U.

C :Develop Understanding of Entrepreneurship (DUE)

•LO1:Describe and explain the principles, concept and scope of

entrepreneurship.
•LO2:Discuss how to become entrepreneur .
•LO3:how to organize an enterprise.
•LO4:Discuss how to operate an enterprise.
•LO5:Develop one’s own business plan.
 Describe and explain the principles, concept and scope of entrepreneurship.

• Defining enterprising ,enterprises, entrepreneurship and,

entrepreneurs
• Common concepts and terminologies of entrepreneurship
and enterprising
• Principles of entrepreneurship and enterprising
• Peculiar characteristics of entrepreneurs.
• Kinds of entrepreneurs and enterprises
• The roles of enterprises and entrepreneurs to the society
• Functions of enterprising and entrepreneurship.
• Scope of enterprising and entrepreneurship
 Concept and scope of entrepreneur & entrepreneurship

• The word ‘entrepreneur’ is derived from French word

‘Entreprendre’ (“to begin something, undertake”).
• Richard Cantillon, an Irishman who first used the term
entrepreneur to refer to economic activities.
• According to Cantillon:“an entrepreneur is a person who buys
factor services at certain prices with a view to selling its
product at uncertain prices.
• An entrepreneur is a bearer of risk, which is non-insurable.
 Cont.

• Entrepreneur (Oxford Dictionary) – Person who undertakes an

enterprise with chances of profit or loss. (i.e.) Entrepreneur is a
person who undertakes a business activity of which he has no
background and faces considerable risks in the process.
• Entrepreneur (New Encyclopedia Britannica) – An individual
who bears the risk of operating business in the face of
uncertainty about the future conditions.
• Common Meaning – one who starts his own, new and small
business.
 Cont.
• How do you define an entrepreneurship in the 21s t Century y?
• Standard (New) Definition: Entrepreneurship is the process of
creating something different with value by devoting the necessary
time and effort, assuming the accompanying financial, mental,
social risks and receiving the resulting rewards of money, personal
satisfaction and independence.
New Definition involves four aspects –
• The creation process
• Devotion of time and efforts
• Assumption of risks
• Rewards of independence, satisfaction, money.
• Entrepreneurship– It is a philosophy or process through
which an entrepreneur seeks innovation and employment.
• Entrepreneurship can also be described as a creative and
innovative response to the environment.
 Entrepreneur Vs Entrepreneurship

Entrepreneur Entrepreneurship
•An entrepreneur is a person or a group •Entrepreneurship refers to all actions
of persons, who establishes an executed by the entrepreneur to
enterprise, take the risks, accumulates establish an enterprise.
all the resources required to carry out
production or perform services and
creates an innovative product or service.

•An entrepreneur is a person or group of •Entrepreneurship is the process of

persons who try to innovate new innovating new products or services and
products or services. streamlines the resources required to
commercialize these products or
services.

•Entrepreneur will be constantly trying •Entrepreneurship is the process

to innovate and bring about changes followed to create value.
with respect to factor proportions.
 Types of Entrepreneurs

• Aspiring – a person interested and curious about

entrepreneurship who hasn’t started a business.
• Start-up – someone who has an idea and is actively working
towards or has recently started a business.
• Lifestyle – a small business owner who has started a business
with no intention of growing much past providing jobs/income
for that person/family.
• Growth – someone who is interested in growing a company
quickly. Sometimes growth entrepreneurs are referred to as
Gazelles as they are distinguished by their ability to double the
size of their company either by number of employees or in
gross profit every two to four years.
 Cont.
• Serial – an entrepreneur who has the passion to start one
company after another.
• The serial entrepreneur may start a company, work towards
making the company profitable, sell it, then start their next
business. Others may start a business, realize they need to
close it, then try again.
• Civic/Social – this type of entrepreneur is someone who is
passionate about civic or social causes and works towards
starting and growing a non-profit or civic minded organization
focused on serving a social sector.
Group discussion(10 minute)
• Disuse on the Advantages of Entrepreneurship,
a. To an individual.
b. To the nation.
 Advantages of Entrepreneurship

• To an Individual:
 Provides Self Employment for the entrepreneur.
 Entrepreneur can provide employment for near & dear
one as well.
 Entrepreneurship often provides an employment for next
generations as well.
 Freedom to use own ideas – Innovation and creativity.
 Unlimited income / higher retained income.
 Independence.
 Satisfaction.
 Cont.
• To the nation
 Provides larger employment -Entrepreneurs provide
employment for self as well as other people and is source
of employment creation.
 Results in wider distribution of wealth – This is a logical
sequel of above issue. Higher the employment, greater the
distribution of wealth Mobilizes local resources, skills
and savings.
 Accelerates economic development- Entrepreneurship is
the govt’s one of the most trusted vehicles for economic
development
 Stimulates innovation and efficiency.
 Who can be an Entrepreneur?

• Who feels the need for achievement

• Who can take moderate risks
• Who possess skills in organizing
• Who can capitalize on opportunities
• Who has some financial strength – On his own or borrowed
• Who has ability to work hard.
• Who has desire for responsibility.
• Who has a clear perception of probability of success.
• Who gets stimulation by feedback.
• Anyone – He can be male, female
 Cont.

• Generally, Successful entrepreneurs come in various ages,

income levels, gender, and race.
• They also differ in education and experience. But research
indicates that most successful entrepreneurs share certain
personal attributes, including: creativity, dedication,
determination, flexibility, leadership, passion, self-confidence,
and “smarts.”
Key elements or components of Entrepreneurship
• Need for Achievement: Entrepreneurship is a function of high
achievement people having high need for achievement is more
likely to succeed as entrepreneurs.
• Risk taking: Risk is the part and parcel of entrepreneurship.
An entrepreneur assumes the uncertainty of the future.
• It is always risky to start a new enterprise and doing
something new and differently.
• The function of entrepreneurship are greatly influenced by
various risky situations and factors like increase in
competition, change in customer need and taste, shortage of
raw material, change in Government policy, change in
technology. Thus, entrepreneurship needs to be a risk taker.
 Cont.
• Innovation: entrepreneurship is an innovative and a creative
activity.
• It involves doing things in a new and better way.
Entrepreneurship is an automatic and creative response to
change in the environment. As an innovator, entrepreneur has to:
 Introduce new things or goods with which the customer is not
yet familiar;
 Introduce new methods of production which is not yet to apply
in the particular brand of manufacturing;
 Find out a new source of raw material.
 Find a new market or customers which are not yet familiar with
the product.
• Creativity: Creativity is the ability to bring something new
into existence.
 Creativity Vs Innovation

Creativity Innovation

•Creativity is the ability to bring

•Innovation is the process of doing new
something new into existence.
things or brings new ideas or new process
or new products or new services into
reality.

•Innovation is a process that transforms

•Creativity is pre-requisite for innovation.
creative ideas into useful realities.

• A creative individual may just have a • An innovator may have the right ability
vision but may not have the necessary to transform the ideas into products and
resources or the drive to convert the idea services, but may suffer from shortage of
into action. creative thoughts and ideas
 Function of Entrepreneur
• An Entrepreneur has to perform a number of functions right
from the generation of idea up to the establishment of an
enterprise.
1. Idea generation: Implies product selection and project
identification through insight, keen observation, education,
experience and exposure.
2. Determination of business objectives:
• Objectives should be spelt out in clear terms.
• The Entrepreneur must be clear about the nature and type of
business. (manufacturing or service oriented unit or a trading
business)
3. Rising of funds: Entrepreneur can raise the fund from internal
source as well as external source. He should be aware of
different sources of funds.
 Cont.

4. Procurement of machines and materials: Entrepreneur has to

identify cheap and regular sources of raw materials which will
help him to reduce the cost of production and face competition
boldly.
5. Market research: It is the systematic collection of data
regarding the product which the Entrepreneur wants to
manufacture.
6. Determining form of enterprise: Entrepreneur has to determine
form of enterprise depending upon the nature of the product,
volume of investment etc.
 Cont.
7. Recruitment of manpower: To carry out this function an
Entrepreneur has to perform the following activities.
(a) Estimating man power requirement for short term and
long term.
(b) Laying down the selection procedure.
(c) Designing scheme of compensation.
(d) Laying down the service rules.
(e) Designing mechanism for training and development.
8. Implementation of the project:
• Develop schedule and action plan for the implementation
of the project.
• Organize various resources and coordinate various
activities.
 Mistakes of Entrepreneurs

1. Management mistakes
2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic plan
6. Uncontrolled growth
7. Poor location
8. Improper inventory control
9. Incorrect pricing
ENTREPRENEURS VS INTRAPRENEURS

• Entrepreneurs: are people that notice opportunities and take

the initiative to mobilize resources to make new goods and
services.
• Intrapreneurs: also notice opportunities and take initiative to
mobilize resources, however they work in large companies and
contribute to the innovation of the firm.
• Intrapreneur is a person who works for a company, but uses
entrepreneurial skills to develop new products, services or
programs to benefit the employing company.
 Entrepreneur vs Intrapreneur

Entrepreneur Intrapreneur
•Entrepreneur is employer. •Intraprener is employee.
•Bears all the risk involved in enterprise. •Does not bear all the risk.
•Exhibits higher need for achievement. •May not have high need for
achievement.

•Profit is the reward. •Attractive salary, promotion &

incentives are the reward.

•May not have formal qualification. •Should have some professional or

technical qualification.

•Do not have any boundary for •He has to operate within the
operations. organizational policies.
 Individual test
Define the following terms
A. Entrepreneurship.
B. Entrepreneur.
C. Intrapreneur.
D. Write some functions of an entrepreneur to the
establishment of an enterprise.
E. Write the elements of Entrepreneurship.
 Intellectual Property (property gained from mined creativity)

• Intellectual property is a valuable asset for an entrepreneur.

• It consists of certain intellectual creations by entrepreneurs or
their staffs that have commercial value and are given legal
property rights.
• Examples of such creations are a new product and its name, a new
method, a new process, a new promotional scheme, and a new
design.
• A fence or a lock cannot protect these intangible assets.
• Instead, patents, copyrights, and trademarks are used to prevent
competitors from benefiting from an individual’s or firm’s ideas.
 Cont.
• The purpose of intellectual property law is to encourage
innovation by giving creators time to profit from their new
ideas and to recover development costs.
• Intellectual property rights can be bought, sold, licensed, or
given away freely.
• Some businesses have made millions of dollars by licensing or
selling their patents or trademarks.
• Every entrepreneur should be aware of intellectual property
rights in order to protect these assets in a world of global
markets.
 Cont.
• An intellectual property lawyer can provide information and
advice.
• The main forms of intellectual property rights are:
• Patents right : A patent grants an inventor the right to exclude
others from making, using, offering for sale, or selling an
invention for a fixed period of time - in most countries, for up
to 20 years.
• When the time period ends, the patent goes into the public
domain and anyone may use it.
• It can not be renewed.
 Cont.
• Copyright: Copyrights protect original creative works of
authors, composers, and others.
• In general, a copyright does not protect the idea itself, but only
the form in which it appears - from sound recordings to books,
computer programs, or architecture.
• The owner of copy right material has the exclusive right to
reproduce the work, prepare derivative works, distribute
copies of the work, or perform or display the work publicly.
Copyrighted material is denoted by the symbol ©.
 Cont.
• Trade Secrets: Trade secrets consist of knowledge that is
kept secret in order to gain an advantage in business.
• Certainly, secret processes, formulas, techniques,
manufacturing know-how, advertising schemes, marketing
programs, and business plans are all Protectable.
• Trade secrets are usually protected by contracts and non-
disclosure agreements.
• No other legal form of protection exists.
• The most famous trade secret is the formula for Coca-Cola,
which is more than 100 years old.
 Cont.
• Trademarks: A trademark protects a symbol, word, or design,
used individually or in combination, to indicate the source of
goods and to distinguish them from goods produced by others.
• For example, Apple Computer uses a picture of an apple with
a bite out of it and the symbol (®) which means registered
trademark.
• Service mark : similarly identifies the source of a service.
• Trademarks and service marks give a business the right to
prevent others from using a confusingly similar mark.
• In most countries, trademarks must be registered to be
enforceable and renewed to remain in force.
 Cont.
• However, they can be renewed endlessly. Consumers use
marks to find a specific firm’s goods that they see as
particularly desirable — for example, Barbie dolls or Toyota
automobiles.
• Unlike copyrights or patents, which expire, many business’s
trademarks become more valuable over time.
 Group discussion(10 minute)

A. Disuse on the Advantages of intellectual property rights.

B.Disuse on the main forms of intellectual property rights with
properties they are used to protect.