Unit 1 EDPM

The word entrepreneur derives from the French words entre, meaning
“between,” and prendre, meaning “to take.”
The word was originally used to describe people who “take on the risk”
between buyers and sellers or who “undertake” a task such as starting a new
venture
 Entrepreneurship
• Entrepreneurship is defined as the process by which individuals
pursue opportunities without regard to resources they currently control
for the purpose of exploiting future goods and services.
• An entrepreneur assembles and then integrates all the resources needed—the
money, the people, the business model, the strategy, and the risk-bearing
ability—to transform the invention into a viable business
 Why do people become entrepreneurs?
• To be their own boss,
• To pursue their own ideas, and
• To realize financial rewards.
 Characteristics of Successful Entrepreneurs

• Passion for the business

• Product Customer Focus
• Tenacity despite failure
• Execution Intelligence
 Passion for the business
• The number-one characteristic shared by successful entrepreneurs is a passion for their
business, whether it is in the context of a new firm or an existing business. This passion
typically stems from the entrepreneur’s belief that the business will positively
influence people’s lives.
• Making a difference in people’s lives is also the primary motivator behind many social
enterprises, which are often started by people who set aside promising careers to pursue a
social goal.
• This was the case with John Wood, who founded Room to Read and is the author of the book Leaving Microsoft to Change the World. Wood’s deep
passion to help children in the developing world caused him to start cashing in small amounts of Microsoft stock to buy books and build schools,
even before he left the company
 Product Customer Focus
• The second defining characteristic of successful entrepreneurs is a product/ customer
focus.
• A product/customer focus also involves the diligence to spot product opportunities and to
see them through to completion.
• The idea for the Apple Macintosh, for example, originated in the early 1980s when Steven Jobs and several other Apple employees took a
tour of a Xerox research facility. They were astounded to see computers that displayed graphical icons and pulldown menus. The
computers also allowed users to navigate desktops using a small, wheeled device called a mouse. Jobs decided to use these innovations to
create the Macintosh, the first user-friendly computer. Throughout the two and a half years the Macintosh team developed this new
product, it maintained an intense product/customer focus, creating a high-quality computer that is easy to learn, fun to use, and meets the
needs of a wide audience of potential users
 Tenacity despite failure
• Because entrepreneurs are typically trying something new, the possibility of failure exists.
Developing a new business idea may require a certain degree of experimentation before a
success is attained. Setbacks and failures inevitably occur during this process. The litmus test
for entrepreneurs is their ability to persevere through setbacks and failures.
 Execution Intelligence
• The ability to fashion a solid idea into a viable business is a key characteristic of
successful entrepreneurs. Commonly, this ability is thought of as execution intelligence.
In many cases, execution intelligence is the factor that determines whether a start-up is
successful or fails
• The ability to effectively execute a business idea means developing a business model,
putting together a new venture team, raising money, establishing partnerships, managing
finances, leading and motivating employees, and so on. It also demands the ability to
translate thought, creativity, and imagination into action and measurable results.
 Characteristics of Entrepreneurship

• The main features of entrepreneurship are as follows:

• (i) Economic activity: Entrepreneurship is primarily an economic activity because it

involves creation and operation of an enterprise as well as its expansion and
growth. For all this, profit earning is a precondition.

• (ii) Creative response to environment: Entrepreneurship is a creative response to the

volatile environment that continuously impacts its functioning. This response can be in
the form of business innovations, i.e., introduction of something new with
commercial value.
• Goal-oriented activity: Entrepreneurship is undertaken for economic gains, i.e.,
to earn profits. Also, it has an inherent goal of making a social impact. The
entrepreneur earns profits through customer satisfaction.

• A function of risk-bearing: Risk is an inherent and inseparable element of

entrepreneurship. An entrepreneur assumes risk in the hope of earning profits
when the business turnover exceeds its expenses, i.e., rent, salary and wages,
interest and other recurring and non-recurring expenses. However, in pursuit of
profits there is possibility of loss also.
• An organising function: An entrepreneur brings together various factors of
production. He coordinates and controls the efforts of all the persons engaged in
his enterprise. He harnesses land, labour, capital and other resources for the
benefit of society. Therefore, an entrepreneur is an organisation builder.

• Gap-filling function: The gap between human needs and the available
products and services gives rise to entrepreneurship. An entrepreneur identifies
this gap and takes necessary steps to fill it. He introduces new products and
services, new methods of production or distribution, new sources of inputs and
new markets for this purpose.
• Dynamic process: Entrepreneurship thrives on changes in the environment which bring useful
opportunities for business. Flexibility is the hallmark of a successful entrepreneur.

• Optimum use of resources: An entrepreneur assembles all inputs, namely, land, labour and
capital. He works on them and arrives at the most productive combination that will provide
society the much needed goods and services.

• Managerial skill and leadership: The skill to manage and lead are the most important
facets of entrepreneurship. An entrepreneur must possess ability to lead and manage resources
and situations. He must be able to influence behaviour of people. All this requires extraordinary
management competence including interpersonal skills.
Evolution of Entrepreneurial class in India

.
• Phase I: Ancient Period Entrepreneurship
• Phase II: Early Pre-Independence Period (before 1850) Entrepreneurship
• Phase III: Late Pre-Independence Period (between 1850– 1947)
Entrepreneurship
• Phase IV: Post-Independence Period (1947 onwards) Entrepreneurship
 Phase I: Ancient Period Entrepreneurship

• Pre-vedic and vedic period and Harappan and Mohenjodaro civilisation stand as testimony to
the fact that entrepreneurship was flourshing in India during the ancient times.

• According to Manusmriti, “People belonging to Vaisya caste were regarded as

entrepreneurs who were specialized to maintain livestock, to give charity, perform
sacrifices, study scriptures, undertake business and banking”. Hence, entrepreneurship as an
occupation was followed mostly by Vaisya caste. During the early medieval period also there is
enough evidence to suggest the application of technical knowledge in water use.
 Phase II: Early Pre-Independence Period (before 1850)
Entrepreneurship

• Prior to 1850, though agriculture was the most-popular livelihood for a large Indian population, the occupational
scene was also marked by the manufacturing of handicrafts, metal works, stone carving and jewellery
designing, etc. During this period entrepreneurship was mainly carried by some specific communities
including Banias, Parsis, Gujaratis and Chheriars.

• The spirit of entrepreneurship in the country was severely hurt by the colonial policies of the British Raj.
Through its exploitative polities, Britain reduced Indian economy, from a land of entrepreneurs to merely a
supplier of raw materials feeding English machines and a consumer market in demand of British finished
products.
 Phase III: Late Pre-Independence Period (between 1850– 1947)
Entrepreneurship

• This period witnessed rapid industrialisation of India mainly because of introduction of railways in 1853. The favourable industrial climate paved way for
entrepreneurship. The construction of roads, railways, ports and other infrastructural projects, though taken up by British government to meet its selfish ends also
started benefitting the entrepreneurial class in India. During this period, the Parsi community, by associating itself with the British laid the foundation of
manufacturing entrepreneurship in India. The enterprising Parsis, Gujaratis and Marwaris known for their locational mobility started setting up
business ventures in Bombay, Calcutta and Madras.

• Another major factor that led to the growth of Indian entrepreneurship during this period was the Swadeshi Movement (1905). The movement that
encouraged use of Indian made products and boycott of foreign goods emerged as a significant instrument for promoting entrepreneurship in the country.

• A number of famous Indians got inspired by the movement and had set up their own big industrial ventures. Jamshedji Tata, P.C. Roy and V.O. Chidambaram Pillai
are few important names.
• ‘Managing Agency System’ that emphasised separation of ownership from management of business through
the formation of joint stock companies was also popularised during this period. This system was initiated and
glorified by Sri Dwarkanath Tagore. The Indian business community also worked on finding new methods of
production, new sources of raw material, new products and new markets. Industries such as cement, sugar,
cotton textiles, coal, iron and steel and paper experienced growth and provided a further push to
entrepreneurship. Parsis, Marwaris and Gujaratis emerged as more enterprising class of the country during
this period (1850– 1947).

• However, the Indian entrepreneurial scene was still very discouraging due to the lack of technical and
vocational education that caused shortage of technical manpower and managerial skills. In view of this, Tatas
were forced to employ foreign technicians and managers.
 Phase IV: Post-Independence Period (1947 onwards) Entrepreneurship

• On independence, the Government of India identified the need for rapid industrialisation
and started working in this direction by adopting a mixed economy system that assigned an
equally important role for public and private sector enterprises. During the middle of 20th
century Marwari community emerged as big investors and industrialists owning more
than 60 percent of Indian industries. Major entrepreneurial efforts were made after
independence that included setting up of cement factory in Orissa by the Dalmia group in
1947 and the Rayon mill at Gwalior by the Birla group in 1964.
• With the introduction of Industrial Policy Resolution of 1956 that stressed the need for
rapid industrialisation resulting in the creation of an encouraging socio-economic
environment, entrepreneurship in India acquired new dimensions. New communities slowly
started entering into the field of entrepreneurship. This spread of entrepreneurship across
communities and classes happened due to infrastructural development, foreign collaboration,
technical know-how, expansion of vocational and technical education, expert promotion, import
substitution and a favourable policy of Indian government on entrepreneurship.
THEORIES OF ENTREPRENEURSHIP
 THEORIES OF ENTREPRENEURSHIP

• Schumpeter’s Theory of Innovation and Economic Development

• David McClelland’s Theory of Achievement Motivation
• Peter Drucker’s Theory of Entrepreneurship
• Harvard School Theory
• Theory of Profit
• Theory of Adjustment of Price
 THEORIES OF ENTREPRENEURSHIP

• Schumpeter’s Theory of Innovation and Economic Development

Economic development takes place when the real income of a country increases over a
period of time and such increase is largely the outcome of entrepreneurial activity. This
is the basic idea presented by Joseph Schumpeter (1883– 1950), the Austrian Economist.
According to Schumpeter, economic development is the result of new combinations of
entrepreneurship termed as innovation.
He termed the entrepreneur as highly-talented person with a strong desire to innovate,
thus, always striking new combinations or enterprise. These may be new goods or
services, production methods, markets, sources of supplies or new organisations providing
a remarkable boost to the economy.
The theory highlights the following features of entrepreneurship:

• Entrepreneurship leads to economic development: According to Schumpeter, a nation to progress

economically, must innovate and the business organisations must indulge in creating value for their economic
pursuits.
• Innovation and invention are different concepts: Invention means creating new things and innovation means
application of new things into practical use. An innovator, by using the invention creates new business
combinations for producing and distributing goods or services, and thus, makes profits.

• Entrepreneurship represents a situation of disequilibrium: Entrepreneurship is a dynamic exercise that

always keeps itself away from mundane business activities performed repeatedly to reach state of equilibrium.
Most businesses prefer to follow a pre-defined and pre-tested routine, whereas an entrepreneur experiments
with new and creative combinations by performing special kind of function.
• Individual specific small scale entrepreneurial activity must be scaled up and taken to long time horizons:
Though the innovative entrepreneur represents a vigorous type of enterprise in itself, his lone individual efforts
are not enough to produce mega results. For more visible and effective changes small scale needs to be
converted into large scale and short time horizons to long-term horizons. This is essential to achieve substantial
transformation of the economy.
Schumpeter tries to explain entrepreneurship with the help of three corresponding pairs of opposites:

• By mutually opposing processes: On one side is circular flow, i.e., routine work reaching
equilibrium, while on the other side, is plunging into new economic channels.
• By mutually opposing situations and facts: It means referring to existing data and statistics and
at the same time dealing with market dynamics that may undermine the existing statistics.
• By mutually opposing conduct: The two important business individuals are termed as manager
and entrepreneur. They are also found to be mutually opposing characters in business.
Schumpeter’s theory of entrepreneurship is criticized on the following grounds:
• The theory places too much emphasis on innovation while ignoring the risk factor, opportunities offered
in the country and the entrepreneur’s organising capacities. In reality, the entrepreneurial activity, as
opposed to Schumpeter’s view is mostly carried at small and micro level in the beginning. It is so as the
markets are imperfect, capital is in short supply and skilled labour is scarce. Though Schumpeter separates the
entrepreneur from capitalists and workers, he does not explain the reason for difference in entrepreneurial
talent pool across nations.
• Schumpeter’s theory does not take into account the existence of imitative entrepreneurs, mostly
operating in underdeveloped and developing countries with their traditional technology. In such countries,
due to imperfections and scarcities, ‘imitator’ entrepreneurs are more in need than the ‘innovator’
entrepreneurs.
• Schumpeter does not also consider second generation heirs of an already existing business as entrepreneurs. In
family-owned businesses, the subsequent generations also undertake entrepreneurial activity. It is essential for
the sustenance and growth of their businesses.
 David McClelland’s Theory of Achievement Motivation

• Entrepreneurial motivation is viewed as a set of drives that vary in strengths. These motives
are— need to achieve, need for power and need for affiliation. The theory of achievement
motivation was developed by David McClelland (1917– 1988) and his associates in late 1940’ s
The theory describes three motivational aspects of entrepreneurial behaviours: (i) Need for achievement
or ‘n Ach’: Achievement, here, means willingness to do things in a perfect manner, thus, moving
towards success in terms of economic pursuits. Need for achievement is always high in people with
entrepreneurial mindset. If that is so, there is a clear need for inculcating and nurturing achievement
motivation in people for developing their entrepreneurial talent. The need for achievement can be
aroused through proper training and experience.
For this purpose David McClelland conducted a series of experiments with groups of businessmen in
Malawi, India and Equador. These experiments included a series of training programmes.
• Need for power or ‘n Pow’: Need for power is the desire to lead and direct by
influencing behaviour of group members. An entrepreneur believes in earning a
position of authority and command on the group he leads. He wants to engage himself in
directing his subordinates while exercising his status and power. Thus, need for power
seems to be high in entrepreneurs. They derive satisfaction by influencing people and
directing authority.
• Need for affiliation or ‘n Aff’: Need for affiliation is a social need that drives people to
be recognised as warm, affectionate, hospitable, friendly and popular beings. Though, for
an entrepreneur, this need is not predominantly high, yet it greatly helps him in
influencing the subordinates and other stakeholders in business. In his business
dealings an entrepreneur is always keen on maintaining long term pleasant, though
strategic social links. He strives to earn social support and popularity by respecting
others. At the same time, he expects others to shower love and respect on him.
 Limitations
The theory suffers from the following limitations:
1. The theory seems to draw too much focus on the motivational profile of
entrepreneur. Other behavioural dimensions like tolerance to ambiguity, problem
solving and creativity that add in building entrepreneurial character are not
highlighted.
2. The theory tends to rank the three entrepreneurial needs, with the need for achievement
being high, the need for power moderate and the need for affiliation being low.
However, these motivational strengths may show different patterns in different
entrepreneurs, depending upon their own personalities and preferences. So, weighing
and ranking of entrepreneurial motives is not correct.
 Peter Drucker’s Theory of Entrepreneurship

Peter Drucker’s Theory of Entrepreneurship Peter Drucker (1909– 2005) describes

entrepreneurship as a discipline that can be learned and practiced.
Drucker highlights major characteristics of entrepreneur and entrepreneurship
which are mentioned here:
1. An entrepreneur innovates and creates resources because there is no such
thing as resource until someone finds a use for something and endows
economic value to it.
2. This resource is an outcome of conversion of a material or combining of
existing resources in a new or more productive configuration. An entrepreneur
allocates resources to opportunities that are brought about due to change. He is
always in search of changes and devices ways to exploit them in creating
something new, different and valuable to the market that can enhance customer
satisfaction from a resource.
 Peter Drucker’s Theory of Entrepreneurship

3. While responding to change, he dissents against well established norms and

dares to break or upset it.
4. An entrepreneur shifts resources from areas of low productivity and yield to
areas of high productivity. There is risk of failure, but if he is moderately
successful, the returns should be more than adequate to offset the risk.
5. Entrepreneurship is equally important to small businesses and non-economic
institutions and its need is not confined to big businesses or economic institutions
only. This is evident in the foundation and growth of all types of organisations.
 Limitations
• Unlike other theories of entrepreneurship, the theory seems to be too much
generalised in its approach.
• The theory focuses on what the entrepreneur does while completely
ignoring his intuition. However, many times intuition proves to be more
powerful than a well designed and well defined theory.
 Harvard School Theory

• According to the Harvard School entrepreneurship comprises any purposeful activity that
initiates, maintains or develops a profit-oriented business in interaction with the
internal situation of the business or with the economic, political and social
circumstances surrounding the business.
• This approach emphasised two types of activities – the organisation or coordination
activity, and the sensitivity to the environmental characteristics that affect decision
making.
 Limitations
• Despite its stress on the human factor in the production system, the Harvard
tradition never explicitly challenged the equilibrium-obsessed orthodox
economic theory. This was challenged by the neo-Austrian School who
argued that disequilibrium, rather than equilibrium, was the likely scenario
and as such, entrepreneurs operate under fairly uncertain circumstances.
 Theory of Profit

Knight identifies the entrepreneur as a recipient of pure profit. Pure profit, according to him, with
regard to the entrepreneur, is bearing the costs of uncertainty. He identifies uncertainty with a situation
where the probabilities of alternative outcomes cannot be determined either by a priori reasoning or by
statistical inference. A priori reasoning is simply irrelevant to economic situations involving a unique event.

Knight argues that business uncertainty can be reduced through ‘consolidation.’ Consolidation is to
uncertainty what insurance is to risk; it is a method of reducing total uncertainty by pooling individual
instances. The elasticity of the supply of self-confidence is the single most important determinant of the level
of profit and the number of entrepreneurs.
 Theory of Adjustment of Price

• Kirzner, the adjustment of price is the main role of the entrepreneur. If the
wrong price prevails in the market, then an opportunity for profit is created
somewhere in the market if a frustrated buyer or seller is willing,
respectively, to pay a higher price or accept a lower one. e is scope for
profitable arbitrage between the two segments of the market.
• According to Kirzner, alertness to disequilibrium is the distinguishing
characteristic of an entrepreneur. Alertness enables some individuals to intervene
in the market by changing the price while other individuals simply respond by
changing their buying and selling plans in lieu of the new price.
 ENTREPRENEUR AND MANAGER

• Innovation: An entrepreneur is always an innovator as his job is to experiment with new

ideas. On the other hand, a manager runs the business on established lines and prefers to
maintain status quo.
• (ii) Venture creation: An entrepreneur creates and establishes a new enterprise. He identifies
and mobilises resources to implement his creative ideas. A manager only operates an existing
enterprise. He is concerned with the efficient use of resources to reach organisational goals.

• (iii) Risk bearing: An entrepreneur bears the risk of economic uncertainties arising out of an
enterprise. His personal investment sinks if the venture fails. A paid manager gets a fixed
salary irrespective of volume of economic returns of a venture. Thus, he undertakes no risk.
 ENTREPRENEUR AND MANAGER
• Reward: The rewards earned by an entrepreneur are always varying as they are subject to the
environmental uncertainties. A manager, being an employee gets fixed financial rewards.

• (v) Status: An entrepreneur is his own boss and enjoys an independent status. In contrast, a
manager is an employee and dependent on the owner.

• (vi) Education: Formal education is more important for a manager than for an entrepreneur as
entrepreneurship is more concerned with generating innovative ideas and application of creativity
in real life situations. However, formal education grooms a person to become a complete
entrepreneurial personality.
 TYPES OF ENTREPRENEUR

• Innovating entrepreneur:
• Adoptive or imitative entrepreneur:
• Fabian entrepreneur
• Technologist entrepreneur:
• Individual and institutional entrepreneur:
• Entrepreneur by inheritance:
• Serial entrepreneur:
• Social entrepreneur:
• Innovating entrepreneur: Commonly found in developed economies because of
heavy industrialisation, this type of entrepreneur is characterised by quick
assemblage of market information, aggressive experimentation and a clever
combination of factors of production. He is fast in introducing a new production
technique or a new product or entering a new market. As the environment for
entrepreneurship is congenial, he raises funds, assembles factors of production and
launches an enterprise.
• Adoptive or imitative entrepreneur: This kind of entrepreneur adopts
tested and successful innovations introduced by innovative
entrepreneurs with minor or no changes. An adoptive entrepreneur, thus,
does not innovate, rather he imitates the technology created by others. Such
entrepreneurs are required in underdeveloped and backward countries as they
contribute significantly to their development. Imitative entrepreneur helps in
improving the system with limited resources available. However, he faces
lesser risks and uncertainty than innovative entrepreneur.
• Fabian entrepreneur: He is least innovative or open to change in the
current set up of his work. He also lacks desire to follow the new business
methods introduced by other forward looking entrepreneurs. Fabian
entrepreneur is risk aversive and prefers to follow the path already taken.
• Technologist entrepreneur: This type of entrepreneur is a technically
qualified person eager to enter field of business. The basic reason for
him to start a business is to reap commercial benefit of his technical
invention, discovery and enterprise. However, he lacks knowledge of
business and after raising necessary capital, he seeks expert advice in
finance, production, marketing and other areas of business. His success
depends on his ability to transform technical knowledge into ongoing
production and regular marketability.
• Entrepreneur by inheritance: Family-owned businesses nurture such type
of entrepreneur. The successor in the family may become entrepreneur by
learning business techniques and skills. As he grows, he is trained and
groomed by the family to succeed in the line of business. In India, the
number of such entrepreneurs is very large as the business is generally
inherited by one generation from another.
• Serial entrepreneur: The objective of serial entrepreneur is to develop
businesses for selling it later at profit. He creates business, successfully
runs it for some time and eventually when the business expands into new
markets and reaches its prime, he sells it to cultivate high profits. After
making a sale, the serial entrepreneur again launches and expands another
enterprise to sell it for a profit. The same practice is repeated at intervals to
make substantial gains. Serial entrepreneurs are quite popular in developed
nations.
• Social entrepreneur: He is the most desirable kind of entrepreneur as he
brings about social progress combined with economic development.
Though each type of entrepreneur serves the society through innovation and
value creation, yet a social entrepreneur is known for his utmost
commitment to social transformation. He observes and analyses social
problems and sets up his venture to offer solutions to such problems.
Though he makes monetary gains and sustains the business, he considers
elimination of social evils as true reward for his efforts.
Intrapreneurship
 Intrapreneurs
• Intrapreneurs are self-motivated, proactive, and action-oriented people who take the
initiative to pursue an innovative product or service.
• Employees, such as marketing executives, internal professionals or perhaps those engaged in a
special project within a larger firm, are encouraged to behave as entrepreneurs, even though they
have the resources, capabilities and security of the larger firm to draw upon.
• Eg: Another example could be 3M, who encourage many projects within the company. They give certain
freedom to employees to create their own projects, and they even give them funds to use for these projects.
(In the days of its founders, HP used to have similar policies and just such an innovation-friendly atmosphere
and intrapreneurial reputation.) Besides 3M, Intel also has a tradition of implementing intrapreneurship.
Google is also known to be intrapreneur friendly, allowing their employees to spend up to 20% of their time to
pursue projects of their choice.
 Women Entrepreneurship

• Participation of women as industrial entrepreneurs is comparatively a

recent phenomenon.- commencing from 70s onwards.
• Women own only 14% of all enterprises in India.

• 82% of these women-led enterprises are micro units, run as sole

proprietorships, while most are concentrated in the informal sector.
 Segments of Women Entrepreneurs
• 4 segments of women entrepreneurs exist:
• Self help groups – Those who are well served and mentored by
microfinance institutions.
• Grass root entrepreneurs – Those who are driven by a need to augment the
family’s finances especially to secure their children;s future. With turnover
aspiration of five lakh a year, they are very work focused . They are hungry
for formal skills and training and can clearly articulate what they want to
learn that will help them earn more.
• Mid-rung entrepreneurs – They are driven by a need to build
reputation, become known and improve quality and satisfy creative
instincts. Mostly graduate , they typically have garment shops, poultry farms,
export businesses etc. With turnover aspirations from 50 lakh to 1 crore.
Their biggest need is for know how to take the quality of their business to
the next level.However they do not want to scale too much.
• Upper crust – Drawn from the top most social class, very well educated,
with businesses like export houses , travel agencies, they aspire to turnover of
more than 5 crores.
 Kiran Mazumdar-Shaw - Biocon

• Kiran Mazumdar-Shaw is a billionaire women entrepreneur in India. She is the

chairperson and managing director of Biocon Limited, a biotechnology company based in
Bangalore, India and the former chairperson of Indian Institute of Management,
Bangalore. Named among TIME magazine’s 100 most influential people in the world,
she is recognized as a global thought leader for Biotechnology. Under her stewardship.
• Falguni Sanjay Nayar (born 19 February 1963) is an Indian billionaire
businesswoman,[3] who is the founder and CEO of the beauty and lifestyle
retail company Nykaa, formally known as FSN E-Commerce Ventures
which is an acronym of her own name
 Upasana Taku - Mobikwik
• MobiKwik was founded in 2009[11] by husband and wife team Bipin Preet Singh and
Upasana Taku.
• MobiKwik is an Indian payment service provider founded in 2009 that provides a mobile
phone-based payment system and digital wallet. Customers can add money to an online
wallet that can be used for payments. In 2013 the Reserve Bank of India authorized the
company's use of the MobiKwik wallet,[4] and in May 2016 the company began providing
small loans to consumers as part of its service.[5]
 Vandana Luthra - VLCC
• Vandana Luthra (born July 12, 1959) is an Indian entrepreneur
and the founder of VLCC Health Care Ltd, a beauty and wellness
conglomerate[1] represented in Asia, the GCC and Africa.
 Richa Kar – Zivame
• Founded by Richa Kar in 2011, Zivame is India's leading online
lingerie store which offers a variety of 5,000 styles, 50 brands and
100 sizes with a valuation of $100 million.
 Challenges Faced by Women Entrepreneurs
Gender bias

• Even though society has evolved and men and women are called equal, a gender bias still
exists. Despite the calls for women empowerment and female leadership, it is difficult for
women to prove their mettle and get recognized for their efforts. Gender inequality, pay
gap, and bias are common blockades that prevent women entrepreneurs from reaching the
heights they deserve.
 Challenges Faced by Women Entrepreneurs

• Accessing funding
Not all startup founders look for potential investors to help get their
businesses off the ground, but those who do know how difficult the
pitching process can be. Raising capital is even more difficult for
women-owned businesses.
 Risk-averse nature

• Women, by nature, have an aversion to taking risks and

experimentation. These two aspects are essential in starting and running a
business. Snap decisions, experimental strategies, innovative changes,
etc., are required to make the business stand out from the competition. Not
many women tend to master these arts as they involve risk and
uncertainty, traits that women tend to shirk away.
 Challenges Faced by Women Entrepreneurs

• Gender Barriers. ...

• Economic Challenges. ...
• Legal and Regulatory Hurdles. ...
• Work-Life Integration. ...
• Networking and Mentorship. ...
• Access to Resources and Technology. ...
• Overcoming Mental Barriers
 Mahila Samriddhi Yojana
• Ministry - Ministry of Social Justice and Empowerment

• Benefit of the Scheme - It is a Micro Finance scheme for women with a rebate in
interest. Financial Assistance up to the cost of Rs. 1,40,000/- is provided.
• Eligibility Criteria - Women belonging to backward classes, as per the government
norms, and whose family income is less than Rupees three lakhs per annum.
 Skill Upgradation and Mahila Coir Yojana
• Ministry - Ministry of Micro, Small and Medium Enterprises
• Benefit of the Scheme - It is an exclusive training programme aimed at the skill
development of women artisans engaged in the coir industry. Two months of training in
coir spinning is imparted through this programme. The candidates who undergo this
training are given a stipend of Rs. 3000/- per month. The trained artisans under the
scheme are encouraged to avail assistance through Prime Minister’s Employment
Generation Programme (PMEGP) scheme to set up coir units.
 Women Entrepreneurship Platform (WEP)

• As an aggregator platform,WEP hosts information and services relevant to women entrepreneurs. It

enables key partnerships to bring crucial content, workshops, campaigns, and other avenues of learning
and growth to its users from trailblazers in the industry.
Through its partnerships, services are provided in 6 main focus areas
• Community and Networking
• Funding and Financial Assistance
• Incubation and Acceleration
• Compliance and Tax Assistance
• Entrepreneur Skilling and Mentorship
• Marketing Assistance
 STRATEGIES FOR THE DEVELOPMENT OF WOMEN ENTREPRENEURS

1. Encouraging Home-based Businesses By operating her business from

home, a woman can coordinate her household and business responsibilities
more easily, and be on the path to achieving work–life balance. Widespread
Business Education Workshops, counselling services, vocational training,
2. Widespread Business Education Workshops, counselling services,
vocational training, seminars, and conferences should be organized
frequently for women entrepreneurs. They should undergo training in
effective communication and
 STRATEGIES FOR THE DEVELOPMENT OF WOMEN ENTREPRENEURS

• management skills and practices to handle human resources as well as in the legal
aspects of running a business. Non-governmental organizations should be
involved in training women entrepreneurs at the grassroots level. Efforts should be
taken to include entrepreneur education at
3. Better Financial Assistance- A separate and independent bank for women along
the lines of Venezuela’s Women’s Development Bank (WDB) should be established
in our country to provide low-interest loans to women. Procedures for financial
assistance by banks and government organizations should be simplified. Women
inspectors, if available, should be asked to inspect women’s enterprises.
 STRATEGIES FOR THE DEVELOPMENT
OF WOMEN ENTREPRENEURS
4. Wider Access to Technology Women entrepreneurs should acquire
relevant training in the use of technology and in the functioning of their plant
and machinery.
• Group entrepreneurship is a collaborative approach to enterprise creation that
benefits a community. It is a viable option for the weaker sections of society and
can help women overcome their poverty.
• A scheme for group entrepreneurship is the self-help group (SHG), which enables
the rural poor to earn their own livelihood while participating in the process of
development.
• A self-help group is a small, voluntarily-formed, economically-homogeneous, and
significant group of rural/urban poor who mutually agree to contribute to a
common
 Mode of Operation of SHG
• In an SHG, women are organized into small groups. The group formation helps to
generate peer group support and solidarity. The group meets regularly, initially for
awareness generation. After selecting a project, some members of the group attend
training. At this stage, regular and timely attendance at meetings becomes very
important. The quantum of weekly saving is also decided upon at this stage and
each member is expected to contribute and participate. The initial contribution is
usually made by an NGO, a funding agency, or the government. SHGs directly
help women increase their income by providing loans for productive enterprises.
There are also other indirect ways in which SHGs can help increase income. It
needs to be mentioned that the SHG’s involvement in self-employment activities
certainly contributes to group entrepreneurship at the grassroots level.
 INSTITUTIONS SUPPORTING WOMEN ENTREPRENEURS IN
INDIA

1.Consortium of Women Entrepreneurs of India (CWEI) CWEI is a registered

civil society and a voluntary organization that works for the economic empowerment
of women in India and all over the world, and aims to eradicate poverty and
unemployment among women. It consists of NGOs, voluntary organizations,
self-help groups, institutions and individual enterprises, both from rural and urban
areas, which collectively support and benefit from the activities taken up by the
consortium. CWEI has a representation in policymaking at the Ministry of Small-Scale
Industries (SSI), Government of India. It is based in New Delhi and acts as a
springboard for promoting entrepreneurship at the grassroots
2. Federation of Indian Women Entrepreneurs (FIWE) FIWE was founded in
1993 following the decisions taken at the Fourth International Conference of Women
Entrepreneurs held in Hyderabad in December. Today, it is one of India’s premier
institutions for women and is completely devoted to entrepreneurship development. It
is a formation of an umbrella group of local organizations with a large membership
base of 15,000 individual members/professionals and 28 member associations spread
throughout the country. Small-scale entrepreneurs account for approximately 60
percent of FIWE combined membership, with large firms representing 15 percent and
the remaining being microentrepreneurs.
3. FICCI Ladies Organization (FLO) FLO is the women’s wing of the Federation
of Indian Chambers of Commerce and Industry (FICCI)—the apex body of industry
and commerce in India. FLO was formed in 1983 as a nationallevel forum for women
with the objective of “women’s empowerment.” FLO aims to promote the
socioeconomic advancement of women by promoting entrepreneurship and
professional excellence. It has established chapters in major cities all over India, with
the head office in Delhi. The members comprise entrepreneurs, professionals, and
corporate executives. FLO conducts seminars, workshops, panel discussions, training
programmes, and conferences on a wide range of subjects to empower women
entrepreneurs and professionals.
 Mobility of Entrepreneurs

• Geographical mobility refers to the movement of entrepreneurs from one

location to another.
• An entrepreneur’s drive and initiative to move to alternative place is the result
of his desire to find better business opportunities.
• In a country, only a small percentage of entrepreneurs tend to be mobile and
if the number of entrepreneurs is limited and that too is unevenly distributed,
there will be strong regional imbalances in industrial development. This
explains the need for locational mobility for economic growth.
• Further, a nation’s all-round development in economic, political, educational
and cultural fields promotes locational mobility.
 Factors affecting entrepreneurial mobility
• The degree of entrepreneurial mobility depends upon the following factors:
• Own resources of entrepreneur: Locational mobility means a higher
resource requirement, thus, a higher risk. As in the initial stages of a
business resources are limited, an entrepreneur has no choice, but to operate
within a limited geographical area. When he gets a greater access to
resources, he may think of assuming higher risk. He can now avail better
information, make better contracts and can operate more successfully within
a wider area. Thus, larger the resources, greater the locational mobility and
vice versa.
• (ii) Language: Knowledge of local language increases probability of
locational mobility of an entrepreneur. He would prefer to move only to
those areas where he can converse well with the customers, suppliers,
employees and concerned authorities. Obviously, a lack of knowledge of
local language hampers locational mobility.
iii)Experience: An experienced entrepreneur with a sufficient exposure to
environmental uncertainties and adversities is likely to be more mobile than a naive
business person. The uncertainties and risks associated with business help him learn
skills to be applied in different areas of business including production, marketing,
finance and human resource.

Iv) Aspiration for growth: Due to non-availability of land in the immediate vicinity,
they may move to distant places that may offer plenty of land at cheaper prices.
• V) Political system: A fair amount of political support from local
authorities, state and Central Government boosts locational mobility.
Entrepreneurs are likely to move to places that offer a favourable business
climate. Further, places with hostile political set up may also cause mobility
of entrepreneurs.
• Vi) Support of government: Government support in the form of general, fiscal
and financial incentives creates a favourable business climate and attracts
entrepreneurs to specific regions. Tempting government policies on excise duty,
Foreign Direct Investment and labour laws encourage entrepreneurs to locate their
units in such regions.
• (x) Attraction of availability of inputs: Shortage of various inputs like power,
raw material supply and poor infrastructural facilities would adversely effect
the chances of entrepreneurial mobility to such areas. Regions with abundance of
these inputs would attract entrepreneurs from existing locations.
Entrepreneurship in Family Owned Businesses
 Entrepreneurship in Family Owned Businesses

• A family business is a commercial organization in which decision-making is influenced

by multiple generations of a family, related by blood or marriage or adoption, who has
both the ability to influence the vision of the business and the willingness to use this
ability to pursue distinctive goals. They are closely identified with the firm through
leadership or ownership
• Family business is the oldest and most common model of economic organization.
• Some of the world's largest family-run businesses are Walmart (United States), Volkswagen
Group (Germany), Samsung Group (Korea) and Tata Group (India).

• In a family business, two or more members within the management team are drawn from the
owning family. Family businesses can have owners who are not family members. Family
businesses may also be managed by individuals who are not members of the family.
 VARIOUS TYPES OF FAMILY BUSINESSES

• Family-owned business: It is a for-profit enterprise owned by members of a single

extended family.
• A family-owned and managed business: It is a for-profit enterprise owned by members
of a single extended family. The business also has the active participation of at least one
family member in the top management of the company. This enables family members to
set policies and objectives and implement them.
• A family-owned and led business: It is a for-profit enterprise owned by members of a
single extended family. The business has the active participation of at least one family
member in the top management as well as on the board of directors of the company. This
enables family members to set the company’s direction, culture, and strategies.
 FAMILY BUSINESS MODELS

• There are four broad models of Family Businesses

1.Captain
• 2. Family team
• 3. Professional family
• 4. Family Enterprise
 FAMILY BUSINESS MODELS

1. The captain model: This model is characterized by low family and low
business complexity. They are small companies or shops owned and run by
their founders. Here family-business relations revolve around one person. This
individual, The Captain, is the one who controls both family and business.
Both family and business are seen as units that need a leader in order to develop and
perform. The majority of small family business follow The Captain model. This
model works well so long as the captain’s traits meet the business’ needs. The
complexity profile does not allow separation of ownership from management and this
model can be replicated successfully into the future, provided the next generation
also has the same competencies. The example of this model is Mom and Pop shops.
 FAMILY BUSINESS MODELS

2. Family team model: The Family Team model is characterized by low business
orientation and relatively high family orientation. Such families both run and work in
the business. They are part of the workforce, not just the management. The family
orientation comes first. Family effort makes the business succeed and therefore the family
succeeds as well. This model can be replicated as long as the group maintains high levels of
self-accountability and the family members are comfortable working together.
Example of this model is service businesses (restaurants, hotels shops) or professional services
(chartered accountants, lawyers, dentists, and so on.)
 FAMILY BUSINESS MODELS

3. Professional family model: This model is characterized by low family orientation and
high business orientation. The family manages the company in a professional way.
Professional behavior is the driver. The company needs to have a minimal complexity to make
management a requirement. Such family businesses have fairly well-developed structures in
terms of governance, family-business differentiation, management practices, communication,
and succession.
• The example of this model is Dabur India Limited.
 FAMILY BUSINESS MODELS

4. Family enterprise model: This model is characterized by high family orientation and
high business orientation. This model is the most sophisticated of all. It tends to dominate
in family businesses that are complex in both family and business terms. The mental model of
these families is that they are owners of the companies and therefore responsible for the
company’s competitive development. The family sees the professionals it hires as working for
them. The managers, including the CEO, are seen as employees.
The example of this model is Godrej.
 Merits of Family-owned Business

(i) Long-term view: One of the major objective of initiating a family-owned

business is to continue it over successive generations. The business is handed
over to the children who are expected to develop and take it to next level of success.
This long-term view helps the family to ignore narrow, short time and personal
interests for the overall well-being of the business and the family.
2)Commitment to quality: In its pursuit to achieve higher benchmarks of success,
the family constantly evolves growth plans and targets which can be achieved only by
fixing tough quality standards. Deliverance of a premium quality product or service
not only enhances goodwill of business, but also speaks about the family and its
values.
 Merits of Family-owned Business

• (iv) Employee loyalty: As the FOB tends to do righteous to its employees, it

expects and values loyalty and commitment from the employees. In this
pursuit, the family does not mind to go an extra mile. This approach provides
the advantage of building a more stable leadership teams of the employees.
• Family members understand each other better: Thick family ties result
in the matching of wavelengths among members. The family members
know each other better and understand temperaments, attitudes and
emotions that flow within the family.
 Merits of Family-owned Business

• (viii) Emphasis on return on investment: One important thing that keeps the
family-owned business going even during turbulent times is the focus on bottom
line or the profit targets. The business fixes an ROI and every investment made and
every expense incurred is viewed as an investment in terms of its payback.
• (ix) Better long term performance: In its initial stages the family-owned business
may not appear promising due to uncertain demand, dwindling revenues and
profits and a resource crunch. However, with the family’s positive contribution,
motivation and push, it often starts showing inspiring results. All participating
members understand the value of their stakes and rewards that always float within
the family only. This results in steady improvements in work quality leading to
higher returns.
 Limitations of Family-owned Business

• Overlapping of roles: Numerous family relations may exist in various

business roles, conflicts often arise in FOBs due to mesh of relations and the
overlap of roles. Personal interests, differences or rivalries may get
reflected at work place to the detriment of the business.
To overcome the dysfunction of role overlapping family members must keep
lines of communication open, make use of strategic planning tools and seek
outside assistance when needed.
 Limitations of Family-owned Business

• Problems for non-family employees: The employees hired from outside

may find it difficult to work in an atmosphere vitiated by family conflicts.
Working in a family-owned business may also mean limited opportunities
for advancement as special treatment is generally accorded to the family
members.
• An easy solution to this problem is to follow a professional approach and
keep family issues and conflicts away at work.
 Limitations of Family-owned Business

• Salaries and compensation: Since overrating of one’s contribution in

business is a common problem in family-owned businesses, there may be
members demanding highest salary cheques.
Another frequently encountered challenge is division of profits among
participating family members. They often forget the importance of allocating a
relatively large percentage of profit for future expansion.
 Limitations of Family-owned Business

• Selection of successive leader: One important issue relating to

family-owned business is appointing the next business leader in the event of
retirement or death of the present head. Lack of a well-defined future
business plan, absence of an open family discussion and the reluctance of
current generation to step down to make way for the change of guard can be
the major reasons for downfall of a business empire. A well-established
succession plan and its timely implementation may save the family-owned
business from future succession-related problems.
• Disintegration of family business into smaller units: In FOBs, it is not
uncommon to find integrated and well-knit families breaking into
smaller units and deciding for the division of business. This may happen
due to the absence of proper understanding among family members, lack of
regard and respect for merit and family values, and a desire to keep business
interests above personal motives.
• However, a continued existence of FOB over multiple generations may also
make division of business inevitable as well as desirable.
 Limitations of Family-owned Business

• (xii) Uncertainty of continuity: The successive generations may not be fit to

take charge of existing business or may simply not be willing to continue
with it. Besides this, limited business growth may also make the absorption of
successive generations in the same business difficult. Expansion of business
coupled with sufficient grooming of youngsters is essential for the continuity
of business. Selling of business to outsiders can also be a viable solution.
 GUIDELINES FOR AN EFFICIENT MANAGEMENT OF family-owned
BUSINESSES

1. Defined hierarchy for decision-making:There should be a clear cut, unquestionable,

pre-defined and formalised hierarchy for the flow of authority and command.
2. Alignment of social values: Healthy family traditions combined with socially acceptable
norms, values and morals would help build a desirable character of family members and
would further strengthen family ties.

3. An established plan for succession: A well thought over and time lined scheme
ensuring successful continuation of business should be put in place. The plan must be
drawn with utmost care keeping in mind the interests of business. The succession plan
should be devoid of personal preferences, prejudice and emotions. Only the deserving
and meritorious members should be allowed to take future charge of business
 Problems Faced By Entrepreneurs
1. Lack of seed capital: Procurement of initial funding which is crucial to give a
kick-start to a business is a major hurdle. Also, called early stage funding, front-end
money, front money or start-up capital, seed capital is mainly of three types—
angle funding, own funding and crowd funding. Seed capital is required to
support a number of business activities including market research, product research
and development and business plan development. It is comparatively small amount of
money expected to be contributed by lenders or institutional investors. However, in
developing nations these investors are hesitant in providing seed capital because
start-up is considered the riskiest stage in a firm’s life cycle with the highest chance of
failure. Banks and venture capital investors view seed capital as ‘at risk’ investment
because the business is not fully functional and has no track record.
2. Lack of skilled and productive labour:
The real problem concerning labour is its poor quality rather than
inadequate quantity. In developing countries a comparatively cheaper labour
though appears as a major advantage, the fact is that cheap labour is often
unproductive or has very low productivity. This unskilled and less productive
labour acts as an important problem in the success of an enterprise.
3. Shortages and delays in raw material supply: Entrepreneurs can emerge and
succeed only in those economies that provide for sufficient and timely supply of raw
materials.
Many times great entrepreneurial ideas and attempts fail due to uncertainties regarding
raw and semi finished materials. Lack of a reliable and durable tie-up in the raw
material supply chain may pose a major threat to entrepreneurs. In view of this
it is common for them to resort to backward integration or develop other ways and
means for an assured and timely raw material supply or import the raw material from
other countries.
4. Non-availability of modern technology:
In developing nations, access to world class technology is a common problem.
Use of old and outdated technology by entrepreneur not only limits the scope
of his growth but also causes environmental pollution and accidents at work.
Technology related challenges are mostly faced by all entrepreneurs in the initial
stages when they are struggling to establish their ventures.
5. Legal constraints: A plethora of complicated laws and bylaws, rules and orders
enacted frequently by the union and state governments discourage people take up
entrepreneurship. Further, quite often these rules and regulations are not uniformly
applied and are subject to frequent amendments. An entrepreneur is personally liable
for due compliance with these legal provisions and a failure to conform leads to civil
and criminal liability. An entrepreneur who is mostly indulged in creativity and
innovation is likely to sometimes skip or overlook some of the latest legal
developments. These may relate to the ownership form, industrial licence, project
registration, environment protection, building construction, trade licence, employee
welfare, labour laws or consumer rights.
 RISKS OF ENTREPRENEURSHIP

• Risk of getting paid:

• (ii) Production risks:
• (iii) Market risks:
• (iv) Working capital risks:
• V) Assets risks:
 RISKS OF ENTREPRENEURSHIP

1. Risk of getting paid: Unlike a fixed salaried job entrepreneurship

guarantees no regular income. The earnings are sporadic and fluctuate with
time. There are periods when after paying for expenses, no income is left for
the entrepreneur. This situation arises due to unexpected costs or lower than
expected sales or occurrences of any other unforeseen event. The income of
business will determine how and when an entrepreneur gets paid.
 RISKS OF ENTREPRENEURSHIP

2. Production risks: Losses may occur by machinery break down, inefficient

labour, sudden labour turnover, non-availability of raw materials, supply of
faulty materials and tools or weak quality control.

3. Market risks: These risks may be in the form of demand-supply mismatch,

loss due to bad debts, selection of wrong distribution channels or promotional
tools. Also, variations in currency value may pose a serious market risk.
 RISKS OF ENTREPRENEURSHIP

• 4. Working capital risks: A reduction in sales reduces the inflow of cash,

preventing repayment of debts and in extreme cases causing bankruptcy. Under
such conditions a business fails to raise funds required to meet its working capital
needs.

• 5. Assets risks: There is a risk of loss of firm’s assets and earning capacity through
destruction of its property by fire, earthquake or other natural calamities. Also, a
fall in the value of goodwill is unavoidable in the event of losses.
 Politico-legal Factors

• (i) Political stability: Unstable political conditions are created when a

country is ruled by a weak government or when the government policies
change frequently. This results in loss of investors’ confidence as they fear
for safety of their investment. They prefer to pull out their investments and
the perspective entrepreneurs feel discouraged to start business in such
politically weak countries.
• (ii) Government’s support to economic development: A government can
create a positive business climate through infrastructural development,
industrial parks and Special Economic Zones (SEZs). Good roads, power,
communication facilities and a tight check on corruption and bureaucratic
delays in obtaining such utilities encourage entrepreneurship in a country.
iii) Labour and environmental laws: While most businesses accept laws related to
the safeguard of labour rights and the environment, some countries have retrogate
laws that make their compliance very difficult, lengthy and time consuming. Such legal
hurdles act as barriers to entrepreneurship.
iv)Entry barriers: These are factors that prevent startups from entering a particular
market by imposing a cost element on new entrants. They discriminate these startups
against existing players that enjoy strong brand loyalty and an easier access to financial
resources, desired distribution channels and raw materials. Thus, they restrict
competition and promote monopolies in a market. In order to promote
entrepreneurial environment the impact of these barriers must be minimised.
 3.1.2 Economic Factors

1. Economic system:
It is clear that capitalism provides sufficient boost to entrepreneurial
environment. Countries that support principles of capitalism nurture new
ventures.
2. Tax structure and incentives: The tax structure of a country is divided into
two major categories— direct and indirect. In order to increase the investment
potential and induce entrepreneurs to undertake industrial activities,
governments adopt policies of tax exemptions and tax holidays.
3. Rebates: Besides exemptions, special categories of industries may be provided
rebates on raw-material purchase and imports. Therefore, rebates also influence
possibilities of entrepreneurship by facilitating production process of small, medium
and large industries.
4. Import and export duties: Concessions and exemptions on import duty act as a
protective cover and help entrepreneurs develop new ventures amidst competition
and market pressures. Similarly, exemptions in export duties stimulate
entrepreneurship as they induce entrepreneurs to take initiative on innovative
enterprises and add value to the products before export.
5. Chamber of commerce and industry: They greatly influence the
entrepreneurial environment by organising training programmes, seminars,
conferences and workshops that benefit entrepreneurs.
6. Ecosystem for startups: Countries, especially those with tough business
environment, need to assure a favourable startup ecosystem for entrepreneurs.
The business adversities can be balanced by support organisations with
sufficient provision for incubators and accelerators.
7. Financial institutions: These include development financing institutions,
commercial banks, state finance corporations, industrial development
corporations, money market and capital market. Financial institutions provide
monetary assistance to the entrepreneurs in setting up and running their units.
Provision for easy credit facilities by these institutions can enrich the small scale
sector and influence the investment decisions.
 Socio-cultural Factors

1.Family and friends: Parents may encourage or resist a curious, experimentative

and analytical child. Families that accept, affirm and support inquisitive
behaviour, keep patience while answering even weird queries and encourage the
child to know the unknown, definitely channelise his energies towards
entrepreneurship.
2.Social values: A nation’s philosophy regarding social tenets of democracy,
liberty, equality, justice, tolerance, secularism, non-violence, diversity and
inclusiveness determine entrepreneurial character of its citizens.
3. Community character: It is observed that in societies some communities are
more enterprising than others. For example, Punjabi, Sindhi and Marwari
communities are well recognised for their handwork, innovativeness, risk taking
and flexibility. They are also found to be more mobile and ready to migrate to
different geographic locations.
4. University: Towards final stages of formal learning, college education
polishes an individual’s personality that may prepare him take up
entrepreneurial activities.