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An Entrepreneur is a person who perceives a need and then brings together manpower, material and capital required to meet that need. In other words an entrepreneur is an individual or team that identifies the opportunity, gathers the necessary resources, creates and ultimately responsible for the performance of the organization. An entrepreneur is a person who is able to express and execute the urge, skill, motivation and innovative ability to establish a business or industry of his own, either alone or in collaboration with his friends. His motive is to earn profit through the production or distribution of goods or services. Adventurism, willingness to face risks, innovative urge and creative power are the inborn qualities of entrepreneurship. Entrepreneurship can also be explained as a process of executing a work in a new and better way. Definition of Entrepreneur: According to Harbison "An entrepreneur is not an innovation but an organization builder or one who has the skill to build an organization and who must be able to harness the new ideas of different innovators to the best of the organization." Peter F. Drucker defines an entrepreneur as one who always searches for change, responds to it and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. Characteristics of an Entrepreneur: Vision: An entrepreneur has a dream and he visualizes the ways and means to achieve dream. In doing so he visualizes: Market Demands Socio-Economic Technological Environment And then based on these dynamic, he visualizes a future for his business venture. Knowledge: An entrepreneur has full knowledge about all the technicalities of his business- be it technological, operational, financial or market dynamic. Desire to succeed: An entrepreneur has a strong desire to succeed in life. Their dreams are not just limited to achieving one single goal but they constantly work to achieve higher goals. Independence: An entrepreneur needs independence in work and decision-making. They don't follow the rules of thumb but make their own rules and destiny. Optimism: Entrepreneurs are highly optimistic about achieving their vision.
Value Addition: Entrepreneurs do not follow the conventional rules of thumb. They have a constant desire to introduce something new to the existing business. They create, innovate or even add value to the existing products/services. Leadership: An entrepreneur exhibits the qualities of leader. They are good planner, organizers, have good communication skill, good decision makers, take initiative to implement plans and are result-oriented. Hardworking: At times they are called workaholics. Work is worship for then. They put in continuous efforts to achieve success and know that there is no substitute for hark work. Risk-Taking Ability: Risk is an inherent and inseparable element of entrepreneurship. He assumes the uncertainty of future. An entrepreneur guarantees rent to the landlord, wages to employees and interest to the investor in the hope of earning more than the expenses.
Meaning of Entrepreneurship: Entrepreneurship refers to a process of action an entrepreneur undertakes to establish his enterprise. It is a creative and innovative response to the environment. In other words entrepreneurship can be defined as an ability to discover, create or invent opportunities and exploit them to the benefit of the society, which in turn brings prosperity to the innovator and his organization. B. Higgins, in his book "The economic Development" has said. "Entrepreneurship is meant the function of seeking investment and production opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labor, arranging the supply of raw materials, finding site, introducing a new technique and commodities, discovering new sources of raw materials and selecting top managers of day to day operations of the enterprise."
Entrepreneurship Traits: A successful entrepreneur must possess the following traits: (1) Mental Ability: Mental ability consists of intelligence and creative thinking. An entrepreneur should be intelligent and must have an analytical mine. He should have the capacity to analyses the problem and able to study the various situations under which decision have to be made. (2) Clear Objectives: An entrepreneur should have a clear objective. Without objective an entrepreneur cannot success. So a successful entrepreneur must have to objective to establish his product in the market, make profit and also render social service. (3) Business Secrecy: An entrepreneur must be able to guard business secrets. Leakage of business secrets to trade competitors is a serious matter. So the entrepreneur should be able to make a proper selection of his subordinates.
(4) Human Relations Ability: An entrepreneur must have good relations with his customers to earn profit and win their confidence in his product. He must also maintain good relation with his employees. (5) Effective Communication: Good communication also means that the entrepreneur has the ability to put his point effectively and with clarity. Communication ability is the secret of the success of most entrepreneurs. (6) Technical Knowledge: The entrepreneurs are dealing with situations where sophisticated technology is involved. The entrepreneur must have a reasonable level of technical knowledge. (7) Decision-Making: Running a business requires taking a number of decisions. Hence an entrepreneur should have the capacity to analyses the various aspects of the business for arriving at a decision. (8) Risk-Bearing: 'No risk, no business' or 'no risk, no gains'. Risk is an inherent and inseparable element of entrepreneurship. He assumes the uncertainty of future. (9) Self-Confidence: Entrepreneurs must have the mental capacity to face any situation. They should also have the ability to inspire other. They must have the confidence in themselves and the determination to achieve their goals.
Meaning of Entrepreneur:
An Entrepreneur is a person who perceives a need and then brings together manpower, material and capital required to meet that need. In other words an entrepreneur is an individual or team that identifies the opportunity, gathers the necessary resources, creates and ultimately responsible for the performance of the organization. Types of Entrepreneur: (A) Classification on the Basis of Ownership: (1) Founder or "Pure Entrepreneurs": Those individuals who are the founder of the business. They are the ones who conceptualize a business plan and then put in efforts to make the plan a success. Example: Dhirubhai Ambani of the Reliance Group. (2) Second-generation operators of family-owned business: They are individuals who have inherited the business from their fathers and forefathers. Example: Like Mukesh Ambani and Anil Ambani sons of Dhirubhai Ambani of the Reliance Group now split into two: Reliance Industries Limited and Reliance-Anil Dhirubhai Ambani Group.
(3) Franchisees: It is a method of doing business wherein the parent owner licenses his trademarks and tried and proves methods of doing business to a franchisee in exchange for a recurring payment. Example: NIIT has given its franchisee operations to local players after thorough scrutiny and proper training. (4) Owner-Manager: When a person buys a business from the founder and then invests his time and resources in it he is called the owner-manager. Example: Like Sabeer Bhatia is the founder entrepreneur of Hotmail. (B)Classification on the basis of Personality Traits and their style of running the business: (1) The Achiever: These types of entrepreneurs have personal desires to excel. The only drive that pushes them is the desire to achieve something in life, the desire to make a mark in society, the desire to prove their excellence. They do not need any external stimulus but are self-driven. (2) The Induced Entrepreneur: These types of entrepreneurs are induced by some external factors to start a business. The external factors could be like: Government Policies Unemployment Family Support Facilitating Institutional Support (3) The Idea Generator: These kinds of entrepreneurs are highly creative people who are always in search of innovative ideas for setting up new business ventures. They enjoy the First Movers' Advantage and are able to skim higher profits from the market. (4) The Real Manager: The real managers run the business in a systematic manner. They analyze business situation, assess the demands of future, both in terms of opportunities and threats and then take actions based on the above assessments. (5) The Real Achievers: The real achievers are full of life. They are looking for the achievement of not even their goals but also of people associated with themselves like employees, suppliers and distributors. (C)Classification based on the type of Business: (1) Industrial Entrepreneur: Industrial entrepreneur is an entrepreneur who is into manufacturing of a product. He identifies the needs and wants of customers and accordingly manufactures products to satisfy these needs and wants. (2) Trading Entrepreneurs: Trading entrepreneur is one who undertakes trading activities and is not concerned with the manufacturing of products. He identifies potential markets, stimulates demands and generates interest among buyers to purchase a product.
(3) Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his innovative skill in organizing and managing a corporate undertaking which is registered under some acts that given it a separate legal entity. (4) Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who undertake business related to agricultural activities. Like farm equipment’s, fertilizers and other inputs of agriculture. (D)Classification on the Stages of Development: (1) First Generation Entrepreneur: A first-generation entrepreneur is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable product or service. (2) Modern Entrepreneur: A modern entrepreneur is one who undertakes business to satisfy the contemporary demands of the market. They undertake those ventures which suit the current socio-cultural trends. (3) Classical Entrepreneur: A classical entrepreneur a stereo-type entrepreneur is one whose aim is to maximize the economic returns at a level consistent with the survival of the firm, with or without element of growth. (E)Other: (1) Innovative Entrepreneur: Innovative entrepreneurs are full of creative ideas and offer innovate products to the society. It is because of these innovative entrepreneurs that many important changes occur in our society. (2) Imitative Entrepreneurs: Imitative entrepreneur adapt a successful innovation. They are risk-aversive and so they do not try out new ideas or products. (3) Drone Entrepreneurs: Drone entrepreneurs are not open to creativity and change. They do not like changing the working of organizations with the changing times. (4) Copreneurs: When both husband and wife together start and run a business venture then they are called copreneurs.
Qualities of an Entrepreneur:
An entrepreneur is a person who takes risk of setting up his own venture for perceived reward. He is a person who initiates the idea, formulates the plan, organizes resources and puts the plan into action to achieve his goals. The entrepreneur must have following qualities:(1) Planner: Entrepreneur has a strong desire to achieve a higher goal and make their dreams come true. So the entrepreneur must have these quality to achieve the target an entrepreneur cannot achieve the target.
(2) Technician: An entrepreneur must have the technical knowledge. He should know that how to use the resources and achieve the target. (3) Risk Bearing Ability: Risk is very important element. An entrepreneur must have capacity to bearing risk an entrepreneur cannot success. (4) Decision Maker: Decision making is the process of choosing best alternative among various alternatives. An entrepreneur must have these qualities because decision making affect the profitability and reputation of the enterprise. (5) Ability to find and Explore Opportunities: Entrepreneurial persons are quick to see and seize opportunities. They show an innovative turn of mind and convert difficulties into opportunities. (6) Motivator: An entrepreneur must have a motivator. He inspires the employees to achieving the target. Without motivation an entrepreneur cannot achieve the target. So motivation is very necessary for achieving the target. (7) Future Oriented: Entrepreneur shows a high level of future orientation. They do not allow the past to obsess them. They are oriented towards present and future. (8) Interpersonal Skills: An entrepreneur is a person who during the course of his activities he should be a person who likes working with people and who has skills of dealing with people. (9) Facing Uncertainty: An entrepreneur is a person who faces uncertainty. The future is uncertain. So the decision of entrepreneur affects the profitability and reputation of the enterprise. Coordination: An entrepreneur must have a coordinator. He allocates the resources and utilizes the resources for achieving the target. Without coordination an entrepreneur cannot achieve the target.
Functions of Entrepreneur:
An entrepreneur has to perform the following function: (1) Risk taking and Uncertainty Bearing: The future is unpredictable. The entrepreneur has to take risks in these circumstances. If the venture succeeds, the entrepreneur profits; if it does not, losses occur. Thus, taking risks forms an important entrepreneurial function. (2) Taking Business Decisions: All decision concerning business are taken by the entrepreneur. He has to formulate an action plan regarding the product and quality of the product to be produced. He has to evolve the best possible method of production which would earn him a sizeable profit.
(3) Managerial Functions: The entrepreneur performs various managerial functions. The entrepreneur arranges finance, purchase raw materials, provides the necessary infrastructure for production. The entrepreneur has a multiphase personality when he undertakes managerial functions. (4) Innovation: The most important function of an entrepreneur is innovation. He introduces far-reaching improvements in the quantity and quality of production line. He considers the economic viability and technical feasibility of an invention. (5) Coordination: The entrepreneur coordinates the other factors of production. Coordination involves selection of the right type of factors, employment of each factor in the right quantity, use of the best technical devices, division of labor, reduction of waste etc. (6) Maintain Good-Relations: An entrepreneur must have good relations with his customer to earn profit and win their confidence in his product. He must also maintain good relations with his employees. (7) Analysis the Environment: An entrepreneur analysis the environment. Environment is that factor which affects the business. There are two type of environment: Internal Environment: Internal environment are controllable External Environment: External environment are beyond the control of the business. (8) Planning: Planning is the first function of the management. Planning is deciding in advance what is to be done, how is to be done, which is to be done, by whom is to be done. It is very necessary function of entrepreneur. Without planning an entrepreneur cannot achieve the target. (9) Utilizes the Resources: An entrepreneur allocates the resources and utilizes the resources. An entrepreneur must utilize the resources for the achievement of the objectives. If the entrepreneur does not utilizes the resources he cannot become a successful entrepreneur.
Role of Entrepreneur in Economic Growth:
The position of the entrepreneur in modern production is like that of the director of a play. Modern economic development is closely linked with production. Modern production is higher complex. The entrepreneur directs production and he must do whatever is necessary for its success. His role in modern economic development has at least three aspects: (1) The entrepreneur co-ordinates the other factors of production. This involves not only assembling the factors, but also to see that the best combination of factors is made available for the production process.
(2) The entrepreneur takes risks. This is the important function of the entrepreneur and the quantum of profit he receives is directly proportionate to the risks he takes. Risks are generally based on the anticipation of demand. (3) Finally the entrepreneur innovates. Innovation is different from invention. Invention is the work of scientists. Innovation implies the commercial application of an invention. As an innovator the entrepreneur assumes the role of a pioneer and an industrial leader. The entrepreneur can undertake anyone type of the following five categories of innovation: The introduction of a new good or a new quality of a good The introduction of a new method of production The opening of a new market The conquest of a new source of supply of raw materials The carrying out of a new organization of any industry.
Importance of Entrepreneur in Economic Development:
Every country tries to achieve maximum economic development. The economic development of a country to a large extent depends on human resources. But human resource alone will not produce economic development-there must be dynamic entrepreneurs. Importance’s of entrepreneurs in economic development are: Employment Generation: Growing unemployment particularly educated unemployment is an acute problem of the nation. If a hundred persons become entrepreneur they not only create a hundred jobs for themselves but also provide employment to many more. These enterprises grow providing direct and indirect employment to many more. Thus entrepreneurship is the best way to fight the evil of unemployment. National Income: National Income consists of goods & services produced in the country and those imported. The goods & services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with ever increasing population and standard of living. The export demand also increases to meet the needs of growing import due to various reasons. An increasing number of entrepreneurs are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income. Dispersal of Economic Power: When a society produces a small number of entrepreneurs the enterprise due to lack of competition grow into a few big business houses. This results in concentration of wealth in a few families. This can have a serious social and national implication. When the number of entrepreneurs increases, a large amount of national wealth is also shared by a large number of entrepreneurs, thus dispersing wealth. This dispersal of wealth promotes the real socialism and makes the economy healthy. Balance Regional Development: The growth of industry and business leads to a large number of public benefits like road, transport, health, education, entertainment etc. A rapid development of entrepreneurship ensures a balanced regional development. When the new entrepreneurs grow at a faster pace, in view of the increasing competition in and around the cities, they are forced to
set up their enterprise in the smaller towns away from big cities. This helps in the development of the backward regions. Economic Independence: Entrepreneurship is essential for national self-reliance. Businessman export goods and services on a large scale and earn the scarce foreign exchange for the country. Such import substitution and export promotion help to ensure the economic independence of the country. Reducing Unrest and Social Tension Amongst Youth: Many problems associated with youth and social tensions are rightly considered to be due to youth not being engaged in productive work. In the changing environment where we are faced with the problem of recession in wage employment opportunities, alternative to wage career is the only viable option. The country is required to divert the youth with latent entrepreneurial traits from wage career to selfemployment career. Such alternate path through entrepreneurship could help the country in defusing social tension and unrest amongst youth. Improvement in Living Standards: Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture handicrafts etc. in the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and increase variety in consumption. Harnessing Locally Available Resources and Entrepreneurship: India is considered to be very rich in natural resources. A few large scale industries started by entrepreneurs from outside the state in economically backward areas may help as models of pioneering efforts, but ultimately the real strength of industrialization in backward areas depends upon the involvement of local entrepreneurship in such activities. Increased activities of local entrepreneurs will also result in making use of abundantly available local resources. Innovations in Enterprises: Business enterprises need to be innovative for their survival and better performance. Entrepreneurship development programs are aimed at accelerating the pace of small firms' growth in India. Increased number of small firms is expected to result in more innovations and make the Indian industry compete in international market.
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