Unit 1

ENTERPRUERSHIP
 Definition of Entrepreneur
• The word entrepreneur is derived from the French word, “Entreprendre” and its lateral
meaning is ‘to undertake’.
• The term entrepreneurs is defined in different ways. Important definitions by some
author are as follows:
• Cotillion :- According to him, “An entrepreneurs is an agent who buys means of
production at a certain prices in order to combine them into a product that he is going to
sell at prices that are uncertain at the movement at which he commits himself to his
cost”. In this definition Cotillion emphasize the function of risk taking and uncertainty
bearing.
• J. B. Say :- According to him, “Entrepreneurs is an economic agent who units all means of
production, the labor force, the capital or the land of others and who finds in the value of
products. His results from their employment reconstitution of the value of the wages, the
interest and the rent which he pays as well as profit belonging to himself.”
• Joseph A Schumpter :- He defined entrepreneur as “An individual who carries out new
combines of means of production by which this occurs disequilibrium”. He further stated
that the key individuals in the development are the entrepreneurs who are specially
motivated and talented class of people. They foresee the potentially profitable
opportunity and try to exploit it.
In the layman , An entrepreneur is an individual who conceives the idea
of starting a new venture, take all types of risks, not only to put the
product or service into reality but also to make it an extremely
demanding one. He is someone who:
• Initiates and innovates a new concept,
• Recognises and utilises opportunity,
• Arranges and coordinates resources such as man, material, machine
and capital,
• Take suitable actions,
• Faces risks and uncertainties,
• Establishes a startup company,
• Adds value to the product or service,
• Takes decisions to make the product or service a profitable one,
• Is responsible for the profits or losses of the company.
Entrepreneurs have certain characteristics that
set them apart from other individuals. The
majority of people who pursue entrepreneurship:
• Risk Taker.
• Decision Maker.
• Undertaker.
• Identify opportunities for making profitable
business.
• Self Motivated
• Entrepreneurship is the act
of creating a business or
businesses while bearing
all the risks with the hope
of making a profit.
• Entrepreneurship is what
people do to take their
career into their hands and
lead it in the direction they
want.
 Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make entrepreneurship
successful. A few of them are mentioned below:
• Ability to take a risk- Starting any new venture involves a considerable amount of failure risk.
Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks, which is an
essential part of being an entrepreneur.
• Innovation- It should be highly innovative to generate new ideas, start a company and earn profits
out of it. Change can be the launching of a new product that is new to the market or a process that
does the same thing but in a more efficient and economical way.
• Visionary and Leadership quality- To be successful, the entrepreneur should have a clear vision of
his new venture. However, to turn the idea into reality, a lot of resources and employees are
required. Here, leadership quality is paramount because leaders impart and guide their employees
towards the right path of success.
• Open-Minded- In a business, every circumstance can be an opportunity and used for the benefit of
a company. For example, Paytm recognised the gravity of demonetization and acknowledged the
need for online transactions would be more, so it utilised the situation and expanded massively
during this time.
• Flexible- An entrepreneur should be flexible and open to change according to the situation. To be
on the top, a businessperson should be equipped to embrace change in a product and service, as
and when needed.
• Know your Product-A company owner should know the product offerings and also be aware of the
latest trend in the market. It is essential to know if the available product or service meets the
demands of the current market, or whether it is time to tweak it a little. Being able to be
accountable and then alter as needed is a vital part of entrepreneurship.
 Importance of Entrepreneurship:

• Creation of Employment
• Innovation
• Impact on Society and Community
Development
• Increase Standard of Living
• Supports research and development
1. Who is the father of entrepreneurship?
-- Joseph Alois Schumpeter is regarded as the father of entrepreneurship. He introduced the
concept of entrepreneurship.
2. What are the two main types of entrepreneurship?
--there are many types of entrepreneurship, two examples of such are:
Small business entrepreneurship
Large company entrepreneurship
3. What are the key concepts of entrepreneurship?
--The 4 key concepts of entrepreneurship are as follows:
Innovation
Risk taking
Vision
Organisation
4. What are entrepreneur traits?
--Some of the most important entrepreneurial traits are:
• Passion
• Risk taking ability
• Persisting nature
• Innovative
• Leading from the front
• Ethical in nature
Factors affecting entrepreneurial
development
 Personal Factors
• Initiative : does task before being asked for
• Proactive: Identification and utilization of opportunities.
• Perseverance: working against all odds to overcome
obstacles and never complacent with success.
• Problem solver : conceives new ideas and achieves
innovation solutions
• Self confidence : takes and sticks to his decisions.
• Self critical: learning from his mistakes and experiences
of other .
• Risk taker
 2. Environmental factor
• These factor relate to the condition in which an
entrepreneur has to work. If the environment
that a individual is working is unsatisfactory ,
that is , not conductive to his growth needs, it
is likely that the individual will quit his job and
start his own business as an entrepreneur.
• Unsatisfied personal needs for growth and
achievement in employment condition results
in successful entrepreneurship.
 Political factor
• Some researchers felt that the growth of
entrepreneurship cannot be explained fully
unless the political set-up of a country is taken
into consideration.
• Political stability in a country is absolutely
essential for smooth economic activity and
entrepreneurship. Unfair trade practices,
irrational monetary and fiscal policies ,etc are a
road block to the growth of entrepreneurship .
 4. Socio-Economic Factors
• The entrepreneurial activity at any time and place is governed
by varying combination of socio-economic factors. The empirical
studies have identified the following socio-econimic factors:
• Cast/religion
• Family back ground
• Level of education
• Migratory factors
• Social mobility
• Social security
• Investment capacity
• Ambition/motivation
 Economic Factor
• Factors such as availability of finance , labour,
land, accessibility of customers, suppliers, are
the factors that stimulate entrepreneurship .
MOTIVATION FACTOR FOR ENTERPRENUERS

• To make money
• To continue family business
• Leave the legacy
• Full fill desire to self
• To secure self employment
 Mc Clelland’s Achievement motivation
theory
McClelland's Three Needs Theory
David McClelland's motivation theory of management suggests that each
person has three basic needs: the need for power, achievement, or
affiliation. In this employee motivation theory, McClelland says that a
person's particular need will have a significant impact on their behavior.
• Need for Power: this person is motivated by having a position of power
or control. They are typically strong leaders and are self-disciplined.
• Need for Achievement: this person is motivated by success or
achieving objectives. They thrive on challenging situations and typically
set themselves hard to reach goals and work to excel at them.
• Need for Affiliation: this person is at home in a group or collaborative
environment. They work well with others and seek out social
interactions.
 A brief description of these three follows:

1. Need for Achievement (“n Ach”):

• This is the drive to excel, to achieve in relation
to a set “standard, and to strive to succeed. In
other words, need for achievement is a
Behaviour directed towards competition with a
standard of excellence. McClelland found that
people with a high need for achievement
perform better than those with a moderate or
low need for achievement, and noted regional,
national differences in achievement motivation.
 Through his research, McClelland identified the following six
characteristics of high need achievers:

1. High-need achievers have a strong desire to assume

personal responsibilities for performing a task or finding a
solution to a problem.
2. High need achievers tend to set moderately difficult goals
and take calculated risks?
3. High need achievers have a strong desire for performance
feedback?
4. They have need for achievement for attaining personal
accomplishment.
5. They look for challenging tasks.
6. The high need-achievement individuals are not buck-passers.
 2. Need for Power (“n Pow”):
• The need for power is concerned with making an
impact on others, the desire to influence others, the
urge to change people, and the desire to make a
difference in life. People with a high need for power
are people who like to be in control of people and
events. These result in ultimate satisfaction to man.
• People who have a high need for power are
characterized by:
1. A desire to influence and direct somebody else.
2. A desire to exercise control over others.
3. A concern for maintaining leaders-follower relations.
Need for Affiliation (“n Aff”):

The need for affiliation is defined as a desire to establish

and maintain friendly and warm relations with other
people. The need for affiliation, in many ways, is similar
to Maslow’s social needs.
The people with high need for affiliation have the
following characteristics:
• 1. They have a strong desire for acceptance and
approval from others.
• 2. They tend to conform to the wishes of those people
whose friendship and companionship they value.
• 3. They value the feelings of others.
Conceptual model of entrepreneurship
• John Kao has developed a conceptual model of
entrepreneurship in his article in 1989. This model
has four main aspects:
1. Entrepreneurial Personality: The overall success of a new
venture largely depends upon the skill, qualities, traits
and determination of the entrepreneur.
2. Entrepreneurial Task: It is a role played by entrepreneur
in an enterprise. The major task of the entrepreneur is to
recognize and exploit opportunities.
3. Entrepreneurial Environment: It involves the availability
of resources, infrastructure, competitive pressures, social
values, rules and regulations, stage of technology etc.
4. Organizational Context: It is the immediate setting in
which creative and entrepreneurial work takes place. It
involves the structure, rules, policies, culture, human
resource system, communication system
 Entrepreneur vs. Intrapreneur
• As both entrepreneur and intrapreneur share similar
qualities like conviction, creativity, zeal and insight, the
two are used interchangeably. However, the two are
different, as an entrepreneur is a person who takes a
considerable amount of risk to own and operate the
business, with an aim of earning returns and rewards,
from that business.
• On the contrary, an intrapreneur is an employee of the
organization who is paid remuneration according to the
success of the business unit, for which he/she is hired
or responsible.
 Entrepreneur vs. Intrapreneur
BASIS FOR COMPARISON ENTREPRENEUR INTRAPRENEUR
Meaning Entrepreneur refers to a person Intrapreneur refers to an
who set up his own business employee of the organization
with a new idea or concept. who is in charge of undertaking
innovations in product, service,
process etc.
Approach Intuitive Restorative
Resources Uses own resources. Use resources provided by the
company.
Capital Raised by him. Financed by the company.
Enterprise Newly established An existing one
Dependency Independent Dependent
Risk Borne by the entrepreneur Taken by the company.
himself.
Works for Creating a leading position in Change and renew the existing
the market. organizational system and
culture.
 Definition of Intrapreneur

• An intrapreneur is nothing but an entrepreneur within the

boundaries of the organisation. An intrapreneur is an employee of a
large organisation, who has the authority of initiating creativity and
innovation in the company’s products, services and projects,
redesigning the processes, workflows and system with the objective
of transforming them into a successful venture of the enterprise.
• The intrapreneurs believe in change and do not fear failure, they
discover new ideas, looks for such opportunities that can benefit
the whole organisation takes risks, promotes innovation to improve
the performance and profitability, resources are provided by the
organisation. The job of an intrapreneur is extremely challenging;
hence they are appreciated and rewarded by the organisation
accordingly.
 Different types of Entrepreneurs

• 1. Innovative Entrepreneurs. They are aggressive

in experimentation and put attractive possibilities
into practice.
• 2. Imitative Entrepreneurs. They copy suitable
innovations made by innovative entrepreneurs.
3. Fabian Entrepreneurs. They use age old
technique of production

4. Drone Entrepreneurs. They do not like to

change or adapt new techniques.
Entrepreneurial Development program
This program helps in developing entrepreneurial
abilities among individuals to establish an enterprise.
• Objectives of EDPs
1. To develop entrepreneurial skills.
2. To make good understanding of law.
3. To develop small scale and medium scale businesses.
4. To industrialize rural areas.
5. To design project for manufacturing a product or
services.
 Institutions which provide EDPs
• DIC(District industries centre): It helps to provide
technical support.
• TCO(Technical consultancy organization):Provides
consultancy on management
• SFC(State financial corporation): Provides loan to
small scale industries.
• NSIC(National small scale industries corporation):
It helps workers on operation of machinery.
SIDO(Small industries development
organization): Helps in production and marketing of
product and quality control.
NABARD(National bank for agricultural and rural
development): Helps to provide capital to small
scale industries and agriculture in rural areas.