CHAPTER-1 ENTREPRENEURSHIP DEFINITION OF ENTREPRENEUR:According to Peter Drucker, Entrepreneur is one who always searches for change, responds to it &

exploits it as an opportunity. Innovation is a specific tool of entrepreneur, the means by which they exploit change as an opportunity for different business or services. ENTREPRENEURSHIP:Entrepreneurship is the process of creating something new with values by devoting the necessary time & effort, assuming the accompanying financial, psychic, & social risks & receiving the resulting rewards of monetary & personal satisfaction & independence. ENTERPRISE:Enterprise is an organisation engaged in a business activity. It is an integrated whole of values, orientation, vision of entrepreneur & his workforce, mission, major objectives & strategic interest. INNOVATION:Innovation is the introduction of new ideas, goods & services, practices which are intended to be useful. The main drivers for innovation are often the courage & energy to better the world. Innovation can also be defined as the successful exploitation of new ideas incorporating new technologies, design & best practice is the key business process that enables businesses to compete effectively in the global environment. IMPORTANCE OF ENTREPRENEUR: The entrepreneur is one of the most important components in the economic development of a nation. He is a catalyst of development.  Entrepreneurial competence makes a significant difference in the rate of economic growth. In India, an increasingly important role has been assigned to the identification & promotion of entrepreneurs in the small scale industrial sector, since this sector is completely left to private entrepreneurs.

 An entrepreneur is an initiator of action, stimulator of social economic change & a harnesser of resources. ADVANTAGES OF BEING AN ENTREPRENEUR: BRIDGE THE GAP BETWEEN KNOWLEDGE & APPLICATION:An entrepreneur is in a position to put his knowledge to practical use. He can bridge the gap between knowledge & application. An entrepreneur can convert his knowledge in to an economic activity & gain out of it.  CONVERTING AN IDEA INTO MONEY:Being an entrepreneur, one may push up ones innovative ideas into reality. An entrepreneur is dynamic, creative, and skilful & is ready to take calculative risk. At the same time, entrepreneur, besides enjoying economic gain, makes the society more enjoyable.  BE YOUR OWN BOSS:Many people would like to enjoy their lives independently. They possess high capacity to take risks & to have adventurous life. These personal traits of entrepreneur provide an opportunity to the society to improve the standard of living.  ORIGINALITY RESPECTED:The creative & original business ideas of an individual can be used for societal benefit & with this the originator respected in the society. Originators feel that they can offer a new service/product that no one has offered before.  COMPETITION:By adapting innovative ideas of entrepreneur the product/service can be produced at a low cost. This facilitates the organisation to face competition in the market. Besides, this society can get the quality products.  BETTER UTILIZATION OF SKILL & KNOWLEDGE:The advantage of becoming an entrepreneur is that creative skills & knowledge of an individual can be used for the benefit of the society otherwise which would go wasted.  ALTERNATIVE TO CURRENT CAREER:-

The advantage of being an entrepreneur not only gets satisfied of becoming entrepreneur, but also their creative skill will be used for the benefit of the society. Persons having entrepreneurial skills will be having alternative to their present career. If opportunity come in their way.  BUSINESS OPPORTUNITY:People with entrepreneurial ability can seize such opportunities and have personal gain. This also facilitates the society to tap the resources for improving the standard of living of the people. Other advantages are:Of managing their time for better living having flexible operations in their own business. Enjoy independence. Optimized earning for their full efforts. Work wherever they want. Become role models for success. DISADVANTAGES OF BEING AN ENTREPRENEUR: RISK BEARING:An entrepreneur has to bear and assume risks. The reward for risk bearing may be positive or negative.  TIME MANAGEMENT:Time management is a critical factor for an entrepreneur. As the entrepreneur has invested his own funds, he has to be very cautious about how he utilises his time.  INITIAL TEETHING PROBLEMS:Any business has to face the initial teething problems. This delays the process of reaping the benefits of entrepreneurship. Even in the long run, benefits are not extraordinary and the entrepreneurs earn only normal profits. Moreover, there is a constant threat of competition.

 INEXPERIENCE:An entrepreneur needs to have core competence in the accepted line of business. An inexperienced person without entrepreneurial ability cannot manage business. MEANING OF ENTREPRENEUR DEVELOPMENT PROGRAMME (EDP):EDP is a programme designed to help a person in strengthening his entrepreneurial motive & in acquiring skills & abilities necessary for playing his entrepreneurial role effectively. CLASSIFICATION OF ENTREPRENEURS:A. ACCORDING TO THE TYPE OF BUSINESS: There are various different types of businesses such as agriculture, trading, industrial and the like. Entrepreneurs can be classified according to the type of business they operate. 1. BUSINESS ENTREPRENEURS:These are the individuals that come up with innovative ideas for a new product/service and put their ideas into action by venturing into business. They may set up a big establishment or a small business unit such as printing press, textile processing house, advertising agency etc 2. TRADING ENTREPRENEURS:These are individuals who undertake trading activity & are not concerned with the manufacturing work. They identify potential markets, stimulate demand for the product line & create a desire & interest among buyers to go in for the product.

3. INDUSTRIAL ENTREPRENEURS:-

A manufacturer who identifies the potential needs of customers & tailors a product/service to meet the marketing needs. He has the ability to convert economic resources & technology into a considerably profitable venture. 4. CORPORATE ENTREPRENEURS:A corporate entrepreneur plans, develop & manages a corporate body. He demonstrates his innovative skill in organising and managing corporate undertaking. 5. AGRICULTURAL ENTREPRENEUR:The primary activity of these entrepreneurs revolves around raising and marketing of crops, fertilisers, & other agricultural inputs. They cover a broad spectrum of the agricultural sector & it is called occupation. B. ACCORDING TO THE TYPE OF TECHNOLOGY:1. TECHNICAL ENTREPRENEUR:This kind of entrepreneur demonstrates his innovative capabilities in the matter of goods/services. He is capable of manufacturing high quality goods because of his technical expertise. 2. NON TECHNICAL ENTERPRUNER They are not concerned with the technical aspects of the product in which they deal and restrict themselves to formulation of marketing and distribution strategies for the promotion of their business. 3. PROFESSIONAL ENTREPRENEUR:They are dynamic and restrict themselves to the establishment of business. They do not get involved in the routine operations of the business.

C. ON THE BASIS OF MOTIVATION:-

1. PURE ENTREPRENEUR:A pure entrepreneur undertakes entrepreneurial activity for his personal satisfaction and is motivated by psychological and economic rewards 2. INDUCED ENTREPRENEUR:They venture into business due to financial, technical and several other facilities such as assistances and incentives provided to them by the state agencies to promote entrepreneurship. 3. MOTIVATED ENTREPRENEUR:This is the new class of entrepreneursmotivated by the desire for self-fulfilment. 4. SPONTANEOUS ENTREPRENEUR:They are naturally inclined towards entrepreneurship. They have the inborn ability and confidence to become an entrepreneur. D. GROWTH LEVEL:1. GROWTH ENTREPRENEUR:Such entrepreneurs take up a high growth industry which has substantial growth prospects. 2. SUPER GROWTH ENTREPRENEUR:Such entrepreneur show enormous growth of performance in their venture. The growth performance is indicated by the liquidity of funds, profitability and gearing. E. DEVELOPMENT STAGE:1. FIRST GENERATION ENTREPRENEUR:He is an innovator, who combines different technologies to produce a marketable product/service. 2. MODERN ENTREPRENEUR:He undertakes ventures as per the market demands. 3. CLASSICAL ENTREPRENEUR:-

He is a stereotype entrepreneur whose objective is to maximize his returns at a level consistent with the survival of the firm. CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR: MENTAL ABILITY:It consists of intelligence & creative thinking. An entrepreneur must be reasonably intelligent, & should have creative thinking & must be able to engage in the analysis of various problems & situations in order to deal with them.  CLARITY OF OBJECTIVES:An entrepreneur should be clear as to the exact nature of the goods to be produced & subsidiary activities to be undertaken.  ACHIEVEMENT MOTIVATION:This is the most important characteristics of an entrepreneur since all other characteristics emanate from this motivation. He must have a strong desire to achieve business goals.  HUMAN RELATIONS ABILITY:The most important personality traits contributing to the success of an entrepreneur are emotional stability, personal relations, considerations & tactfulness. An entrepreneur must maintain good relations with his customers if he is to establish relations that will encourage them to continue to patronise his business. He must also maintain good relations with his employees if he is to motivate them to perform their jobs at a high level of efficiency.  PRUDENCE:A successful entrepreneur must be prudent in all his dealings. He should have the ability to workout the details of the venture from all angles, assess the favourable factors & pitfalls & takes suitable measures to overcome the pitfalls.

 RISK-TAKING:-

An entrepreneur is not a gambler & hence, he should not assume high risks. However, he must love a moderate risk situations, high enough to be exciting, but with a fairly reasonably chance to win.  SECRECY MAINTENANCE:A successful entrepreneur must be capable of maintaining & guarding all his business secrets. Leakage of business secrets to trade competitors will definitely lead to the downfall of his business. Hence, he should be very careful in selecting his subordinates.  COMMUNICATION SKILL:It is the success of the most entrepreneurs. Good communication skill enables them to put their points across effectively & with clarity & thereby helps them to win customers.  KEEN FORESIGHT:An entrepreneur must have keen foresight to predict the future business environment. He has the capacity to visualise the likely changes to take place in the market, customer attitude, technological developments, governments policy etc..& take timely action accordingly.  INNOVATIVENESS:One should be always innovative to satisfy the varying demands of the customers. For this purpose, the entrepreneurs should initiate research & innovative activities to produce new goods & services. It is a never ending process. RELEVANCE OF AN ENTREPRENEUR:In any society, the govt. has two vital roles to play, one is of a promoter & the other is of a regulator. In order to play both the roles effectively, a certain amount of skill & knowledge is required. This skill & knowledge is useful in the promotion of various economic activities. However, for the overall & balanced development of the economy, it is necessary to have the participation of citizens as well. It is here that the role of an entrepreneur becomes relevant. More than increasing national income by creating new jobs, entrepreneurship acts as a positive force in the economic growth by serving as the bridge between innovation & the market place. In this regard, the govt. plays the role of a promoter in order to be able to tap the entrepreneurial skills of the citizens of the society. Whether the economic system is a

controlled one or an open one, entrepreneurial skills of the people have to be utilised for the economic growth & the entrepreneurs should be allowed to play independently. Once the govt. has played the promotional role of assisting small business people, it has to then play the role of a regulator. As a regulator, it has to control, guide, & regulate the activities of the entrepreneur. Entrepreneurship is presently the most effective method for bridging the gap between science & market place, creating new enterprises, & bringing new products & services to the market. These entrepreneurial activities significantly affect the economy of an area by building the economic base & providing jobs. FACTORS AFFECTING THE GROWTH OF ENTREPRENEURSHIO:A. ECONOMIC FACTORS:1. LACK OF ADEQUATE BASIC FACILITIES:Certain basic facilities like modern transport & communication, adequate irrigation & power facilities, latest technology etc.are very essential for undertaking innovative activities. But these facilities are not adequately available in less developed countries. 2. NON-AVAILABILITY OF CAPITAL:Innovations generally require huge capital investment on capital equipment. Capital equipment & basic expertise have to be imported which involves heavy shipping & insurance expenses. Imports also involve the use of considerable amount of foreign exchange which is also scarce in less developed countries. 3. NON-AVAILABILITY OF RAW-MATERIALS & FINISHED GOODS:Raw materials supply is not uniform throughout the year. They have to be stocked in plenty during the periods of their supply. Moreover, large stocks of inventories have to be kept to ensure adequate industrial supplies. Hence the amount of working capital required is increased considerably in less developed countries pushing up the cost of production.

4. GREATER RISKS INVOLVED IN BUSINESS:y

There is considerable instability in both domestic & foreign economic policies.

y y

There is instability in the market due to seasonal fluctuations of demand. Exports of these countries are subject to violent swings of prosperity & depression prevailing in import countries.

y y

The domestic market is also small that inhibits new investments. There is lack of information on cost, market demand, overhead facilities etc.Hence, an entrepreneur cannot make correct estimates of his purposed venture.

5. NON-AVAILABILITY OF SKILLED LABOUR:In developing countries, labour is not trained & hence lacks industrial skills. The traditional skills of workers are highly insufficient for modern industrial jobs. B. SOCIAL FACTORS:1. CUSTOMS & TRADITIONS:If customs & traditions play a dominant role in production decision-making rather than the critical assessment of facts, then entrepreneurship will not be encouraged. It is so because an entrepreneur will be guided more by customs than his individual initiative & drive. 2. RATIONALITY OF THE SOCIETY:A society is said to be rational when decisions regarding resources utilisation are based on empirical facts & critical scientific stands. While rational behaviour is the order of the day in the developed nations, a majority of the less developed countries are characterised by a nonrational society which is unsuitable to entrepreneurship. 3. SOCIAL SYSTEM:The social system prevailing in a locality also affects entrepreneurship. For instance, in a society where the joint family system is in vogue, entrepreneurship cannot be developed. It is so because those members of the joint family who gain wealth by their hard work are denied of the opportunity to enjoy the fruits of their labour, since they have to share their wealth with the other members of the family. 4. SOCIAL SET-UP:-

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The social set-up in some countries is hostile to entrepreneurship. For instance, in some societies, education, research & training are given very little importance. Such societies cannot expect entrepreneurs to emerge & take up new ventures. Again, if narrow parochial & caste consideration are given importance in a society, it cannot produce entrepreneurs with skills & aptitudes. C. CULTURAL FACTORS:The cultural factors prevailing in a country decide the level of entrepreneurs activities in that country. If the culture does not attach great value to business talents, industrial leadership etc then people may not prefer any business ventures. D. PERSONALITY FACTORS:1. SUSPECT PERSONALITY:In the less developed countries, the entrepreneur is looked upon the suspicion. People tend to see in the entrepreneur a suspect personality. They see the entrepreneur only as profit maker & an exploiter. Thus, the public opinion has become hostile to entrepreneurship. 2. EMERGENCE OF PLANNING:In developed countries, people favour direct state activity in the economy rather than private entrepreneurship due to suspect personality factors. Hence, many countries have resorted to planning as a means of achieving economic progress & the state has been given a pivotal role. Planning imposes controls & this goes against the very personality of the entrepreneurs. E. PSYCHOLOGICAL AND SOCIOLOGICAL FACTORS:According to McClelland need achievement motive induces entrepreneurship. This is confirmed by Paul Wilker who says that entrepreneurship becomes the link between need achievement & economic growth. This need achievement is influenced by not only by social & cultural factors, but also by parental influence. Psychological consequences of social change like a radical loss status are the root cause of entrepreneurship. WOMEN ENTREPRENEURS:-

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Women entrepreneurs are those women or group of women who initiate, organise & operate a business enterprise. The govt. of India has defined women entrepreneur as an enterprise owned & controlled by a women having a minimum financial interest of 51% of capital & giving at least 51% of the employment generated in the enterprise to women. The attitudes, perceptions, role, etc of Indian women look like an assembly of diverse fragments. One cannot have a logical look at all the aspects. BASIC PROBLEMS OF WOMEN ENTREPRENEURS: Access to start-up finance is the greatest single issue faced by women entrepreneurs. It is observed that the women entrepreneurs face greater problems in this regard than small business in general. As family members are not in favour of supporting their ladies to take up the business in which they have skills, naturally they will be unwilling to support with the finance required for starting a business unit.  Another disturbing factor is managing the working capital. Working capital is required for maintaining finished stock to meet the market demand for production & for meeting marketing & other administrative expenses. It will be very difficult for women entrepreneurs to avail such loan facilities from financial institutions as they are unable to provide security.  Regarding marketing skills, women entrepreneurs have problem of access to markets as their marketing skills are weak compared to male entrepreneurs. This is a major barrier for them to expand business or enter into business.  Access to technology & adapt it in production process, poses certain problems. Coordinating factors of production are really a challenge to women entrepreneurs. Women entrepreneurs cannot easily co-ordinate the production process particularly with the ever changing technology. Women who aspire to become entrepreneurs cannot keep pace with technology advancement.  Regarding administrative & regulatory requirements, many feel that is a significantly greater problem for women entrepreneurs than their male counterparts.  Other problems like societys attitude towards women entrepreneurs, unequal opportunities between men & women & very important amongst all the Lack of Confidence in women are also haunting women entrepreneurs.

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