Basics of Entrepreneurship

Narayana Murthy
Nagavara Ramarao Narayana Murthy, more popularly known as Narayana Murthy, is the co-
founder of Infosys, a multinational corporation that provides services pertaining to technology,
engineering, consulting and outsourcing.

Narayana Murthy was not born with a silver spoon in his mouth; in fact, he had to work
extremely hard to reach the top. He was born on August 20, 1946, in Mysore, Karnataka. He
came from a poor but an educated family.
From his childhood days, Narayana Murthy was academically brilliant. He was passionate
about Mathematics and Physics and always had the thirst and the desire to gain more knowledge
in these fields.
Hence, he pursued a Bachelor’s degree in Electrical Engineering from the University of Mysore
and later, received his Master’s degree from the Indian Institute of Technology, Kanpur.
Although Narayana Murthy was born into a poor family, his dreams were huge. From a young
age, he dreamt of starting his own business venture.
Narayana Murthy began his career as a chief systems programmer at IIM Ahmedabad. He then
started a company called Softronics, which failed after 1.5 years of its inception.

Despite the failures he encountered at an early age, he did not give up his dream of being an
entrepreneur. He learnt from his previous mistakes and decided to start afresh in 1981. That year,
he, together with six software professionals, put together Rs 10,000 to create a company called
Infosys.
From the beginning, the team kept the interests of the company ahead of their own interest. And
each of the team members brought complementary strengths to the company.
Today, Narayana Murthy is listed as one of the greatest entrepreneurs of all time, alongside
Steve Jobs and Bill Gates. In 2000, he was awarded Padma Shri by the Government of India for
his significant contribution to the country’s IT sector and economy. In 2008, he was awarded
Padma Vibhushan, India’s second highest civilian award.
In 2011, when Narayana Murthy took retirement, the company went through tumultuous times.
Cost-cutting was evident and the performance of the company deteriorated.
 On June 1, 2013, Narayana Murthy was called out of retirement to lead the company once again.
Narayana Murthy, who will turn 67 this year, has taken up the challenge to bring the company
back on its feet.
He has taken up the positions of an Additional Director and the Executive Chairman of the
Board with the company. And he is working closely with the top management to come up with
incentives such as giving higher salaries to top performers to improve the performance of the
company.
This is a true example of commitment and dedication. Even after his retirement, Narayana
Murthy is willing to sacrifice his luxuries to revive the company.
Being born into a poor family did not deter Narayana Murthy from pursuing his dreams. This is
what we can learn from Narayana Murthy’s determination to succeed – anyone can rise in
education and career if he/she puts his mind and heart to it.
Lack of financial resources is not an excuse for a dull career. William Shakespeare once said, “It
is not in the stars to hold our destiny but in us.” Similarly, just because one is born into a poor
family does not mean that he/she will remain poor and unsuccessful for the rest of his/her life.
If we are passionate about changing our future, our dreams will definitely come true. Life is full
of challenges. We all make mistakes but it is important to learn from them and rise in our
academic and professional lives.

What is an Enterprise?
An Enterprise is a small Company that especially one involving a partnership of two or more people. It is
the activity of managing Companies and Businesses and to start a New One also.

An enterprise can be defined as:

 A unit of economic organization or activity; especially: a business organization.
 The carrying out of new combinations, we call ‘enterprise’.
 It is a systematic purposeful activity.
 It is a company organized for commercial purposes; business firm. In general it is an
Industrious, systematic activity, especially when directed toward profit.
 An undertaking, especially one of some scope, complication, and risk.

Agriculture is one of the oldest enterprise which is now the main economic entity among rural
people.
Business enterprise is the common word used for an activity of providing goods and services
involving financial and commercial and industrial aspects and risk.
Who is an Entrepreneur?
The word entrepreneur 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. On the other extreme of definitions, anyone who wants to
work for himself or herself is considered to be an entrepreneur.
Entrepreneurs are reshaping the business environment, creating a world in which their companies
play an important role in the vitality of the global economy. But there is not always necessary to
establish a company in order to implement new ideas. A great potential lies in applying business
principles within existing organizations
Entrepreneur is a person who brings in change through innovation for the maximum social
goods. Four key elements of entrepreneurship are- Innovation, Risk Taking, Vision and
Oganising Skill.
He or she is an individual who actively form or lead their own business and nurture them for
growth and prosperity (UiTM Entrepreneurship Study Group).
A person, who creates and manages changes by recognizing opportunities (needs, wants,
opportunities, problems, and challenges) and develops people and manages resources to take
advantage of the resources to take the opportunity and creates a venture (profitable business)
(Eston Kimani).
Frank Young describes an entrepreneur as an agent of change.
Around 1700A.D. the term Entrepreneur was used for architects and contractors of public
work. Entrepreneurial firms are typically proactive innovators and are not adverse to risk.
In14th Century, tax contractors were called entrepreneurs, they bore risk of collecting tax. If
they collected more than the fee, extra was kept as profit by them.
During 1755 the entrepreneurs were called as a person who pays a price for a product to resell it
at an uncertain price.
Definitions of Entrepreneurs:
The word entrepreneur originates from the French word, “entreprendre”, which means "to
Undertake." In a business context, it means to start a business. The concept of entrepreneurship
has a wide range of meanings.
 The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who
organizes, manages, and assumes the risks of a business or enterprise.
 According to Oxford Dictionary ―One who undertakes an enterprise, especially a
contractor – acting as intermediary between capital and labor.
 According to Eston Kimani, A person who creates and manages change by the
recognition of opportunities (needs, wants, opportunities, problems, and challenges) and
develops people and manages resources to take advantage of the resources to take the
opportunity and creates a venture (profitable business).
 According to the ‘Organisation of Economic Coorporation and Development(OECD)’
and Eurostat- Persons who seek to generate value through the creation or expansion of
economic activity,by identifying and exploiting new products, processes or markets.
 According to Peter .P. Drucker, ―Innovation is the specific tool of entrepreneurs, the
means by which they exploit changes as an opportunity for different business or a
different service.
  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.
 Austrian economist Joseph Schumpeter 's definition of entrepreneurship placed an
emphasis on innovation, such as:
a) New products, b) New production methods, c) New markets, d) 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.
Key Characteristics and Skills of an Entrepreneur:
Entrepreneurs are a unique group of people. Not only do they think differently; they act differently. They
draw on personality traits, habits and mind-sets to come up with ideas that connect the line
between insanity and genius. But just because you’re an original thinker and came up with an
idea to replace gasoline in cars doesn’t mean you’re cut out to be an entrepreneur. Not everyone
has the qualities it takes to be an entrepreneur or even wants to be an entrepreneur. Even people
who possess the necessary qualities are not necessarily made happy by being entrepreneurs.
Although entrepreneurs have certain characteristics and skills in common, there is a wide range
of uniqueness among them. In sports, some athletes do well because they love a sport and are
trained to play it. They have developed their skills. Others are full of natural talent and require
much less special training. Still others simply find their own successful approach to playing a
sport even though they may not have been trained.
Entrepreneurs are the same way. Some receive formal training and skill development. Others
have a natural flair for it. Still others break every rule or devise very unusual approaches, but
still succeed.
Who can become an entrepreneur? There is no one definitive profile. Successful entrepreneurs
come in various ages, income levels, gender, and race. They differ in education and experience.
While there is no recipe for becoming a successful entrepreneur, certain characteristics are
associated with entrepreneurial success. Research indicates that most successful entrepreneurs
share certain personal attributes; some of them are as follows:
Passion for Business: The number one characteristic shared by successful entrepreneurs is
passion for their business. This passion typically stems from the entrepreneur’s belief that the
business will positively influence people’s lives.
Creativity: Entrepreneur must have creative thinking and must be able to analyze problems and
situations. He should be able to anticipate changes. Creativity is the spark that drives the
development of new products or services or ways to do business. It is the push for innovation and
improvement. It is continuous learning, questioning, and thinking outside of prescribed formulas.
Although they may not realize it, most entrepreneurs are creative, they find innovative ways to
solve problem. They always look for new and better ways to do things. Believe in your ability to
be creative. Experts tell us that the biggest block to creativity is thinking you are not creative.
Sees and Acts on Opportunities- Entrepreneur has the ability to identify and act on the
opportunities. Flexibility is the ability to move quickly in response to changing market needs. It
is being true to a dream while also being mindful of market realities. The entrepreneur modified
his/her vision to accommodate these needs.
Persistence- They are persistent, entrepreneurs are willing to work until the job is done, no
matter how long it takes.
Moderate risk taker- He takes a calculated risk. They are risk taker but not reckless. They seek
opportunities that offer both challenges with reasonable chances of success.
Initiative- Entrepreneurs takes initiative with calculated risk.
Dedication- Dedication is what motivates the entrepreneur to work hard, 12 hours a day or more,
even seven days a week, especially in the beginning, to get the endeavor off the ground. Planning
and ideas must be joined by hard work to succeed. Dedication makes it happen.
Perseverance- Developing a new business may require a certain degree of experimentation
before a success is attained. Setbacks and failures inevitably occur during this process. The
litmus test for entrepreneurs is their ability to persevere through setbacks and failures.
Determination is the extremely strong desire to achieve success. It includes persistence and the
ability to bounce back after rough times. It persuades the entrepreneur to make the 10th phone
call, after nine have yielded nothing.
Motivator- An entrepreneur keeps its employees and himself motivated to achieve the goal of
enterprise. For the true entrepreneur, money is not the motivation. Success is the motivator;
money is the reward.
Leadership- It is the ability to create rules and to set goals. It is the capacity to follow through to
see that rules are followed and goals are accomplished. One of the most important leadership
skills an entrepreneur must have is the ability to develop a vision for the company and to inspire
the company employees to pursue that vision as a team. The expression “people would rather be
led than managed” applies especially well to an entrepreneurial venture
Passion- It is what gets entrepreneurs started and keeps them there. It gives entrepreneurs the
ability to convince others to believe in their vision. It can’t substitute for planning, but it will
help them to stay focused and to get others to look at their plans.
Self-confidence- Entrepreneur is full with self-confidence. They believe in themselves and act
accordingly. Self-confidence comes from thorough planning, which reduces uncertainty and the
level of risk. It also comes from expertise. Self-confidence gives the entrepreneur the ability to
listen without being easily swayed or intimidated.
Efficiency Orientation- To sustain and grow in the competitive market, entrepreneurs are
focused on the efficient utilization of the available resources.
Problem Solving- The entrepreneurs have strong problem solving attitude. Right from the
beginning they keep on receiving new problems and barriers in the growth and development of
business. But the entrepreneurs are not worried about these problems; they always have their
focus on the goal of the business.
Inquisitive- Finally, entrepreneurs are willing to learn. They are information seekers. They may
already know a great deal, yet they recognize that no one knows everything, and that they can
learn valuable information from others. They always hunt for new information. They want to
know as much as possible about anything that might affect their venture. They conduct research
and ask for questions to solve problem. Entrepreneurs who are not open to learning often
compromise the degree of success.
Essential Entrepreneurial Skills for Success
As with any sport, having the right attitudes and characteristics can carry you only so far. You
also need the skills that will help you succeed. However, unlike personal characteristics and
attitudes—which can often be hard or impossible to change, entrepreneurs can acquire skills if
they are willing to learn them. Additionally, they can hire people to work for them who have the
needed skills. Either way, the following skills are important if the entrepreneur’s business is to
succeed.
Ability to Plan: The ability to plan is a key skill for entrepreneurs. They must be able to
develop plans to meet goals in a variety of areas, including finance, marketing, production, sales
and personnel (hiring and maintaining productive and satisfied employees).
Human Relations – He must maintain good relation with his customers, employees, etc. To
maintain good relationship he should have emotional stability, personal relations, tactfulness
and consideration. Entrepreneurs constantly interact with people, including customers and
clients, employees, financial lenders, investors, lawyers and accountants, to name a few. The
ability to establish and maintain positive relationships is crucial to the success of the
entrepreneur’s business venture.
Marketing Skills: A business’s success or failure is very dependent on whether the business
reaches the market (its potential customers), interests the market and results in those in the
market deciding to buy. Many entrepreneurs who failed started with an innovative good or
service that with proper marketing could have been very successful. Good marketing skills that
results in people wanting to buy your good or service—are critical for entrepreneurial success.
Team Building Skills: Because entrepreneurs usually assemble a team of skilled people
who help them achieve business success, they must be able to effectively develop and
manage the team.
Communication Skills: Entrepreneurs should be able to explain, discuss, sell and market their
good or service. It is important to be able to interact effectively with your business team.
Additionally, entrepreneurs need to be able to express themselves clearly both verbally and in
writing. They also should have strong reading comprehension skills to understand contracts and
other forms of written business communication. He/ She should be an effective Communicator –
external & internal of organization. Good communication skills means both the sender and the
receiver should understand each other’s message.
 Every entrepreneur has these qualities in different degrees. But what if a person lacks one or
more? Many skills can be learned. Or, someone can be hired who has strengths that the
entrepreneur lacks. For example, they often look to outside experts for help in areas such as
strategic planning, accounting and finances, contracts and legal issues, and specialized
marketing.
Entrepreneurship
Entrepreneurship continues to thrive in almost all corners of the world. The concept of
entrepreneurship was first established in the 1700s, and the meaning has progressed ever since.
Majority of people simply associate it with opening one’s own business. Most economists
believe it is more than that.
The concept of entrepreneurship is seen as the process of uncovering and developing an
opportunity to create value through innovation and seizing that opportunity without regard to
either resources (human and capital) or the location of the entrepreneur – in a new or existing
company (Churchill, 1992).
Entrepreneurship is the process of creating something new of value by devoting (giving) the
necessary time and effort. By accepting and acknowledging the necessary financial,
psychological, and social risks, and finally receiving the consequential rewards be it monetary
and personal satisfaction and freedom to do what you want. (Robert D.Hisrich, M. Peters & D.A
Shepherd)
According 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.
In the 20th century, Austrian economist Joseph Schumpeter (1883-1950) focused on how the
entrepreneur’s drive for innovation and improvement creates upheaval and change. Schumpeter
viewed entrepreneurship as a force of “creative destruction.” The entrepreneur carries out “new
combinations,” thereby helping render old industries obsolete. Established ways of doing
business are destroyed by the creation of new and better ways to do them
Joseph Schumpeter’s definition of entrepreneurship placed an emphasis on innovation, such as:
New products, New production methods, New markets and New forms of organization.
Wealth is created when such innovation leads to 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.
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. A quick look
at changes in communications—from typewriters to personal computers to the Internet—
illustrates these ideas. 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”.
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”.
T.V. Rao describes entrepreneurship as a creative and innovative response to environment.
According to the classic definition-Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently control.
Most economists today agree that entrepreneurship is a necessary ingredient for stimulating
economic growth and employment opportunities in all societies. In the developing world,
successful small businesses are the primary engines of job creation, income growth, and poverty
reduction. Therefore, government support for entrepreneurship is a crucial strategy for economic
development.
As the Business and Industry Advisory Committee to the Organization for Economic
Cooperation and Development (OECD) said in 2003, “Policies to foster entrepreneurship are
essential to job creation and economic growth.” Government officials can provide incentives that
encourage entrepreneurs to risk attempting new ventures. Among these are laws to enforce
property rights and to encourage a competitive market system.
Entrepreneurship offers a greater possibility of achieving significant financial rewards than
working for someone else. It provides the ability to be involved in the total operation of the
business, from concept to design and creation, from sales to business operations and customer
response. It offers the prestige of being the person in charge. It gives an individual the
opportunity to build equity, which can be kept, sold, or passed on to the next generation.
Entrepreneurship creates an opportunity for a person to make a contribution. Most new entre-
preneurs help the local economy. A few—through their innovations—contribute to society as a
whole. One example is entrepreneur Steve Jobs, who co-founded Apple in 1976, and the subse-
quent revolution in desktop computers.
Factors that contribute to entrepreneurship are broadly classified in to:
 Economic Factors
 Individual Factors
 Social Factors
 Cultural Factors
 Political Factors
 Psychological Factors
 Other Factors

Emergence of strong and consistent entrepreneurial growth in any region depends on the
existence of these factors. These conditions may have both positive and negative influences on
the emergence of entrepreneurship. Positive influences constitute facilitative and conducive
conditions for the emergence of entrepreneurship, whereas negative influences create inhibiting
environment to the emergence of entrepreneurship.

Economic Factors
Economic environment contributes the most direct and immediate influence on entrepreneurship.
It encompasses the wide spectrum of items, namely, land, availability of raw material, skilled
labor, infrastructure, machinery; capital and so on. Major economic factors that affect the growth
of entrepreneurship are the following:

Capital: It is one of the most significant factors of production for the establishment of an
enterprise. Entrepreneurship activity too gets enhanced with the easy availability of funds for
investment. Availability of capital facilitates for the entrepreneur to bring together the land of
one, machine of another and raw material of yet another to combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of production.

Raw Materials: In the absence of raw materials, neither any enterprise can be established nor
can an entrepreneur be emerged. It is one of the basic ingredients required for the operation of
the business. Shortage of raw material can adversely affect entrepreneurial environment.
Availability of natural resources of good quality in sufficient amount leads to the emergence of
entrepreneurship. Without adequate supply of raw materials no industry can function properly.

Labour: Availability of workers with required skills also affect entrepreneurship. The quality
rather than quantity of labor influences the emergence and growth of entrepreneurship. The
problem of labor immobility can be solved by providing infrastructural facilities including
efficient transportation. For India brain drain is one of the major concern. A good numbers of
talented human capital migrate to developed countries due to the better professional opportunity
in those countries

Market: Market plays a vital role in the development of entrepreneurship. In modern

competitive world no entrepreneur can think of surviving in the absence of latest knowledge
about market and various marketing techniques. The size and composition of market both
influence entrepreneurship in their own ways.

Frankly speaking, if the proof of pudding lies in eating, the proof of all production lies in
consumption, i.e., marketing.

Infrastructure: Expansion of entrepreneurship presupposes properly developed communication

and transportation facilities. It not only helps to enlarge the market, but expand the horizons of
business too. Take for instance, the establishment of post and telegraph system and construction
of roads and highways in India. It helped considerable entrepreneurial activities which took place
in the 1850s.

Apart from the above factors, institutions like trade/ business associations, business schools,
libraries, etc. also make valuable contribution towards promoting and sustaining
entrepreneurship’ in the economy. You can gather all the information you want from these
bodies. They also act as a forum for communication and joint action.

Individual Factors:

Occupational background- Occupational background plays a very significant role in

entrepreneurial development. The person engaged in some occupation gains a very good
knowledge of his field. His professional experiences and understandings works as a pull factor to
start his own business in the same field.

Educational background- Academic background is always considered as an important asset of

an individual in building an occupational career. It makes available more skills necessary to
entrepreneurial endeavor.

Parental background: Background of a family in manufacturing provided a source of industrial

entrepreneurship. Occupational and social status of the family influences future profession of the
young members. Sometimes children continue their family business which is given by their
parents. They try to bring in some changes in the existing business in the form of some new
technology, new process, new product etc. they are called second generation entrepreneur.
Family Background includes size of family, type of family and economic status of family. In a
study by Hadimani, it has been revealed that Zamindar family helped to gain access to political
power and exhibit higher level of entrepreneurship.

Social Factors:
Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. A society that is
rational in decision making would be favorable for decision making. Social factors strongly
affect the entrepreneurial behavior, which contribute to entrepreneurial growth. The social
setting in which the people grow, shapes their basic beliefs, values and norms.

The main components of social environment are as follows:

Caste Factor: There are certain cultural practices and values in every society which influence
the’ actions of individuals. These practices and value have evolved over hundreds of years. For
instance, consider the caste system (the varna system) among the Hindus in India. It has divided
the population on the basis of caste into four division. The Brahmana (priest), the Kshatriya
(warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined limits to the social
mobility of individuals

Education System: Education enables one to understand the outside world and equips him with
the basic knowledge and skills to deal with day-to-day problems. In any society, the system of
education has a significant role to play in inculcating entrepreneurial values.

In India, the system of education prior to the 20th century was based on religion. In this rigid
system, critical and questioning attitudes towards society were discouraged. The caste system
and the resultant occupational structure were reinforced by such education. It promoted the idea
that business is not a respectable occupation. Later, when the British came to our country, they
introduced an education system, just to produce clerks and accountants for the East India
Company, The base of such a system, as you can well see, is very anti-entrepreneurial.

Unfortunately our educational system has not changed much even today. The stress is still on
preparing students for standard jobs, rather than grooming them to stand on their feet.

Attitude of the Society: Consequence of the social factors is reflected in the attitude of the
society towards entrepreneurship. Certain societies encourage innovations and novelties, and
thus approve entrepreneurs’ actions and rewards like profits. Certain others do not tolerate
changes and in such circumstances, entrepreneurship cannot take root and grow. Similarly, some
societies have an inherent dislike for any money-making activity. It is said, that in Russia, in the
nineteenth century, the upper classes did not like entrepreneurs. For them, cultivating the land
meant a good life. They believed that rand belongs to God and the produce of the land was
nothing but god’s blessing. Russian folk-tales, proverbs and songs during this period carried the
message that making wealth through business was not right.

Cultural Value:

Motives impel men to action. Entrepreneurial growth requires proper motives like profit-making,
acquisition of prestige and attainment of social status. Ambitious and talented men would take
risks and innovate if these motives are strong. The strength of these motives depends upon the
 culture of the society. If the culture is economically or monetarily oriented, entrepreneurship
would be applauded and praised; wealth accumulation as a way of life would be appreciated. In
the less developed countries, people are not economically motivated. Monetary incentives have
relatively less attraction. People have ample opportunities of attaining social distinction by non-
economic pursuits. Men with organizational abilities are, therefore, not dragged into business.
They use their talents for non-economic end.

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.

Psychological Factors

The psychological factors like high need for achievement, determination of unique
accomplishment, self-confidence, creativity, vision, leadership etc., promote entrepreneurship
among individuals. Factors like, need for independence and need for achievement etc. supports
promotion of entrepreneurship. On the other hand psychological factors like security, conformity
compliance and need for affiliation restrict the growth of entrepreneurial culture.

Thomas Begley and David P. Boyd studied in detail the psychological roots of entrepreneurship
in the mid-1980s. They came to the conclusion that entrepreneurial attitudes based on
psychological considerations have five dimensions:

1. First come ‘need-achievement’ as described by McClelland. In all studies of successful

entrepreneurs a high achievement orientation is invariably present.
2. The second dimension that Begley and Boyd call ‘locus of control’ This means that the
entrepreneur follows the idea that he can control his own life and is not influenced by factors like
luck, fate and so on. Need-achievement logically implies that people can control their own lives
and are not influenced by external forces.
3. The third dimension is the willingness to take risks. These two researchers have come to
the conclusion that entrepreneurs who take moderate risks earn higher returns on their assets than
those who take no risks at all or who take extravagant risks.
4. Tolerance is the next dimension of this study. Very few decisions are made with
complete information. So all business executives must, have a certain amount of tolerance for
ambiguity.
5. Finally, here is what psychologists call ‘Type A’ behavior. This is nothing but “a chronic,
ceaseless struggle to achieve more and more in less and less of time” Entrepreneurs are
characterize by the presence of ‘Type A’ behavior in all their endeavors.

Other Factors:
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.
There are various rules and regulations applicable to different groups of industries, for various
purposes. That may be regarding registration, licensing, pollution, location, acquisition, payment
of wages and labor related laws, pollution and environmental rules, laws relating to organization,
product, patent, resource and taxes.
In view of the haphazard development of economic zones, Government is encouraging through
incentives, tax benefits and other supports for 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.
Entrepreneurs Vs Managers:
The term ‘entrepreneur’ is often contrasted with the term ‘manager’, as they are the key persons
in an enterprise that help in the organisation, management, control and administration of the
company. An entrepreneur is a person with an idea, skills, and courage to take any risk to
pursue that idea, to turn it into reality. On the other hand, manager, as the name suggests, is the
person who manages the operations and functions of the organisation.

Managers and entrepreneurs both play a major role in the business environment. Many of them
have some common traits, but some differences exist when it comes to the basic traits of each.

“When entrepreneurs and investors come together to pool resources, they form a team. When
employees and self employed specialists come together to network, they form a union.” – Robert
Kiyosaki.

It appears that an entrepreneur and a professional manager are same but they are not. However,
both entrepreneurs and managers are needed for the growth of any business. One cannot do
without the other.

The main difference between entrepreneur and manager lies in their standing, i.e. while an
entrepreneur is the owner of the organization and so he is the one who bears all the risks and
uncertainities in the business, the manager is an employee of the company.

Entrepreneur Vs Professional Manager

 Basis For Entrepreneur Professional Manager
Comparison
Meaning Entrepreneur refers to a person who Manager is an individual who takes the
creates an enterprise, by taking financial responsibility of controlling and
risk in order to get profit. administering the organization.
Focus Business startup Ongoing operations
Primary Achievement Power
motivation
Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse

Behaviour wants to "be in control" of his life Wants to delegate authority

Note: At the heart of every new venture and start- up company is a "structural conflict", which
often poses a threat to the continued existence of the organization. This conflict can be summed
up by the following statement: "The very qualities necessary to set up a new business, are the
qualities which will adversely affect the smooth running of that business, sometimes, fatally".

The "structural conflict" arises from the fact that the entrepreneur, who has taken significant
personal and commercial risks to set up the business, who has worked day and night to
strengthen and promote it, at some point discovers that the business is working well and he can
sit back, relax, and enjoy the fruits of his labors. But the typical entrepreneur is not the type to
take things easy; he continues to be actively involved in the day-to-day activities of the company,
which is growing quickly and now requires well-organized administration. His involvement can
lead to hostility and tension, which damage the organization's ability to function and even to
survive.

For this reason, the literature and history of commercial organizations in western countries are
full of cases where the entrepreneur did not know when to ask himself: "Am I superfluous
around here?" as well as many descriptions of "the entrepreneur who ruins his business".

In the light of the above, we can conclude that there is a world of difference between the
"entrepreneurial manager" and the professional manager, and indeed this was true until the last
decade. But, it has become clear in recent years that the ideal manager will be one who knows
how to combine certain traits of the professional manager, such as order and discipline, with
entrepreneurial characteristics such as quick reaction to business opportunities, creativity and the
ability to fill employees with a sense of vision and challenge.
Intrapreneurship defined
 Successful adaptation of entrepreneurial attitudes and strategies inside of a bureaucratic
organization.
 Implementation of start-up practices within a large organization, producing valued
innovation.
The term was first discussed in a 1978 by Gifford and Elizabeth Pinchot. In 1982 Norman
Macrae’s used in an article, “We’re all Intrapreneurial Now”. There after the term reemerged
after the dot.com bubble burst and Silicon Valley innovators started to look beyond the newest
internet start-up for growth in the technology sector.
Intrapreneurship represent the beginning and implementation of innovative systems and practices
within an organization, by some of its staff under the supervision of a manager who takes the
role of an intrapreneur, in order to improve the economic performance of the organization, by
using a part of its resources, namely those that previously have not been used in an appropriate
manner.
Intrapreneurship improves the economic and financial performance of the company, by applying
a more efficient use of the resources and by using a suitable motivational system for its
employees (Istocescu, 2003).
Unlike the entrepreneur, the intrapreneur acts within an existing organization. The intrapreneur is
the revolutionary inside the organization, who fights for change and renewal from within the
system.
Entrepreneurship and Intrapreneurship:
Similarities
• Both involve opportunity recognition and definition.
• Both require a unique business concept that takes the form of a product, process, or service.
• Both are driven by an individual champion who works with a team to bring the concept to
fruition.
• Both require that the entrepreneur be able to balance vision with managerial skill, passion with
pragmatism, and reactiveness with patience.
• Both involve concepts that are most vulnerable in the formative stage, and that require
adaptation over time.
• Both entail a window of opportunity within which the concept can be successfully capitalized
upon.
• Both are predicated on value creation and accountability to a customer.
• Both entail risk and require risk management strategies.
• Both require the entrepreneur to develop creative strategies for leveraging resources.
• Both require harvesting strategies.

Differences
•The entrepreneur takes the risk of business whereas the Intrapreneur takes the career-related
risk.
•While intrapreneurs make risky decisions by using the resources of the company, the
entrepreneurs make risky decisions using their own resources
•Entrepreneurs prefer to develop tacit knowledge, in new organizations, instead of using
procedures and mechanisms from other companies. On the other hand intrapreneurs work in
organizations that have their own policies, procedures and bureaucracy
•Intrapreneurship takes place among employees from within an organization while
entrepreneurship tends to mainly be externally focused
• In a start-up venture, one strategic blunder could mean instant failure; in Intrapreneurship the
organization has more flexibility for management errors.
• The individual entrepreneur owns the concept and intellectual rights of the company whereas
anIntrapreneure (employee) have little or no equity in the venture at all.
• In a start-up potential rewards for the individual entrepreneur are theoretically unlimited where
in intrapreneurship an organizational structure is in place to limit rewards/compensation to the
employee.
• In a start-up the entrepreneur is subject or more susceptible to outside influences; in
intrapreneurship the organization is more insulated from outside forces or influence.
Why are entrepreneurs and Intrapreneurs suddenly more important today than before?
An explanation to this question would be that the world is changing nowadays more rapidly
under the influence of new technologies. The increasing competition hinders our work. It does
not suffice anymore to stand before our competitors simply driven by our will of competing; we
have to bring something new to the market. Entrepreneurs and Intrapreneurs play a decisive role
as they help the company (newly established or existing) to engage in new business and enter
new markets.
Although there are several differences between entrepreneurship and intrapreneurship, they also
have some connections because intrapreneurship is consistently positioned as entrepreneurship
within organizations
Nowadays, when we are facing economically difficult times, entrepreneurship and
inrapreneurship is an excellent tool for breaking out of the trend trough innovation, by bringing
something new on the market. Both entrepreneurship and intrapreneurship are instruments of
innovation that help in creating new competencies and accessing new markets.
Finally, without developing the insight towards these various aspects, no change of the company
can be realized, and changing, so adapting means in fact, the survival of that company. The value
created yesterday, can mean nothing today, therefore only a sustainable company, who
recognizes the difference between an entrepreneur and intrapreneur, can turn ideas and creativity
into successful new values for tomorrow.
Why India needs Entrepreneurs

India has been growing at a relatively high rate in the last few years, and is likely to be the
largest economy in the world by 2050. Unlike most of the developed economies, India is a young
country with about 63 per cent population currently being in the working age group of 15 to 59
years. This is a plus factor in its favour as studies have found that emerging entrepreneurship
popularity rates are highest in the 25-34 age groups. But, this demographic dividend could prove
to be its burden if we are not able to engage our youth in creative hobbies through developing
appropriate skills, including entrepreneurship skills. As of now, only about 5-6 per cent youth
have access to some kind of skills.

Entrepreneurship education is being increasingly promoted in most European countries,

according to a new report published by the European Commission. Eight countries (Denmark,
Estonia, Lithuania, the Netherlands, Sweden, Norway, Wales and the Flemish part of Belgium)
have launched specific strategies to promote entrepreneurship education, while 13 others
(Austria, Bulgaria, the Czech Republic, Finland, Greece, Hungary, Iceland, Liechtenstein,
Poland, Slovakia, Slovenia, Spain and Turkey) include it as part of their national lifelong
learning, youth or growth strategies. Half of European countries are engaged in a process of
educational reforms which include the strengthening of entrepreneurship education.

The role of entrepreneurship is not confined only to creation of enterprises, but also includes
creation of the capacity to produce wealth, jobs and income, which are the most direct indicators
of economic development. In fact, underdevelopment is not because of the lack of natural
resources but because of the absence or inadequate supply of entrepreneurs. If only natural
resources were the key determinant of economic growth, the entire African continent or Latin
America or most of Asia would have been developed. Within India, states like Assam, Bihar,
Madhya Pradesh, Orissa, etc., would have been leading the growth trajectory of the country. As a
matter of fact, economic growth is the outcome of entrepreneurial endeavors‘. They pool
together and organise various factors of production. They explore opportunities, convert ideas
into viable business propositions leading to provision of new products and services to society.
They change the way we live.

The Indian society, by and large, has a distinct preference for service/decent job that provides
economic security and access to power that be. Youth get exposure to this kind of pro-service
culture since childhood. They grow up with a job-oriented mind-set, and seldom think of
entrepreneurship as a career. Our educational system also rarely exposes the students to
entrepreneurship; prepares them for a job instead. Even if someone with a high entrepreneurial
aptitude wants to set up a business, she /he is discouraged by a host of adverse factors: lack of
adequate access to information on setting up and operating a business, procedural hurdles, lack
of start-up funds, lack of adequate networks and mentoring support, difficult access to
technology, lack of a supportive system, operational difficulties, and the nightmare about the
consequences of failure. These factors emerge large and hinder the emergence of
entrepreneurship, in adequate measure.

In view of these considerations, the Government of India has decided to formulate a National
Entrepreneurship Policy with the predominant aim to enhance the supply of entrepreneurs.
The proposed Entrepreneurship Policy, it needs to be clarified, is different from Micro, Small
and Medium Enterprise (MSME) Development Policy. While MSME policy focuses on existing
enterprises or a group of enterprises (clusters), entrepreneurship policy focuses on individuals
with an expectation that they would move towards entrepreneurship.

The client in the case of an MSME Policy is a firm, a physical entity, unlike the entrepreneurship
policy where it is difficult to pin point the ‗target‘ precisely. The Entrepreneurship Policy covers
multiple stages in the emergence of an enterprise from pre-start to stabilisation and growth. It
usually focuses on motivation, opportunity and skills with the primary objective of encouraging
people to venture out. Moreover, while an MSME Policy uses hard policy instruments ‘to
directly benefit established firms; entrepreneurship policy uses soft‘ policy measures such as
awareness, promotion, skill development, networking and mentoring, and tries to change the
mind-set of target group. In short, it aims at making entrepreneurship a movement.

It is often argued that while every entrepreneur is self-employed, every self-employed person is
not an entrepreneur. By and large, Entrepreneurship Policies across the globe do not regard self-
employment as entrepreneurship‘. Rather, entrepreneurship has some element of innovation and
growth potential. Entrepreneurs bring productivity gains through innovations and enhance
competitiveness. Entrepreneurship Policy strives to promote and strengthen the requisite
competence to this end.

But entrepreneurship policy in a developing country likes India, suffering from serious
unemployment problem, can hardly ignore self-employed segment of the economy. Not only do
these necessity based‘ entrepreneurs eke out their living as an integral part of
unorganised/informal sector, they also contribute significantly to GDP and employment. It is
estimated that the non-farm unorganised sector accounts for about 89 per cent of the gross value
added and almost 98 per cent of employment in MSMEs, of which over 64 per cent units fall in
the self-employment category. Government is aware of the fact that due to their informal status
they do not have much access to the Government support umbrella. It is, therefore, necessary to
craft an Entrepreneurship Policy which is all inclusive and addresses concerns of self-employed
micro entrepreneurs as well as under-represented groups like women, minority communities, SC/
ST, other disadvantaged groups.

In view of these considerations, the proposed Policy, though focusing primarily on innovative,
budding, start-up and growth-oriented entrepreneurs, will also address the issues challenging
self-employed micro entrepreneurs and under-represented groups with a view to making them
more productive, efficient and competitive.

Brief history of Entrepreneurial activities in India:

The known Economic history of India begins with the Indus Valley Civilisation. The Indus
civilization's economy appears to have depended significantly on trade, which was facilitated by
advances in transport. Around 600 BC, the Mahajanapadas minted punch-marked silver coins.
The period was marked by intensive trade activity and urban development. By 300 B.C., the
Maurya Empire united most of the Indian subcontinent. The political unity and military security
allowed for a common economic system and enhanced trade and commerce, with increased
agricultural productivity.

For the next 1500 years, India produced its classical civilization such as the Rashtrakutas,
Hoysalas and Western Gangas. During this period India is estimated to have had the largest
economy of the ancient and medieval world between until 17th century AD, controlling between
one third and one fourth of the world's wealth up to the time of Maratha Empires, from whence it
rapidly declined during European colonization.

India has followed central planning for most of its independent history, which have included
extensive public ownership, regulation and trade barriers. After the 1991 economic crisis, the
central government launched economic liberalisation. India has turned towards a more capitalist
system and has emerged as one of the fastest growing economies of the world.

Ancient and medieval characteristics

Though ancient India had a significant urban population, much of India's population resided in
villages, whose economy was largely isolated and self-sustaining. Agriculture was the
predominant occupation of the populace and satisfied a village's food requirements besides
providing raw materials for hand based industries like textile, food processing and crafts. Besides
farmers, other classes of people were barbers, carpenters, doctors (Ayurvedic practitioners),
goldsmiths, weavers etc.

Business structure:

Mostly it was a family business. In the Joint Family System, members of a family pooled their
resources to maintain the family and invest in business ventures. The system ensured younger
members were trained and employed in the family business and the older and disabled persons
would be supported by the family.

Along with the family-run business and individually owned business enterprises, ancient India
possessed a number of other forms of engaging in business or collective activity, including the
economic organisations of merchants, craftspeople and artisans, and perhaps even para-military
entities.
GDP Estimates:

During the Mughal period (1526–1858) in the 16th century, the gross domestic product of India
was estimated at about 25.1% of the world economy. An estimate of India's pre-colonial
economy puts the annual revenue of Emperor Akbar's treasury in 1600 at £17.5 million (in
contrast to the entire treasury of Great Britain two hundred years later in 1800, which totaled £16
million). The gross domestic product of Mughal India in 1600 was estimated at about 24.3% the
world economy, the second largest in the world. By the late 17th century, the Mughal Empire
was as its peak and had expanded to include almost 90 per cent of South Asia, and enforced a
uniform customs and tax-administration system. In 1700 the exchequer of the Emperor
Aurangzeb reported annual revenue of more than £100 million.

According to economic historian Angus Maddison in his book Contours of the world economy,
1–2030 AD: essays in macro-economic history, India had the world's largest economy during the
years 1 AD and 1000 AD.

Economic historians in the 21st century have found that in the 18th century real wages were
falling in India, and were "far below European levels."

After gaining the right to collect revenue in Bengal in 1765, the East India Company largely
ceased importing gold and silver, which it had hitherto used to pay for goods shipped back to
Britain. During the period, 1780–1860, India changed from being an exporter of processed goods
for which it received payment in bullion, to being an exporter of raw materials and a buyer of
manufactured goods. More specifically, in the 1750s, mostly fine cotton and silk was exported
from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw
materials, which chiefly consisted of raw cotton, opium, and indigo, accounted for most of
India's exports.

The British colonial rule created an institutional environment that stabilized law and order to a
large extent. The British foreign policies however stifled the trade with rest of the world. They
created a well-developed system of railways, telegraph and a modern legal system. The
infrastructure the British created was mainly geared towards the exploitation of resources in the
world and totally stagnant, with industrial development stalled, agriculture unable to feed a
rapidly accelerating population. They were subject to frequent famines, had one of the world's
lowest life expectancies, suffered from pervasive malnutrition and were largely illiterate.

Declining Share of World GDP

British economist, Angus Maddison argues that India's share of the world income went from
27% in 1700 (compared to Europe's share of 23%) to 3% in 1950.Before the 18th century, China
and India were the two largest economies by GDP output. Modern economic historians have
blamed the colonial rule for the dismal state of India's economy; investment in Indian industries
was limited since it was a colony.

The Absence of Industrialisation During The Colonial Period

Historians have questioned why India did not undergo industrialisation in the nineteenth century
in the way that Britain did. In the seventeenth century, India was a relatively urbanised and
commercialised nation with a buoyant export trade, devoted largely to cotton textiles, but also
including silk, spices, and rice. By the end of the century, India was the world’s main producer
of cotton textiles and had a substantial export trade to Britain, as well as many other European
countries, via the East India Company. Yet as British cotton industry underwent a technological
revolution in the late eighteenth century, the Indian industry stagnated, and industrialisation in
India was delayed until the twentieth century. Historians have suggested that this was because
India was still a largely agricultural nation with low wages levels. In Britain, wages were high,
so cotton producers had the incentive to invent and purchase expensive new labour-saving
technologies. In India, by contrast, wages levels were low, so producers preferred to increase
output by hiring more workers rather than investing in technology.

Independent India

After the independence India adopted a socialist-inspired economic model with elements of
capitalism. India adopted a USSR-like centralized and nationalized economic programs called
Five Year Plan.

The "Nehruvian Socialist rate of growth" is used to refer to the low annual growth rate of the
economy of India before 1991. It stagnated at around 3.5% from the 1950s to 1980s, while per
capita income growth averaged extremely low 1.3% a year. At the same time, South Korea grew
by 10% and Taiwan by 12%.

Moreover, the structural economic problems inherited at independence were exacerbated by the
costs associated with the partition of British India, which had resulted in about 2 to 4 million
refugees fleeing past each other across the new borders between India and Pakistan. Government
was assigned an important role in the process of alleviating poverty, and since 1951 a series of
plans had guided the country's economic development. Although there was considerable growth
in the 1950s, the long-term rates of real growth were less positive than India's politicians
expected. Toward the end of Nehru's term as prime minister, India would continue to face
serious food shortages despite hoped for progress and increases in agricultural production.

Since 1950, India ran into trade deficits that increased in magnitude in the 1960s. The
Government of India had a budget deficit problem and therefore could not borrow money from
abroad or from the private sector, which itself had a negative savings rate. As a result, the
government issued bonds to the RBI, which increased the money supply, leading to inflation. In
1966, foreign aid, which was hitherto a key factor in preventing devaluation of the rupee, was
finally cut off and India was told it had to liberalise its restrictions on trade before foreign aid
would again materialise. The response was the politically unpopular step of devaluation
accompanied by liberalisation

From FY 1951 to FY 1979, the economy grew at an average rate of about 3.1 percent a year in
constant prices, or at an annual rate of 1.0 percent per capita (see table 16, Appendix). During
this period, industry grew at an average rate of 4.5 percent a year, compared with an annual
average of 3.0 percent for agriculture. The Union government treasury reported annual revenue
of £5–6 billion in 1975 thus registering an average annual growth of almost 12 per cent during
the third quarter of the 20th century.

Economic liberalisation in India in the 1990s and first decade of the 21st century led to large
changes in the economy. This is a chart of trend of gross domestic product and foreign trade of
India at market prices estimated by Ministry of Statistics and Programme Implementation with
figures in millions of Indian Rupees.

Per Capita
Gross Domestic
Year Exports Imports US Dollar Exchange[2] Income
Product
(as% of USA)
1980 1,380,334 90,290 135,960 7.86 Indian Rupees 2.08

1985 2,729,350 149,510 217,540 12.36 Indian Rupees 1.60

1990 5,542,706 406,350 486,980 17.50 Indian Rupees 1.56
1995 11,571,882 1,307,330 1,449,530 32.42 Indian Rupees 1.32
2000 20,791,898 2,781,260 2,975,230 44.94 Indian Rupees 1.26

2000 onwards

The Indian steel industry began expanding into Europe in the 21st century. In January 2007
India's Tata Steel made a successful $11.3 billion offer to buy European steel maker Corus
Group. In 2006 Mittal Steel (based in London but with Indian management) acquired Arcelor for
$34.3 billion to become the world's biggest steel maker, ArcelorMittal, with 10% of the world's
output. Currently, the economic activity in India has taken on a dynamic character which is at
once curtailed by creaky infrastructure, for example dilapidated roads and severe shortages of
electricity, and cumbersome justice system yet at the same time accelerated by the sheer
enthusiasm and ambition of industrialists and the populace.

Despite steady growth and continuous reforms since the Nineties, Indian economy is still mired
in bureaucratic hurdles from coast to coast.

Current Status
India has emerged as the fastest growing major economy in the world as per the Central Statistics
Organisation (CSO) and International Monetary Fund (IMF).The Government of India has
forecasted that the Indian economy will grow by 7.1 per cent in FY 2016-17. As per the
Economic Survey 2016-17, the Indian economy should grow between 6.75 and 7.5 per cent in
FY 2017-18. The improvement in India’s economic fundamentals has accelerated in the year
2015 with the combined impact of strong government reforms, Reserve Bank of India's (RBI)
inflation focus supported by benign global commodity prices.India’s economy was slowing
down in early FY17, until the favourable monsoon started lifting the economy, but the recovery
was temporarily disrupted by demonetization.
According to the World Bank Country Director in India, Mr. Junaid Ahmad, India will remain
the fastest growing economy in the world and it will get a big boost from its approach to GST
which will reduce the cost of doing business for firms, while ensuring no loss in equity. The
World Bank said demonetisation only caused a temporary disruption in growth.
GDP growth slowed to 7% year-on-year in the 3rd quarter of 2016-17 from 7.3% in the 1st
quarter. “As a result, a modest slowdown is expected in the GDP growth in 2016-17 to 6.8%,”the
bank said.

Entrepreneurial Initiatives in India- “Top Incubation Center”

Centre for Innovation, Incubation& Entrepreneurship (CIIE) - IIM Ahmedabad

Set up in 2001Since inception CIIE has 15-odd innovations grow out of the incubation centre in
varied Technologies.

Society for Innovation and Entrepreneurship (SINE)- IIT Bombay

Set up in 2004 .It currently has 16 companies under its incubation programme

Cell for Tech Innovation, Development & entrepreneurship support- IIT Chennai
Set up in 2000.Organises national level competitions, „Breakthrough (general business plan
competition) and „Genesis (social entrepreneurship plan competition)

Society for Innovation and Development (SID) - IISc, Bangalore

Set up in 2006. The investigator is given a seed capital for Rs 20 lakh a year for two years as soft
loan for the approved plan

The SP Jain Centre for Entrepreneurship Development- SPJIMR

16-week 'Start Your Own Business' programme-a public programme held every six months.

Technology Business Incubator (TBI) - BITS Pilani

In association with DST, BITS has established Technology Business Incubator in the area of
embedded systems and VLSI design back in 2004.So far, TBI has helped spawn ten companies.

Technology Incubation and Entrepreneurial Training Society (TIETS) – IIT Kharagpur

Set up in 2005, So far, the institute has been able to incubate two companies throughConcipio
over the last three years. Besides, an in house panel has helped 11-12 ventures take wing
Nirma Labs, Nirma University, Ahmedabad
Established in 2004, Nirma Labs used to pride itself in a three-step model for students who were
interested to start their own businesses-training, incubation and funding.

Society for Innovation & Entrepreneur at IIT-B, Nedathur S Raghvan Centre for entrepreneurial
Learning (NSR-CEL) at IIM-B and the Technopreneur Promotion Programme at the Department
of Scientific and Industrial Research DSIR are some other institutions working for the
development of entrepreneurial mindset in young students.

Nivesh Mitra - Online Platform for Entrepreneurs

To maintain the momentum of industrial development and attracting investment, Govt. of Uttar
Pradesh has taken various investment facilitation measures to provide assistance to entrepreneurs
thereby contributing to overall socio-economic progress of Uttar Pradesh and India.
Nivesh Mitra enables submission of applications online anytime from anywhere; submission &
processing of applications for setting up of industries, saves time and money as repeated visits to
different departments not required. This introduces transparency in granting approvals, reduces
visits to departments, brings all functionalities at one place.

Bottlenecks and Remedies of entrepreneurship in India

The biggest challenge to an entrepreneur is the entrepreneur himself/herself: Fear, Self doubt,
Lack of focus, and Self-sabotage can bring down even the most brilliant entrepreneur with the
best idea. Nearly 60%Indians possess strong entrepreneurial qualities- optimism, business-
mindedness, persistence etc. Yet most Indians do not want to start their own business. Why? A
look around may be sufficient to see ample reasons that prove to be a barrier to the
entrepreneurial strength of mind.

A study on Entrepreneurship was conducted by National Knowledge Commission in 2008 that

was based on the one-to-one interviews of 155 entrepreneurs across the country(mostly from big
cities). According to the study about 60 per cent of the entrepreneurs interviewed responded that
during their entrepreneurial journey while dealing with government procedure and officials they
faced corruption. Entrepreneurs face difficulty and delays in meeting various government
requirements such as registration of company, obtaining licenses and registering the property.

According to the Bureaucratic potholes, poor infrastructure facilities prove to be a huge hurdle to
the distribution network. Corruption, red-tapism, lack of adequate skilled manpower and poor
infrastructure are the major barriers to growth of entrepreneurship in India.

The study also quoted the World Bank report, 'Doing Business in South Asia 2007', and said it
takes 35 to 52 days to start a business in India. The official costs of starting a business are high
and the process quite complex involving no less than 13 procedures, it said.

About 50 per cent of the entrepreneurs said they faced problems while obtaining various
clearances and licences. The NKC study quoted the World Bank report and said certain Indian
cities had best practices like Jaipur (for starting business), Bhubaneswar (for obtaining
construction clearance) and Bangalore (for obtaining building permits). With regard to
infrastructure, India projects a poor show, it said. The facilities like roads, highways, railways,
ports, airports, power and telecom are in bad state causing high transport and supply-chain costs,
it said.

Entrepreneurship in India comes with its huge share of cultural bottlenecks. There is a never-
ending family pressure for job security through traditional means. Educational system in India is
held within rigid boundaries one that prepares students to take up traditional employment rather
than instilling the confidence to do something that one likes.
Common challenges faced by Entrepreneurs while starting business in India are:
1. Bureaucracy,
2. Corruption,
3. Entrepreneurial Culture
4. Labour,
5. R&D and technology related factors
6. Physical infrastructures
7. Regional Sentiments,
8. Grey Market and Counterfeit Goods and
9. Social Capitals
10. Access to Finance
Not everybody will call the factors discussed here problems, but these can lead to problems if not
managed properly.
These are the factors you have to take into account if you are operating in India. If managed
correctly, these can be advantages; otherwise these can lead to serious problems for the
enterprise.
Bureaucracy:
The word bureaucracy comes from the French word bureau, which refers to an ‘office’ and the
Greek suffix kratos, which means ‘power’ or ‘rule.’ So, bureaucracy refers to the ‘rule of the
office.’
Max Weber is one of the most influential social thinkers to have studied bureaucracy in detail.
According to Weber, some of the main characteristics of bureaucracy are as follows:
1. Official business is conducted on a continuous basis.
2. Official business is conducted according to written rules.
3. Roles and responsibilities are defined within a hierarchy, with rights of supervision and
appeal.
4. Official and private business and income is strictly separate.
Public offices are set up for the good of the people and the officials manning the posts are
referred to as public servants. But, if left unchecked, these public officials can become self-
serving and corrupt.
Firstly, there are a large number of procedures to be followed and clearances to be obtained to
start and operate a business. Secondly, each of these procedures can take an inordinately large
amount of time.
Procedures are established to safeguard the interest of the common man. But, sometimes, the
rules and regulations stop serving the purpose they were designed for. Rules become tyrannical
in nature and an enormous wasted effort is directed towards compliance with rules and
regulations.
Lack of resources is one of the major problems faced by entrepreneurial firms. In this situation,
new ventures find it extremely taxing to divert time and attention to time-taking procedural
issues.
Corruption:
While under no circumstances, corruption can be justified, it is a bitter truth that it is rampant in
many government departments. Even private sector is not spared by it. We have to make a
collective effort to curb this social evil. As it hampers growth of the business, it is a challenge for
budding entrepreneurs.
Sometimes, people pay money to just hasten processes and do not ask for any undue favours.
According to Kauffman and Wei (1999), in an environment in which bureaucratic burden and
delay are exogenous, an individual firm may find bribes helpful to reduce the effective red tape it
faces.
For example, the bank is not releasing money even though it has sanctioned release of funds.
There might be some official who has raised an unwarranted objection. In such cases, some
people are tempted to grease the palms to get things flowing.
Some people also pay bribes to get something beyond the scope of what is fairly due to them, for
example paying bribe to get money released from bank even though the paperwork is not in
order. Sometimes, this is carried to a ridiculous extent such as paying money to ensure that the
competitor’s funds are not released from the bank.
Many entrepreneurs have experienced a higher degree of corruption among employees of large
private-sector companies than in the government. How you prefer to deal with corruption is your
personal choice. There are some entrepreneurs who have taken the difficult path and have played
it by the book. Many entrepreneurs have chosen the middle path and have given in to corruption
in some instances but later have fought vehemently against it and succeeded. There are also some
dangerous entrepreneurs who use their access to corrupt officials as a competitive edge. But,
such practice does not give them success in the long run.
Corruption has also spawned a business of ‘consultants’ whose only activity is to mediate
between the corrupt officials and those seeking favours from them. Some entrepreneurs use them
to secure funding from banks, get approvals for constructions and for periodic submissions
relating to labour laws, taxes, and industrial approvals.
The situation is now changing rapidly and there is hope that corruption will come down in the
near future. The factors likely to lead to a lesser degree of corruption are as follows:
1. There is greater transparency in procedures to be seen across government departments. A
number of departments have initiated e-governance initiatives, which decrease public interface
with officials by enabling registration, filing, payments, and registering complaints through the
Internet.
2. The right to information (RTI) Act has significantly changed the situation by giving greater
access of government records to interested or affected members of the general public.
3. The media too has played an active and visible role by conducting sting operations to expose
corruption at many levels. The public humiliation suffered by officials caught in these operations
has served as a deterrent to corruption.
Entrepreneurial culture

Societal norms that “permit variability in the choice of paths of life" are likely to promote
entrepreneurial behavior (Hoselitz 1960, p.l55). A society’s religions strongly dictate such a
possibility. Most of the Indian religions discourage entrepreneurships (Berdyaev, 1990; Buss,
2003). Many beliefs and values run counter to capitalism and entrepreneurship (Dana, 2000).
Accepting one's destiny rather than trying to control life can be viewed as a central core of
traditional cultural values in India. A distinguishing feature of Hinduism is its social structure
based on the caste system, which have acted as a major barrier to entrepreneurship in India
(Dana, 2000; Sharma, 2003). The caste system has thus hindered class mobility. Unsurprisingly
the Vaishya (the caste of merchants) and non-Hindu communities (e.g., Jains and Parsis)
historically dominated Indian businesses community.
The studies of many researchers over the past few decades have indicated that various
obligations associated with the Indian caste system make it more compelling and convenient to
follow the family occupation instead of launching a new venture.
Entrepreneurship thrives in a society that places a high value on work and innovation. It is
argued that work is not valued in itself in India. Observers also suggest that people in the country
work primarily because of emotional attachment with the workplace or as a favor to the
supervisor or to the employer.
Indian culture also places relatively less value on innovation and gradual improvements.
For example, a belief among many people in India is that for the inner soul and mind, being
passive and satisfied with the status quo is healthier than trying to improve the situation (Dana,
2000). Women entrepreneurs in India face additional obstacles (Bertaux and Elaine, 2009).
Majority of communities in the country think that a respectable girl should not expose herself to
outside influences. In traditional sectors, it is a taboo and probably hard to imagine for young
women to work during nights. During 1993-2001, 53% of adult Chinese worked compared to
37.7% of Indians (Deloitte, 2006). This difference was largely due to the lower female
participation in India. Traditionally, women were not allowed to work after sunset.

One final, but not less important, aspect of Indian culture is the fact that Indian society has a
negative attitude toward entrepreneurship in general and especially failure as an entrepreneur.
Gandhi (2010) notes: “And don’t even think about what will happen if you fail as an
entrepreneur. Socially, you will have lost your eligibility for marriage until you get a job.
Financially, you’ll be saddled with loads of debt, and politically, good luck on somebody
acknowledging your entrepreneurial endeavor as real work experience.
With all these challenges, one wonders why anyone bothers trying to become an entrepreneur in
India?”

Labour:
Lack of manufacturing capability in India has been attributed to red tapism and corruption, but
the low productivity of labour is also a big factor. In the early days of offshoring, firms from the
US and Western Europe preferred to set up manufacturing facilities in Thailand, Mexico, and
China, rather than in India. Though these countries too had an equally bad record of red tapism
and corruption, the labour in these countries was found to be more productive.
In spite of our huge population and high economic growth, it was only in 2006 that the economy
of India overtook that of Mexico in terms of GDP.
An active workers’ union is not bad, but sometimes, in India, there may be more than one union
(e.g., one affiliated to CITU and the other to AITUC), with differing agendas, claiming to
represent the workers’ interests.
Since India is a secular country, religious beliefs of every religion are respected. So, it has
holidays on occasions such as Christmas, Good Friday, Holi, Diwali, Muharram, Id-ul-Zuha,
Guru Nanak’s Birthday, Buddha Jayanti, and Mahavir Jayanti. There are also holidays on
occasions of national importance.
As a result, the number of working days in a year is reduced. Furthermore, long breaks in work
brought about by bandhs, regional unrest, and breakdown of supporting infrastructure in times of
floods, earthquakes, and other natural calamities also disrupt the work.
Welfare measures that restrict long hours of work, protect women workers, and prohibit
underage employees are desirable; but, misuse of these clauses to halt legitimate business
practices is harmful for the growth of industry.
The Indian labour is cheap because of a comparatively low wage structure. But, the productivity
of the cheap labour is not always satisfactory. Employers often need to keep a regular check on
their employees.
The manufacturing sector is now beginning to take off, and there has been a spectacular growth
in the services sector. There is a tremendous shortage of skilled and semi-skilled manpower.
There are not enough institutions in India geared to train employable youth on skills that are in
demand in the job market.
The manufacturing sector is facing a dearth of fitters, welders, draftsmen, and machine operators.
The lack of elementary skills in many call centre and BPO employees has been very well
documented by NASSCOM and other industry watchers.
Finally, stringent laws governing lay-off of employees make it very difficult to fire workers in
case of non-performance or during times of financial distress when it becomes imperative to lay-
off workers to maintain the financial viability of the business operations.
Regional Sentiments:
Many businesses have failed because they failed to take into account the sentiments of the local
population. Many successful businesses have managed to identify and respond to local
sentiments. Many outlets of international fast food chains such as Pizza Hut and McDonald’s do
not serve beef or pork as a sign of respect for local mores. On the other hand, scores of
businesses suffer because of anti-social elements trying to score political points by going on a
rampage.
The local community expects to gain from every business being set up in its vicinity. This is
especially true when businesses come up in economically backward areas with very little
industrialization. The local community expects employment in the firm and does not react
favourably to employment of migrant workers.
In case the business is also planning on marketing its end products in that area, some local
businesses will be adversely affected. It is important to address the concerns of those who fear
for their businesses. Otherwise, they are likely to try their best to drum up for an organized
opposition to your business.
For example, if you are setting up a large biscuit factory, some local bakery owner will fear that
his/her unit will have to close down. The local biscuit factory owner has to be reassured that the
biscuits from your factory are aimed at a different market and are going to compete with
Britannia and Parle and not with him/her. You have to be truthful; lying at this stage will not be
of much use in the long run.
Sometimes, setting up an industrial unit will put pressure on the availability of scarce resources
or might adversely affect the quality of the resources. For example, pollution can affect the
quality of the ground water, or if it is a power-intensive unit, it might affect the availability of
power in the area.
In case such adverse reactions from the local population are foreseen, it is usually desirable to
spread the word about the advantages of having the business in the vicinity. Some of the
advantages that can be presented to the local community are growth in employment, possibility
of generating business for service providers such as small transporters and welding shops, long-
term possibility of small ancillary units, and improvement of some local infrastructure such as
roads.
Sometimes, entrepreneurs make goodwill gestures such as donating money to the local puja
committee, buying a computer for the school, or something similar. Overdoing this can backfire
as it can raise the expectation of the local community.
R&D and technology related factors
India’s ICT adoption and usage rates have been relatively lower compared to most countries. For
instance, India’s subscription rates of cellular and fixed phones, PC, the Internet and high speed
broadband are well below China (UNDP-2008). According to a study released by Google India
in the mid-2011, only 2 million out of 35 million SMEs were online (Narasimhan, 2011).
Nonetheless, there have been some highly visible instances of ICT usage in promoting
entrepreneurial activities. As a high profile example, in October 2010, Intel announced an
agreement with an alliance of 70 companies including Bombay Stock Exchange (BSE) and CtrlS
to develop hardware and software for an open and inter-operable cloud. The Open Data Center
Alliance (ODCA) works to address security, energy efficiency and interoperability. The BSE
expects that the new trading platforms supported by mobile telephony and clouds would broaden
participation by allowing real-time and seamless access to data across phones, laptops and other
devices. The new platforms have increased participation of younger Indians in shares, insurance,
mutual funds and others. Especially the popularity of mobile-based cloud applications is
promising.
India’s overall innovation and R&D profile is weak. India lags behind industrialized countries
and its neighbor China in terms of various indicators related to R&D and innovations. Due to
India’s poor R&D and innovation performance, some liken entrepreneurial activities in the
Indian IT and off shoring industry to a “hollow ring”. An Economist article notes: “India makes
drugs, but copies almost all of the compounds; it writes software, but rarely owns the result. …[it
has] flourished, but mostly on the back of other countries' technology" (Economist, 2007a).
Physical infrastructures
A lack of well-developed physical infrastructures has been a barrier hindering entrepreneurship.
Most roads are narrow. In 2007, there were only 1,500 trucks and one-third of produces were
reported to be rotted before reaching customers (Hamm and Lakshman, 2007). The global
financial crisis further hindered India’s infrastructure development. In the late 2008, reports
indicated that about half of India's planned highway-improvement projects, which were valued at
about 420 billion INR, could be delayed by two years.
According to the Planning Commission, inefficient power supply has hindered entrepreneurial
activities, employment creation and poverty reduction (UNDP, 2008). As of 2008, half of India’s
population or about 500 million people, lacked access to electricity (UNDP2008).
Grey Market and Counterfeit Goods:
The grey market refers to the flow of goods through a distribution channel not authorized or
intended by the manufacturer. Usually, this happens when the price of a product in the domestic
market is much higher than in other nearby markets.
Sometimes, this may be because of high local taxation. In India, the goods that are usually
smuggled in are cell-phones, electronic goods, jewellery, and alcohol. Chen (2002) even suggests
that grey marketing activities can develop a situation of fair competition in which social welfare
increases. In India, the prices of cell-phones used to be very high but rampant smuggling has
prompted a change in taxes and prices, greatly reducing the differential between India and
Singapore or Dubai.
Another problem is that of counterfeit goods. Even though, strictly speaking counterfeit goods
are not part of the grey market, increasingly people are clubbing the two together and including
counterfeit goods in the definition of ‘grey’ products.
The existence of a well-entrenched grey market is a truth in the Indian business scene. The
problem of ‘grey markets’ can be visualized as existing at various levels. Let us look at the
following situations to have a clearer perception.
Suppose a customer is interested in buying a DVD player. She goes to an authorized dealer and
the authorized dealer tries to sell her a spurious product. This is common in the case of branded
electronic items, clothes, perfumes, and accessories. It is very easy for unscrupulous
manufacturers to make imitation of the actual product and try to sell it as the real thing.
Sometimes, in the case of pirated products, the buyers know that they are buying fake items.
They are willing to buy a product that gives them the same utility as the real product at a much
lower cost. In many parts of India, people make a living by selling pirated copies of software,
movies, and video games to customers who know that they are buying a pirated copy for a
fraction of the cost of a legally procured copy.
Now, a range of proactive measures are taken by companies to stamp out counterfeit and grey
goods. Some of these are outlined here:
1. Manufacturers are drastically reducing prices to narrow the gap in prices in local and overseas
markets.
2. Warranties may not be extended to products not purchased through the regular channels. So, a
Nokia service centre will not honour a manufacturer’s warranty on a Nokia product that has not
been bought from a bona-fide dealer paying all taxes.
3. Some high-tech solutions have also been devised such as the use of DVD regional codes to
protect movies and other digital content.
A new enterprise desirous of building a brand or an image of a manufacturer of high-quality
goods needs to think about a strategy to tackle the problems posed by the grey market.
Fake products are an industry by themselves. There are many shady enterprises manufacturing
fake labels, packaging, etc. There are many products that carry a name similar to that of the
successful product. HUL has identified dozens of manufacturer of washing powder who sell
using a brand name very similar to Surf. This is a direct contravention of the intellectual property
rights of HUL.
Social Capital:
It is also loosely defined as Pehchaan in India or Guanxi in China. Social capital has been
defined as the aggregate of the actual or potential resources that are linked to relationships of
mutual acquaintance and recognition (Bourdieu 1983). It can also be referred to as connections
or relationships. Unlike other forms of capital, social capital is not depleted by its use; rather, it is
depleted by its non-use.
People like to do business with people they know. Conversely, it becomes easier to do business if
you know the right people. They may be the people either in the industry or in the bureaucracy.
When relationships take precedence over the principles of fair play and rules, it leads to
cronyism and nepotism. Sometimes, these relationships extend to doing special favours to others
in your social group or caste and those connected by kinship.
Portes (1998) has identified the following negative consequences of misuse of social capital:
i. Exclusion of meritorious outsiders
ii. Excessive claims on group members
iii. Restrictions on individual freedom
iv. Norms aimed at downward leveling
Measuring social capital can prove to be tricky, but it depends on how many people you know,
how powerful are those people, and what they are willing to do for you. There are a number of
cases of entrepreneurs who have benefited by knowing the right people and using it to their
advantage.
Similarly, there will be a lot of cases of business failure that can be attributed to not having a
close relationship with some significant individuals. Whether use of social capital for business
purpose is right or wrong, can be argued for long, but its existence is a reality that every
entrepreneur has to deal with.
Access to finance

Access to finance has been a major barrier facing many potential entrepreneurs in India. A bank
loan or angel investment is not impossible to get but extremely unlikely. Getting funding is even
harder if, like most aspiring entrepreneurs, you are not from a top-tier university and don’t have a
family with deep-pockets. There are countless ‘micro entrepreneurs ‘in Indian society who
finance their own small businesses as a means to survival but don’t have access to the capital
necessary to grow them”. Situation regarding the common forms of entrepreneurial financing is
described below.

India's nationalized banks which account for 70% of bank assets in the country, are a major
source of financing for entrepreneurial firms (Economist, 2009a). The state banks, however, have
done little to promote productive entrepreneurship in India. A complaint often heard is that
business merits play a little role in loan disbursements (Bikchandani, 2010). Lending is
disproportionately oriented toward powerful economic and political interests such as family-
owned groups. This situation was more readily apparent in the pre-1991 India.
VC culture is not well developed in India. Observers have noted that Indian entrepreneurs often
fail to understand the reality that not all VC-funded companies are likely to achieve an IPO.
While there is a greater likelihood of a VC-funded company exiting through an M&A than an
IPO in the U.S., Indian entrepreneurs are less prepared for an M&A option (Tagare, 2011).
But the situation is changing very fast. In recent years, India has become increasingly attractive
destination for VC investments. In a survey conducted by Deloitte in 2009, 12% U.S.-based VC
investors considered India as the most attractive market

Finally, domestic savings have also been an important source of investment. The household
saving rates are showing increasing trends, which 34.7% of GDP in 2010 (Power, 2010). As is
the case of China and other Asian economies, the high savings rates in India can be attributed to
income insecurity associated with mostly informal jobs. The high saving rates thus may not
automatically translate to a higher investment rates.
The Entrepreneurship Process
Entrepreneurship is described as the quest of market opportunities to create future
innovative goods and services. These opportunities are discovered, evaluated and
exploited to extract social and economic value from the environment that ultimately
leads to new independent business / venture creation.
The extraordinarily multifarious process of new venture creation is embodied in
entrepreneurship. At start-up, the entrepreneurship process is a course of action that
involves all functions, activities and actions associated with identifying and evaluating
perceived opportunities and the bringing together of resources necessary for the
successful formation of a new firm to pursue and seize the said opportunities 1 Once set
up, the process of entrepreneurship becomes effectively a cyclical progression of
opportunity targeting and making strategic decisions regarding the allocation of scarce
resources in pursuit of value adding opportunities.
Although theoretical models of the new venture creation process differ in the
assumptions and variables encompassed, they do include common elements. Different
authors have identified different stages in the entrepreneurship process. In general given
below five stages of the entrepreneurial process are expressed by majority of the
economists.
1. Triggering event: In this stage the person develops impulsion to be an entrepreneur. There
are different reasons of this impulsion (internal or external) motivated by different factors that
can be categorized into either the push (requisite) or pull (prospects) factors There are
primarily three reasons that people become entrepreneurs or decide to become entrepreneurs
are a) to be their own boss, b) pursue their own ideas and c) realize financial rewards. This
intention is followed by next stage that is Innovation.
2. Innovation: Many new businesses fail not because the business men did not work hard
but because the idea was not viable. In other words there was no real opportunity in the
market. In this stage the idea is generated, opportunities prevailing in the market are
identified, information searched, idea is evaluated and researched to understand its
practicality and feasibility.
3. Planning: After feasibility analysis of idea and proper market research the entrepreneur
moves forward for the execution of idea in to reality. This includes business planning,
strategy formation, decision to proceed, identifying the different resources required, risk
assessment, resource acquisition and assembling.
4. Implementation: Fourth stage includes launching the new venture, implementing the
business plan, running the business, deploying of resources, handling marketing and funding
issues, monitoring the plan building success and managing the venture. The stage also
includes adopting a suitable marketing model, taking care of funding activities, feedback
& developing visions for future.
5. Growth: Lastly entrepreneur develops its business to the adolescence by maximizing
profits, harvesting the rewards and continually growing the venture to include other
opportunities. Safeguard of its intellectual property by required method is one of the most
important activities in this stage. Also entrepreneur has to retain its market position by
further innovation or improvement in the product or service.
STAGE 1 STAGE II STAGE III STAGE IV STAGE V
Decision to Idea Heading for Establishing Growing the
become generation & an enterprise and Managing business
entrepreneur Evaluation Enterprise

-Opportunity -Decision to -Implementing -Adolescence,

Impulse/
identification move forward business Strategy leading-
Intention for
-Information - Business -Deploying challenges of
launching a
search Plan resources growth, IP
venture
-Evaluation & -Resource - Handling - Harvesting
assessments mobilization marketing and the reward
-Screening or - Building funding issues -Growing the
creation of team - Monitoring venture-
idea - Gestation the plan Planning,
-Feasibility - Feedback & organizing &
Study, market developing Control
research visions for
future
Triggering event Innovation Planning Implementation Growth

The detail of this model of Entrepreneurial process is explained below.

Entrepreneurial Process – Stage I

Decision to move as an entrepreneur
The initial and crucial step in entrepreneurial process stage I is the decision to become
an entrepreneur. Normally a triggering event prompts an individual to be his/her own
boss. For example an individual may lose her job and decide to start her own business.
Life style issues may prompt entrepreneurial career. For example one may wait her kids
to be grown up before she can spare time for her own venture. Many authors articulate
that the actual decision to become an entrepreneur is motivated by different factors that can
be categorized into either the push (requisite) or pull (prospect) factors. Watson et al
(1998:224) endorses this and warns that motivation may also have a bearing on their
ultimate success or failure in business.

Entrepreneurial Process – Stage II

Idea Generation and Evaluation
Most authors agree that after the initial stage in the entrepreneurial process is idea
generation, identification and refining of a viable economic opportunity that exists in the
market.
There is a strong link between getting the initial idea and the starting of the new enterprise. Since
ideas are many, developing the right idea into a market opportunity, implementing it and
building a successful business around it are the important aspects of entrepreneurship.
Opportunity identification is related to entrepreneurial alertness that is described as the
entrepreneur’s ability to see, discover and exploit opportunities that others miss. Opportunity
identification includes searching and scanning the informational environment, inherent the
information from the changing external environments. It also includes being able to capture,
recognize and make effective use of abstracts.
Timely adaptation of that opportunity to suit actual market need is key to new venture
success. Opportunity development is the process of combining resources to pursue a market
opportunity identified. This involves systematic research to refine the idea to the most promising
high potential opportunity that can be transformed into marketable items. Feasibility of the idea
is checked and evaluated from all aspects. A professional evaluation can tell whether the specific
product or service developed by the idea can justify the investment and the risk taken for the
venture. The detail of process of feasibility analysis is discussed later in this book.
Feasibility Analysis
Feasibility analysis is the process of determining if a business idea is viable before spending
resources on it. Most entrepreneurs do not conduct a feasibility analysis before launching their
ventures.
Business feasibility study can also be defined as a controlled process for identifying problems
and opportunities, determining, describing situation, defining successful outcomes and assessing
the range of cost and benefits associated with several alternatives for solving a problems. As the
name implies, a feasibility study is an analysis of the viability of an idea.

The business feasibility reports is used to support the decision making process based on a cost
benefits analysis of actual business or project viability. The feasibility study is conducted during
the deliberation phase of business development cycle, prior to commencement of formal business
plan. It is analytical tool that include recommendation and limitation which are utilysed to assist
decision maker when determining if the business concept is viable.
Conducting a feasibility study need not be difficult or expensive, but the most important aspects
should all be taken into account to ensure that potential problems are addressed.
In general, the following questions can be answered by a feasibility study report:

a. Is there a demand for the produce? (Find out the characteristics required of the product
and the size and value of the market)

b. who else is producing similar products?(Determine the number and type of competitors)

c. What is needed to make the product? (Find the availability and cost of staff, equipment,
services, raw materials, ingredients and packaging)

d. What is the cost of producing a product? (Calculate the capital costs of getting started
and the operating costs of production)

e. What is the likely profit? (Calculate the difference between the expected income
from sales to an estimated share of the market and the costs of production)

Each of these aspects should be looked at in turn. When all the information has been gathered
and analysed, it should be possible to make a decision on whether the proposed investment in the
business is worthwhile or whether the producer's money could be better spent doing something
else. The same considerations should be taken into account when an existing entrepreneur wishes
to diversify production or make a new product.
A feasible business venture is one where the business will generate adequate cash-flow and
profits, withstand the risks it will encounter, remain viable in the long-term and meet the goals
of the founders. The venture can be either a start-up business, the purchase of an existing
business, an expansion of current business operations or a new enterprise for an existing
business.
A feasibility study is only one step in the business idea assessment and business development
process. To reduce the risk of failure and losing money, potential producers should go through
the different aspects of running their business in discussions with friends and advisers before
they commit funds or try to obtain a loan. This process is known as doing a feasibility
study and when the results are written down, the document is known as a business plan.

The conclusions of the feasibility study should out-line in depth the various scenarios examined
and the implications, strengths and weaknesses of each. The project leaders need to study the
feasibility study and challenge its underlying assumptions. This is the time to be skeptical.
Don’t expect one alternative to “jump off the page” as being the best scenario. Feasibility
studies do not suddenly become positive or negative. As you accumulate information and
investigate alternatives, neither a positive nor negative outcome may emerge. The decision of
whether to proceed is often not clear cut. Major stumbling blocks may emerge that negate the
project. Sometimes these weaknesses can be overcome. Rarely does the analysis come out
overwhelmingly positive. The study will help you assess the tradeoff between the risks and
rewards of moving forward with the business project.

Entrepreneurial Process - Stage III

After feasibility analysis of idea and proper market research the entrepreneur moves forward for
the execution of idea in to reality. In this stage the entrepreneur has to use his executive talent to
plan and manage the required resources, strategy to implement his plan in most efficient way.
So in this stage we discuss business planning, strategy formation, decision to proceed,
identifying the different resources required, risk assessment, resource acquisition and
assembling.
Entrepreneurial Process - Stage V
The last stage in the entrepreneurial process relates to that which facilitates the
continued survival of the firm, which may lead to its expansion to some optimum size
determined by the market demand. Growth is critical to entrepreneurial success and
distinguishes the entrepreneurial venture from the small one.
The Oxford Dictionary defines growth as “An industry that is developing particularly rapidly;
a company stock that tends to increase in capital value rather than yield high income”.
Synonymous with growing are the terms booming, rising, increasing, maturing and
developing.
The activities undertaken in the growth process are linked to five strategic growth intentions,
namely market expansion, technological change, garnering resources, operations, and
organizational development. There are five indicators for growth as financial, strategic,
structural, and organizational and image indicators.
Financial growth relates to the increase in turnover, costs and investment needed to achieve the
targeted sales, profits, business assets, tax efficiency and all related value added.
Strategic growth relates to changes taking place through corporate restructuring like take over,
mergers and acquisitions. Strategic growth is also related to the exploitation of new markets, new
products and new opportunities.
Structural growth relating to the changes taking place in the way the business organizes its
internal systems with regard to managerial roles, increasing employees and their responsibilities,
reporting relationships, communication links and increased use of internal systems to control
resources.
Organizational growth relating to changes taking place in terms of technical knowhow, processes
used the organization’s culture, management attitudes towards staff, as well as changes regarding
the entrepreneur’s role as the business moves from small to large.
Image growth relates to the changes taking place in the outlook of the location, offices its
branches and other changes taking place such as becoming more formal (e.g. having formal
business premises), relationship with prominent business associates and image building in the
market through publicity and advertisement.
It is well established that maintaining the growth of the company is vital for image building.
A professional organization always looks for developing a brand image for long term. This
process is more significant and challenging for the organization.
Protecting its Intellectual Property (IP) is crucial for any organization to maintain its lead in the
market. Intellectual Property rights allow the creators or owners to have the benefits from their
works when these are exploited commercially. In the last stage of entrepreneurial process these
assts protection becomes a challenging task for the organization.

Social Entrepreneurship
Social entrepreneurs are gearing to change India. Social entrepreneurship is expected to be the next big
thing to influence India as the country juggles to achieve a balance between a growing GDP growth,
ensuring inclusive growth and attempting to address issues ranging from education, energy efficiency to
climate change.
The terms social entrepreneur and social entrepreneurship were used first in the literature on social
change in the 1960s and 1970s. The terms came into widespread use in the 1980s and 1990s, promoted by
Bill Drayton the founder of Ashoka: “Innovators for the Public” and others such as Charles Leadbeater
after the publication of “The Rise of the Social Entrepreneur”.
Many activities related to community development and higher social purpose fall within the modern
definition of social entrepreneurship Social entrepreneurs are individuals with innovative solutions to
society‘s most pressing social problems. They are ambitious and persistent, tackling major social issues
and offering new ideas for wide-scale change.
Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is
not working and solve the problem by changing the system, spreading the solution, and persuading entire
societies to move in different directions.
Modern Concepts

There are continuing arguments over precisely who counts as a social entrepreneur. Thus far,
there has been no consensus on the definition of social entrepreneurship, so many different sorts
of fields and disciplines are associated with social entrepreneurship. Philanthropists, social
activists, environmentalists, and other socially-oriented practitioners are referred to as social
entrepreneurs.
For a clearer definition of what social entrepreneurship entails, it is necessary to set the function
of social entrepreneurship apart from other socially oriented activities and identify the
boundaries within which social entrepreneurs operate.
Social entrepreneurship is the process of pursuing innovative solutions to social problems. More
specifically, social entrepreneurs adopt a mission to create and sustain social value. They draw
upon appropriate thinking in both the business and nonprofit worlds and operate in a variety of
organizations: large and small; new and old; religious and secular; nonprofit, for-profit, and
hybrid.
Business entrepreneurs typically measure performance in profit and return, but social
entrepreneurs also take into account a positive return to society. Social entrepreneurship typically
furthers broad social, cultural, and environmental goals and commonly, is associated with the
voluntary and nonprofit sectors. At times, profit also may be a consideration for certain
companies or other social enterprises.
Social entrepreneurship in modern society offers a philanthropic form of entrepreneurship that
focuses on the benefits that society may reap. Simply put, entrepreneurship becomes a social
endeavor when it transforms social capital in a way that affects society positively. It is viewed as
advantageous because the success of social entrepreneurship depends on many factors related to
social impact that traditional corporate businesses do not prioritize. Social entrepreneurs
recognize immediate social problems, but also seek to understand the broader context of an issue
that crosses disciplines, fields, and theories. Gaining a larger understanding of how an issue
relates to society allows social entrepreneurs to develop innovative solutions and mobilize
available resources to affect the greater global society.
Unlike traditional corporate businesses, social entrepreneurship ventures focus on maximizing
gains in social satisfaction, rather than maximizing profit gains. Both private and public agencies
worldwide have had billion-dollar initiatives to empower deprived communities and individuals.
Such support from organizations in society, such as government-aid agencies or private firms,
may catalyze innovative ideas to reach a larger audience.
Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents
for society, seizing opportunities others miss to improve systems, invent new approaches, and
create solutions to change society for the better. While a business entrepreneur might create
entirely new industries, a social entrepreneur develops innovative solutions to social problems
and then implements them on a large scale.
Importance of Social Entrepreneurs in India
The growth post-liberalization, benefited the rich, (the increase in number of Indian millionaires
was second only to China), and a newly created middle class. What of the rest? Most of India or
400 odd million people live on less than $1 a day. In the latest 2012 human development index
(HDI) report, India languishes at 136, out of 187 countries. Income inequality has doubled in the
last 20 years.

Here social enterprises can play a role. They use market-proven business practices to solve social
and environmental problems. In the world of social entrepreneurs, business and philanthropy
collide, and strive to create a more equitable and sustainable world. They may not be the silver
bullet for all of India‘s gargantuan problems related to agriculture, poverty, infrastructure,
healthcare and education, but they may perhaps be our best bet.

They are turning rice husk into electric power (Husk Power Systems), employing the power of
the sun to bring light (Selco), bringing healthcare to rural areas (Vaatsalya Healthcare),
introducing solar-powered ATMs to villages (Vortex Engineering), providing emergency
ambulance services (Ziqitza Health Care), teaching English (English Helper) and giving access
to affordable potable drinking water.

They are identifying markets and problems that have been ignored and solving those using
innovative products and services. Most of the global case studies on successful social
entrepreneurs are peppered with Indian examples. Social entrepreneurship could also help India
avoid the mistake China made with its growth. The Red Dragon‘s phenomenal economic growth
has come at the cost of air, water and soil pollution.
One of the most interesting developments in the recent past has been the CSR bill proposed
by the government where 2 per cent of profits for big companies will be used for social
programmes that includes investment in social business ventures. This could be a huge boost for
social entrepreneurship, and give them access to more than a billion dollars in precious capital,
that is needed especially at the seed and early stages. Husk Power Systems, for example,
benefited from the grant that it got from Shell Foundation in its early days of technology
creation.
Increasing scope of social entrepreneurship naturally increases the likelihood of an efficient, sustainable,
and effective initiative. Increased participation draws more attention, especially from policymakers and
privately owned corporations that may help shape social entrepreneurs through policy changes, training
programs, and leadership development focused on developing social entrepreneurs.

Banker to the Poorest of the Poor

Economist and Nobel Peace Laureate Muhammad Yunus has become internationally renowned
for his revolutionary system of micro-credit (small loans to entrepreneurs too poor to qualify for
traditional bank loans) that has helped millions to escape poverty.
Born in the seaport city of Chittagong, Bangladesh, Yunus’ life is motivated by his vision of a
world without poverty.
“Here we were talking about economic development, about investing billions of dollars in
various programs, and I could see it wasn’t billions of dollars people needed right away.”
—Muhammad Yunus
In 1976, during visits to the poorest households in the village of Jobra near Chittagong
University, Yunus discovered that very small loans could make a disproportionate difference to a
poor person. Village women who made bamboo furniture had to take usurious loans to buy
bamboo, and repay their profits to the lenders. Traditional banks did not want to make tiny loans
at reasonable interest to the poor due to high risk of default. But Yunus believed that, given the
chance, the poor will repay the money and hence microcredit was a viable business
model. Yunus lent US$27 of his money to 42 women in the village, who made a profit
of BDT 0.50 (US$0.02) each on the loan. Thus, Yunus is credited with the idea of microcredit.
In December 1976, Yunus finally secured a loan from the government Janata Bank to lend to the
poor in Jobra. The institution continued to operate, securing loans from other banks for its
projects. By 1982, it had 28,000 members. On 1 October 1983, the pilot project began operation
as a full-fledged bank for poor Bangladeshis and was renamed Grameen Bank ("Village Bank").
Yunus and his colleagues encountered everything from violent radical leftists to conservative
clergy who told women that they would be denied a Muslim burial if they borrowed money from
Grameen.
By July 2007, Grameen had issued US$6.38 billion to 7.4 million borrowers. To ensure
repayment, the bank uses a system of "solidarity groups". These small informal groups apply
together for loans and its members act as co-guarantors of repayment and support one another's
efforts at economic self-advancement.
In the late 1980s, Grameen started to diversify by attending to underutilized fishing ponds and
irrigation pumps like deep tube wells.In 1989, these diversified interests started growing into
separate organizations. The fisheries project became Grameen Motsho ("Grameen Fisheries
Foundation") and the irrigation project became Grameen Krishi ("Grameen Agriculture
Foundation"). In time, the Grameen initiative grew into a multi-faceted group of profitable and
non-profit ventures, including major projects like Grameen Trust and Grameen Fund, which runs
equity projects like Grameen Software Limited, Grameen CyberNet Limited, and Grameen
Knitwear Limited, as well as Grameen Telecom, which has a stake in Grameenphone (GP), the
biggest private phone company in Bangladesh. From its start in March 1997 to 2007,
GP's Village Phone(Polli Phone) project had brought cell-phone ownership to 260,000 rural poor
in over 50,000 villages.
The success of the Grameen microfinance model inspired similar efforts in about 100 developing
countries and even in developed countries including the United States. Many microcredit
projects retain Grameen's emphasis of lending to women. More than 94% of Grameen loans have
gone to women, who suffer disproportionately from poverty and who are more likely than men to
devote their earnings to their families.
For his work with Grameen, Yunus was named an “Ashoka: Innovators for the Public Global
Academy Member” in 2001.In the book Grameen Social Business Model, its author Rashidul
Bari said that Grameen's social business model (GSBM) has gone from being theory to an
inspiring practice adopted by leading universities (e.g., Glasgow), entrepreneurs (e.g., Franck
Riboud) and corporations (e.g., Danone) across the globe. Through Grameen Bank, Rashidul
Bari claims that Yunus demonstrated how Grameen Social Business Model can harness the
entrepreneurial spirit to empower poor women and alleviate their poverty. One conclusion Bari
suggested to draw from Yunus' concepts is that the poor are like a "bonsai tree", and they can do
big things if they get access to the social business that holds potential to empower them to
become self-sufficient.
Yunus was awarded the 2006 Nobel Peace Prize, along with Grameen Bank, for their efforts to
create economic and social development. In the prize announcement The Norwegian Nobel
Committee mentioned:
Muhammad Yunus has shown himself to be a leader who has managed to translate visions into
practical action for the benefit of millions of people, not only in Bangladesh, but also in many
other countries. Loans to poor people without any financial security had appeared to be an
impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost
through Grameen Bank, developed micro-credit into an ever more important instrument in the
struggle against poverty.
Yunus was the first Bangladeshi to ever get a Nobel Prize. After receiving the news of the
important award, Yunus announced that he would use part of his share of the $1.4 million
(equivalent to $1.74 million in 2018) award money to create a company to make low-cost, high-
nutrition food for the poor; while the rest would go toward setting up an eye hospital for the poor
in Bangladesh.
Former US president Bill Clinton was a vocal advocate for the awarding of the Nobel Prize to
Yunus. He expressed this in Rolling Stone magazine as well as in his autobiography My Life.
Apart from Other notable awards, he is one of only seven persons to have won the Nobel Peace
Prize, Presidential Medal of Freedom and the Congressional Gold Medal. Yunus was named
by Fortune Magazine in March 2012 as one of 12 greatest entrepreneurs of the current era. In its
citation, Fortune Magazine said "Yunus' idea inspired countless numbers of young people to
devote themselves to social causes all over the world."
In January 2008, Houston, Texas declared 14 January as "Muhammad Yunus Day".
Yunus was named among the most desired thinkers the world should listen to by the FP 100
(world's most influential elite) in the December 2009 issue of Foreign Policy magazine.
In 2010, The British Magazine New Statesman listed Yunus at 40th in the list of "The World's 50
Most Influential Figures 2010".
On Google+, Yunus is one of the most followed person worldwide, with over two million
followers.
Discussion Questions:
 Write short notes on

Enterprise &

Entrepreneur

 Explain the skills required to become a successful entrepreneur

 Write some important definitions of entrepreneurship
 What do you mean by an intrapreneur?
 Psychological factors that contribute to the success of entrepreneurs
 Compare between entrepreneurs and intrapreneurs?
 Identify the myth prevailing in your society related with entrepreneurship.
 What are the factors which have affected the entrepreneurial culture in your region?
 In current times professional company needs more intrapreneurs than managers. Give
your comments.

Class Assignments
 Assume you are going to establish a hotel in your surroundings. Illustrate how this hotel
will affect the economy of your region.