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ENTREPRENEURSHIP DEVELOPMENT
Unit I
J.B. Say says “ An entrepreneur is the economic agent who unites all means
of production, land of one, the labour of another and the capital of yet another
and thus produces a product. By selling the product in the market he pays rent
of land, wages to labour, interest on capital and what remains is his profit.”
Concept of Entrepreneurship:
Though the terms entrepreneur and entrepreneurship are often used as
synonyms, conceptually, they are different.
Entrepreneur
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A. B C D
Clarence Danhof Arthur Cole Ownership Scale of Enterp
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1. Aggressive/ Emperical Private Small Scale
Innovative
3. Fabian Cognitive
4. Drone
Characteristics of an Entrepreneur:
An entrepreneur is a highly achievement oriented person with high degrees of
enthusiasm and energy. They have the following characteristics;
1. They are action oriented. They are highly motivated individuals who
take risks to achieve goals. They work hard and endlessly.
2. They have unwavering determination and commitment. They are
creative and result oriented. They have a strong desire to achieve high
goals in business.
3. They accept responsibilities with enthusiasm.
4. They are full of self confidence. They are dedicated and have their
fingers on the latest in the market trends. They are highly optimistic
5. They are both thinkers and doers, planners and workers.
6. They can foresee the future, have a salesman’s persuasiveness, an
auditor’s precision and a penchant for money generation.
7. They are intelligent, imaginative and have strength of purpose, highly
innovative and independent in nature.
Qualities of an Entrepreneur:
1. Success and achievement: The entrepreneurs are self determined to
achieve high goals in business. Their determination helps them to
surmount obstacles and suppress anxieties, repair misfortune and
overcome all stumbling blocks in their enterprise.
2. Risk Bearer: Though they select a moderate risk situation, they are
willing to bear all risks. They avoid gambling and understand the
risk involved and find scientific ways of handling those situations.
3. Opportunity explorer: A good entrepreneur is always on the look
out for viable opportunities. After locating them, he loses no time in
converting them into achievable goals
4. Perseverance: They make extreme efforts and work hard till their
goals are achieved. They are perseverant and not deterred by
uncertainties or risks that may come their way.
5. Facing Uncertainty: Achievement oriented people are not afraid of
uncertainties. They go ahead with solutions to whatever problem
may arise.
6. Feedback: Entrepreneurs like to have and insist on prompt feedback
of their performance.
7. Independence: Entrepreneurs like to be their own masters and want
to be responsible for their own decisions. He is a job giver and not a
job seeker.
8. Flexibility: Entrepreneurs make decisions based on the prevailing
situations. They do not hesitate in revising their decisions. His is an
open mind which is not rigid .
9. Planner: Entrepreneurs frame realistic business plans and follow
them rigorously in order to obtain their goals within stipulated time
limits.
10. Self-confidence: An entrepreneur knows his strengths and
weaknesses and works with self-confidence within his parameters.
11. Motivator: Entrepreneurs influence and motivate people to think in
his way and to act accordingly.
12. Stress taker: He keeps cool under all conditionas and absorbs stress.
Functions of an Entrepreneur:
Like other managers and leaders, an entrepreneur has to perform essential
function that will lead to the expansion of his enterprise.
Functions may be divided into two categories.
1. Primary functions
2. Other functions
Primary functions:
1. Planning: Planning is the first step in the direction of setting up an
enterprise. He plans all the activities in a systematic manner and
prepares a blueprint of each activity. After this, legal sanction is
acquired.
The planning process involves the following steps;
1. Scanning the best ideas.
2. Selection of product line. Product research and market analysis.
3. Determination of type of business organization ( individual,
partnership or corporate).
4. Estimation of the capital needed.
5. Selection of capital resources.
6. Selection of location
7. Acquiring knowledge of Govt rules and regulations and policies.
8. Selecting ways of fulfilling Govt. formalities.
9. Surveying availability of labour force.
10. Study of market strategy to be adopted.
5. Innovation: This means doing new things or doing things that are
already being done, in a new way. It may occur in any one of the
following ways;
Other functions:
1. Diversification of production
2. expansion of the enterprise.
3. Maintaining cordial employer-employee relationship
4. Tackling labour problems.
5. Co-ordination with outside agencies.
Characteristics of Entrepreneurship
Scope of Entrepreneurship:
Entrepreneurship works in different ways under different economic systems
such as capitalism, socialism and mixed economy.
Mixed Economy: In the mixed economy, both the private as well as public
sectors co-exist side by side. Both take part in the same line of
production. Usually consumer goods are produced by private
organizations and capital goods are produced by Government agencies.
Mixed economy solves the problems of production, pricing and
distribution in a better way. It helps in the reduction of inequality of
income among people It also helps in the fixation of minimum wages to
be paid to employees.
DISTINCTION BETWEEN ENTREPRENEUR & MANAGER:
INTRAPRENEUR:
Some entrepreneurs who are already working within a big organization, catch
hold of new ideas and then convert these ideas into fresh products through
research and development activities. within the framework of the
organization.
This concept has become very popular in developed countries like America. It
has also been found that an increasing number of intrapreneurs have been
leaving their jobs in big organizations and setting up enterprises on their own
and have become exceedingly successful in their ventures. They, thus become
a threat to the organizations that they leave.
The difference between the two can be seen in the following aspects;
Organised industrial activity among the Indian artisans could be seen only a
few recognizable cities such as Benaras, Allahabad, Gaya, Puri and Mirzapur,
which were established along river banks. This was most probably because the
river served as a basis means of transportation. Because of royal patronage,
these artisan industries thrived.
Then came into being industries or “Karkhanas” which brought the craftsmen
under an association or guild. On the whole, the distinguishing qualities of the
arts were perfection, durability and pleasingness to th eye. Bengal was well
known for corahs, Lucknow for chintzes, Ahmedabad for dupattas and
dhotis, Nagpur for silk-bordered cloths, Kashmir for shawl and Benaras for
metal wares. Till the earlier part of the 18 th century, India enjoyed the
prestigious status being the queen of international trade with the help of its
handicrafts.
Some scholars are of the view that manufacturing enterprise in India began as
a consequence of the advent of the East India Company. The company
exported raw material from India and injected finished goods in India. The
Parsis were much influence with the Company’s commercial operations and
followed them.
The Company established its first ship-building industry in Surat and from
1673 onwards, the Parsis built vessels for the Company. In 1677, Manjee
Dhanjee was given a contract for building the first large gun-powder mill in
Bombay, for the East India Company. A Parsi foreman of a gun factory
belonging to the company established a steel industry in Bombay in 1852.
Thus we can see that the East India Company made some contribution
towards the entrepreneurial growth in India.
The actual growth of entrepreneurship in India can be noted in the second half
of the 19th century. Ranchodlal Chotalal, a Nagar Brahmin, was the first Indian
to think of setting up a modern textile factory on modern lines, in 1847. He
succeeded in the year 1861 in Ahmedabad. Cowwasjee Nanabhoy Davar,
followed by Nawrosjee, in Bombay, opened textile mills in 1880. Later,
Jamshedjee Tat became the first entrepreneur to establish the first steel
industry in India.
The improvement of the business climate in the countryside during this period
resulted in the increase in the quantum of trade which assured quick returns in
investment and improved the commercial activity of the country. It also
helped to change the commercial entrepreneurship to industrial
entrepreneurship.
POST-INDEPENDENCE ENTREPRENEURSHIP:
The India Govt. came forward with its first Industrial policy in 1948. This has
been revised from time to time. Special stress has been laid on;
Entrepreneurship gained tremendous impetus after the Second World War. The
Five Year Plans, especially the Third Five Year Plan has seen tremendous
increase in the number to enterprises. But they all lacked entrepreneurial
ability. Still certain entrepreneurial families like the Tatas, the Birlas, the
Mafatlals, Kirloskars and others emerged on the entrepreneurial scene.
Because of various factors such as lack of funds, lack of skilled labour and
non existence of minimum social and economic overheads, the environment is
less conducive for entrepreneurs. There is lack of well developed institutions
to support and encourage them. Therefore, there may be many imitators rather
than innovators who copy the innovations of other entrepreneurs.
Because of lack of funds, research work is done on a very small scale which in
turn, would involve less risk. Because things are not done on a massive scale,
economic development and results are on the lower scale and may not be
perceptible.
Questions:
1. Define Entrepreneurship.
2. Distinguish between Entrepreneur and Intrapreneur.
3. Describe in detail the types of entrepreneurs.
4. Explain the main functions performed by entrepreneurs.
5. Explain “ Developing countries require intuitive rather than innovative
entrepreneurs”.
6. Write notes on the following;
(i) Innovative Entrepreneurs
(ii) Intrapreneurs
(iii) Imitative Entrepreneurs.
8. In the India context, explain the specific role that entrepreneurship has
fulfilled in the economic development of the country.
9. Write an essay on the growth of entrepreneurship in India.