BBA4A13 - Entrepreneurship Development

Module 1: Concepts of entrepreneur

Module II: Institutional support and incentives to

entrepreneur

Module III: Micro Small and Medium Enterprise

Module IV: Setting up of Industrial unit

Module IV: Project Report

 Module-I
Concepts of entrepreneur
• According to George Bernard Shaw, people fall
into three categories:
(i) those who make things happen.
(2) Those who watch things happen, and
(3) those who are left to ask what did happen.
Generally, entrepreneurs fall under the first
category
The man behind the White The man behind TATA (Jamsetji Tata)
Revolution of India(VARGHESE
KURIAN)

Azim Premji -WIPRO Kumar Birla-Adithya Birla Group

 Who is an entrepreneur?
• The word ‘entrepreneur’ is derived from the French word
entreprendre. It means ‘to undertake’.
-Thus, entrepreneur is the person who undertakes the risk of new
enterprise
-entrepreneur is a person who brings all the other factors of production
together.
-he is a person who is the owner of such an enterprise &bears the risk of
such an enterprise.
-he is the person who manages the enterprise
-He is one who has inititiave ,skill for innovation and looks for high
achievement.
-he is a catalytic agent of change and works for the good of the people.
-he puts the new Greenfield projects that actually creates wealth, opens
up employment opportunities and foster other sectors.
 Definition
• Joseph A Schumpeter defines “an
entrepreneur as one who innovates, raises
money, assembles inputs and sets the
organization going with the ability to identify
them and opportunities, which others are not
able to fulfill such economic opportunities”.
TRAITS OR QUALITIES OF SUCCESSFUL ENTREPRENEUR
Traits is a particular characteristics or quality or tendency that someone or
something has. A successful entrepreneur has the following characteristics:
1.Willingness to make sacrifices and assume risk :an entrepreneur sacrifices
his time,money,energy and resources in order to carry out his venture. He
should be willing to assume relatively larger degree of risk because he has
to guarantee wages to his employees, interest to his creditors and rent to
his landlords. Risk and rewards are inseperable.To earn higher gains ,one
has to bear heavy risks.
2.Innovative ability: Innovation may occur in the following forms
 The introduction of new goods
 The introduction of a new method of production
 The opening of a new market
 The conquest of a new source of supply of raw-material
 The carrying out of a new form of organization of any industry
3.Organiser
4.Creativity:Creativity refers to the ability of an entrepreneur to bring
out new ways to run a business. They always looking for new
solutions to problems.
5.Desire for high achievement:
6.Technically Competent: Technical knowledge implies the ability to
device new products, find uses for the existing products and also
find better ways of producing and marketing goods and services.
7.Self-confident:
8.Socially responsible: Social Responsibility means eliminating
corrupt, irresponsible or unethical behavior which might harm to
the community, its people and the environment.
9.Optimisic
10.Equipped with capability to drive: Drive is a persons motivation
towards a task. It comprises of such personality traits such as
responsibility,vigour,initiative,persistence and ambition.
11.Blessed with mental ability: Mental ability
that contributes to the success of an
entrepreneur consists of overall
intelligence ,ie..,IQ,creative thinking ability
and analytical thinking ability.
12.Human relations ability: Personality factors
such as emotional stability, personal relations,
sociability consideration and tactfulness are
important contributors to entrepreneurs
success.
13.Communication ability
14.Decision-making
15.Buisiness planning: The entrepreneur is the
most knowledgeable person to write the
business plan.
16.A Venture Capitalist: Entrepreneur as energetic,
single-minded having a mission and a clear
vision.
17.Visionary:Entrepreneur have a vision for growth,
commitment to constructive change, persistence
to gather necessary resources and energy to
achieve result.
18.Entrepreneurs make significant differences
19.Ability to spot and exploit opportunities
20.Courage to face adversities
21.Leadership:Leadership is the process of
influencing and supporting others to work
enthusiastically towards achieving objectives.
 Key elements of entrepreneur

Risk taking innovation

ethics
values Operational excellence

Vision character organisation skill

CREATING JOBS
PROMOTING CAPITAL FORMATION
INCREASING THE PERCAPITA INCOME AND GDP
IMPROVING THE PHYSICAL QUALITY OF LIFE
IMPROVING THE STANDARD OF LIVING
HELPING IN TH EGROWTH OF INFRASTURAL
FACILITIES
IMPROVING ECONOMIC INDEPENDENCE
BACKWARD AND FORWARD LINKAGES
EFFECTIVE UTALISATION OF RESOURCES
EXPORT OF HANDICRAFT ITEMS
BALANCED REGIONAL DEVELOPMENT
CREATING JOBS: With setting up of more and more business units by the
entrepreneurs ,both the small and large scale, numerous job opportunities are created for
others.Entrrepreneurs play a major role in reducing the problem of unemployment in our
country. Entrepreneurs are job creators not job seekers.
Govt of India has launched the initiative such as "start –up India –to promote and support
new startups.
SETU (Self Employment and Talent Utilisation)
SETU is be a TechnoFinancial, Incubation and Facilitation Programme to support all aspects
of start-up businesses, and other self-employment activities, particularly in technology-
driven areas.
MUDRA Bank Micro Units Development Refinance Agency (MUDRA) Bank
To encourage entrepreneurs to set up micro units.
The Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana
and will have a corpus of Rs 20,000 crore, and credit guarantee corpus of Rs 3,000 crore
Stand up India Scheme
Stand Up India Scheme promotes entrepreneurship among Scheduled Castes/Schedule
Tribes and Women.
The schemes provides for composite loans by banks between Rs. 10 lakh and upto Rs.100
lakh for setting up a new enterprise in the non-farm sector
Startup India Program- An Initiative for Innovation and Inclusiveness
To promote entrepreneurship, innovation and inclusive development at all the levels of
economic growth and social development process.
Promoting capital formation: entrepreneurs promote capital
formation by mobilizing the idle saving of public. They employ
their own as well as borrowed resources for setting their
enterprise. This is very essential for economic development.

Increasing the percapita income and GDP:Entrepreneurs

exploit the opportunities. They convert the latent and idle
resources like land, labour and capital into national income and
wealth in th form of goods and services. Entrepreneurs
compliment and support the economic growth by increasing the
GDP and percapita income of the country. This is made possible
through identification of profitable venture.
Improving the physical quality of
Life:Establishment of enterprise leads to increase in
employment avenues both directly and indirectly.
Poverty is alleviated as percapita income grows. This
results in improving the physical quality of life which is
an indicator of economic growth.

Improving the standard of Living:entrepreneurs

start a new business venture and hire employees.the
workers earn an income,which may spend in the local
economy.all these creats wealth for the population
and rsises the standard of living for eveyone involved.
Helping in the growth of Infrastructural Facilities:Enrepreneurs
help in th growth of infrastructural facilities such as
roads,bridges,factories etc.these are the cornerstone of economic
growth.
Improving economic Independence: National self reliance can be
ensured due to the growth of entrepreneurship. In augmenting the
indigenous technologies and their use in massive way in small scale
enterprise, dependence on foreign technology can be avoided.
Entrepreneurs can also export their goods and commodities and
thereby earn the scarce foreign exchange for the country.
Backward and Forward Linkages: Setting up of an enterprise has
several backward and forward linkages. For example, the
establishment of a steel plant generates several ancillary units and
expand the demand for iron ore, coal etc.these are backward
linkages. By increasing the supply of steel, the plant facilities,the
growth of machine building, tube making, utensil manufacturing and
such other units. These are forward linlages.In this way entrepreneurs
supplements the economic growth.
Effective utilization of resources:
Export of handicraft items: Entrepreneurs play a significant role
in producing and exporting handicraft items. They generally use the
local traditional skill ,traditional technology, local knowledge and
experience for producing traditional art and craft and handicraft
items. Such items are on demand in foreign markets-Jewelries,
carpets, stone carvings, handbages,table mats etc.They are both
exported to foreign market and sold locally at markets.
Balanced regional development: Entrepreneurs setup industries
particularly in backward areas to avail the various concessions and
subsidies offered by the Central and state Governments. The govt of
India and State Government are trying to disperse the industries by
establishing industrial estates and creating infrastructural facilities in
backward areas. The growth of industries and business in these
areas leads to infrastructure improvements like better roads and rail
links,airport,stable electricity and water
supply,schools.hospitals ,shopping malls and other public services
that would not otherwise available.
 FACTORS EFFECTING ENTREPRENEURIAL
GROWTH
• Psychological factors
• Cultural factors
• Social factors
• Economic factors
• Personality factors
 Psychological factors
• Need for achievement
• Personal motives or expectations
• Recognition
• Need for authority
 Cultural factors
• Culture
• Religious belief
• Minority groups
• Spirit of capitalism
 Social factors

• Legitimacy of entrepreneurship
• Social marginality family, role model and
association with similar type of individuals
• Caste system
• Occupation
• Education and technical qualification
• Social status
• High responsibility
 Economic factors

• Infrastructural facility
• Availability of capital
• availability of material and know-how
• Labour conditions
• Market
• Support system
• Government policy
 Personality factors
• Personality
• Independence
• compulsion
 DIFFERENCE BETWEEN ENTREPRENEUR AND ENTERPRISE

ENTREPRENEUR ENTERPRISE

Entrepreneur is a person Enterprise is a business unit

Entrepreneur is a risk taker Enterprise is a unit involving risk and

uncertainty

Entrepreneur is a decision maker Enterprise serves as a framework within

which decision are taken by
entrepreneurs

Entrepreneurs procures raw materials Enterprise utilize the rawmeterials and

and other inputs for production other inputs in the process of production
 ENTREPRENEURSHIP

• Entrepreneurship is the process of changing ideas into

commercial opportunities and creating value.
• “Entrepreneurship is doing things in a better way and
decision making under the conditions of uncertainty”
D.C.MacClelland
• Entrepreneurship is the process of identifying
opportunities in the market place, arranging the
resources required to pursue these opportunities and
investing the resources to exploit the opportunities
for long gains.
• Entrepreneurship=entrepreneur + enterprise
(process) ( person) (object)

• All activities undertaken by an entrepreneur to

bring a business unit into existence are
collectively known as entrepreneurship.
• It is a process of creating a business
enterprise.
 DIFFERENCE BETWEEN ENTREPRENEUR AND MANAGER
ENTREPRENEUR MANAGER
Entrepreneur is the real owner of business Manager is the employee of the
entrepreneur

Entrepreneur bears all risks and Manager neither shares risk nor bears
uncertainty involved in the enterprise uncerinity

Entrepreneur receives profit which is Manager receives salary for service

uncertain and irregular and may be rendered which is fixed and regular and
negative can never be negative

Entrepreneur introduces innovations and Manager executes the plan of the

new idea entrepreneur and thus translate these
idea into practice.

Entrepreneurs responsibility is high. He is Managers responsibility is low. He is

responsible for combination of inputs and responsible for day-to-day office work.
production process

Entrepreneur is self-motivated Manager is motivated by power

 CLASSIFICATION OR TYPES OF ENTREPRENEURS

• On the basis of type of business

• On the basis of motivation
• On the basis of stages of development
• Classification by Clarence Danhof
• Other Classification
 On the basis of type of business

• 1) Business Entrepreneur: He is an individual who discovers an idea

to start a business and then builds a business to give birth to his idea.
• 2)Trading Entrepreneur: He is an entrepreneur who undertakes
trading activity i.e.; buying and selling manufactured goods.
• 3) Industrial Entrepreneur: He is an entrepreneur who undertakes
manufacturing activities.
• 4) Corporate Entrepreneur: He is a person who demonstrates his
innovative skill in organizing and managing a corporate undertaking.
• 5) Agricultural Entrepreneur: They are entrepreneurs who undertake
agricultural activities such as raising and marketing of crops,
fertilizers and other inputs of agriculture. They are called
agripreneurs.
 ON THE BASIS OF MOTIVATION
• 1) Pure Entrepreneur: They believe in their own performance
while undertaking business activities. They undertake business
ventures for their personal satisfaction, status and ego. They are
guided by the motive of profit. For example, Dhirubhai Ambani of
Reliance Group.
• 2) Induced Entrepreneur: He is induced to take up an
entrepreneurial activity with a view to avail some benefits from
the government. These benefits are in the form of assistance,
incentives, subsidies, concessions and infrastructures.
• 3) Motivated Entrepreneur: These entrepreneurs are motivated
by the desire to make use of their technical and professional
expertise and skills. They are motivated by the desire for self-
fulfillment.
• 4) Spontaneous Entrepreneur: They are motivated by their desire
for self-employment and to achieve or prove their excellence in
job performance. They are natural entrepreneurs
 ON THE BASIS OF STAGES OF DEVELOPMENT
• 1) First Generation Entrepreneur: He is one who
starts an industrial unit by means of his own innovative
ideas and skills. He is essentially an innovator. He is also
called new entrepreneur.
• 2) Modern Entrepreneur: He is an entrepreneur
who undertakes those ventures which suit the modern
marketing needs.
• 3) Classical Entrepreneur: He is one who develops
a self supporting venture for the satisfaction of
customers’ needs. He is a stereo type or traditional
entrepreneur
 CLASSIFICATION BY CLARENCE DANHOF :
• 1) Innovative Entrepreneurs: They are generally
aggressive on experimentation and cleverly put attractive
possibilities into practice. An innovative entrepreneur, introduces
new goods, inaugurates new methods of production, discovers
new markets and reorganizes the enterprise. Innovative
entrepreneurs bring about a transformation in lifestyle and are
always interested in introducing innovations.
• 2) Adoptive Or Imitative Entrepreneurs: Imitative entrepreneurs
do not innovate the changes themselves, they only imitate
techniques and technology innovated by others. They copy and
learn from the innovating entrepreneurs. While innovating
entrepreneurs are creative, imitative entrepreneurs are adoptive
• 3) Fabian Entrepreneurs: These entrepreneurs are
traditionally bounded. They would be cautious. They
neither introduce new changes nor adopt new methods
innovated by others entrepreneurs. They are shy and lazy.
They try to follow the footsteps of their predecessors. They
follow old customs, traditions, sentiments etc. They take up
new projects only when it is necessary to do so.
• 4) Drone Entrepreneurs: Drone entrepreneurs are those
who refuse to adopt and use opportunities to make
changes in production. They would not change the method
of production already introduced. They follow the
traditional method of production. They may even suffer
losses but they are not ready to make changes in their
existing production methods
 OTHER CLASSIFICATION

• Commercial Entrepreneurs: They are those entrepreneurs

who start business enterprises for their personal gain. They
undertake business ventures for the purpose of generating
sales and profits. Most of the entrepreneurs belong to this
category.
• Social Entrepreneurs: They are those who identify,
evaluate and exploit opportunities that create social values
and not personal wealth. Social values refer to the basic long
standing needs of society. They focus on the disadvantaged
sections of the society. They play the role of change agents in
the society. In short, social entrepreneurs are those who start
ventures not for making profits but for providing social welfare
 Functions…
 Planning the project
 Organizing
 Risk taking and uncertainty bearing
 Management
 Decision making
 Search for market
 Distribution of income
 Innovation
 Liaison with the Government
 Project implementation
 Other functions.
• Planning the project: Before starting business enterprise, the
entrepreneur has to take valuable decisions regarding nature
and type of goods produced, the form of business
organisation,amount of capital needed, selection of location,
the type of market and market strategies to be adopted
etc.These entrepreneur has to prepare a blue print of the
proposed project and this is submitted to the authorities
concerned for obtaining the legal sanction for the venture.
• Organizing :it is the duty of an entrepreneur who brings
land ,labour and capital in such a way as to maximize
production or to minimize cost. He has to take all efforts to
make an optimum utilization of resources. It is an essential
part of an entrepreneur to take decisions regarding expansion
of business, additional capital to be employed etc.He arranges
finance for setting up the enterprise.
• Risk taking and uncertainty bearing :Risks are
inherent in all forms of business. There may be
changes in demand and fashion, changes in market
conditions, changes in consumers preference,
unfavourable changes in price etc.these risks are not
insurable. Such non-insurable risks are called the
uncertainities.An entrepreneur has to bear all types
of the losses and risks himself. Future is also
uncertain. There is guarantee to get back the amount
of invested in business. Profit are not guaranteed to
an entrepreneur.
• Management :An entrepreneur has to perform
managerial functions like-
 Looking day to day working of the business
 Plans ,direct and control business activities
 Formulate production plans and strategies
 Organizes sales
 Motivate the employees
 Take the task of personnel management
• Decision making:Arthur.H.Cole has described
the entrepreneur as a decision maker.He takes
various decisions like
1) determination of business objective
2)procurement of men ,money, material,
machine and market
3)Acquisition of efficiency, technology and new
equipments
4)Maintenance of good relationship with public
authorities and with society at large.
• Search for market: An entrepreneur has to
explore the market for his products. He has to
foresee the trends in the market and ascertain
the nature of demand for his products. He has
to appoint efficient salesmen and arrange for
proper advertisements for his products
through newspapers, TV etc.
• Distribution of income: Entrepreneur makes
payments to the landlord, labour and capitalist
in the form of rent, wages and interest.
• Innovation :According to Schumpeter
innovation is the most important function of an
entrepreneur. Entrepreneur has to introduce
new combination of means of production, looks
for new opportunities, identifies the
opportunities and tries to explore them.
• Liaison with the Government:
• Project implementation: the identified
project is to be implemented in a time bound
manner. All the activities from the conception
stage to the commissioning stage are to to be
accomplished by him in accordance with the
implementation schedule.
• Other functions: other functions include
1)developing social atmosphere 2)rendering
service to the people around him 3)fulfilling
social obligations.
 QUALITIES OF A SUCCESSFUL ENTREPRENEUR

• 1) Willingness to Make Sacrifices and Assume Risks: - A new venture is

full of difficulties and unanticipated problems. In such an inhospitable
environment entrepreneur has to be prepared to sacrifice his time,
energy and resources in order to carry out the venture and make it
success.
• 2) Hard Work: - Willingness to work hard distinguishes a successful
entrepreneur from an unsuccessful one. For example, Assim Premji
(chairman of Wipro) works in his office fourteen hours every day. He is
a successful entrepreneur. He is one of the richest persons in India.
• 3) Optimism: - Successful entrepreneurs are not worried by the present
problems that they face. They are optimistic about the future. This
enhances their confidence and drives them towards success. Some of
the world’s greatest entrepreneurs failed before they finally succeeded
• 4) Self Confidence: - This is the greatest asset of a
successful entrepreneur. He must have the confidence to
make choices alone and bounce back when he fails.
• 5) Leadership: - Successful entrepreneur generally has
strong leadership qualities. He should be a good judge of
human nature and a good leader. He must be able to
select, train and develop persons who can properly
manage and control the labour force. McClelland
identified two main characteristics in an entrepreneur- (1)
Doing things in a new and better manner. (2) Decision
making under uncertainty. A successful entrepreneur
must be capable and well-informed, a successful leader of
men, a keen judge of things, courageous and prudent.
 RISK INVOLVED WITH ENTREPRENEUR

Change in the taste and attitude of customers

Cutthroat competition from other producers

• Risks due to Changes in govt. Policies

Political unrest

Natural calamities
 Types of Risks
• FINANCIAL RISK: An entrepreneur invest money in an
enterprise on the expectation of getting attractive returns but
it may not get profit
• PERSONAL RISK: Starting an enterprise and management and
he devote most of his time and energy…but his family life and
social life are at risk
• CAREER RISK:If he faces severe losses, another career is a
question mark.
• PSYCHOLOGICAL RISK: Mental stress creates many diseases.
 ENTREPRENNEURIAL COMPETENCIES

• Competency is a characteristic of a person,

which results in effective and/or superior
performance in a job.
• It is a combination of knowledge, skills and
appropriate motives or traits that an individual
must possess to perform a given task
 MEANING OF ENTREPRENEURIAL COMPETENCIES

• It is defined as characteristics such as generic

and special knowledge, motives, traits, self
image, social roles and skills which result in
birth of a venture, its survival and/ or growth.
In short, the competencies required by an
entrepreneur for starting a business venture
and carrying it on successfully are known as
entrepreneurial competencies
 TYPES OF ENTREPRENEURIAL COMPETENCIES

• A) PERSONAL ENTREPRENEURIAL COMPETENCIES

• B) VENTURE INITIATION AND SUCCESS COMPETENCIES

 A) PERSONAL ENTREPRENEURIAL COMPETENCIES

• These are required to perform the tasks effectively and efficiently.

This includes..
 Initiative: It is an inner urge in an individual to do or initiate
something.
 Ability to See and Act on Opportunities: Entrepreneurs look for
opportunities and take action on such opportunities.
 Persistence: It means the capacity or skill to take repeated and
different actions to overcome obstacles.
 Information Seeking: A successful entrepreneur always keeps his
eyes and ear open. He should accept new ideas which can help him
in realizing his goals. He is ready to consult experts for getting their
expert advice.
 Concern for High Quality of Work: Entrepreneurial persons act to
do things that meet or beat existing standards of excellence.
 Commitment to Work: Successful entrepreneurs are prepared to make all
sacrifices for completing the commitments they have made.
 Commitment to Efficiency: Entrepreneurial persons have to look and find
ways for or find ways to do things faster or with fewer resources or at a
lower cost. They should try new methods aimed at making work easier,
simpler, better and economical.
 Systematic Planning: Entrepreneurial persons should be able to develop
and use the logical step by step plans to reach goals.
 Problem Solving: Entrepreneurial persons are supposed to possess the skill
of identifying new and potentially unique ideas to reach goals. They should
generate new ideas or innovative solutions to solve problems.
 Assertiveness: They assert own competence, reliability or other personal
or company’s qualities. They also assert strong confidence in own
company’s products or services
 Persuasion: Entrepreneurs should have the
ability to successfully persue others to perform
the activities effectively and efficiently.
 Use of Influence Strategies: Entrepreneurs
should have the competence of using a variety
of strategies to influence others. Such
entrepreneurs can develop business contacts
and use influential people to accomplish
his/her own objectives
B) VENTURE INITIATION AND SUCCESS COMPETENCIES :
An entrepreneur must also posses the competencies required
for launching the enterprise and for its survival and growth.
These competencies may be further divided into two
categories of competencies
1. ENTERPRISE LAUNCHES COMPETENCIES
2. ENTERPRISE MANAGEMENT COMPETENCIES
 1. ENTERPRISE LAUNCHES COMPETENCIES

• Competency to understand the nature of business.

• Competency to comply with Government regulations.
• Competency to deal with the business.
• Competency to finance the business.
• Competency to locate the business.
• Competency to plan the marketing strategy.
• Competency to choose the type of ownership.
• Competency to obtain technical assistance.
• Competency to develop a business plan.
• Competency to determine the potential as an entrepreneur
 2. ENTERPRISE MANAGEMENT COMPETENCIES

• Competency to protect the business.

• Competency to manage customer credit and collection.
• Competency to manage the finances.
• Competency to manage the business records.
• Competency to manage sales efforts.
• Competency to promote the products and services of the
business.
• Competency to manage human resources.
• Competency to manage the business
 COPRENEURS

• Copreneurs are entrepreneurial couples who work together as

co-owners of their business.
• Copreneurs are entrepreneurial couples who work together
as co-owners of their business. That is when a married couple
share ownership, commitment and responsibility for a
business ,they are called Copreneurs.
 INTRAPRENEURS

• The term intrapreneur was coined in USA in the late

seventies
• Many senior executives of big companies in America left
their jobs and started small business of their own. They
left the organisation because they did not get any
opportunity to apply their own ideas and innovative
ability. These entrepreneurs become successful in their
own ventures. Some of them caused a threat to the
corporations they left. This type if entrepreneurs have
come to be called Intrapreneurs or intra-corporate
entrepreneurs.
• Giffen Pinchot II ,An American management
expert in his famous
work”Intrapreneuring”-”the person who
resigned from their well-paid executive
position to launch their own ventures”
• Intrapreneurs are innovaters.These persons
are driven not by monetary gain but by a deep
desire of personal achievement. Such people
are “intra-corporate entrepreneurs”
Intrepreneurship requires
I. The managers inside the company should be
encouraged to be entrepreneurs within the
firm
II. For an entrepreneurs to survive in an
organisation he needs to be sponsored and
given adequate freedom to implement his
ideas
EXAMPLES
1.International Business Machines
(IBM)adopted the concept of “independent
business units”(IBU’s).each IBU is promoted by
an Executives(intrapreneures)
11.General Motors launched “saturn Corporation
“in order to promote new ways of making,
selling and servicing cars and is headed by the
executives of the parent company.
 Characteristics of Intrapreneurs

• They believe strongly in their own talents. They

want freedom to apply their own ideas
• They have a vision and courage to realize it.
• They have the ability to plan necessary steps for
actualization of the ideas.
• They have a high need for achievement.
• They introduce new product, ideas and services
within the frame work of a company
• They are dedicated to their work