Entrepreneur

Module: 1

Who Are Entrepreneurs?

Entrepreneurs are:
People who start and/or operate a business.
Individuals who discover market needs and

launch new firms to meet those needs.

Risk takers who provide an impetus for

change, innovation, and progress.

All active owner-managers (founders and/or

managers of small businesses).

Entrepreneur
Entrepreneur is a person who creates an

enterprise.
The process of creation is called as
entrepreneurship.
The word entrepreneur is derived from
the French verb enterprendre, which means
to undertake
This refers to those undertook the risk of
new enterprise.

Definitions of an
Entrepreneur
A individual who bears the risk of operating a business

in the face of uncertainty about the future conditions.

Encyclopedia Britannica

He searches for change, responds to it and exploits

opportunities, innovation is the specific tool of

entrepreneur.
Peter F. Drucker

He is one who is endowed with more than average

capacities in the task of organizing and coordinating

the various factors of production. He is a pioneer and
captain of industry.
International Labor Organization

ENTREPRENEURSHIP
What is Entrepreneurship?

It is the process of mind to take calculated

risk with confidence to achieve predetermined objectives.
Conventional view

Entrepreneurs are born and it is hereditary

Entrepreneurship is a monopoly of some
communities and restricted to certain regions.

ENTREPRENEURSHIP
Modern view

It does not belong to any particular

region, community, education, sex, age
etc.,

Salient Features
Entrepreneurship is need-based function
Production is not for self consumption
Profit oriented
Entrepreneur posses distinct qualities like

risk bearing, goal setting, information

seeking, time planning , maintaining good
interpersonal relations, innovator and team
builder

Continue.
He posses the different Ds for success.

ie., Desire, Discipline, Determination,

Dedication, Devotion, Dignity.
He is a creator of wealth
He takes decision about
What to produce --- Product selection
How to produce --- Technology
Where to produce --- Location
When to produce --- Time
planning/Duration
For whom to produce --- Target
consumers/ Market

Entrepreneurial Incentives

Why People Become

Entrepreneurs
Reluctant Entrepreneur
A person who becomes an entrepreneur as a

result of some severe hardship

Refugee
A person who becomes an entrepreneur to

escape an undesirable situation

Misconceptions about
Entrepreneurs

Entrepreneurs are born

They are profit-hungry
They are dishonest
They are favoured by luck.
Only rich people can become
entrepreneurs
It is a monopoly of certain communities

Misconceptions about
Entrepreneurs
Most of what you hear about

entrepreneurship, says Americas leading

management thinker, is all wrong. Its not
magic; its not mysterious; and it has
nothing to do with genes. Its a discipline
and, like any discipline, it can be learned.
- Peter F. Drucker

Distinction between
Entrepreneurs and Managers
Entrerpreneur :
1. Entrepreneurial function is organizing
production
2. Decision making & calculated risk bearing
3. Has all round responsibility
4. Public relation skills & team building
5. High level of achievement and motivation
6. Innovative, creative, imaginative soul
7. Challenges established values and
attitudes

Continue.

1.
2.
3.
4.
5.
6.

Managers :
Managers are employees (specific role)
Limited scope for innovation & creativity
Managerial jobs are transferable
Managers do not bear risk
Managers Need team building &
leadership role
Managers need knowledge, insight and
expertise (KIE)

Role of Entrepreneurship in
Economic development
Increasing per capita output and Income
Involves initiating and constituting change

in the structure of business and society

The theory of economic growth depicts
innovation as the key not only for
developing new products but also in
stimulating investment interest in the new
ventures

Role of Entrepreneurship in
Economic development
Production evaluation process: Process for

developing & commercializing an

innovation
Iterative Synthesis: The intersection of
knowledge & social need that starts the
product development process
Ordinary innovations: New products with
little technological change
Technological innovations: New products
with significant technological advancement

Role of Entrepreneurship in
Economic development
Reduces unemployment.
Reduces poverty.
Improves the life style of people.

Functions of Entrepreneur
An entrepreneur frequently has to wear many

hats. He has to perceive opportunity, plan,

organize resources, and oversee production,
marketing, and liaison with officials. Most
importantly he has to innovate and bear risk. The
main
functions of an entrepreneur are as follows:
1.Innovation:

Innovation is one of the most important functions of an

entrepreneur An entrepreneur uses information,
knowledge and intuition to come up with new products,
new methods of reducing costs of a product,
improvement in design or function of a product,
discovering new markets or new ways of organization of
industry.
Through innovation, an entrepreneur converts a material
into a resource or combines existing resources into new
and more productive configurations.

Functions of Entrepreneur
It is the creativity of an entrepreneur
that results in invention [creation of
new knowledge] and innovation
[application of knowledge to create
new products, services or processes.]
Systematic innovation means
monitoring the innovative opportunity
and exploiting the opportunity:

Functions of Entrepreneur
Risk and uncertainty bearing:

2.

According to Hozelist an entrepreneur performs the

function of risk and uncertainty bearing. Every
decision pertaining to development of new products,
adapting new technologies, opening up new markets
involves risk.
Decision-making in an environment of uncertainty
requires anticipation of risk.
Profit is said to be the reward for anticipating and
taking such risks.
However it is pertinent to mention that the
entrepreneur is not a gambler, he only takes
calculated risks.
An entrepreneur develops the art of decision-making
under conditions of uncertainty as a matter of survival

Functions of Entrepreneur
3. Organization building:

An entrepreneur has to organize men, material and

other resources. He has to perform the functions of
planning, co-ordination and control.
He has to use his leadership qualities to build a team,
generate resources and solve problems.
With his organizational skills an entrepreneur builds an
enterprise from scratch, nurtures it and makes it grow.
His vision sows the seeds for a sound and vibrant
organization and synergies are built in the enterprise.

Characteristics of a Successful
Entrepreneur
Creativity
Innovation
Dynamism
Leadership
Teambuilding
Achievement motivation
Problem solving
Goal orientation
Risk taking and decision making ability
commitment

Creativity
Creativity is the the ability to bring

something new into existence

Creativity process

Innovation
Innovation is the process of doing new

things but creativity is a prerequisite to

innovation
Innovation is the specific instrument of
entrepreneurship.
Is the act that endows resources with a new
capacity to create wealth.

Dynamism
Innovation together dynamism constitutes

a potential combination for prosperity.

Dynamism revises the targets of the
enterprise upwards time and again.
A dynamic entrepreneur is always
pragmatic(practical matters).
He sets attainable goals
Approaches problem to solve than to run

away

Leadership
Leadership is the basic quality of an

entrepreneur..
Leadership qualities will enable a person to
stand apart in whatever profession he
might be in.
The quality of leadership is clear from
personal relationship, mode of handling a
problem, generating resources and taking
others in to ones stride.

Team Building
An entrepreneur should have an ability to

build a team.
A team is a group of individuals with a
common purpose, that is focused and
aligned to achieve a specific task or set of
outcomes.
A good team will be able to share
knowledge, core competency and goals

Achievement motivation
Entrepreneurs have a high need for

achievement and are guided by their inner

self, motivating their behaviour towards
accomplishments
Entrepreneurs can be classified into three
categories
Dreamers
Doubter
Doers

Problem solving
It is important that an entrepreneur should

be able to solve problems and not avoid

them.
The formal model of problem solving
Define the problem
Gather information
Identify various alternatives
Evaluate alternatives and select the best

option
Take action
Evaluate the action taken

Goal orientation
Goal setting is the achievement of targets and

objectives for successful performance of an

entrepreneur, both long run and short run.
It helps to measure how well individuals and
groups are meeting the performance standards
Human behaviour is goal directed. Therefore
goal setting is a necessary part of all activities.
The goal setting requires three steps
Definition of goal
Specific goals
Feedback about goals

Risk taking and decision

making ability
Entrepreneurs are persons who take

decisions under conditions of uncertainty

and therefore are willing to bear risk but
never gamble with results.
Risk bearing and decisions making calls for
absolute clarity in thinking and coordinated
actions.

Commitment
Strong determination with sound thinking

fortifies will power.

Varieties of Entrepreneurship
Founder (Pure Entrepreneur)
A person who brings a new firm into existence
Administrative Entrepreneur
An entrepreneur who oversees the operations

of a ongoing business
Franchisee
An entrepreneur whose power is limited by
the contractual relationship with a franchising
organization
Entrepreneurial Team
Two or more people who work together as
entrepreneurs

Classification & Types of

Entrepreneurs
Based on Functional characteristics
Innovative entrepreneur
Imitative or adaptive entrepreneur
Fabian entrepreneur
Drone entrepreneur

Classification & Types of

Entrepreneurs..contd
Based on the Developmental Angle
Prime mover
Manager
Minor innovator
Satellite
Local trading

Classification & Types of

Entrepreneurs..contd
Based on types of entrepreneurial business
Manufacturing
Wholesaling
Retailing
service

Classification & Types of

Entrepreneurs..contd
Based on the Nine Personality types of

Entrepreneurs
The improver
The advisor
The superstar
The artist
The visionary
The analyst
The fireball
The hero
The healer

Classification & Types of

Entrepreneurs..contd
The improver

If you operate your business predominately in the

improver mode, you are focused on using your

company as a means to improve the world. Your
overarching motto is: morally correct companies will
be rewarded working on a noble cause.
Improvers have an unwavering ability to run their
business with high integrity and ethics.

The advisor
This personality type will provide an extremely high

level of assistance and advice to customers.

The advisors motto is: the customer is right and we
must do everything to please them.

Classification & Types of

Entrepreneurs..contd
The superstar

Here the business is centered on the charisma and

high energy of the superstar CEO. This personality

often will cause you to build business around your
own personal brand.
The Artist
This business personality is the reserved but a

highly creative type. Often found in business

demanding creativity such as web design and ad
agencies.
As an artist type youll tend to build your business
around the unique talents and creativities that you
have.

Classification & Types of

Entrepreneurs..contd
The visionary

A business built by a visionary will often be

based on the future vision and thoughts of the

founder.
The analyst
If a run a business as an analyst, your company

focus is on fixing problems in a systematic way.

Analyst companies excel at problem solving.
The fireball
A business owned and operated by a fire ball is

full of life, energy and optimisim.

Classification & Types of

Entrepreneurs..contd
The hero

They have an incredible will and ability to

lead the world and their business through

challenge.
The healer
If you are a healer, you provide nurturing and

harmony to your business. You have an

uncanny ability to survive and persist with an
inner clam

Classification & Types of

Entrepreneurs..contd
Based on Schools of Thought on

Entrepreneurship
Assessing personal qualities
The great person school of entrepreneurship
The psychological characteristics school of
entrepreneurship
Recognizing opportunities
The classical school of entrepreneurship

Classification & Types of

Entrepreneurs..contd
Acting and managing
The management school of entrepreneurship
The leadership school of entrepreneurship
Reassessing and adopting
The intrapreneurship school of entrepreneurship

The great person school of

entrepreneurship.

This school believes that an entrepreneur is

born with an intuitive ability, sixth sense,

traits and instincts.
The successful entrepreneur is described as
having a strong drive for independence and
success, with high levels of vigor,
persistence and self esteem.
These kind of entrepreneurs are suitable for
start up organizations

The psychological
characteristics school of
This school of thought focuses on
entrepreneurship
personality factors and believes that
entrepreneurs have unique values and
attitudes towards work and life.
The personality characteristics that they
have are personal values, risk taking, need
for achievement and others.
These kind of entrepreneurs are suitable for
start up organizations

The classical school of

entrepreneurship

Innovation, creativity or discovery are the

key factors underlying the classical body of

thought and research on entrepreneurship.
These kind of entrepreneurs are suitable for
start up and early growth organizations .

The management school of

entrepreneurship
Entrepreneurs are organizers of an

economic venture; they are people who

organize own, manage and assume the
risk.
They have different skills like production
planning, people organization,
capitalization and budgeting.
These kind of entrepreneurs are suitable for
early growth and mature organizations.

The leadership school of

entrepreneurship

An entrepreneur is often a leader who relies

on people to accomplish his purpose and

objectives.
Entrepreneurs are leaders of people; they
have the ability to adapt their style to
needs of people.
They have motivating, directing and
leading skills.
These kind of entrepreneurs are suitable for
early growth and mature organizations.

The intrapreneurship school

of entrepreneurs.
The intrapreneurship school evolved in

response to the lack of innovativeness within

organisations.
In corporations intrapreneurship is the
development of independent units to create,
market and expand services.
The skills that they have are alertness to
opportunities
These kind of entrepreneurs are suitable for
mature and organizations that operate in
changing environment and uncertanity.

Concept of Entrepreneurship

What do you mean by

Entrepreneurial culture?

Entrepreneurial Culture
An Entrepreneurial Organizational Culture

(EOC) is a system of shared values, beliefs

and norms of members of an organization,
including valuing creativity and tolerance of
creative people, believing that innovating
and seizing market opportunities are
appropriate behaviors to deal with problems
of survival and prosperity, environmental
uncertainty, and competitors threats, and
expecting organizational members to behave
accordingly.

People and empowerment focused

Value creation through innovation and

change

Attention to the
Elements
ofbasics
Entrepreneurial

Hands-on management
Culture
Doing the right thing
Freedom to grow and to fail
Commitment and personal responsibility
Emphasis on the future

Sub-cultures of
Entrepreneurship

Culture of a business
Culture represents the manner in which
members of a group regulate their behaviour
in order to be in harmony with each other
and with other groups in the corporates
Business ethics
It is concerned with rightness or wrongness,

goodness or badness of human conduct.

Ethics is supposed to provide the basis for
deciding whether a particular course of
action is morally correct or bad

Sub-cultures of
Entrepreneurship
Productivity culture

Productivity improvement is not just doing things better;

more importantly it is doing the right things better.

All productivity improvements stems from people
productivity as people constitute the motive power for all
resources.
A key to productivity is the attitude of employees who
work together.
Total quality culture
TOC is the way of marking an integration of all efforts in

the organization between Hard Ss (strategy, structure &

systems)and Soft Ss(shared values, skills, staff & style) in
achieving total quality and customer care.

Sub-cultures of
Entrepreneurship

Organization's culture
It is the integral pattern of human behaviour that
includes thought, speech and action and depends
on mans capacity for learning and transmitting
knowledge to succeeding generations.
Culture enables organizations to function as a
collective unit
Cultural change key to mastering of change
Change can be mastered by the leaders and their

people only as they develop cultures which are

relatively more stable and enduring in terms of
their values

Create an Entrepreneurial
Culture Among Your

One motivation cited by many small

Employees

business owners is the opportunity to be

ones own boss. But that doesnt mean
youre free to forget what it is like to be an
employee.
Think about the people working for you
now. Are they contributing to your
companys growth through their energy
and ideas? Or, are they merely putting in
the hours until a better opportunity comes
along?

Create an Entrepreneurial
Culture Among Your
People want to contribute to a cause they
Employees
believe in, and one that recognizes the value of
their participation. Your small business is no
different. Along with being the eyes and ears
of your business, employees can help solve
(and, often, avoid) problems, identify
opportunities to improve efficiency and
strengthen your niche, and offer insights that
you might otherwise have overlooked.
In other words, your employees should approach
their jobs the same way you tackle the roles of
founder and owneras entrepreneurs.

Create an Entrepreneurial
Culture Among Your
Its All About People
Employees
Instilling that kind of thinking is not difficult, but it
doesnt happen just because you include we will
be entrepreneurs in your mission statement.
An entrepreneurial culture is created in part from
your leadership. That doesn't mean you should
try to be like Ratan Tata or Dhirubai ambani etc.
Simply be yourself. The most effective leaders
are those who set a good exampletimeliness,
throughness, integrity, consistency in words and
actions, unconditional respect for others opinions
and an openness to new ideasincluding those
that may be unworkable.

Create an Entrepreneurial
Culture Among Your
Likewise, entrepreneurial employees must
Employees
be creative, proactive thinkers.
Open Season

All entrepreneurs need information to

succeed, so it makes sense to make
information sharing a routine part of your
entrepreneurial culture. Communication
also reduces the potential for mistakes,
miscommunications, intra-office politics and
other problems that can hold companies
back or poison the working dynamic.

Create an Entrepreneurial
Culture Among Your
Information-sharing trait is not intrinsic to all
Employees
entrepreneurs, I believe its one they should
adopt if they want retain their employees and
thrive in businessSharing information about
your business with employees can help them
become better collaborators as you work to
create your vision.
Returns on Investment
Employees are better able to contribute when
they understand the expectations and desired
outcomes of their work, both individually and
for the business as a whole.

Create an Entrepreneurial
Culture Among Your
Encouraging entrepreneurship among your
Employees
employees will also remove some of the
mental burden from your shoulders. You
can draw on more resources to overcome
challenges, capitalize on opportunities, and
improve productivity. With that kind of
approach, the whole truly is greater than
the sum of its parts

Stages in Entrepreneurial
Development process

What is Intrapreneurship?
Intrapreneurship is the practice of

entrepreneurship by employees within an

organization.
An intrapreneur is an individual employed
by an organization for remuneration, which
is based on the financial success of the unit
he is responsible for.

Intrapreneurship
Intrapreneurs share the same traits as

entrepreneurs such as conviction, zeal and

insight.
As the intrapreneur continues to expresses
his ideas vigorously, it will reveal the gap
between the philosophy of the organization
and the employee. If the organization
supports him in pursuing his ideas, he
succeeds. If not, he is likely to leave the
organization and set up his own business.