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ENTREPRENEURSHIP
DEVELOPMENT
SSIPMT/SAPNA SHARMA/2012
ENTREPRENEUR- Chapter Scheme

Introduction Concept Definition Nature/Characteristics Types of risk an entrepreneur may face Functions Role Types & Classification Women Entrepreneurs Entrepreneurs Vs Managers
SSIPMT/SAPNA SHARMA/2012 2
INTRODUCTION
Since an Individual has 3 career options to work for someone else
To be self employed To be an entrepreneur
Important factor in economic development First & foremost catalyst for change As a tool for income generation & employment
REASONS OF POPULARITY
Provides numerous opportunities for selfexpression & self realisation for doing something new Offers growth & self development More monetary rewards Decision making power Satisfactory rewards
CONCEPT
The word s derivation is from French word entreprendre which means to undertake . Previously applied to military expeditions (early 16th century), then in context to architects,contractors etc (18th century), then as an intermediate between capital & labour (19th-20th century), & at last as emerging class called entrepreneur class (in 21st century).
Entrepreneurs...
14th century...Tax contractors...bore the risks of collecting taxes. If they collected more than the fee...they kept the rest as profit. Called the change agents of progressive economies
Entrepreneurship
Entreprendre...17th century French...the individual who undertook the risk of a new enterprise... undertakers . They were contractors who bore the risks of profit or loss Examples: soldiers of fortune, adventurers, builders, merchants and funeral directors
Entrepreneurs...
Adam Smith...The Wealth of Nations: spoke of the enterpriser as an individual who undertook the formation of an organization for commercial purposes A. Smith...mentioned role of industrialist...,person with unusual foresight who could recognize potential demand for goods and services
Entrepreneurs...
John Stuart Mill...describes an entrepreneur as a business founder Recognized entrepreneurship as central to economic theory Carl Menger...Principles of Economics: Economic change does not arise from circumstances but from an individual s awareness and understanding of those circumstances
Entrepreneurs...
In 19th century entrepreneurs were:
risk takers decision makers aspired to wealth endured commensurate losses gathered and managed resources to create new enterprises
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Entrepreneurship
Joseph Schumpeter...20th century talks about creative destruction whereby established ways of doing things are destroyed by the creation of new and better ways of getting things done Described it as a process and entrepreneurs as innovators who use process to shatter the status quo through new methods...
Entrepreneurs...
Are not equal to inventors...inventor might only create anew product, whereas an entrepreneur will gather resources, organize talent, and provide leadership to make it a commercial success Peter Drucker... Resources, to produce results, must be allocated to opportunities rather than to problems...
DEFINITIONS
The entrepreneur can be defined as one who recognizes & manages only enterprise especially involving high risk . An entrepreneur is one who creates a new business in the face of risk & uncertainty for the purpose of achieving profit & growth by identifying significant opportunities & assembling the necessary resources to capitalize on them. As per different social scientist- like economist, psychologist, sociologists, management experts As per different authors- like R.CANTILLON, J.B.SAY, J.A.SCHUMPETER, P.F.DRUCKER..
1755 1816 1921 1934 1985 1988 1991
Cantilllon Say Knight Schumpter Stevenson Gartner Bygrave & Hofer
A person bearing risk Agent combinig all fops Recipient of pure profits Ability to identify new opportunity Relentless pursuit of opportunity Actions taken to create org. Characteristic of entrepreneur process
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ENTREPRENEURIAL NATURE/CHARACTERISTICS/DIMENSIONS
An entrepreneur should be one who bears, innovates or imitates & organizes the business Desire for responsibility
Preference for moderate risk Confidence to succeed Immediate desire for feedback High level of energy & commitment Future orientation Skill at organizing Value of achievement over money Tolerance for ambiguity & flexibilty Locus of control Other important traits
TYPES OF RISK
Financial Risk
Family & Social Risk
RISKS
Career Risk
Psychological Risk
FUNCTIONS OF AN ENTREPRENEUR
A successful entrepreneur recognizes the commercial potential of a product, designs operating policies in marketing, production, product development & the organization structure. Function of Innovation Assumption of Risk Managerial Function of Organization & Managemant Business Decisions
Thus,the entrepreneur is an institution himself & he perfomes Various functions related with organization development& management control.
ROLE OF ENTREPRENEUR
Most important factor in the economic development. Organizes & utilizes the various factors & set productive machinery in action. As per Prof. Schumpter, supply of entrepreneur depends on the rate of profit & social climate. Innovator with a certain achievement motive In ensuring the change required by the development process Mobilises capital source to have a command over FOP s.
ENTREPRENEUR Vs MANAGER
Very often Entrepreneur & manager are used interchangeable terms, but strictly speaking these terms are different. Entrepreneurial role is Played by Chief Executive teams & Top level executive team Whereas Managerial Role by Middle & joint Level executives. Management involves combining or coordinating resources to produce whereas entrepreneurship involves combining to initiate changes in production. As per Joseph Schumpter, manager is one who deals with day to day affairs of a going concern. But an entrepreneur attempts to change the factor combinations & thus increases productivity & profits.
Difference
Parameter
Goal Management Status Risk Rewards Innovation Qualification Continuity To Produce Result
Entrepreneur
Starts a new venture for personal use Owner Bears all risk and responsibilities Gets uncertain & irregular profit & may even be negative Innovator, change agent & meets changing customer needs To possess high qualities & qualifications (high achievement motive etc) Discontinuous
Manager
Renders service in an already existing set up Employee/servant Bears no risk or responsibility Receives fixed & regular salary for service rendered & never negative Executes & translates existing plans of others To possess distinct qualifications (knowledge in management theory)
TYPES
As per Clarence Danhof (on the basis of economic development) Innovative/aggressive entrepreneur Imitative/Adoptive entrepreneur Fabian entrepreneur Drone entrepreneur As per Arthur H. Cole(on the basis of function & characteristics) Empirical Rational Cognitive
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CLASSIFICATION
TYPES OF BUSINESS
Business
Entrepreneur
Agricultural Dairy
Trading Forestry
Corporate
Industrial
Service
Retail
Horti Culture
Tiny
Small
Medium
Large
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USE OF TECHNOLOGY
Technical Non Technical Professional High Technology Low Technology
MOTIVATION
Pure Induced Motivated Spontaneous
DEVELOPMENT First Generation Modern Classical
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GROWTH
Growth
Super Growth
AREA
Urban
Rural
GENDER
M/F
Young
Old
Middle
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WOMEN ENTREPRENEUR
In 1988, for the first time the definition of Women entrepreneurs enterprise was evolved.
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ENTREPRENEUR LEADERS
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The Builder of Indian Industry
J R D
TATA
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Dhirubhai Ambani alias Dhirajlal Hirachand Ambani was born on December 28, 1932, at Chorwad, Gujarat, into a Modh family. His father was a school teacher. Dhirubhai Ambani started his entrepreneurial career by selling "bhajias" to pilgrims in Mount Girnar over the weekends.
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After doing his matriculation at the age of 16, Dhirubhai moved to Aden, Yemen. He worked there as a gas-station attendant, and as a clerk in an oil company. He returned to India in 1958 with Rs 50,000 and set up a textile tradingcompany. Assisted by his two sons, Mukesh and Anil, Dhiru Bhai Ambani built India's largest private sector company, Reliance India Limited, from a scratch. Over time his business has diversified into a core specialisation in petrochemicals with additional interests in telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets, and logistics.
N.R.Narayana Murthy An Indian IT chief who's really made it big without dropping his ethical precepts by the wayside is Nagawara Ramarao Narayana Murthy, Chairman of Infosys. Born in 1946, Murthy's father was a schoolteacher in Kolar district, Karnataka, India. A bright student, Murthy went on to acquire a degree in Electrical Engineering from Mysore University and later studied Computer Science at the IIT, Kanpur, India.
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The Infosys legend began in 1981 when Narayana Murthy dreamt of forming his own company, along with six friends. There was a minor hitch, though-he didn't have any seed money. Luckly, like many Indian women who save secretly without their husband's knowledge, his wife Sudhathen an engineer with Tatashad saved Rs 10,000. This was Murthy's first big break.
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Infosys.a
The decade until 1991 was a tough period when the couple lived in a one-room house. The second break came in 1991 when Indian doors to liberalization were flung open Murthy grabbed the opportunity with both hands and has never looked back ever since. Today, Infosys is the first Indian company to be listed on the US NASDAQ. It provides employment to 85,000 people.
Food king
When 27-year old Sarathbabu graduated from the Indian Institute of Management, Ahmedabad, he created quite a stir by refusing a job that offered him a huge salary. He preferred to start his own enterprise -- Foodking Catering Service -- in Ahmedabad.
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The Motivating Force of Food King
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Requirements to be an entrepreneur
Innovation, Creativity Risk Taking Organization
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Creative as a prerequisite to innovation

Creativity - is the ability to bring something new into existence Innovation - is the process of doing new thing.
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The Creative Process

Idea Germination Preparation Incubation Illumination Verification
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The difference between invention and innovation is:

Invention - is the creation of new products, processes, and technologies not previously known to exist. Innovation - is the transformation of creative ideas into useful applications by combining resources in new or unusual ways to provide value to society for or improved products, technology, or services.
Elements in the Innovation Process

Analitical Planning Organizing Resources Implementation Commercial Application
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ENTREPRENEURSHIP
It is an important factor of industrial development of a country. This concept is a complex phenomenon, broadly it relates to the entrepreneur, his vision & its implementation. Therefore, it refers to a process of action an entrepreneur undertakes to establish his/her enterprise. BUT,,, the degree & quality of entrepreneurship differ from entrepreneur to entrepreneur. Is a dynamic process of creating incremental wealth. This wealth is created by individuals who assume the major risks in terms of equity, time and career commitment of providing value for some product or service The entrepreneur must somehow infuse value to the product or service...
CONCEPT/APPROACHES THEORIES
Entrepreneurship is an evolved thing. With the advancement of science and technology it has undergone metamorphosis change and emerged as a critical input for socio-economic development. Various writers have developed various theories on entrepreneurship and popularized the concept among the common people. The theories propounded by them can be categorized as under Sociological theories Economic theories Cultural theories Psychological theories
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Explanation
Sociological Theory: It is a process of role performance. Entrepreneurs are expected to be governed by the wishes of the society, customs, ethics etc.
CONTRIBUTORS- Thomas Chocharan, Peter Marris etc
Economics Theory: Process of initiating a new venture, organizing the resources it requires & assuming the risk it entails. Entrepreneurship and economic development are interdependent. Economic development takes place when a country' real rational income increases overall period of time wherein the role of entrepreneurs is an integral part.
CONTRIBUTORS-Adam Smith (1776),JB Say(1803), J.S.Schumpter(1934), P.F.Drucker
According to Schumpeter an entrepreneur is one who perceives the opportunities to innovate, i.e. to carry out new combinations or entreprise. In his views, the concept of new combination leading ti innovation covers the following 5 cases 1- The introduction of new goods, that is the one with which consumers are not yet familiar, of a new quality. 2- The introduction of new method of production 3- The opening of new market 4- the conquest of new source of supply of raw material 5-The carrying out of new organization
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THEORIES conttdd
Cultural Theory: Advocates of cultural theories point out that entrepreneurship is the product of culture. Entrepreneurial talents come from cultural values and cultural system embedded into the cultural environment.
Hoselitz explains that the supply of entrepreneurship is governed by cultural factors, and culturally minority groups are the spark-plugs of entrepreneurial and economic development. in many countries, entrepreneurs have emerged from a particular socio-economic class. He emphasized the role of culturally marginally groups like Jews and the Greeks in medieval Europe, the Chinese in south Africa and Indian in east Africa in promoting economic development.
Psychological Theory: It center's around the psychological characteristic so the individual in a society. Psychological characteristics affect the supply of entrepreneurs in the society.
Mc Clelland states that it is the need for achievement which drives people towards entrepreneurial activities. Individuals with High achievement motive tend to take interest in situations of High risk.
DEFINITION
Higgin B: It is meant for the function of seeking investment & production opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labour, arranging the supply of RM, finding site, introducing a new technique & commodities, discovering new sources of RM & selecting top managers of day to day operations of enterprise. J.A.Schumpter: It is essentially doing things that are not generally done in the ordinary course of business routine. P.F.Drucker: It occurs when resources are redirected to progressive opportunities not used to ensure administrative efficiency. A.H.Cole; It is the purposeful activity of an individual or group of associated individuals undertaken to initiate maintain profit by production or distribution of economic G/S. Thus, It is the propensity of mind to take calculated risk with confidence to achieve a predetermined business or industrial objective.

CHARACTERISTICS OF ENTREPRENEURSHIP
Innovation A function of high achievement Organization building function A function of group level pattern A function of managerial skills & leadership A function of status withdrawal Gap filling function A function of religious belief Dynamic process Decision making, skillful management, accepting challenges
DIMENSIONS
Individual Characteristics
Environment
New venture creation
Organization
Constraints
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BENEFITS
Opportunity to create your own destiny Opportunity to make a difference Opportunity to reach full potential Opportunity to reap impressive profits Opportunity to contribute to society & be recognized for the efforts Opportunity to make avocations their vocation Opportunity for Economic & social benefits -creating innovation, fuelling economic growth, identifying ownership opportunities ,enhancing welfare amenities
BARRIERS
BARRIERS
ENVIRONMENTAL
FINANCIAL
PERSONAL
SOCIETAL
CAUSES DRAWBACKS
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ENTREPRENEURSHIP STIMNULANTS
Entrepreneurial education Entrepreneurs are heroes Demographic & economic factors Technological advancements Increased focus on capital formation Supportive government programmes E-commerce & WWW. International opportunities Availability of required training & input Business & research To make an environment for innovation
CULTURAL DIVERSITY
Young entrepreneurs Women entrepreneurs Minority entrepreneurs Part-time entrepreneurs Home-based entrepreneurs Family business Copreneurs Corporate castoffs Corporate dropouts
HOW TO AVOID PITFALLS

Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively To keep in tune with yourself
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CONCEPTUAL MODEL
As per Kao, a conceptual model of entrepreneurship can be a relativity among various factors. It was generated due to the limitations of some of the definitions.
THE PERSON
THE ORGANIZATION
ENTREPRENEUR-SHIP
THE TASK
THE ENVIRONMENT
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ANALYTICAL FRAMEWORK
THE PERSON: personality, skill, experience, motives, psychological preferences THE TASK: perceiving opportunity, marshalling resources, providing leadership THE ENVIRONMENT: availability of resources, infrastructure, competitive pressures, social values, rules, state of technology THE ORGANIZATION: structure, rules, policies, culture, HR system, communication system
ENTREPRENEURIAL DECISION
This decision occurs despite recession, inflation, high interest rates, lack of infrastructure, economic uncertainties etc. Each of these decisions is a personal human process which although is unique, have common characteristics. The impulsive motives are the forces behind these decisions. The decision to start a new company occurs when an individual perceives that it is both desirable & possible. The perception is desirable result from an individual s culture, teachers, sub culture, family etc.
DECISION FOR A POTENTIAL ENTREPRENEUR

Change from present Life style Work environment Disruption Form new enterprise DESIRABLE cultural Sub cultural Family Teachers Peers POSSIBLE Government Background Marketing Finance Role models
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ENTREPRENEUR Vs ENTREPRENEURSHIP Vs ENTERPRISE

CONCEPT
ENTREPRENEUR (person)
ENTREPRENEURSHIP (process of action)
ENTERPRISE (object)
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ENTREPRENEUR Vs ENTREPRENEURSHIP
Refers to a person Visualizer Able Creator Organizer Innovator Decision maker Administration Motivator Analysizer Leader Human Planner Refers to a process Vision Ability Creation Organization Innovation Decision Administration Motivation Analysis Leadership Humanity Planning
Conttddd .
Character Believer Marketier Director Programmer Investor Empowerer
Characteristics Belief Marketing Direction Action Investment Empowerment
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ENTREPRENEUR & ENTERPRISE

Entrepreneur is one who provides the 4th FOP, namely enterprise . Enterprise may be defined as an undertaking or adventure involving uncertainty & risk & requiring innovations. It serves as the framework within which decisions concerning what to produce, how much to produce, when to produce & how to produce are taken by entrepreneurs / managers. The success of an enterprise depends upon several internal & external factors to the business world & some of these factors may be under the control of the entrepreneur.
ENTREPRENEURIAL PROCESS
Identify an opportunity Establish vision Persuade others Gather resources Create new venture Change/adapt with time
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Scope of entrepreneurship
Capitalism: a capitalist economy represents free enterprise, freedom to save & invest, free competition, consumer sovereignty & very little interference from the government. Socialism: private entrepreneurship is absent in it. It is the economic & financial experts who played an important role in the development. The purpose is to serve for the satisfaction of society & not to make profits or to make profits Mixed economy: both private as well as public sectors coexist side by side.
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Intrapreneur
Intra means inside the organization In the era of globalisation, large corporations are developing new products & services & creating innovative technologies & systems. The term was coined in America in late 70 s. this is called as corporate entrepreneurs or intra corporate entrepreneur. It implies any of the dreamers who do. The concept was promoted by Pinchot III
Definition
Those who take hands-on responsibility for creating innovation of any kind within an organization. The intrapreneur may be creator or inventor but is always the dreamer who figures out hoe to turn an idea into a profitable reality. Intrapreneur is a person who promotes creativity within a larger enterprise.
Meaning
In certain cases, larger enterprise welcomes creative or new ideas & try to motivate their managers & employees to create something new to enlarge the scope of corporate entrepreneurship. These motivational efforts involve breaking down formal organizational barriers
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Intrapreneurship can be defined as the development within large corporation of internal markets & relatively small autonomous or semi autonomous business units producing products, services or technologies that employ the firm s resource in unique way. Intrapreneuring means the entrepreneurial activities that acquire organizational sanctions & commitment of resource for the sole objective of innovative results Intrapreneurship is not limited to germination of new ideas but even includes implementation of new ideas
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Evolution of concept
Since the term was coined in America, as in 1970 s, several senior executives of big corporation left their jobs to start their own small businesses because the top bosses in these corporation were not receptive to innovative ideas. These executives turned entrepreneur achieved success & some posed threat to the corporations they left a few years ago, they were known as intrapreneurs.
G. Pinchot III wrote in his famous book Intrapreneuring in 1985 & as intrapreneurs are the person who resigned from their well paid executive positions to launch their own ventures. He suggested that well established company should learn to make use of the entrepreneurial talents within to avoid stagnation & decline. Therefore, needed was a system & an organization culture within a large organization that would allow the executives to operate like entrepreneur. These persons are not driven by monetary gain but by a deep desire of personal achievement.
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Examples
Don Estridge, an employee at IBM posted at Florida, far away from his bosses at IBM HQ spearheaded the creation of PCs. Paul Scagnetti, an engineer at Intel came up with the concept of a handheld computer aimed at helping people do just one thingrecord & plan their fitness & nutrition. The gizmo Vivovic fitness planner hit the market successfully.
Features
An entrepreneurship which takes place within an existing business. It is the development within a corporation of internal markets Internal managers & employees are responsible for it through their innovative work. It is promoted in the form of autonomous or semi autonomous business units that produce products, services or technologies in a unique way.
Stages in Intrapreneurial Behaviour

Solo stage Networking Boot legging Creating formal team
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Factors governing intrapreneurial success

Appropriate rewards & punishment Recruitment of interested & enthusiastic personnel New ventures & established business with a difference Internal product competition & corporate bureaucracy
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Process
Problem definition Coalition building
Resource mobilisation
Project execution
Venture completion
Types
Innovative Intrapreneur Technical Intrapreneur Marketing Intrapreneur Manufacturing Intrapreneur Financial Intrapreneur Service Intrapreneur Other intrapreneur in various management activities
Difference
Entrepreneur Owner of his enterprise Independent Raises finance from various sources Maynot be educated & skilled organizer Strives to earn maximum profit Bears full risk of business Promoter Visualizer Direct participation in all activities Intrapreneur Not the owner, but a key worker Partially independent Doesnot own responsibility to raise capital Educated & skilled person Strategist Strives to excel in all fields Doesnot bear full risk Operates & develops the business Pragmatic visionary, innovator & creative Direct but restricted participation
Objective is money, freedom to take decision, Objective is freedom to take decisions, chance to innovate corpaorate rewards, promotion rewards75 SSIPMT/SAPNA SHARMA/2012
Entrepreneurial culture
Implies a set of values, norms & traits that are conducive to the growth of entrepreneurship. It is the corporate culture that focuses on the emergence of new opportunities, the means of capitalising on them & the creation of the structure appropriate for pursuing them. It should be differentiated from administrative culture which focuses on existing opportunities, organization structure & control procedures.
An ideal administrator would ask questions as-
An ideal entrepreneur would ask questions as-
What resources do I control? What structure determines our organization s relationship to its market? How can I minimise the impact of others on my ability to perform? What opportunity is appropriate?
Where is the opportunity? How do I capitalize on it? What resources do I need? How do I gain control over them? What structure is best?
Exception: though as per Stevenson & Gumpert companies must often contain both entrepreneurial & administrative culture because they consist of both entrepreneurial & established units. SSIPMT/SAPNA SHARMA/2012
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focus Strategic orientation
Entrepreneurial culture Driven by perception of opportunities due to changing technology Revolutionary, with short duration, due to narrow decision, action orientation Many stages with minimal exposure at each stage
Administrative culture By controlled resources due to social constraints
Commitment to seize opportunity
Evolutionary, with long duration, due to negotiation, risk reduction A single stage with complete commitment out of decision
Commitment of resources
Control of resources
Episodic use/ rent of Ownership or employment requirement resources due of required resources to to increased specialization power , status Flat, with multiple informal networks Hierarchy
Management structure
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Various subculture
Culture of a business Business ethics TQ culture Productivity culture Corporate culture Organization culture
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ENTREPRENEURSHIP

ENTREPRENEUR- Chapter Scheme

1755 1816 1921 1934 1985 1988 1991

Cantilllon Say Knight Schumpter Stevenson Gartner Bygrave & Hofer

Family & Social Risk

DEVELOPMENT First Generation Modern Classical

The Builder of Indian Industry

The Motivating Force of Food King

Creative as a prerequisite to innovation

The Creative Process

The difference between invention and innovation is:

Elements in the Innovation Process

New venture creation

HOW TO AVOID PITFALLS

DECISION FOR A POTENTIAL ENTREPRENEUR

ENTREPRENEUR Vs ENTREPRENEURSHIP Vs ENTERPRISE

ENTREPRENEURSHIP (process of action)

Character Believer Marketier Director Programmer Investor Empowerer

Characteristics Belief Marketing Direction Action Investment Empowerment

ENTREPRENEUR & ENTERPRISE

Stages in Intrapreneurial Behaviour

Factors governing intrapreneurial success

An ideal administrator would ask questions as-

An ideal entrepreneur would ask questions as-

focus Strategic orientation

Administrative culture By controlled resources due to social constraints

Commitment to seize opportunity

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