ENTREPRENEUR

1.
2.
3.

4.

5.

MEANING
Entrepreneur is an organizer of a business firm central to its
distributive and productive function.
Entrepreneur are specialized group of persons who bear risk
and deal with uncertainties.
Entrepreneur is an economic man who tries to maximize his
profits by innovations. Innovation involves problem solving
and entrepreneur gets satisfaction from using capabilities in
attacking problems.
Entrepreneurs are people who have the ability to see and
evaluate business opportunities; together with the necessary
resources to take advantage of them, and to intimate
appropriate action to ensure success.
Entrepreneur is one who innovates, and introduces something
new in the economy.

EVOLUTION OF ENTREPRENEURSHIP

Evolution of entrepreneurship
1.

Earliest period : Marco polo is an early example of an

entrepreneur who attempted to establish trade route to far
east. Marco polo would sign contract with money person to
sell his goods. A common contract for taking loan stated that
trader had to pay interest of 22.5 % for the loan. Which
includes insurance. When the merchant adventurer would
successfully sell the goods and complete the trip profit were
divided into two parts of which capitalist would gain 75% of
profit and trader would end up getting 25 % of income.

2. Middle ages : in middle ages entrepreneur were more

described as actor, person, manager. His job was to manage
large production projects. He was merely managing the
business while the risk was borne by the government of the
country and not the entrepreneur. A typical entrepreneur in
middle ages were the clerk in charge of great architecture.

3. 17th century manager : emerging connection of risk with

entrepreneurship developed with 17th century. In this stage
entrepreneur entered in contract with government were
payment to be made to capitalist was fixed and after fixed
payment, profit or loss incurred through the business had to
be borne by entrepreneur.

4. 18th century: During this period entrepreneur were

divided into two persons
a.
Person with capital
b.
Person who needed capital


Major reason for such differentiation was due to the
industrialization occurring throughout the world. Many
inventions developed during the period were reactions to
the changing world. E.g. Edison raised capital from private
sources to develop and experiment in the field of electricity
and chemistry. Similarly Whitney had to finance his
invention of cotton gin from expropriated British crown
property. Therefore both were entrepreneur looking for
venture capitalist to finance their inventions. J B Say
broadened the concept of entrepreneur and included the
concept of combining the factors of production.

5. 19th and 20th century : during this period entrepreneur were

not distinguished from mangers and were viewed mostly from
managers and from economic perspective in following
manner :
a.
He organizes and operates the enterprise for his personal
gains.
b.
He pays current prices for the materials consumed in the
business.
c.
He contributes his own initiative, skill, in planning,
organizing and administering things in company.
d.
He assumes the chance of loss and gain consequent to
uncontrollable factors.

a.

b.

c.

d.

During the period of 20th century:

century: entrepreneur was seen as
innovator in the economy. He was the one who came up the
unique concept in the market. He performed following
functions as entrepreneur :
To revolutionize the pattern of production by exploiting
inventions.
To perform pattern of production by exploiting
technological method of producing new commodity or old
commodity in new pattern.
Opening new source of supply of raw materials or new
change outlet of products.
Performing these functions by organizing new industry.
Cont....

a.
b.
c.
d.

Concept of innovation and newness is the integral part of

entrepreneur which not only requires the ability to create and
conceptualize but ability to understand forces at work
environment. The newness in the concept can be in the
following ways :
Introduction of new or quality goods
Introducing new method of production
Utilization of new source of raw material
Carrying out new organizational form of industry.

6. 21st century : during the present century two characteristics

are associated with the entrepreneur they are innovation and
creativity. Creativity is the ability to bring some thing new
into existence. While innovators are practical people and
create from the opportunities available in reality . Following
principles of innovation have emerged leading to success of
entrepreneur :
a.
Action oriented and searching for new ideas
b.
Making the product service simple and understandable
c.
Trying, testing and revising
d.
Learning from failures
e.
Hard work is the key to success

Risk
taking
Supervise
and control

Innovate

Direct
activities of
firm

Analyze
opportunity

Functions of
entrepreneur
Strategies to
start venture

Develop
venture

Start
venture
Acquire
resources

Develop
business
plan

1.

FUNCTIONS OF ENTREPRENEUR
Risk measurement and risk taking : risk taking and risk
measurement is the primary function of entrepreneur. Risk are
not only related to success or failure of business but also involve
personal and professional career forgone for the sake of
opportunity.

2.

Innovate/ create/ discover : entrepreneurship is innovativeness

of individual and does not involve ownership. Principal
function of the entrepreneur is to carry out new combinations
of means of production.

3.

Analyze opportunities : entrepreneur has to have opportunity

seeking style where he has to evaluate credibility of various
alternatives and choose suitable alternative which will prove to
be profitable in future.

4. Strategies for venture : entrepreneur has to strategize long term

plan for starting venture. He has to analyze the market and
devise effective strategies to face present and future
competition.
5.. Develop business plan : business plan is written document
containing details about every aspect of proposed business
venture. It provides roadmap to employees working in
company to attain objectives and is capable of convincing
potential customers they are share holders and investors of
company.
6. Acquire resources : entrepreneur has to acquire various types
of resources such as men, money, material, machinery to start
venture. Entrepreneur has to have suitable skills to line up
required resources for the company.

7. Organize and start venture : entrepreneur should be a good

organizer, he should deploy suitable resources at right place in right
time required to for the company to ensure effective working of
organization.
8. Develop and grow venture : it is not only important to start a
venture but also company should be able to respond to changes
happening in the business market which is crucial factor deciding
existence of company.
9. Delegate, direct and lead the plan : during the growth stage of the
company entrepreneur should provide required resources for the
company and during later stage entrepreneur should come up with
effective strategies to face competition and guide employees in
company performing role of leader.
10.. Supervise and control : for success of business it is important to
have suitable mechanism in place so that entrepreneur can track
overall success of the company.

CHARACTERISTICS OF ENTREPRENEURS
Motivated

Hard
work

Creative

Goaloriented

Visionary
Entrepreneur/
enterprising
person
Independent

Optimistic

Desire to
succeed

Risk taker
Leadership

CHARACTERISTICS/ FEATURES OF ENTREPRENEUR

 Vision entrepreneur works hard to fulfil his dream in process
to achieve his objective, he visualizes market scenario, socio
economic, and technological environment based on these
information he predicts future situation and accordingly plans
his vision and ways to achieve desired objective.


Knowledge as entrepreneur is soul of organization he is

required to have knowledge about all the operations carried in
organization so that he can direct and regulate activities of his
employees from time to time.

Desire to succeed entrepreneur are recognized in society

because of their varied mindset and high dreams which
motivates them to bring in invention and innovation in are of
their business.

Independence entrepreneur needs independence in his work

area as they are not know to follow their rule of thumb.

Optimistic entrepreneurs are optimistic about achieving their

objective as they intend to take risk to any extent to
accomplish desired goals.

Value addition entrepreneurs are known for bringing new

things in market. They create, innovate, add value to existing
products in market.

Leadership entrepreneur exhibits qualities of good leader.

They are good planners, organizers, decision makers and are
empathetic towards employees at workplace.

Hardworking entrepreneur are know to be workaholic. They

put in continuous efforts to achieve success and know that
their is no substitute for hard work.

Risk taking ability is one of the major trait of successful

entrepreneur .

1.
a.

TYPES OF ENTREPRENEURS
According to type of business :
Business entrepreneur: these are set of
entrepreneurs who convince the idea of new product or
service and then translate ideas into reality.

b.

Trading entrepreneur : they are concerned with

trading activities. They are basically into buying the
finished activities of producing and selling off to the
customer directly or through the retailer.

c.

Industrial entrepreneur : he is the one who sets up

industrial unit. He perceives opportunity to set up his
business, complies with necessary formalities and
ensures availability of required resources for starting
the business.

d. Corporate entrepreneur : is the one who plans,

develops and manages a corporate body. He is
promoter, organizer and director responsible for
running the organization. He gets the corporate body
registered under the suitable companies act in
compliance with legal legislation.
e. Agriculture entrepreneur : is the one who is
engaged in agricultural activities. He uses the latest
technology to increase the productivity of agriculture.

2. According to use of technology :

a.
Technical entrepreneur: strength of technical
entrepreneur is the technical knowledge of person.
He possesses craftsmen skill in him which he
develops to apply and implements to develop
technical aspect of product.
b.

Non technical entrepreneur: these entrepreneurs

believe in coming up with new strategies rather then
concentrating technical aspect of the product. His
target is not to change the technology related to the
product but rather increase demand for product with
effective strategies by attracting customers.

c.

Professional entrepreneur: are the one who are

interested in floating a business rather then
managing or operating the same.

3. According to stages of development :

a.
First generation entrepreneur : are those who do
not possess any entrepreneurial background. They
start industrial unit by the means of their own
innovative skill.
b.

Second generation entrepreneur: are those

entrepreneur who inherit family business firm and
pass it from one generation to other.

c.

Classical
entrepreneur:
is
a
stereotype
entrepreneur who aims to maximize his economic
returns at every level consistent with the survival of
the unit but with or without element of growth.

4. Classification given by Danhof :

a.
Innovating entrepreneur : are the one who
introduce new goods, inaugurate new techniques of
production, discover new market etc. He arranges for
various factors of production, chooses competent
managers, and sets his enterprise.
b.

Imitative entrepreneur : are characterized by

readiness
to
adopt
successful
innovations
inaugurated by successful entrepreneurs. They
imitate technology, strategies, techniques from
successful business.

c. Fabian entrepreneur : accept change only when

they feel threatened that failure to do so would result
in losses. They are imitative by nature but not
determinant and also lack in power.
d. Drone entrepreneur : these are entrepreneur who
refuse to accept to adopt to changes adopted by the
competitors. When competition increases they are
pushed out of the market as it becomes uneconomical
for them to carry their business further due to
financial crisis.

5. According to capital ownership :

a.
Private entrepreneur : when an individual or
group of people together
set up enterprise
collectively bear profit and loss of company, and
adopting latest techniques in business are known as
private entrepreneur.
b.

State
entrepreneur : refers to trading or
industrial venture undertaken by the state or the
government.

c.

Joint entrepreneur : refers to combination of

private and state enterprise running the business by
sharing resources with each other.

INTRAPRENEUR


Intrapreneur is the person who works within the

organization, utilizes the resources available within the
organization and tries to accomplish present task in
innovative and creative manner by effective utilization of
available resources.

1.

CHARACTERISTICS OF INTRAPRENEUR
Creates new venture : giving birth to new business within the
existing organization is the typical characteristics of
intrapreneur.

2.

Innovates products and services : intrapreneur to create

effectiveness at workplace has to update organization
techniques through implementation of new technology in
company.

3.

Innovates process : to sustain in market company's strategies

should be effective to that of competitors for which
intrapreneur should renew company process at regular
interval of time.

4. Proactive : intrapreneur attempt to lead rather than follow

competitors through their proclivity in terms of advance
operations in company.
5. Risk taking : intrapreneur possess risk taking attitude with
regard to investment decision and strategic actions under
uncertain situations.
6. Renews organization : intrapreneur is expected to transform
the organization through renewal of key ideas.
7. Competitively aggressive : intrapreneur is expected to come
up with new strategies to stabilize or develop company's
brand image in market.

Point of
distinction

Entrepreneur

Intrapreneur

Qualities

An innovative, risk taker,

high achiever

Person having all the

qualities and characters
of an entrepreneur

Goal management An entrepreneur starts a

venture by setting up a
new enterprise for his
personal gratification

But the main aim of a

Intrapreneur is to render
his service in a enterprise
already set up by
someone.

Status

An entrepreneur is owner
of enterprise

Work for others as a paid

employee.

Risk

An entrepreneur bears all

risks and uncertainty
involved in the enterprise.

Does not bear all risk

involved in the enterprise.

Rewards

Entrepreneur for his risk

bearing role he receives
profits. It is only uncertain
and irregular but can at
times be negative.

Which is fixed and

regular income can never
be negative.

DEVELOPMENT OF ENTREPRENEURSHIP
1. Government and non government support bodies : government in
country has come up with various institution for supporting SSI
they are national institute for entrepreneurship and small
business development ( NIESBUD ) was established in 1983 by the
ministry of micro, small and medium enterprise.
Entrepreneurship development institute in India ( EDI ) an
autonomous body and non profit institution set up for supporting
SSI in country .

2.. Incubation facility : premiere business schools and technical

institution in India have entrepreneurship centres which
provide incubation facility to start up small scale unit.
Incubator is facility designed to assist start up companies with
respect to providing knowledge and technical assistance.
3. Educational programs : entrepreneurship is be coming
popular choice as an elective in MBA programs at business
schools in India. In addition to educational programs their are
some business school which provide certification programs
and training to candidates intending to start up their own
business.

4. Entrepreneurship networks : refers to association formed by

successful entrepreneur where by becoming member of such
association fresher's will get some guidance and assistance to
start up their own business. E.g. TIE : the Indus entrepreneurs
was founded in silicon valley in 1992 by successful
entrepreneurs and professionals in country. National
entrepreneurship network ( NEN ) founded in 2002 is the non
profit initiative working to inspire and educate emerging
entrepreneurs in company.

STAGES IN ENTREPRENEURIAL PROCESS

Identify an opportunity
Establish vision
Persuade others
Gather resources
Create new venture, product or market
Change/ adapt with time

Identify an opportunity : is an first step towards setting up an

enterprise. Entrepreneur before identification of an
opportunity should do proper market analysis about market
situation, economic conditions and understand taste
preference of customers.

Establish vision : is second step towards establishing an

enterprise. In the process entrepreneur is required to establish
long term vision and accordingly plan in mission which will
serve as roadmap to achieve company vision. Objectives
established by entrepreneur should be flexible in nature to
adjust according to changing situation.

Persuade others : even though the idea of entrepreneurship is

initiated by individual person, it requires team effort to covert
an idea into reality. Entrepreneur is required to convince skilled
employees to work on business plan, make investors and
marketers understand credibility of business to enhance status
and goodwill of company in business market.

Gather resources : next step towards entrepreneurship requires

gathering of required resources to start business. Resources
includes
a. Finance resources : it refers to getting required capital through
financial institutions, raising capital through general public by
issue of shares, raising required finance though other resources
such as self investment, finance through family and friends.

b. Operating resources refers to tangible and intangible

resources which includes machinery, raw material, company
image, operating procedure, transportation etc.
c. Human resources refers to skilled labour force in organization
and other decision in relation to human resource such as
training and development of employees, decision to hire
permanent or temporary employees, amount of investment to
be made of human resource in organization.
d. Information resources : it is very important on part of
organization to collect information about competitors,
customers taste and preference, recent development in area of
business company will be operating. The company has to
maintain valid and accurate management information system
in order to suffice to the information needs of company.

create new venture : once the entrepreneur has arranged in

for resources mentioned above, next step involves creation
and establishment of new venture. Which requires fulfilment
of various legal formalities.

Change and adapt with time : initial plan developed by

entrepreneur may not be suitable for long run. So business
plan is required to be updated on regular basis to cope up
with recent trends or updation in market.

1.

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

Create employment opportunities : unemployment is major
problem faced by developing and under developing countries
around the world. As small scale industries are labour intensive
in nature they generate more employment opportunities rather
then large scale industries in country.

2.

Inspire others towards entrepreneurship : team created by

entrepreneurship provides opportunity for employee cum team
mates to have first hand experience in process of setting up an
venture creating possibility for team mate to come up with his
own SSI in future.

3.

Create knowledge spill over : entrepreneurship serves as

mechanism by which knowledge over to the firm in which it is
commercialized. New firm gets the benefit by the experience
and knowledge gained by the founder in the company.

4. Augment the number of enterprise : augment refers to

making basic comparison and trying to find out area in which
competitors are ahead. Entrepreneurship not only leads to
formation of new business but also brings into picture idea or
new concept in market exploring almost all the available
areas in market creating tuff competition in market thus
leading to supply of quality products in market.
5. Provide diversity in the firms : entrepreneurship activity in
particular region often results into creation of variety of firms
in country. These firms operates into diverse activities and
these diversity fosters economic development in the country.

1.

2.

ENTREPRENEURSHIP AND ITS BARRIERS

Macro
economic
environment
:
macroeconomic
environment in which SSI operates is dependent on policies
of the government in supporting private participation in
business. Macro means large and it refers to various factors
existing in the environment which effect the working of
company. E.g. instability in government of country which
leads to change in legal legislation on continuous basis.
Legal and regulatory environment : for entrepreneurship is
formed by registration and licence procedure, commercial
and contractual laws, real estate regulations and laws. If the
administration procedure and laws are unclear, time
consuming and cumbersome then it proves to be barrier in
operation of SSI.

3. Corruption and unfair competition : a corrupt can lead to

unfair competition, which in turn can become major hurdle
to entrepreneurship activity in country. Excessive approvals
and regulations and approval from government required by
entrepreneurs may make the government officials corrupt
they develop attitude to take bribe for quicker completion of
work.
4. Financial obstacles : start up ventures are usually dependent
upon capital to be sourced from financial institution. But it is
general tendency of financial institution to be reluctant in
providing finance to SSI rather then LSI as LSI given in more
amount of interest compare to SSI.

5. Tax burden : in many regions government charges tax to SSI

at similar rate as to LSI which SSI cannot afford to pay as the
revenue generated by SSI is comparatively less.
6. Challenges in attracting talent : to generate improved quality
of product in the company human resource in company
should be efficient in nature. It is possible only when
company is able to attract efficient employee to join company,
but candidates these days expect in for higher salary which
SSI cannot afford to pay because of the same SSI has to
compromise with average candidates in the company.

7. Difficulty to source raw material : for timely production of

product in the market it is important to have proper supply of
raw material, but supplier in market give second preference
to SSI in market compare to LSI as they order in bulk rather
then SSI in market.
8. Expensive to access proprietary technology : as investment
amount of SSI is industry is less they cannot afford to do heavy
investment in technology which again has adverse effect on
quality and quantity of product produced by the company.