Chapter ± 5 ENTREPRENEUR

Management and Entrepreneurship, RVCE 1

CONTENTS 
     

Meaning of Entrepreneurship Entrepreneurship Core Competencies Evolution of Concept Functions of Entrepreneur Types of Entrepreneurship Intrapreneur ± an emerging Class Concept of Entrepreneurship
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CONTENTS
‡ Development of Entrepreneurship ‡ Steps in Entrepreneurial Process ‡ Role of Entrepreneurship Development ‡ Economic development ‡ Entrepreneurship ± is Barriers ‡ Entrepreneurship in India
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in

Economic

Meaning of Entrepreneur 
An entrepreneur is a person who has possession over a new company, or enterprise, and assumes significant accountability for the inherent risks and the outcome.  The term is a loanword from French and was first defined by the Irish economist Richard Cantillon.
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Meaning of Entrepreneur contd« 
A female entrepreneur is sometimes known as an entrepreneuse. However, with the word "entrepreneuse" being the French feminine form of entrepreneur, its usage in English in delineating sexes detracts from the meaning of the word "entrepreneur".
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Meaning of Entrepreneur contd« 
Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome.

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Entrepreneurship Core Competencies
Sl. No. 1. Core Competencies Initiative Entrepreneurial Activities Does things before asked for or forced by events, and acts to extend the business to new areas, products, or services. Identifies business opportunities and mobilises necessary resources to make good an opportunity. Takes repeated or different actions to overcome obstacles. Consults experts for business and technical advice. Seeks information on client¶s or supplier¶s needs. Personality undertakes market research and makes use of personal contacts or information network to obtain useful information
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2. 3. 4.

Perceiving Opportunities Persistence Information Gathering

Entrepreneurship Core Competencies
Sl. No. 5. Core Competencies Concern for quality work Commitment to contractual obligations Entrepreneurial Activities States desire to produce or sell a better quality product or service. His performance compares favourably with that of others. Makes a personal sacrifice or expends extraordinary effort to complete a job. Accepts full responsibility in completing a job contract on schedule. Pitches in with workers, or works in their place, to get job done. Shows utmost concern to satisfy customer. Finds ways and means to do things faster, better, and economically. Various inter-related jobs are synchronised according to plan.
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6.

7. 8.

Efficiency orientation Planning

Entrepreneurship Core Competencies
Sl. No. 9. 10. 11. 12. Core Competencies Problem Solving Self confidence Expertise Self-critical Entrepreneurial Activities Conceives new ideas and finds innovative solutions. Makes decisions on his own and sticks to them in spite of initial setbacks. Possesses technical expertise in area of business, finance, marketing, and so on. Aware of personal limitations but tries to improve upon them by learning from his past mistakes, or experience of others and is never complacent with success. Persuades customers and financiers to patronize his business.
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13.

Persuasion

Entrepreneurship Core Competencies
Sl. No. 14. Core Competencies Use of influence strategies Assertiveness Monitoring Credibility Entrepreneurial Activities Develops business contracts. Retains influential people as agents. Restricts dissemination of information in his possession. Instructs, reprimands, or disciplines for failing to perform. Develops a reporting system to ensure that work is completed and that it meets quality norms. Demonstrated honesty in dealing with employees, suppliers, and customers even if it means a loss of business.
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15. 16. 17.

Entrepreneurship Core Competencies
Sl. No. 18. 19. 20. 21. Core Competencies Concern for employee welfare Impersonal relationship Expansion of capital base Building product image Entrepreneurial Activities Expresses concern for employees by responding promptly to their grievances. Places long-term good will above short-term gain in a business relationship Reinvests a greater portion of profits to expand capital base of the firm. Concerned about the image of his product among customers. Does everything possible to establish a niche for his product in the market.
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Evolution of the Concept 
The concept of entrepreneurship has been around for a very long time, but its resurgent popularity implies a ´sudden discovery´, as if we had stumbled onto a new direction for American enterprise.  This is a myth, as we shall see, because the American system of free enterprise has always engendered the spirit of entrepreneurship.
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Evolution of the Concept contd.. 
America was discovered by entrepreneurs, and the United States became a world economic power through entrepreneurial activity.  More important, our future rests squarely on entrepreneurial individuals.
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ventures

founded

by

creative

Evolution of the Concept contd.. 
They are inspired people, often adventurers, who can at once disrupt a society and instigate progress.  They are risk takers who seize opportunities to harness and use resources in unusual ways, and entrepreneurs will thrust us into the twenty-first century with a thunderous roar.
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Functions of Entrepreneur
‡ Innovation ‡ Risk and uncertainty bearing ‡ Organization building

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Functions of Entrepreneur contd«
According to Kilby in a developing country even the imitator entrepreneurs are very important and the entrepreneurial role encompasses the following: ‡ Perception of market opportunities ‡ Gaining command over scarce resources ‡ Purchasing inputs ‡ Marketing the products ‡ Dealing with bureaucrats
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Functions of Entrepreneur contd«
‡ Managing human relations within the firm ‡ Managing customer and supplier relation ‡ Managing finance ‡ Managing production ‡ Acquiring and overseeing assembly of the factory ‡ Industrial engineering ‡ Upgrading process and product ‡ Introducing products new production techniques and
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Types of Entrepreneur
The Achiever The Salesperson The Manager The Inventor

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The Achiever 
Achievers are willing to work long and hard to reach their personal goals.  They like to plan and are committed to making things happen.  They are good at dealing with crises and trying to be good at everything.
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The Achiever contd« 
They should focus on running small organizations and be careful not to expect themselves to know everything.  Large organizations or those that are controlled by outsiders may be too structured for the achiever.
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The Salesperson 
Salespeople care about people and want to help them.  They use a soft-sell approach, and their

customers buy from them as a way to show gratitude for the help offered by the salesperson.  They should focus on selling and have someone else manage the business.
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The Manager 
Managers are competitive, decisive, and feel comfortable being in charge.  They may be good at sales because they use logic and persuasion.

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The Manager contd« 
They are good at managing major growth in a new organization needing their talents.  They may tend to over-manage a small operation and need to be careful that they really have the knowledge and skills they need.
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or

an

existing

operation

The Inventor 
Inventors are drawn to new ideas and finding ways to get ahead of the competition.  They may be idealistic and get carried away with their enthusiasm. They are good at envisioning solutions to challenges for an organization.
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The Inventor contd« 
They need to stay away from areas in which they are not experts and remember that some of their ideas may not be the best. Some people possess more than one type of entrepreneurship.

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Intrapreneur ± an Emerging Class 
Corporate entrepreneurship, whereby an organization seeks to expand by exploring new opportunities through new combinations of its existing resources  Intrapreneurship, an obvious play on ³entrepreneurship,´ is the practice of beginning and developing new business ventures within the structure of an existing organization.
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Concept of Entrepreneurship 
Entrepreneurship is a process undertaken by an entrepreneur to augment his business interests.  It is an exercise involving innovation and creativity that leads towards establishing his/her enterprise.  One of the qualities of entrepreneurship is the ability to discover an investment opportunity and to organize an enterprise, thereby contributing to real economic growth.
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Concept of Entrepreneurship contd« 
It involves taking of risks and making the necessary investments under conditions of

uncertainty and innovating, planning, and taking decisions so as to increase production in agriculture, business, industry etc.
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Concept of Entrepreneurship contd« 
Entrepreneurship is a composite skill, the resultant of a mix of many qualities and traits these. include tangible factors as imagination, readiness to take risks, ability to bring together and put to use other factors of production capital, labour, land, as also intangible factors such as the ability to mobilize scientific and technological advances.
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Development of Entrepreneurship 
Develop a business description  Describe business facility and location  Develop an organizational chart  Develop funding/financial resources  Generate a budget

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Development of Entrepreneurship contd« 
Create forms/records  Design a personnel management plan  Apply laws, regulations and codes  Select supply and equipment needs  Formulate an advertising and customer recruitment plan  Develop a list of resources
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Steps in Entrepreneurial Process
The Entrepreneurial Process :The process of starting a new venture is embodied in the

entrepreneurial process, which involves more than just problem solving in a typical management position.

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Steps in Entrepreneurial Process contd«
An entrepreneur must find, evaluate, and develop an opportunity by overcoming the forces that resist the creation of something new. The process has four distinct phases: (1) Identification and evaluation of the opportunity, (2) Development of the business plan, (3) Determination of the required resources, (4) Management of the resulting enterprise.
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Steps in Entrepreneurial Process
Identification and evaluation of the opportunity

Development of the business plan

Determination of the required resources

Management of the resulting enterprise

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Identify and Evaluate the Opportunity 
Opportunity identification and evaluation is a very difficult task.  Most good business opportunities do not suddenly appear, but rather result from an entrepreneur¶s alertness to possibilities, or in some case, the establishment of mechanisms that identify potential opportunities.
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contd«
The assessment of the opportunity answering the following questions: requires

‡ What market need does it fill? ‡ What personal observations have you experienced or recorded with regard to that market need? ‡ What social condition underlies this market need? ‡ What market research data can be marshaled to describe this market need?
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contd« 
What patents might be available to fulfill this need?  What competition exists in this market? How would you describe the behavior of this competition?  What does the international market look like?  What does the international competition look like?  Where is the money to be made in this activity?
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Developing a Business Plan 
A good business plan must be developed in order to exploit the defined opportunity.  This is a very time-consuming phase of the entrepreneurial process. An entrepreneur usually has not prepared a business plan before and does not have the resources available to do a good job.
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Developing a Business Plan contd« 
A good business plan is essential to developing the opportunity and determining the resources required, obtaining those resources, and

successfully managing the resulting venture.

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Determine the Resources Required 
The resources starts needed with an for addressing of the the opportunity must also be determined. This process appraisal entrepreneur¶s present resources.  Any resources that are critical need to be differentiated from those that are just helpful.
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Determine the Resources Required contd« 
Care must be taken not to underestimate the amount of variety of resources needed. The downside risks associated with insufficient or inappropriate resources should also be assessed.  Acquiring the needed resources in a timely manner while giving up as little control as possible is the next step in the entrepreneurial process
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Determine the Resources Required contd« 
An entrepreneur should strive to maintain as large an ownership position as possible,

particularly in the start-up stage.  Alternative suppliers of these resources, along with their needs and desires, need to be identified.
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Manage the Enterprise 
After resources are acquired, the entrepreneur must use them to implement the business plan.  The operational problems of the enterprise must also be examined. growing 

This involves implementing a management style and structure, as well as determining the key variables for success.
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Manage the Enterprise contd« 
A control system must be established, so that any problem areas can be quickly identified and resolved.  Some entrepreneurs have difficulty managing and growing the venture they created.

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Role of Entrepreneurship in Economic Development
The entrepreneur who implements µnew combinations of means of production' plays a crucial role in disturbing the status quo through innovation ± or µcreative destruction¶ ± and there by becomes an agent of change.

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Contd«
As such, the µdynamic equilibrium¶ achieved by a constantly innovating entrepreneur could generate conditions for: 1. Increase opportunities for employment (comprising various competitive skill sets); 2. Additional wealth creation; 3. Introduction and dissemination of new methods and technology; and 4. Overall economic growth.
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Entrepreneurship Barriers
‡ Difficulties of access to new technologies or the inability to adapt to local conditions ‡ Inability to access private and public ‡ procurement opportunities ‡ Non-availability of affordable technical and

managerial consultancy
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Entrepreneurship Barriers contd«
‡ Educational levels including computer competency ‡ Inability to conduct Market research

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Environmental Helps
1. Market Contacts 2. Local Incubator Companies 3. Capable Local Manpower 4. Technical Education & Support 5. Supplier Assistance & Credit 6. Local Venture Capitalists 7. Venture ± Savvy Bankers 8. Capable Local Advisors 9. Entrepreneurial Education 10.Successful Role Models K. L. I. J. A. B. C. D. E. F. G. H.

Barriers
Lack of Viable Concept Lack of Market Familiarity Lack of Technical Skills Lack of Seed Capital Lack of Business Knowhow Complacency, Nomotivation Social Stigma Job ³Lock-ins´, ³Golden Handcuffs´ Time Pressures, Distractions Legal Constraints, Regulation, Red Tape Protectionism, Monompoly Patent Inhibitions

Personal Pushes

Personal Pushes

Venture

Barriers to Entrepreneurship

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Entrepreneurship in India
Entrepreneurship has been µembedded in Indian genius and is part of its tradition. To quote the renowned economist, T.N.Srinivasan, µIndian has been entrepreneurial society« we had the entrepreneurial skill but suppressed it for too long time«and now it is thriving.

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Entrepreneurship in India contd«
Entrepreneurship in India occurs in µfar more encompassing and far reaching ways than in developed countries. And could therefore be far more complex, µfor there is so much more that needs to be done¶.
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contd«
Is India a right place to start a startup? Following are few interesting observations: 1. People: India is a land of technologists. It is the best place for techies with similar interests to combine their skills and innovate than in any other countries. 2. Funding: Indian startups can survive for much longer time than in any other countries looking at the limited amount of cash requirement for running business here.
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contd«
It is required to create right environment to create successful business builders in India. To do this India should be focusing on following areas: 1. Create the right environment for success 2. Ensure that entrepreneurs have access to the right skills 3. Ensure that entrepreneurs have access to ³smart´ capital: 4. Enable networking and exchange:
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CASE STUDY 1
This case is about James Dyson (Dyson), a UKbased engineer and founder of Dyson Appliances Ltd (DAL), best known as the inventor of the bag less vacuum cleaner. With sales of over £514.7 million and a presence in 45 countries worldwide as of 2007, DAL had emerged as the market leader in the vacuum cleaner market in UK as well as the USA.
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contd«
Analysts noted that Dyson's journey from launching the award-winning Ballbarrow (a gardening tool) in the 1970s to building one of the most successful multinational brands (i.e. the vacuum cleaners that are called Dysons) in the 2000s had been anything but easy. There were plenty of challenging moments that punctuated his career, be it in the initial struggles to get funding for his venture or the patent litigation involving a major rival, which came much later.
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contd«
Despite all the problems, Dyson managed to build DAL into a market leader in a highly competitive industry dominated by multinational companies. While analysts hailed him as a great entrepreneur and praised his business acumen and approach towards innovation, Dyson also earned many laurels including receiving the knighthood for his services to the business world on December 2006.
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contd«
Experts felt that Dyson was not only a great inventor but had also shown sound business acumen which helped him build DAL from the ground up to a global company. However, he was also criticized for shifting the company's production base to Malaysia in 2002. Union leaders alleged that this move had affected around 800 workers in the already waning manufacturing industry in the UK.
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contd«
Issues: ‡ Understand the personality traits of an entrepreneur from the life and work of James Dyson. ‡ Identify the benefits and challenges faced by an entrepreneurial venture with regard to managing its business growth and sustaining its innovation. ‡ Understand the leadership and management style of James Dyson and his contribution to the success of Dyson Appliances Ltd. ‡ Appreciate the sources of inspiration for an entrepreneur in the consumer appliances Management and Entrepreneurship, 58 industry. RVCE

CASE STUDY 2
SAM WALTON 1918-1992

Sam Walton, the founder of Wal-Mart, grew up poor in a farm community in rural Missouri during the Great Depression. The poverty he experienced while growing up taught him the value of money and to persevere.
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CASE STUDY 2 contd« After attending the University of Missouri, he immediately worked for J.C. Penny where he got his first taste of retailing. He served in World War II, after which he became a successful franchiser of Ben Franklin five-and-dime stores. In 1962, he had the idea of opening bigger stores, sticking to rural areas, keeping costs low and discounting heavily. The management disagreed with his vision. Undaunted, Walton pursued his vision, founded Wal-Mart and started a retailing success story. When Walton died in 1992, the family's net worth approached $25 billion.
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contd«
Today, Wal-Mart is the world's #1 retailer, with more than 4,150 stores, including discount stores, combination discount and grocery stores, and membership-only warehouse stores (Sam's Club). Learn Walton's winning formula for business. Rule 1: Commit to your business Rule 2: Share your profits with all your associates, and treat them as partners Rule 3: Motivate your partners
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contd«
Rule 4: Communicate everything you possibly can to your partners Rule 5: Appreciate everything your associates do for the business Rule 6: Celebrate your success Rule 7: Listen to everyone in your company and figure out ways to get them talking
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contd«
Rule 8: Exceed your customer's expectations Rule 9: Control your expenses better than your competition Rule 10: Swim upstream

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References
‡ Principles of Management-P C Tripathi, P N Reddy; TMH ‡ ‡ ‡ Management-Stephen Robbins; PHI Management - VSP Rao, V H Krishna; Excel Essentials of Management-Koontz, Weihrich, TMH ‡ Entrepreneurship and Economic Development, Kilby, Peter (1971), New York Press. Management and Entrepreneurship,
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References
‡ Innovation and Entrepreneurship, Drucker, Peter F (1985) New York. ‡ The Achieving Society, McClelland. D.C. (1961), New York Free Press.

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