(Notes for B.

Tech III Year)

Dr. B. MADHUSUDHAN REDDY

GURU NANAK INSTITUTE OF TECHNOLOGY

Ibrahim Patnam, Hyderabad

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 CS600OE: ENTREPRENEURSHIP

III Year B.Tech. CSE/IT II-Sem L T P C

3 0 0 3

Course Objective: The aim of this course is to have a comprehensive perspective of inclusive learning,
ability to learn and implement the Fundamentals of Entrepreneurship.

Course Outcome: It enables students to learn the basics of Entrepreneurship and entrepreneurial
development which will help them to provide vision for their own Start-up.

UNIT – I
Entrepreneurial Perspectives
Introduction to Entrepreneurship – Evolution - Concept of Entrepreneurship - Types of Entrepreneurs -
Entrepreneurial Competencies, Capacity Building for Entrepreneurs. Entrepreneurial Training Methods
- Entrepreneurial Motivations - Models for Entrepreneurial Development - The process of
Entrepreneurial Development.

UNIT - II
New Venture Creation
Introduction, Mobility of Entrepreneurs, Models for Opportunity Evaluation; Business plans – Purpose,
Contents, Presenting Business Plan, Procedure for setting up Enterprises, Central level - Startup and
State level - T Hub, Other Institutions initiatives.

UNIT – III
Management of MSMEs and Sick Enterprises
Challenges of MSMEs, Preventing Sickness in Enterprises – Specific Management Problems; Industrial
Sickness; Industrial Sickness in India – Symptoms, process and Rehabilitation of Sick Units.

UNIT – IV
Managing Marketing and Growth of Enterprises
Essential Marketing Mix of Services, Key Success Factors in Service Marketing, Cost and Pricing,
Branding, New Techniques in Marketing, International Trade.

UNIT – V
Strategic perspectives in Entrepreneurship
Strategic Growth in Entrepreneurship, The Valuation Challenge in Entrepreneurship, The Final Harvest
of New Ventures, Technology, Business Incubation, India way – Entrepreneurship; Women
Entrepreneurs – Strategies to develop Women Entrepreneurs, Institutions supporting Women
Entrepreneurship in India.

TEXT BOOKS:
1. Entrepreneurship Development and Small Business Enterprises, Poornima M. Charantimath,
2e, Pearson, 2014.
2. Entrepreneurship, a South – Asian Perspective, D.F. Kuratko and T. V. Rao, 3e, Cengage,
2012.
3. Entrepreneurship, Arya Kumar, 4 e, Pearson 2015.
4. The Dynamics of Entrepreneurial Development and Management, Vasant Desai, Himalaya
Publishing House, 2015.

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 ENP QUESTIONS FOR SEMESTER END EXAM
SHORT QUESTIONS LONG QUESTIONS
Sl. No. Question Page No. Sl. No. Question Page No.

UNIT - I UNIT - I
1 Define the concept of entrepreneur. 5 1 Explain and define the concepts of entrepreneur and entrepreneurship. 4
2 Define the concept of entrepreneurship. 5 2 Discuss the evolution of the entrepreneurship. (IMP) 5
3 Explain innovative entrepreneur. 12 3 What are the functions of entrepreneur?. 8
4 Explain imitating entrepreneur. 12 4 How could you evaluate the role of entrepreneur in economic development?. 10
5 Explain fabian entrepreneur. 13 5 Interpret the types of entrepreneurs. (IMP) 12
6 Explain drone entrepreneur. 13 6 How would you analyze various entrepreneurial competencies?. (IMP) 16
7 Explain social entrepreneur. 13 7 Explain the factors enabling capacity building for entrepreneurs. (IMP) 22
8 Discuss operational capacity. 22 8 Explain different entrepreneurial training methods. (IMP) 24
9 What is buzz group? 26 9 Examine various factors which motivate entrepreneurs. 28
10 What is simulation method? 27 10 Summarize the models of entrepreneurial development. (IMP) 33
11 Explain achievement motivation theory. 34 11 Discuss the process of entrepreneurship development. 37
12 Who is intrapreneur? 41 UNIT - II
UNIT - II 12 Outline the stages of new venture creation. 43
13 What are the stages of new venture creation? 43 13 How would you explain the mobility of entrepreneurs? (IMP) 45
14 Interpret occupational mobility. 45 14 How can you identify the business opportunities?. 47
15 Interpret locational mobility. 45 15 How could analyze your business idea with RAMP Model?. (IMP) 51
16 Outline RAMP model. 51 16 How could analyze your business idea with Mullin’s Model?. (IMP) 53
17 Explain Mullin's 7 domain model. 53 17 What is a business plan?. Explain its contents. (IMP) 57
18 What is business plan? 57 18 What is a business plan? How can you present it? (IMP) 65
19 Discuss T-Hub. 84 19 Explain the procedure for setting up enterprises. 68
20 Explain NSIC. 79 20 Describe institutional set up for supporting business enterprises. 74
21 Explain DIC. 42 21 Discuss state level T-Hub. (IMP) 84

UNIT - III UNIT - III

22 Define MSME. 91 22 Define MSME and explain challenges being faced by the MSME sector. (IMP) 91
23 Define industrial sickness. 101 23 Define industrial sickness and discuss industrial sickness in India. 100
24 Explain incipient sickness. 115 24 Identify the causes of industrial sickness. 109
25 Discuss rehabilitation sick units. 115 25 Explain the symptoms of industrial sickness. (IMP) 111
26 What is turnaround strategy? 119 26 Narrate the process of industrial sickness. (IMP) 113
27 Interpret winding up. 120 27 How to rehabilitate sick units? Discuss. (IMP) 115

UNIT - IV UNIT - IV
28 Explain service marketing. 127 28 What is essential marketing mix of services marketing? (IMP) 129
29 Explain marketing mix. 129 29 How would you differentiate product marketing and service marketing? 127
30 Discuss marketing research. 133 30 Outline the key success factors in service marketing. (IMP) 131
31 What does cost ladder mean? 137 31 Explain the marketing process. 133
32 What is branding? 139 32 Summarize the new techniques of marketing. (IMP) 140
33 What is niche marketing? 141 33 Interpret the barriers to international trade (IMP) 145
34 what is ambush marketing? 141 34 Explain the facilitators to international trade. 148
35 What is green marketing? 142 35 Discuss the export procedure and documentation. (IMP) 154
36 What is viral marketing? 143 UNIT - V
37 Explain international trade. 145 36 Explain the strategic planning process. 163
38 Outline WTO. 149 37 What is business valuation? and discuss the reasons for valuation. (IMP) 165

UNIT - V 38 What different methods of business valuation? (IMP) 169

39 Define strategic planning. 161 39 How to develop a succession strategy? Explain. (IMP) 172
40 What is business valuation? 165 40 Interpret different business exit strategies. (IMP) 176
41 Interpret capitalization method. 169 41 What are the steps for selling a business? 178
42 What is succession strategy? 171 42 What is business incubation? and explain incubator’s services. (IMP) 180
43 What is business exit strategy? 175 43 Discuss various strategies to develop women entrepreneurs. (IMP) 187
Which institutions are supporting women entrepreneurs in India? Discuss.
44 Explain business incubation. 180 44 (IMP) 190

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CONCEPT OF ENTREPRENEUR

The word “entrepreneur” is derived from the French verb enterprendre,

which means ‘to undertake’. This refers to those who “undertake” the risk of
new enterprises. An enterprise is created by an entrepreneur. The process of
creation is called “entrepreneurship”.

CONCEPT OF ENTREPRENEURSHIP

Entrepreneurship is a process of actions of an entrepreneur who is a person

always in search of something new and exploits such ideas into gainful
opportunities by accepting the risk and uncertainty with the enterprise.

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DEIFINITION OF ENTREPRENEUR

Richard Cantillon defines “a person who buys factors of production at

certain prices in order to combine them into a product with a view to sell
them at uncertain prices”.

Ex: A farmer pays definite price for seeds, fertilizers, pesticides, labour etc.
but not certain at which price he can sell his produce.

Kuratko & Hodgetts defines “a person who is trying to organize, manage

and take risks in business”.

DEIFINITION OF ENTREPRENEURSHIP

Hisrich and Peters define “a process of creating something new and

assuming the risks and rewards”.
Oxford Dictionary defines “the activity of making money by starting or
running businesses, especially when this involves taking financial risks”.

EVOLUTION OF ENTREPRENEURSHIP

Earliest period: Marco polo is an early example of an entrepreneur who

attempted to establish trade route to far east. Marco polo would sign
contract with money person to sell his goods. A common contract for taking
loan stated that trader had to pay interest of 22.5 % for the loan. Which
includes insurance. When the merchant adventurer would successfully sell
the goods and complete the trip profit were divided into two parts of which
capitalist would gain 75% of profit and trader would end up getting 25 % of
income.

Middle ages : in middle ages entrepreneur were more

described as actor, person, manager.His job was to manage large
production projects. He was merely managing the business while the risk

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was borne by the government of the country and not the entrepreneur. A
typical entrepreneur in middle ages were the clerk in charge of great
architecture.

17th century manager: emerging connection of risk with entrepreneurship

developed with 17th century. In this stage entrepreneur entered in contract
with government were payment to be made to capitalist was fixed and after
fixed payment, profit or loss incurred through the business had to be borne
by entrepreneur.

E.g. Richard Cantillon a noted economist and author in 1700

understood laws mistake. He developed one of the early theories of the
entrepreneur and is regarded some as the founder of the term. He viewed
entrepreneur as risk taker. He was the first person to recognize the role of
entrepreneur in economic theory. He stressed on the entrepreneur and not
his personality.

During this period entrepreneur were divided into two

persons

a. Person with capital

b. Person who needed capital

Major reason for such differentiation was due to the industrialization

occurring throughout the world. Many inventions developed during the
period were reactions to the changing world. E.g. Edison raised capital from
private sources to develop and experiment in the field of electricity and
chemistry. Similarly, Whitney had to finance his invention of cotton gin from
expropriated British crown property. Therefore, both were entrepreneur
looking for venture capitalist to finance their inventions. J B Say broadened
the concept of entrepreneur and included the concept of combining the
factors of production.

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 E N P U N I T - I NO T E S
19th and 20th century: during this period entrepreneur were not
distinguished from mangers and were viewed mostly from managers and
from economic perspective in following manner:

a. He organizes and operates the enterprise for his

personal gains.

b. He pays current prices for the materials consumed in the business.

c. He contributes his own initiative, skill, in planning, organizing and

administering things in company.

d. He assumes the chance of loss and gain consequent to uncontrollable

factors.

During the period of 20th century entrepreneur was seen as innovator in

the economy. He was the one who came up the unique concept in the
market. He performed following functions as entrepreneur:

a. To revolutionize the pattern of production by exploiting inventions.

b. To perform pattern of production by exploiting technological method of

producing new commodity or old commodity in new patter.

c. Opening new source of supply of raw materials or new change outlet of

products

Performing these functions by organizing new industry.

Concept of innovation and newness is the integral part of entrepreneur

which not only requires the ability to create and conceptualize but ability to
understand forces at work environment. The newness in the concept can be
in the following ways:

a. Introduction of new or quality goods

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 E N P U N I T - I NO T E S
a. Introducing new method of production

b. Utilization of new source of raw material

c. Carrying out new organizational form of industry.

21st century: During the present century two

characteristics are associated with the entrepreneur they are innovation and
creativity. Creativity is the ability to bring something new into existence.
While innovators are practical people and create from the opportunities
available in reality.

Following principles of innovation have emerged leading to success

of entrepreneur:

a. Action oriented and searching for new ideas

b. Making the product service simple and
understandable
c. Trying, testing and revising
d. Learning from failures
e. Hard work is the key to success

FUNCTIONS OF ENTREPRENEUR

1. Risk measurement and risk taking: risk taking and risk

measurement is the primary function of entrepreneur. Risk are not
only related to success or failure of business but also involve personal
and professional career forgone for the sake of opportunity.

2. Innovate/ create/discover: entrepreneurship is innovativeness of

individual and does not involve ownership. Principal function of the
entrepreneur is to carry out new combinations of means of production.

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1. Analyze opportunities: entrepreneur has to have opportunity
seeking style where he has to evaluate credibility of various
alternatives and choose suitable alternative which will prove to be
profitable in future.

2. Strategies for venture: entrepreneur has to strategize long term

plan for starting venture. He has to analyze the market and devise
effective strategies to face present and future competition.

3. Develop business plan: business plan is written document

containing details about every aspect of proposed business venture. It
provides roadmap to employees working in company to attain
objectives and is capable of convincing potential customers they are
shareholders and investors of company.

4. Acquire resources: entrepreneur has to acquire various types of

resources such as men, money, material, machinery to start venture.
Entrepreneur has to have suitable skills to line up required resources
for the company.

5. Organize and start venture: entrepreneur should be a good

organize, he should deploy suitable resources at right place in right
time required to for the company to ensure effective working of
organization.

6. Develop and grow venture: it is not only important to start a

venture but also company should be able to respond to changes
happening in the business market which is crucial factor deciding
existence of company.

7. Delegate, direct and lead the plan: during the growth stage of the
company entrepreneur should provide required resources for the
company and during later stage entrepreneur should come up with

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effective strategies to face competition and guide employees in
company performing role of leader.

3. Supervise and control: for success of business it is important to

have suitable mechanism in place so that entrepreneur can track
overall success of the company.

ROLE OF ENTREPRENEUR IN ECONOMIC DEVELOPMENT

Historically, entrepreneurs have altered the direction of national economies,

industries, and markets. In addition to increasing national income through
job creation, entrepreneurship has always served as a bridge between
innovation and the marketplace. Many innovations have altered our pattern
of living, and many services have been introduced to alter or create new
service industries such as commercial banking, medical treatment, logistics,
information systems, and insurance. Let us look at some ways in which
entrepreneurs can participate in the development of an economy.

1. Contribution to GNP and per capita income: Entrepreneurship

contributes to economic stability by introducing new products and
services in the market and encouraging effective resource
mobilization. This helps in increasing the gross national product as
well as per capita income of the people in the country. Economic
stability leads to increased institutional investment for productive
activities and is a sign of economic growth.

2. Employment generation: The government is limited in its ability to

create employment opportunities for the country’s population.
Entrepreneurs play an effective role in reducing the problems of
unemployment in the country. Entrepreneurs are not only self-
employed but also provide employment to others. Entrepreneurial
activities lead to other activities, generating a multiplier effect in the

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economy. For example, when the information technology boom
occurred in India, it led to several successful entrepreneurial
ventures. This provided employment to many and also led to the
launch of a number of engineering colleges, development of real-
estate and hospitality ventures, and infrastructural facilities. Such
developments, in their turn, encourage further entrepreneurship.

3. Balanced regional development: The development of enterprises

in less-developed regions promotes balanced regional development
in the country. In addition, entrepreneurship stimulates the
distribution of wealth and income to more and more individuals
(such as stakeholders) and geographical areas, thus benefiting
larger sections of society.

4. Promotion of export and trade: Entrepreneurship promotes the

country’s export trade and earns foreign exchange. When required,
this earning can help combat the country’s import dues
requirements. International trade brings economic strength and
techno-economic reliance.

5. Improvement in the standard of living: Entrepreneurs bring a

wide variety of products and services into the market. This increases
competition in the market and makes it possible for people to avail
of a better quality of products and services at lower and more
competitive prices, resulting in an improvement of the country’s
overall standard of living.

6. Increased innovation: With the liberalization of the Indian

economy, the increased competition in the domestic and
international market has encouraged entrepreneurs to be more
creative.

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1. Overall development of the economy: Entrepreneurs create new
technologies, products, processes, and services that become the
next wave of new industries, and these in turn drive the economy.
Entrepreneurs are change agents in society. They create wealth and
value, and generate employment in society. This naturally leads to
social and economic growth.

TYPES OF ENTREPRENEURS:

1. Innovative entrepreneurs:

These entrepreneurs have the ability to think newer, better and more
economical ideas of business organisation and management. They are the
business leaders and contributors to the economic development of a country.

Inventions like the introduction of a small car ‘Nano’ by Ratan Tata,

organised retailing by Kishore Biyani, making mobile phones available to the
common may by Anil Ambani are the works of innovative entrepreneurs.

2. Imitating entrepreneurs:

These entrepreneurs are people who follow the path shown by innovative
entrepreneurs. They imitate innovative entrepreneurs because the
environment in which they operate is such that it does not permit them to
have creative and innovative ideas on their own.

Such entrepreneurs are found in countries and situations marked with weak
industrial and institutional base which creates difficulties in initiating
innovative ideas.

In our country also, a large number of such entrepreneurs are found in

every field of business activity and they fulfill their need for achievement by
imitating the ideas introduced by innovative entrepreneurs.

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Development of small shopping complexes is the work of imitating
entrepreneurs. All the small car manufacturers now are the imitating
entrepreneurs.

3. Fabian entrepreneurs:

The dictionary meaning of the term ‘fabian’ is ‘a person seeking victory by

delay rather than by a decisive battle’. Fabian entrepreneurs are those
individuals who do not show initiative in visualising and implementing new
ideas and innovations wait for some development which would motivate
them to initiate unless there is an imminent threat to their very existence.

4. Drone entrepreneurs:

The dictionary meaning of the term ‘drone’ is ‘a person who lives on the
labor of others’. Drone entrepreneurs are those individuals who are satisfied
with the existing mode and speed of business activity and show no
inclination in gaining market leadership. In other words, drone
entrepreneurs are die-hard conservatives and even ready to suffer the loss
of business.

5. Social Entrepreneur:

Social entrepreneurs drive social innovation and transformation in various

fields including education, health, human rights, workers’ rights,
environment and enterprise development.

They undertake poverty alleviation objectives with the zeal of an

entrepreneur, business practices and dare to overcome traditional practices
and to innovate. Dr Mohammed Yunus of Bangladesh who started Gramin
Bank is a case of social entrepreneur.

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IMPORTANCE OF ENTREPRENEURSHIP

1. Development of managerial capabilities:

The biggest significance of entrepreneurship lies in the fact that it helps in
identifying and developing managerial capabilities of entrepreneurs. An
entrepreneur studies a problem, identifies its alternatives, compares the
alternatives in terms of cost and benefits implications, and finally chooses
the best alternative.

This exercise helps in sharpening the decision-making skills of an

entrepreneur. Besides, these managerial capabilities are used by
entrepreneurs in creating new technologies and products in place of older
technologies and products resulting in higher performance.

2. Creation of organisations:
Entrepreneurship results into creation of organisations when entrepreneurs
assemble and coordinate physical, human and financial resources and direct
them towards achievement of objectives through managerial skills.

3. Improving standards of living:

By creating productive organisations, entrepreneurship helps in making a
wide variety of goods and services available to the society which results into
higher standards of living for the people.

Possession of luxury cars, computers, mobile phones, rapid growth of

shopping malls, etc. are pointers to the rising living standards of people, and
all this is due to the efforts of entrepreneurs.

4. Means of economic development:

Entrepreneurship involves creation and use of innovative ideas,
maximization of output from given resources, development of managerial

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skills, etc., and all these factors are so essential for the economic
development of a country.

FACTORS AFFECTING ENTREPRENEURSHIP

Entrepreneurship is a complex phenomenon influenced by the interplay of a

wide variety of factors.

1. Personality Factors:
Personal factors, becoming core competencies of entrepreneurs, include:

(a) Initiative (does things before being asked for)

(b) Proactive (identification and utilization of opportunities)

(c) Perseverance (working against all odds to overcome obstacles and never
complacent with success)

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

(e) Persuasion (to customers and financiers for patronization of his business
and develops & maintains relationships)

(f) Self-confidence (takes and sticks to his decisions)

(g) Self-critical (learning from his mistakes and experiences of others)

(h) A Planner (collects information, prepares a plan, and monitors

performance)

(i) Risk-taker (the basic quality).

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1. Environmental factors:
These factors relate to the conditions in which an entrepreneur has to work.
Environmental factors such as political climate, legal system, economic and
social conditions, market situations, etc. contribute significantly towards the
growth of entrepreneurship. For example, political stability in a country is
absolutely essential for smooth economic activity.

Frequent political protests, bandhs, strikes, etc. hinder economic activity and
entrepreneurship. Unfair trade practices, irrational monetary and fiscal
policies, etc. are a roadblock to the growth of entrepreneurship. Higher
income levels of people, desire for new products and sophisticated
technology, need for faster means of transport and communication, etc. are
the factors that stimulate entrepreneurship.

Thus, it is a combination of both personal and environmental factors that

influence entrepreneurship and brings in desired results for the individual,
the organisation and the society.

ENTREPRENEURIAL COMPETENCIES

The term entrepreneurial competencies refer to the key characteristics that

should be possessed by successful entrepreneurs in order to perform
entrepreneurial functions effectively. Entrepreneurs are often unique people.
They often see things that others fail to notice. They endeavour to bring
about change and foster growth. They believe in themselves.
Entrepreneurship drives them to move forward and reach where they want
to be. Entrepreneurs are men and women of all sizes, ages, shapes,
religions, colours, and backgrounds. However, most successful
entrepreneurs do share the competencies given below:

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1. Creativity and innovation: Creativity is the ability to develop new
ideas and to discover new ways of looking at problems and
opportunities; thinking new things. On the other hand, innovation is the
application of creative solutions to problems or opportunities to
enhance or to enrich people’s lives, or doing new things

Ideas usually evolve through a creative process whereby imaginative

people bring them into existence, nurture them, and develop them
successfully. The creative process for an idea involves five stages—
germination, preparation, incubation, illumination, and verification.

2. Leadership and team building: Leadership is the basic quality of an

entrepreneur. This spirit keeps him paces forward in any field. The
quality of leadership should be demonstrated in networking and
problem-solving ability, generating resources, and building teams. Good
business leaders are great visionaries. They create a vision for the
company, share the vision passionately, own a vision, and relentlessly
drive it towards completion.

An entrepreneur should have an ability to build a team. A team is a

group of individuals with a common mission, 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.

3. Opportunity seeking and initiative: Entrepreneurs can pursue

opportunities in any industry at any time. For example, some
entrepreneurs build successful new companies by contributing to the
founding of a new industry, such as Robert Swanson, who co-founded
the biotechnology giant Genentech Inc. and became a pioneering
entrepreneur in the field of biotechnology. Let us take the example of
Captain Gopinath, whose first venture was in the field of sericulture but

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who soon identified an opportunity in the airline business. Later,
Captain Gopinath launched a cargo airline and managed to rope in
Reliance Industries as an investor into his express cargo business. In
short, he is constantly identifying new opportunities across various
industries.

Along with being able to identify business opportunities, an

entrepreneur needs to have the urge to take initiatives. The initiative to
start a business can’t be enough—entrepreneurs must have the
initiative to continue to grow and expand not only the business but their
own minds.

1. Risk-taking and decision-making ability: Great business ideas have

sometimes started as a hunch that enterprising individuals have acted
upon. There is always the risk of loss in any endeavour, and
entrepreneurs have just the right amount of confidence to take
calculated risks to achieve their objective. However, an entrepreneur’s
risk-taking does not depend on luck, but on sheer effort and hard work.

A good entrepreneur should avoid excessively high as well as low risk

situations. Low-risk investment often provides a return not exceeding
10 per cent, moderate risk of 20 per cent and a high risk up to 100 per
cent. It is left to individual entrepreneurs to choose the degree of risk
they would like to or can afford to take.

2. Tolerance of ambiguity and uncertainty: Schere argued that a

tolerance of ambiguity is an important characteristic for entrepreneurs
because the challenges and potential for success associated with
business start-ups are by nature unpredictable. Budner defined an
ambiguous situation as “one which cannot be adequately structured or
categorized by an individual because of the lack of sufficient

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clues.” Tolerance of ambiguity is the ability to respond positively to
ambiguous situations, and this is an important quality for entrepreneurs
to have because they continually face more uncertainty in their
everyday environment than do managers of established organizations.

3. Motivation to excel: Entrepreneurs are motivated primarily by the

desire to create something new, the desire for autonomy, wealth and
financial independence, the achievement of personal objectives, and the
propensity for action (“doing”). The excitement and the thrill of starting
a new venture is another major motivator. Importantly, most
entrepreneurs stress that the objective was never money for its own
sake. They wanted to leave a legacy in the form of a profitable long-
lasting business.

4. Problem solving: Successful entrepreneurs are problem solvers. A

formal problem-solving model helps entrepreneurs solve problems in a
logical manner. The model consists of six steps:

a. Define the problem.

b. Gather information.

c. Identify various solutions.

d. Evaluate alternatives and select the best option.

e. Take action.

f. Evaluate the action taken.

5. Goal orientation: Goal setting is the process of setting both long-term

and short-term objectives for the successful performance of an
entrepreneur. A clear set of goals helps to measure the performance
standards of employees. In addition, everyone needs to feel that they

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have a worthwhile goal to reach with the resources and leadership
available. Without goals, different members may move in different
directions, which may give rise to difficulties.

6. Self-efficacy and adaptability: Self-efficacy is the belief in one’s

ability to muster and implement personal resources, skills, and
competencies to attain a certain level of achievement on a given task.
In other words, self-efficacy can be seen as task specific self-
confidence. Self-efficacy for a specific task has been shown to be a
robust predictor of an individual’s performance in that task and helps to
explain why people of equal ability can perform differently.

Successful entrepreneurs are adaptive and resilient. Change is

inevitable, and there will be plenty of times when entrepreneurs need
to correct course and modify plans so that business isn’t left behind. It
is essential to accommodate changes in the marketplace and not to be
rigid and so miss opportunities for growth and improvement.
Entrepreneurs should not be afraid of failure. Mistakes and failure come
with the territory of being successful entrepreneurs, and if they are not
making mistakes, they are probably engaging in a very easy task,
where there is little chance of failure.

7. Internal locus of control: Do you control your destiny or are you

controlled by it? Some people believe that they hold the power to
control the outcome of their actions. Other people feel that the outcome
of their actions is determined by external factors. Locus of control
refers to how a person perceives the causes of events in one’s life.
Individuals high on the internal locus of control assume that any
success or failure they experience is due to their personal actions and
that they have the ability to influence events. When someone perceives
events as under the control of others, fate, luck, the system or their

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boss, they have an external locus of control. What is your locus of
control? And what forces are responsible for your successes and
failures? These important attitudes affect your motivation, expectations,
self-esteem, risk-taking behaviour, and the actual outcome of your
actions. Successful leaders and entrepreneurs typically show a high
internal locus of control.

8. Persistence, persuasion, and networking: Entrepreneurs display

persistence, and are not discouraged into quitting by difficulties and
problems that come up in business or in their personal life.
Entrepreneurs with a track record of success are much more likely to
succeed than first-time entrepreneurs. In essence, they have exhibited
persistence in selecting the right industry and the right moment to start
new ventures.

Networking is something all successful entrepreneurs are good at.

Networking, is not an option but a pre-requisite for survival in this
world of intense competition. While networking, it is important to open
all avenues by getting involved in every kind of social media, to build
relationships by being open-minded, and to follow through any business
opportunity you may have identified with personal interaction.
Businesses have always relied on networks of clients, suppliers,
associates and contacts to spread the word about their work and their
products. But it is not enough to simply network. A successful
entrepreneur usually uses deliberate strategies to persuade and
influence others.

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CAPACITY BUILDING FOR ENTREPRENEURS

To be a successful entrepreneur, individuals must build capacities in four key

strategic areas – Operational, Management, Financial Management, and
Personal capacities. Entrepreneur capacity building involves developing the
combination of all four capacity elements, to provide the ingredients for a
great entrepreneurial success soup.

Some of these capacities are gained through experience throughout your

career, while others are learned through educational avenues. Some
successful entrepreneurs are born with strong personality traits, and some
behaviors are strengthened through learned responses in the business
environment.

Here are the four key categories of capacity building leading to the
development of successful entrepreneurs.

1) Operational Capacity Building

Having a brilliant understanding of an industry and business at ground level

builds operational capacity. This of course involves working in a variety of
business operations for a period of time prior to diving into
entrepreneurship. This is where you gain valuable insight into what makes
businesses tick. Understanding the dynamics on the floor, in the cubicles, in
the field and out on the road, gives you the perspective on how to lead,
organize and plan for operations.

2) Management Capacity Building

Taking operational experience one more step,

gaining management experience in a field or business will be directly
applicable to managing your own business. The valuable experience you
gain managing operations, resources and people will give you the applicable

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tools for your own business. With a few years of management experience,
you will gain management capacity and an understanding of responsibilities
and accountabilities at that level… all precursors to managing your own
company.

1) Financial Management Capacity Building

Through a combination of work experience and education, you need to be

well-grounded and versed in managing finances. You need to be able to
accurately estimate and build financial statements and to understand them.
With gained skills, you will need to be able to analyze financial statements,
looking at trends and indicators and what those all mean to your business.
Financial reports provide key indicators and information on the business’
financial health…there is a wealth of information in the financial statements.
Other parties, partners and financial institutions will be looking at you and
your organization’s ability to manage finances.

2) Personal Capacity Building

Of extreme importance, if you don’t have some key

personal, entrepreneurial traits you may be closing up shop fast. Some
people are born with strong traits while other behaviors can be picked up
along the development pathway. Demonstrating strong traits and behaviors
such as dedication, perseverance, ambition, determination, strong-will,
openness, honesty, transparency, fairness, etc may move you along the
pathway to become a successful entrepreneur.

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ENTREPRENEURIAL TRAINING METHODS

Entrepreneurship training involves a learning process. The training methods

that facilitate the learning process lead to involvement and participation and
finally result in changes in the behavioural pattern of people at a cognitive or
operational level. Thus, the various methods used during the training
programme have a special significance. Let us discuss some popular training
methods used during entrepreneurship training programmes to create
learning situations.

I. Lecture Method

The lecture method of training is one of the oldest and most widely-used
training methods. A lecture may be defined as an informative discourse
delivered to an audience. It clearly implies a one-way communication to a
number of people by someone who is knowledgeable in his subject. The
method is used to deliver the majority of content in training programmes. In
entrepreneurship training programmes, this method is widely used in
combination with other methods like those involving seminars, conferences,
panel discussions, workshops, buzz groups, the syndicate method, the case
method, role play, the simulation method, and the laboratory method.
Modern technology provides a wide range of aids to the speaker with the
help of which the lecture method could be made more interesting,
absorbing, and meaningful.

II. Participative Methods

The participative training method incorporates discussion of the content of

training programmes, participation, understanding of the group process, and
overall facilitation of things like belief, attitudes, knowledge, and sharing of
experiences between people—all of which are imperative for broadening the

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general perspective as well as in business. Participation leads to a climate in
which the trainees feel responsible, have their own views, knowledge, and
experience. Let’s discuss the various participative training methods:

a) Conference: This method may effectively be used where the

objective is to develop a perspective and insight into the subject
conferred on, and where it is important to collect ideas from many
before embarking on a project. The usual procedure adopted for
conducting conferences is to prepare the agenda notes and working
paper and invite experts to contribute papers for the conference. The
plenary session, which is held in the beginning to spell out the
objectives, purposes, the scope, and specific topics for discussion in
the conference, provides a general forum for the participants and
also helps in sharpening the focus of discussions. The chairman is
the key figure in the conference.

b) Seminar: A seminar is a formal presentation by a small group of

people on a particular topic of common interest. In a seminar,
participants present their views on a specific topic, followed by
discussion and conversation. A seminar enables exchange of
thoughts and ideas and the findings of the discussion are recorded
for future action.

c) Panel discussion: A panel discussion is designed to provide an

opportunity to participants to hear the viewpoints of different people
who are knowledgeable on a specific topic. A panel usually comprises
4–5 panel members. The discussion is led by a moderator. The role
of the moderator is very important for opening the discussion,
leading the discussion, closing the discussion, and concluding the
discussion. The moderator should inform the panel members of the

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objective of the panel discussion and the time allotted for the panel
discussion.

a) Workshop: A workshop is product-centred and focuses on the

specificity of the task to be accomplished. It is a method of designing
training activities around identified work problems in order to find
solutions to them. The objective is to obtain contributions from all
affected individuals and optimize the resources available to solve the
problems and to plan future action. The workshop differs from other
group methods only in that it is set up to tackle specific operational
problems. The participants play a key role in making the workshop a
success. The workshop ends with a definite plan of action for the
solution of a particular problem or task.

b) Buzz group: Buzz groups are sub-divisions of a large group. The

focus of this method is to provide an opportunity to everyone to
express an opinion on the topic. The interaction is confined to a
limited number of participants ranging from five to ten. The
deliberation takes place in a small group on a given topic, which is
presented by the leader of the sub-group.

c) Syndicate method: This method is suitable for learning at a higher

level. This method is widely used in teaching–learning situations,
especially in top-level management training. This method requires a
competent trainer and should have a core group of co-trainers
equally competent in handling different assignments given to them.
The participants should be divided into small groups consisting of
eight to ten participants. This small group is known as a “syndicate.”
Generally, each syndicate is given a brief and carefully prepared
background paper by the instructor. The syndicate discusses the
issues involved in the subject area assigned to it and prepares a

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paper. The leader of each syndicate presents his report separately,
followed by questions raised by each syndicate on the
recommendation of other syndicates. The trainer acts mainly as a
resource person in providing necessary information and facilitating
their thinking on a particular topic. The participants learn from their
own participation and from the experiences the trainers and other
members bring to syndicate discussions.

d) Case method: The case method has long been accepted as an

important method for training entrepreneurs. It facilitates active
participation and participative learning. If properly administered, it
has the advantage of improving the knowledge, attitude, and skills
of the trainees. The effectiveness of the case method depends upon
the preparation of the case and the leading of the case in a
classroom situation by the trainer. The trainer is expected to perform
the role of facilitator.

e) Role play: Trainees are made to enact a particular role so as to give

a real feel of the roles given to them. This enables participants to
understand the behaviour of others as well as their own feelings and
emotions. The trainer must brief the trainees on the theme or
situation and what is expected of them. This is a common and very
effective technique for bringing into the classroom real-life situations
concerning entrepreneurship. Sometimes the script is given to the
team, while at other times the trainees prepare their own script
around a given situation.

f) Simulation method: Simulation methods try to replicate various

activities in “real life” in the form of a game. In the simulation
method, a “near real-life situation” is created providing an
opportunity to trainees to experience. The trainees experience the

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impact of their behaviour on the situation. The simulation technique
is carried out to generate response and reactions based on the real
feelings of the participants, which are subsequently analysed by the
trainer. Simulation games can result in very effective learning but
trainers who administer them need considerable competency and
good preparation.

g) Laboratory method: The laboratory method of training is process-

oriented learning wherein the participants learn by sharing their
experiences, particularly those generated in the group. The method
is also termed as sensitivity training, T-group, D-group, L-group, etc.
The basic assumption in this method is that the efficiency and
productivity of the group depends more often on the manner in
which people work together than on their technological skill. The
laboratory method offers a climate conducive to open discussion and
learning, and encourages trusting behaviour. A major goal of such a
method is to contribute towards personal growth through increased
self-awareness and inter-personal competence.

ENTREPRENEURIAL MOTIVATION

Entrepreneurial motivation is the process of transforming an ordinary

individual to a powerful businessman, who can create opportunities and
helps in maximizing wealth and economic development. It is defined as
various factors stimulate desires and activates enthusiasm in entrepreneurs
which make them attain a particular goal.

Motivation activates innate strengths to achieve a particular goal, many

questions arise during knowing this concept such as why can’t all the human
beings become leader or entrepreneurs even though they face same

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motivation during his/her lifetime? Who can become effective motivators?
What type of motivation can influence one’s behavior? Does the extent of
motivation decide the power of externalized behavior? Etc, entrepreneurial
motivation is a psychological process in which all the motives may not
influence with the same intensity, it varies with the perception levels of the
individuals and factors responsible for the motivation. Sometimes a single
motive can influence to become strong and powerful entrepreneurs, these
motives may come from various factors as follows.

• Internal factors
• External factors

A) Internal factors

Need for self-actualization

It is explained by Maslow and it is the top-level need refers to the desire for
self-fulfillment. Need for freedom and self-fulfillment makes the individuals
or employees of the organization make them become powerful leaders or
entrepreneurs.

Optimism

Individuals having positive mindset get motivated by finding opportunities

during critical situations also. Positive attitude and perception motivate an
individual to work out for the best even during unfavourable and tough
situations also.

Positive attitude

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The positive attitude is the most important factor which motivates the
individuals to become successful entrepreneurs. Habituating positive attitude
can lead an individual to develop constructive thinking; it motivates them to
become powerful entrepreneurs, finally, the positive attitude can prove that
how valuable they are.

Self-motivation

Most of the successful and powerful entrepreneurs are self-motivated; here

they fulfil the desired objectives by motivating themselves. Though many
individuals have ideas but they cannot put those for business development;
however self-motivated people can take decisions to implement ideas.

Enthusiasm

Enthusiasm motivates in finding better solutions, finally, it stabilizes the

ideas and makes them become creators and innovators which result in
successful entrepreneurs.

Commitment

Commitment towards a goal can make to achieve success. It motivates

entrepreneurs by inspiring and developing emotional attachment towards an
objective.

Education

Education is the most important factor it motivates a person to innovate and

create new products, this result in establishing an organization or a new
business venture. The knowledge acquired during the course of time and
innate skills highly motivates a person to become a successful entrepreneur.

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Background

Family background, occupational background and a person’s own experience

in a job motivates him/her to become an entrepreneur. Having
entrepreneurial background acts as a clear path to becoming a successful
and powerful entrepreneur.

Financial background

Finance is the scarce resource which motivates and enables a person to

become an entrepreneur. Money can make many things it is the major thing
in deciding one’s status and development, strong financial background
facilitates to start a business.

B) External factors

Influence

Influence of family members, friends, and society motivates the individuals

to become entrepreneurs. The extent of influence shows an effect on the
character, behaviour, and development, it comes from the external
environment. Here people get influenced by seeing successful entrepreneurs
or by the words of others.

Availability of resources

Resource availability motivates at a high extent to become entrepreneurs,

availability of land, labor, money, machinery, and materials make individual
to start a new business. Though there is creativity, intelligence, commitment
and enthusiasm in the individuals, but the unavailability of resources
becomes an obstacle for new entrants or entrepreneurs.

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Product’s demand

Higher demand for a particular product motivates entrepreneurs to produce

innovative and value-added products, here product’s demand motivates the
individuals to become entrepreneurs. The hope of success makes them
produce innovative products or substitute products; some entrepreneurs
fulfil the market demand by producing complementary goods also. So, the
increase in products demand highly motivates to become entrepreneurs.

Government policies

Subsidies and benefits given by the government motivate entrepreneurs to

produce new products or motivates individual to become entrepreneurs.
Government policies show higher influence on establishing new firms and it
leads to economic development. In the case of small-scale industries, rural
people are encouraged by the various training programs, financial support,
and subsidies; it is one of the main reasons for the establishment of new
firms and arrival of new entrants.

Information availability

Market knowledge and information motivate individuals to enter into the

markets and to become entrepreneurs. If there is abundant information then
it automatically creates interest in the minds of enthusiastic people to
become entrepreneurs. Availability of information facilitates research and
producing innovative and value-added products, and it creates a scope to
become entrepreneurs.

Technological advancement

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Technological advancement acts as a path to transform ideas into products,
feasibility in production and expected success rate highly motivates to
become entrepreneurs. It reduces errors and cost of production and
maximizes success rate; this is the reason why people are interested in
becoming entrepreneurs with the increase in technology.

Changing tastes and preferences

Changing tastes and preferences of the customers maximizes the chance to

produce substitute and complementary goods, it creates a scope to
innovation and establishment of the new ventures.

MODELS OF ENTREPRENEURIAL DEVELOPMENT

The models of entrepreneurial development are broadly classified into three

categories:

• Psychological models
• Sociological models
• Integrated models

1. Psychological Models

The psychological model is based on the psychological approach to

entrepreneurship. The essence of psychological theory is an understanding
of the difference in individuals’ attitudes. According to this theory, the
internal attitude and ability to judge and forecast any situation lead a person
to become a successful entrepreneur. David McClelland’s theory on need for
achievement is the most important among the various psychological theories
on entrepreneurship. In his theory, McClelland emphasized the relationship
of need for achievement or achievement motivation to economic

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development via entrepreneurial activities. He considers “achievement
motivation” to be the major determinant of entrepreneurial development.

McClelland’s Theory of Achievement Motivation: David McClelland has

explained entrepreneurial development from a psychological perspective. He
considers entrepreneurs as people who do things in a better way and make
decisions in times of uncertainty. He argues that motivation is an important
determinant for entrepreneurial growth. The dream to achieve big things
overpowers monetary or other external incentives. The McClelland Theory of
Achievement Motivation holds that people have the following three motives
for accomplishing things:

• Need for Power (nP), or the drive to influence others and any given
situation.
• Need for Affiliation (nAff), or the drive for interpersonal relationship.
• Need for Achievement (nAch), or the drive to excel, advance, and
grow.

McClelland suggests that all of these three needs may simultaneously act on
an individual. However, in the case of an entrepreneur, the need for
achievement is found to dominate.

Theory of Withdrawal of Status Respect (1964): In this theory, Everett

Hagen’s argument is that certain social changes may disrupt the stability of
traditional society and cause psychological changes in a group or in an
individual. The withdrawal of status respect may occur when a traditional,
group is displaced from its previous status or on migration to some other
place or to a new society. Hagen uses the case of Japanese history to
substantiate his argument.

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Internal–External Locus of Control Theory: Professor J. D. Rotter of
Ohio University introduced the Internal–External Locus of Control Theory,
which highlights the self-confidence of a person, and the dependency on
fortune and external environment for becoming an entrepreneur. According
to this theory, the internal locus of control comprises self-confidence,
extreme belief in one’s own ability, and initiatives taken by an individual.
Locus of control determines whether a person perceives a potential goal to
be attainable through one’s own actions (internal locus of control) or through
uncontrollable external factors (external locus of control).

1. Sociological Models

The sociological theory of entrepreneurship holds social cultures to be the

driving force behind entrepreneurship. The entrepreneur becomes a role
performer in conformity with the role expectations of society. Such role
expectations are based on religious beliefs, taboos, and customs. Max
Weber, Hozelist, Thomas Cochran, and Frank W. Young all advocated a
sociological explanation for the development of entrepreneurship.

Max Weber’s Theory of Religious Beliefs: According to Max Weber,

religious beliefs are the driving or restraining forces for entrepreneurial
activity. For one thing, religious beliefs play a crucial role in determining the
attitude of the entrepreneur towards generating or limiting profits. Weber
took the position that entrepreneurial growth is dependent upon the ethical
values (due to religion) of society.

Hozelist’s Sociocultural Theory: According to Hozelist, a specific social

culture leads to growth in entrepreneurship. Social sanctions, cultural
values, and role expectations are responsible for the emergence of
entrepreneurship. He also propounded that entrepreneurship grows in
societies that permit variability in choice of paths of life and non-standard

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socialization of individuals. Hozelist’s approach emphasizes the theory of
deviance and assumes that those who introduce changes must be deviants
since they reject the traditional way of doing things.

Thomas Cochran’s Theory of Entrepreneurial Supply: Thomas

Cochran, in agreement with Hozelist, believed that the environment in which
an individual is brought up determines his entrepreneurial urge. According to
him, the supply of entrepreneurs in society needs to be seen with reference
to prevailing child-rearing practices. He stated that the performance of the
entrepreneur might be seen in reference to his own attitudes towards an
occupation. Values and role expectations of the particular social group to
which he belongs are the most important determinants in the performance
of business entrepreneurial roles.

Frank W. Young’s Theory of Group Level Pattern: Frank W. Young’s

theory of entrepreneurship is one of change based upon society’s
incorporation of relative sub-groups within society. He said that groups can
be reactive in two ways: If a group experiences low status recognition and
denial of access to important social networks, and if the group possesses a
greater range of institution resources than other groups at the same system
level. These two factors bring development to the society. A group without
anything will compete with other groups and also try to acquire societal
recognition. A sub-group that has a relatively low status in a larger society
will lead to entrepreneurial behaviour if the group has better institutional
resources than others in that society at the same level. Young’s model of
entrepreneurship suggests the creation of supporting institutions in society,
such as the family, as the determinant of entrepreneurship.

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1. Integrated Models

In search of an integrated approach, the behaviourists tried to synthesize

psychology and sociology to explain entrepreneurship. However, there has
been a dominant influence of psychological parameters in their interpretation
of entrepreneurial behaviour. In Udai Pareek and T. V. Rao’s theoretical
framework for analysing entrepreneurship, they argue that there are some
sequential propositions in human behaviour that lead to entrepreneurship.
According to them, these propositions, which occur in sequence, ultimately
end up in entrepreneurial development. According to T. V. Rao, the optimal
presence of the following factors, which are additive in nature, leads to the
initiation of entrepreneurship:

• Need for motive (achievement motivation)—the dynamic which is the

main thrust behind entrepreneurial action.
• Long-term involvement in thought and action to achieve the goal in
entrepreneurial activity.
• Personal, social, and material resources favourable to
entrepreneurial activity.
• Socio-political system suitable for the establishment, development,
and expansion od an enterprise.

PROCESS OF ENTREPRENEURSHIP DEVELOPMENT

In a very general sense, development refers to enhancing an existing potential

or asset through the process of learning and application. It is a process of
evolving one’s skills in a systematic manner. Therefore, same goes for the
process of entrepreneurship development. But before we dive headfirst into
the process of entrepreneurship development, let us first shed some light upon
what the term entrepreneurship development entails.

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Definition of Entrepreneurship Development

Basically, entrepreneurship development is the process of improving the skill

set as well as the knowledge of the entrepreneurs. This can be done through
various methods such as classroom sessions or training programs specially
designed to increase the entrepreneurial acumen.

Another definition of this term could be the process of enhancing the capacity
to develop, manage and organize a business venture while keeping in mind
the risks associated with it.

But instead of complicating things with big words and sophisticated

terminologies, let us understand it simply. The process of entrepreneurship
development is nothing but helping the entrepreneurs develop their skills
through training and application of that training. It instils in them the quality of
making better decisions in the day to day business activities.

Now that we understand the meaning of entrepreneurship development, let’s

discuss the process of entrepreneurship development.

1. Clear View of the Objective of the Program

Before you get into training the prospective entrepreneurs, it is very important
to have a clear objective and plan in mind about what the program is going to
encompass.

Without a proper plan and direction, the training would not yield the desired
results. This would lead to a loss of time, money, effort and most of all,
valuable potential.

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1. Selecting the Potential Targets

It is important to select the potential targets who are willing to enhance their
skills and who can be identified as the people who have some amount of
business acumen. These can be further divided into two categories- the
educated target audience and the uneducated target audience.

Educated audience refers to the target people who have a decent educational
background and want to be entrepreneurs. These people have the motivation
to put their education to use by starting a venture and working for
themselves.

Uneducated audience refers to the people who are not as privileged as others
in terms of education about the market and have the potential to become
entrepreneurs. These people are constantly looking for alternative ways to
earn money and support their families. Therefore, they are highly motivated
and, given the right training and direction, can prove to be exceptional
entrepreneurs.

2. Identifying Local Talents and Markets

The process of entrepreneurship development program can be seen as most

effective and efficient when it is applied in the local markets and on the local
entrepreneurs who know about it. These people understand and absorb the
knowledge way more quickly and can apply it in the current scenario because
of which the results of the program can be seen more quickly and effectively.

3. Choosing the Right Location

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In India unfortunately, these programs can only be launched where support
institutions and resources are available, but ideally, these programmes should
be planned and launched in the areas where most people are interested and
willing to take advantages of these programmes so that this opportunity can
be used most effectively and there is no loss of resources.

2. Tying up with Institutions

A lot of times, these programmes involve tying up with various institutions like
universities, NGO and some private institutions. This is done to give a real-
world experience to assist the program and give the people some idea of the
situations in the real world.

3. Develop the Entrepreneurship Program as Needed

People and their skill sets are different and develop over time. Thus, it is very
important to keep developing the programs to suit the needs of the people
enrolled in it. Moreover, the focus must be on harnessing their strengths and
working to minimize their weaknesses.

4. Analyze the Result for Future Development

This is a very important and final step in the process of entrepreneurship

development. After the program has run its course, it is very important to
analyze the effectiveness of the program. This is necessary to ensure that in
future more effective programs can be developed. For this one has to minimize
the shortcomings of the existing program.

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DIFFERENCES BETWEEN ENTREPRENEUR AND INTRAPRENEUR
Intrapreneur refers to an
Entrepreneur refers to a person employee of the organization
Meaning who set up his own business who is in charge of
with a new idea or concept. undertaking innovations in
product, service, process etc.

Approach Intuitive Restorative

Use resources provided by

Resources Uses own resources.
the company.

Capital Raised by him. Financed by the company.

Enterprise Newly established An existing one

Dependency Independent Dependent

Borne by the entrepreneur

Risk Taken by the company.
himself.
Change and renew the
Creating a leading position in the
Works for existing organizational
market.
system and culture.

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