not as valued, and failure may be a disgrace; the rate of
business formation in these countries is not as high.
2. Many subcultures that shape value systems operate within a cultural framework.
a. In the U.S. they include Route 128 (Boston), Silicon Valley (California), and North Carolina
Triangle.
b. These subcultures support and even promote entrepreneurship.
3. Studies indicate that a high percentage of founders of companies had fathers and/or mothers who
valued independence.

4. Encouragement to form a company is also gained from teachers, who can significantly influence
individuals toward entrepreneurship.
5. An area with a strong educational base is also required for entrepreneurial activity.
6. Peers are important, also, as is an area with an entrepreneurial pool and peer meeting place.
 Social Factors in nurturing the
Entrepreneurship
1. Caste factor
2. Family background
3. Education
4. Attitude of the Society
5. Cultural Value
6. Conservative societies
 Cultural factors in nurturing entrepreneurship
• Western culture contributes and supports to entrepreneurship in a big way.

• Developing countries fund raising is the main challenge.

• Mind set up of getting a fixed income as most have already spent enough
money on education.

• India is a country with villages, support if you start an agriculture related

entrepreneurial activity.

• The family setup the Indian society pulls back the entrepreneurs.

• Multicultural society provides avenues for multiple experiments.

• French will be more entrepreneurial in the fields of fashion & designs.

Indians in the fields of agriculture and related activities, Jews in financial field,
Italians in gold and ancient art, Japanese in robotics, Americans in software
and internet field.
 Institutional support for promoting
entrepreneurship in India
• District Industries Centres (DICs)and Industrial Estate, Small Industries
Development Organisation (SIDO), Small Industries Service Institutes (SISI),
Small Industry Development Corporation(SIDCO), Entrepreneurial Guidance
Bureau (EGB), National Alliance of Young Entrepreneurs (NAYE), National
Productivity Council (NPC) and Venture capital funds (VCF). In addition, all
India financial institutions-IDBI, IFCI, ICICI-have promoted/sponsored a
number of Technical Consultance Organisations (TCOs)to assist small
entrepreneurs in different ways.

• Recently, the Small Industries Development Bank of India (SIDBI) has been
established to help small scale units. Besides, agencies like Khadi and Village
Industries Commission, Commercial Banks, Cooperative Banks, EXIM Bank
and National Science and Technology Entrepreneurship Board undertake
promotional activities aiming at support in entrepreneurship development.

• Assignment : Visit any of these organizations and get the details how they
will support your business plan. Go with a business plan.
 Entrepreneurship Development Institute
of India Study
Following is the list of major competencies identified by the study that lead to superior
performance of the entrepreneurs:
1.Initiative.
2.Looking for opportunities.
3.Persistence.
4.Information Seeker.
5.Quality Conscious.
6.Committed to work.
7.Efficiency seeker.
8.Proper planning.
9.Problem Solver.
10.Self-confidence.
11.Assertive.
12.Persuative.
13.Efficient monitor.
14.Employees’ well wisher.
15.Effective strategist.
 Role of Universities & Colleges
• Apart from providing the academic knowledge, the educational institutions
are carrying the following support activities for the aspirants

1. Conducting seminars by renowned entrepreneurs and entrepreneurship

supporting agencies.
2. Establishing the business incubation centers
3. Providing the seed fund for the best business plants (IIM Bangalore etc)
4. Business plan competitions
5. Providing legal support and guidance
6. Mentorship services
7. Consultancy – in-house and external expert guidance.
8. Converting the students from Jobseekers to job providers.
9. Providing support of the angel financers and venture capitalist firms.
10. Providing the summer internships so that students get the idea of how the
business world works.
11. Facilitating in getting the loans from financial institutions and under
various government schemes.
CSIR labs
 Incubation case studies
• Incubation: Business incubators are programs designed to support
the successful development of entrepreneurial companies through
an array of business support resources and services, developed
and orchestrated by incubator management and offered both in
the incubator and through its network of contacts. Incubators vary
in the way they deliver their services, in their organizational
structure, and in the types of clients they serve. Successful
completion of a business incubation program increases the
likelihood that a startup company will stay in business for the long
term: older studies found 87% of incubator graduates stayed in
business, in contrast to 44% of all firms.

• “Wonder Grass” – Bamboo house building company of Mr. Vaibhav

Kale, from Bangalore was provided the incubation services at IIM
Bangalore.

• Hundreds of entrepreneurial ideas incubated by the incubation

cells of top B-Schools.
 The incubation process
Most common incubator services:

1. Help with business basics

2. Networking activities
3. Marketing assistance
4. High-speed Internet access
5. Help with accounting/financial management
6. Access to bank loans, loan funds and guarantee programs
7. Help with presentation skills
8. Links to higher education resources
9. Links to strategic partners
10. Access to angel investors or venture capital
11. Comprehensive business training programs
12. Advisory boards and mentors
13. Management team identification
14. Help with business etiquette
15. Technology commercialization assistance
16. Help with regulatory compliance
17. Intellectual property management
Business incubation has been identified as a means of meeting a
variety of economic and socioeconomic policy needs, which may
include

1. Creating jobs and wealth

2. Fostering a community's entrepreneurial climate
3. Technology commercialization
4. Diversifying local economies
5. Building or accelerating growth of local industry clusters
6. Business creation and retention
7. Encouraging women or minority entrepreneurship
8. Identifying potential spin-in or spin-out business opportunities
9. Community revitalization

• About one-third of business incubation programs are sponsored by

economic development organizations. Government entities (such
as cities or counties) account for 21% of program sponsors.
Another 20% are sponsored by academic institutions, including
two- and four-year colleges, universities, and technical colleges.
 What is Intrapreneurship?

• Intrapreneurship is defined as entrepreneurship within an existing

business set– up. That is to say – Intrapreneurship is corporate
entrepreneurship. When a corporation indulges in entrepreneurial
activities, like diversification into new businesses, it is called
• intrapreneurship.

• Intrapreneur is a manager who focuses on innovation and

creativity; who brainstorms,dreams and puts ideas into profitable
venture by operating within the organisational environment.

• It is a tool for capitalizing the entrepreneurial spirit of employees in

the organisation. It gives managers the freedom to try new ideas by
employing firm’s resources in a unique way.
• Seeing and acting on opportunities

• There is a case of a film distributor in Jamshedpur, Mr. Nair. The

story of how he became a distributor is interesting. He was
working for TISCO at Jamshedpur. One day, he met the Secretary
of one ‘United Club’ in the town, who asked him whether he
could help him in getting a movie to show in his club as he had
difficulties in procuring it. Nair agreed and went to Calcutta to get
the movie. There he met an acquaintance who was connected
with the film line; on being asked Nair told him the reasons for
his visit. The acquaintance offered to help him, but Nair refused
and- still collected name and addresses of some distributors, He
then went to a well-known firm of distributors, got a movie for
Rs.5,000/- and gave it to the club for Rs.7,000/-. This started him
off and he began supplying movies to that club and other movie
theaters in Jamshedpur. Gradually the work increased and he
established an office in Calcutta and became a full time
distributor.
Persistence: Takes repeated action to overcome
obstacles that get in the way of reaching goals.

• Look at the case of Leela. She decided to set up a unit

manufacturing FRP products. She purchased land, engaged
a firm of contractors for construction of building. As luck
would have it, the watchman engaged there got murdered
(some personal enmity) and the contractor’s workers
panicked and left the construction work. Somehow she
managed to get the construction completed. Much later, by
the time she could start production, FRP technology had
changed and she hardly had any orders. As a result she
defaulted in payment of interest to the financial institution
which had extended financial assistance in initial
investment. But did she lose heart? No, she sold the land
and building, paid the financial institution, salvaged the
machinery, shifted it to a rented place and started again.
 Commitment to work contract
• Agnes Kottoor is a woman entrepreneur manufacturing
optical lenses in Kochi. She employs about a dozen girl
workers and has built up a good clientele. Kerala is
known of load shedding and power cuts. Agnes also
has to suffer due to this. During day time there would
be power-cuts and so obviously the work would have
to stop and as her workers are all girls, they have to be
allowed to go home on time. But what about timely
delivery to the customers? Agnes is very particular
about that. So what does she do? She herself works on
the machines, grinding the lenses, sometimes upto2
a.m. in the morning and finishes’ the work. That is an
example of commitment to work contract.
 Sources
• http://www.scribd.com/doc/66406996/8/IN
STITUTIONAL-SUPPORT-TO-ENTREPRENEURS