Fairfield Institute of Management and Technology

ENTREPRENUERSHIP DEVELOPMENT
307
Function of entrepreneur

NAAC ACCREDITED

Submitted to: Submitted by:

Mr Manish Jha Ajay Dhoundiyal
Assistant professor 41951401718
BBA(G) V-C
 Table of Content

S No. Topic Page No. Signature

1. Objective

2. Assignment Questions

3. Conclusion

4. Bibliography
 OBJECTIVE
The objective of this assignment is to understand the basic concept of entrepreneur and its
functions of entrepreneurship that are been practised in an organization.
 ENTREPRENEUR
An entrepreneur is one who innovates, raises money, assembles inputs, chooses managers
and sets the organisation going with his ability to identify them. Innovation occurs through:
(a) The introduction of a new quality product,

(b) A new product,

(c) A discovery of a fresh demand and a fresh source of supply, and

(d) By changes in the organisation and management.

An entrepreneur in a developing economy is one who starts an industry, undertakes risk, bears
uncertainties and also performs the managerial functions of decision-making and coordination.

A most appropriate definition of entrepreneur is that, “he is a man who detects and evaluates a
new situation in his environment and directs the making of such adjustments in the economic
systems as he deems necessary”.

An entrepreneur performs one or more of the following:

(i) Perceives opportunities for profitable investments,

(ii) Explores the prospects of starting a manufacturing enterprise,

(iii) Obtains necessary industrial licenses,

(iv) Arranges initial capital,

(v) Provides personal guarantees to the financial institution,

(vi) Promises to meet the shortfalls in the capital, and

(vii) Supplies technical know-how.

In actual practice the term “entrepreneur” is attributed to all small industrialists, small
businessmen, and traders. All people who are gainfully engaged in work of manufacturing,
distribution or service and other sectors are called entrepreneurs.

As a catalytic agent the entrepreneur has to change the mindset of the workers so that they
accept radical changes in system structure and processes which the organisation is contemplat-
ing to introduce in order to complete the rivals. The most important is to change the key value,
beliefs and norms established and accepted by the workers.
These changes are necessary in the organisation to stress on productivity, quality, speed,
innovation, customer orientation and empowerment. For this purpose an entrepreneur is ex-
pected to play a pivotal role in developing among the employees requisite knowledge, skills
and suitable attitudes, and improve their performance.

Entrepreneur is an organizer and speculator of a business enterprise. Entrepreneur lifts

economic resources out of an area of lower to an area of higher productivity and greater yield.

Entrepreneur is often associated with a person who starts his own new small business.

NATURE OF ENTREPRENEUR

The entrepreneur is expected to identify the environmental change as an opportunity and uses
the factors of production to produce new goods and services.
He is motivated to:
(i) The desire to find a private commercial kingdom,
(ii) The will to conquer and prove his superiority and,
(iii) The joy of creating, getting things done or simply of exercising one’s energy and ingenuity.
In this process, entrepreneur is expected to possess certain attitudes and values in order to
perform the expected entrepreneurial behaviour. The expectations regarding entrepreneurial
values and attributes were termed as entrepreneurial orientation. Entrepreneurial orientation is
prerequisite condition for an entrepreneur.
Entrepreneurial orientation consists of, (i) risk bearing propensity, (ii) change process, (iii)
ambition, (iv) long-term profit perspective, (v) positive attitudes towards management and
workers. The term ‘entrepreneur’ may be used in connection with those who incubate new
ideas, start enterprises based on those ideas and provide added value to society based on their
independent initiative.
Thus, there are typical characteristics of a person who takes up entrepreneurial career in
preference to other opportunities. He prefers to take a risk and start his enterprise rather than
take up a job. In terms of motivation, he has a need for achievement, need for power and need
for affiliation.
Moreover, it is the profit that induces the prospective entrepreneur to get into the business and
start new activities or expand the existing activities. Profit, therefore, is a factor which induces
the entrepreneur to organise and utilise the factors of production for development. It does not
necessarily mean that entrepreneur is concerned only in the pecuniary profits.
He is an innovator to bring change with certain achievement motive and that achievement
motive may also mean something more than money. “For such entrepreneurs to function
effectively we need an appropriate social climate.” Social climate plays a very important role
in the industrialisation of any region.
Industrially backward areas in some cases, possess the requisite infrastructure and availability
of financial incentives yet they have not succeeded well with their efforts at industrialisation
to the desired extent only because they lack entrepreneurs with positive attitudes, culture and
values.
FUNCTIONS OF ENTREPRENEUR
Innovation:
Innovation means doing the new things or the doing of things that are already being done in a
new way. This innovation is the process of doing new things. However, there is distinction
between creativity and innovation. Creativity is the ability to bring something new into
existence.
Practically, it is the ability, not the activity of bringing something new into existence. It is
possible for a person to conceive of something new and envision how it will be useful but not
necessarily take the necessary action to make it a reality.
It is also possible that ideas generated in the mind of a man have little value until they are
converted into new products, services or processes. But “innovation is the transformation of
creative ideas into useful applications but creativity is a prerequisite to innovation.”
Schumpeter described entrepreneurs as innovators who use the process of shatter the status quo
through new combinations of resources and new method of commerce. It includes new
processes of production, introduction of new products, and creation of new markets, discovery
of a new and better form of industrial organisation.
Peter Drucker also elaborates that innovation is the specific tool of entrepreneurs the means by
which they exploit change as an opportunity for a different business or a different service. It is
capable of being presented as a discipline, capable of being learned, capable of being practiced.
Entrepreneurs need search purposefully for the sources of innovation, the changes and their
symptoms that indicate opportunities for successful innovation. They need to know and to
apply the principles of successful innovation. Thus, innovation is the development process. It
translates an idea into an application. It requires entrepreneur to work out the detail of product
design or service analytically, to develop marketing, obtain finance and plan operations.
Risk-Taking:
The risk is the condition of not knowing the outcome of an activity or decision. Nevertheless,
risk is capable of being evaluated for relative probabilities. Risk bearing means provision for
capital in order to enable the entrepreneur to establish and operate the business.
Economists like Cantillon. J.B. Say and others stressed risk taking as the specific function of
an entrepreneur. Entrepreneur is required to reduce uncertainty in his investment strategies by
initiating expansion and diversification programmes in the enterprise. In this connection,
Drucker observed that entrepreneurial behaviour is risky because so few of the so-called
entrepreneurs know what they are doing.
They lack the methodology. They violate elementary and well-known rules. So, entrepreneur
should try to reduce the level of uncertainty by analysing the problem in proper perspective.
Actually, “business game consists of great risks and rewards are also great when risks are
successfully covered. The ability to perform services and the risks involved are inseparable.
Therefore, for successfully covering the risks, highest order of ability is required. A successful
entrepreneur would be one who has trait, patience, sagacity, power of observation and wisdom
and ability of discrimination. He should be mentally alert, gifted with discernment, practically
acute-minded, shrewd and an exceptionally intelligent person.”
Thus, entrepreneurs are required to perform this function—risk taking as well as risk bearing
at the same time. They are the owner as well as executor of the business enterprise.
Organisation and Management:
The process of organisation and management includes planning of an enterprise coordination,
control and supervision. Prof. Alfred Marshal recognised this function as an important function
of an entrepreneur.
Entrepreneurs often fall into the trap of thinking that just because their business is small, they
do not really need a comprehensive system of organisation and management. They may
rationalise that by designing an effective organisational and management control system or
they cannot improve their capabilities because of their limited knowledge about possible
methods of effective control.
But entrepreneur are expected to develop an effective organisation and management system in
the organisation. They have to interact directly with employees and exchange information
about what is going on in the firm. They tend to be directly involved in their organisation’s
operational activities to ensure effective control. They are expected to formulate plans,
production strategies, and financial management and develop marketing channels and
management of personnel.
Business Decisions:
Arther H. Cole described an entrepreneur as a decision maker. The decisions with regard to
what to produce, how to produce and for whom to produce are to be taken by the entrepreneur
himself. In this connection, he has to implement his innovative process.
Prof. Cole described the functions of an entrepreneur as:
(i) The determination of those objectives of the enterprise and the change of those objectives
as conditions required or made advantageous;
(ii) The development of an organisation including efficient relations with subordinates and all
employees;
(iii) The securing of adequate financial resource, the relations with existing and potential
investors;
(iv) The requisition of efficient technological equipment and the revision of it as new
machinery appeared;
(v) The development of a market for products and the devising of a new product to meet or
anticipate consumers demand;
(vi) The maintenance of a good relations with public authorities and with society at large. Thus,
the entrepreneur is an institution himself and he performs various functions related with
organisation development and management control. He is supposed to bear the risk, manage,
innovate, organise and take decisions with regard to his business empire.
 CONCLUSION
After completing the assignment I understand the basic concept of entrepreneurship and its
various functions performed in an organization and will be able to perform better in the
subject.
 BIBLIOGRAPHY
• Production and operation management
• Wikipedia
• Encyclopedia