M&E (15EE51)

MODULE 3 (Part B)
ENTREPRENEUR
An entrepreneur has been defined as, "a person who starts, organises and manages
any enterprise, especially a business, usually with considerable initiative and risk;
running a small business with all the risk and reward of any given business process”.
Entrepreneurs tend to be good at perceiving new business opportunities and they
often exhibit positive biases in their perception (i.e., a bias towards finding new
possibilities and seeing unmet market needs) and a pro-risk-taking attitude that makes
them more likely to exploit the opportunity. An entrepreneur may be in control of a
commercial undertaking, directing the factors of production – the human, financial
and material resources – that are required to exploit a business opportunity.
Entrepreneurs act as managers and oversee the launch and growth of an enterprise.

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”. 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.

Entrepreneurship is the process of designing, launching and running a new

business, which is more often than not, initially a small business, offering a product,
process or service for sale or hire. The people who create these businesses are called
entrepreneurs. Entrepreneurship has been described as the "capacity and willingness
to develop, organise and manage a business venture along with any of its risks in
order to make a profit".

Entrepreneurship is a role played by or the task performed by the entrepreneur. The

central task of the entrepreneur is to take moderate risk and invest money to earn
profits by exploiting an opportunity. For this he must posses far-sightedness to
perceive an opportunity so that he can exploit it well in time. Although an
entrepreneur has to perform diverse functions yet he must manifest many qualities in
himself to be a good entrepreneur.

Entrepreneurship is the process by which either an individual or a team identifies a

business opportunity and acquires and deploys the necessary resources required for
its exploitation.
DEFINITION OF ENTREPRENEUR
According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not
necessarily motivated by profit but regard it as a standard for measuring achievement
or success.

According to Richard Cantillon - An entrepreneur is a person who pays a certain

price for a product to resell it at an uncertain price, thereby making decisions about
obtaining and using the resources while consequently admitting the risk of enterprise.

Entrepreneurship can be defined as the propensity of mind to take calculated risks

with confidence to achieve a pre-determined business or industrial objective. That
points out the risk taking ability coupled with decision making.

CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR

1. Vision - One of your responsibilities as founder and head of your company is
deciding where your business should go. That requires vision. Without it, your
boat will be lost at sea. Are you the type of person who looks ahead and can see
the big picture?

2. Knowledge - Entrepreneurs realise that every event and situation is a business

opportunity. Ideas are constantly being generated about workflows and efficiency,
people skills and potential new businesses. They have the ability to look at
everything around them and focus it toward their goals.

3. Desire to succeed - It's easy in this fast paced, constant info-in-your-face world to
get distracted. This is especially true for start-ups, that often get side-tracked by
shiny object syndrome (i.e. products and services that promise fast results), or
bogged down in unimportant busy work. Successful entrepreneurs are focused on
what will bring results.

4. Independence - An Entrepreneurs needs independence in work and decision

making. They don’t follow the rules of them but make their own rules and
destiny.
5. Optimism - It's difficult to succeed at anything if you don't believe in a good
outcome. Entrepreneurs are dreamers and believe their ideas are possible, even
when they seem unattainable.

6. Value addition - Entrepreneurs do now follow the conventional rules of thumb.

They have a constant desire to introduce something new to the existing business.
They create something new to society.

7. Leadership - Entrepreneurs will take an initiative in the company to start up any

programs because it helps them to understand the problem between employees
and also help for them to gain more and more knowledge.

8. Hardworking - Entrepreneurs enjoy what they do. They believe in themselves and
are confident and dedicated to their project. Occasionally, they may show
stubbornness in their intense focus on and faith in their idea. But the flip side is
their demonstrated discipline and dedication.

9. Desire to have control over their fate - Entrepreneurs should have ability to
change the mind set from negative to positive when they feel they are in wrong
directions.

10. Risk taking ability - Launching any entrepreneurial venture is risky. Are you
willing to assume that risk? You can reduce your risk by thoroughly researching
your business concept, industry and market. You can also test your concept on a
small scale. Can you get a letter of intent from prospective customers to
purchase? If so, do you think customers would actually go through with their
transaction?

11. Motivation - Entrepreneurs are enthusiastic, optimistic and future-oriented. They

believe they’ll be successful and are willing to risk their resources in pursuit of
profit. They have high energy levels and are sometimes impatient. They are
always thinking about their business and how to increase their market share.

12. Creativity and Persuasiveness - Successful entrepreneurs have the creative

capacity to recognise and pursue opportunities. They possess strong selling skills
and are both persuasive and persistent.
13. Economic and dynamic activity:Entrepreneurship is an economic activity because
it involves the creation and operation of an enterprise with a view to creating
value or wealth by ensuring optimum utilisation of scarce resources. Since this
value creation activity is performed continuously in the midst of uncertain
business environment, therefore, entrepreneurship is regarded as a dynamic force.

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, maximisation of output from given resources, development of
managerial skills, etc., and all these factors are so essential for the economic
development of a country.

5. A Creation of job opportunitiesEntrepreneurship firms contributed a large share

of new jobs. It provides entry-level jobs so necessary fur training or gaining
experience for unskilled workers. The small enterprises arc the only sector that
 generates large portion of total employment every year. Moreover,
entrepreneurial ventures prepare and supply experienced labor to the large
industries.

6. InnovationEntrepreneurship is the incubator of the innovation. Innovation creates

disequilibria in the present state of order.It goes beyond discovery and does
implementation and commercialisation, of innovations. “Leap frog” innovation,
research, and development are being contributed by entrepreneurship.Thus,
entrepreneurship nurses innovation that provides new ventures, product,
technology , market, quality of good etc. to the economy that increase Gross
Domestic Products and standard of living of the people.

7. Enhances standard of living - Standard of living is a concept built on increasing

amount of consumption of variety of goods and services over a particular period
by a household.So it depends on availability of diversified products in the market.
Entrepreneurship provides enormous kinds product of various natures by their
innovation.Besides, it increases the income of the people who are employed in
the entrepreneurial enterprises. That also capable employed persons to consumer
more goods and services. In effect entrepreneurship enhances the standard of
living of the people of a country.

8. Promotes research and development - Entrepreneurship is innovation and hence

the innovated ideas of goods and services have to be tested by experimentation.
Therefore, entrepreneurship provides funds for research and development with
universities and research institutions. This promotes the general development o:’
research and development in the economy. Entrepreneurship is the pioneer zeal
that provides events in our civilisation. We are indebted to it for having prosperity
in every arena of human life- economic, technological and cultural. The above
discussion in a nutshell enumerates that tremendous’ contributions of
entrepreneurship.

Entrepreneurial Process:
Entrepreneurship is a process, a journey, not the destination; a means, not an end. All
the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway),
Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla,
Jamshedji Tata and others all went through this process.
To establish and run an enterprise it is divided into three parts – the entrepreneurial
job, the promotion, and the operation. Entrepreneurial job is restricted to two steps,
i.e., generation of an idea and preparation of feasibility report. In this article, we shall
restrict ourselves to only these two aspects of entrepreneurial process.

Idea Generation:
To generate an idea, the entrepreneurial process has to pass through three
stages:Germination:
a. This is like seeding process, not like planting seed. It is more like the natural
seeding. Most creative ideas can be linked to an individual’s interest or curiosity
about a specific problem or area of study.

b. Preparation:
Once the seed of interest curiosity has taken the shape of a focused idea, creative
people start a search for answers to the problems. Inventors will go on for setting up
laboratories; designers will think of engineering new product ideas and marketers will
study consumer buying habits.
c. Incubation:
This is a stage where the entrepreneurial process enters the subconscious
intellectualisation. The sub-conscious mind joins the unrelated ideas so as to find a
resolution.

2. Feasibility study:
Feasibility study is done to see if the idea can be commercially viable.
It passes through two steps:
a. Illumination:
After the generation of idea, this is the stage when the idea is thought of as a realistic
creation. The stage of idea blossoming is critical because ideas by themselves have no
meaning.
b. Verification:
This is the last thing to verify the idea as realistic and useful for application.
Verification is concerned about practicality to implement an idea and explore its
usefulness to the society and the entrepreneur.

CONCEPTS OF ENTREPRENEURSHIP
Entrepreneurship is the tendency of a person to organise the business of his own and
to run it profitably, using all the qualities of leadership, decisions making and
managerial caliber etc. The term “entrepreneur” is often used interchangeably with
“entrepreneurship”. But conceptually they are different. In a way, entrepreneur
precedes entrepreneurship. It is concerned with the development and co-ordination of
entrepreneurial functions.

Entrepreneurship is an abstraction and entrepreneurs are tangible persons. Well

designed and controlled research studies on entrepreneurship are very few. If we view
entrepreneurship as opposed to management, it becomes still more difficult to define
entrepreneurship.

Entrepreneurship is a role played by or the task performed by the entrepreneur. The

central task of the entrepreneur is to take moderate risk and invest money to earn
profits by exploiting an opportunity. For this he must posses far-sightedness to
perceive an opportunity so that he can exploit it well in time. Although an
entrepreneur has to perform diverse functions yet he must manifest many qualities in
himself to be a good entrepreneur.
Entrepreneurship can be defined as the propensity of mind to take calculated risks
with confidence to achieve a pre-determined business or industrial objective. That
points out the risk taking ability coupled with decision making.

The word ‘entrepreneurship’ typically means to undertake. It owes its origin to the
western societies. But even in the west, it has undergone changes from time to time.
In the early 16th century, the term was used to denote army leaders. In the 18lh
century, it was used to denote a dealer who buys and cells goods at uncertain prices.
Towards 1961, Schumpeter, used the term innovator, for an entrepreneur. Two
centuries before, the concept of entrepreneurship was shady. It is only in the recent
years that entrepreneurship has been recognised widely all over the world like in
USA, Germany, Japan and in the developing countries like ours. Gunnar Myrdal
rightly pointed out that Asian societies lack entrepreneurship not because they lack
money or raw materials but because of their attitudes. Till recently, in the west, the
entrepreneurship is mainly an attribute of an efficient manager. But the success
achieved by entrepreneurs in developing countries demolishes the contention that
entrepreneur is a rare animal and an elusive character. In India, the definition of ‘an
entrepreneur being the one who undertakes to organise, own and run a business’ has
been accepted in a National Seminar on Entrepreneurship organised in Delhi in 1975.
Still there has been no consensus on the definition of entrepreneurship and qualities
of entrepreneurship.

CLASSIFICATIONS OF ENTREPRENEURSHIP
Entrepreneurs according to the type of business.
Business entrepreneur: Business entrepreneurs are individuals who conceive an
idea for a new product or service and then create a business to materialize their idea
into reality. They may set up a big establishment or a small business unit. They are
called small business entrepreneurs when found in small business units such as
printing press, textile processing house, advertising agency, readymade garments or
confectionery.
Trading Entrepreneur: The trading entrepreneur is one who undertakes trading
activities and is not concerned with the manufacturing work. He identifies potential
markets, stimulates demand for his product line and creates a desire and interest
among buyers to go in for his product line and creates a desire and interests among
buyers to go in for his product line and creates a desire and interests and buyers to go
in for his product. He is engaged in both domestic and overseas trade. Britain,
due to geographical limitations has developed trade through trading entrepreneurs.
Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who
identifies the potential needs of customers and tailors a product or service to meet the
marketing needs. He is product- oriented man who starts in an industrial unit because
of the possibility of some new product.

Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his

innovative skill in organising and managing corporate undertaking. A corporate
undertaking is is a form of business organisation which is registered under some
statue or act which gives it a separate legal entity. A trust registered under Trust act or
company registered under the companies act is examples of corporate undertakings. A
corporate entrepreneur is thus an individual who plans, develops and manages a
corporate body.
Agricultural Entrepreneur: Agricultural entrepreneur are those entrepreneurs who
undertake agricultural activities as raising and marketing of crops, fertilisers and
other inputs of agriculture. They are motivated to raise agricultural through
mechanisation, irrigation and application of technologies for dry land agriculture
products.

Entrepreneurs and stages of Development:

First-generation entrepreneur: A first generation entrepreneur is one who starts an
industrial unit by innovative skills. He is essentially an innovator, combining different
technologies to produce a marketable product or service.
Modern entrepreneur: A modern entrepreneur is one who undertakes those ventures
which go well along with the changing demand in the market. They undertake those
ventures which suit the current marketing needs.
Classical entrepreneur: A classical entrepreneur is one who is concerned with the
customers and marketing needs through the development of the self supporting
venture. He is a stereotype entrepreneur whose aim is to maximize his economic
returns at a level consistent with the survival of the firm with or without an element
of growth.

Based on Gender:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are
called ‘men entrepreneurs.
2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and controlled by a
woman or women having a minimum financial interest of 51 per cent of the capital
and giving at least 51 per cent of employment generated in the enterprises to women.

Based on the Size of Enterprise:

1. Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery up to Rs 1.00
crore is called ‘small-scale entrepreneur.
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery above Rs 1.00
crore but below Rs 5.00 crore is called ‘medium-scale entrepreneur.
3. Large-Scale entrepreneur:
The entrepreneur who has made investment in plant and machinery more than Rs
5.00 crore is called ‘large-scale entrepreneur.

TYPES OF ENTREPRENEURS
1. Innovating Entrepreneurs:
Innovating entrepreneurs are one who introduce new goods, inaugurate new method
of production, discover new market and reorganise the enterprise. It is important to
note that such entrepreneurs can work only when a certain level of development is
already achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
These are characterised by readiness to adopt successful innovations inaugurated by
innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such
types of entrepreneurs are particularly suitable for the underdeveloped regions for
bringing a mushroom drive of imitation of new combinations of factors of production
already available in developed regions.
3. Fabian Entrepreneurs:
Fabian entrepreneurs are characterised by very great caution and skepticism in
experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.
4. Drone Entrepreneurs:
These are characterised by a refusal to adopt opportunities to make changes in
production formulae even at the cost of severely reduced returns relative to other like
producers. Such entrepreneurs may even suffer from losses but they are not ready to
make changes in their existing production methods.

INTRAPRENEUR
An intrapreneur is an inside entrepreneur, or an entrepreneur within a large firm, who
uses entrepreneurial skills without incurring the risks associated with those activities.
Intrapreneurs are usually employees within a company who are assigned to work on a
special idea or project, and they are instructed to develop the project like an
entrepreneur would. Intrapreneurs usually have the resources and capabilities of the
firm at their disposal.

Intrapreneurship is acting like an entrepreneur within a larger organisation.

Intraprenuers are usually highly self-motivated, proactive and action-oriented people
who are comfortable with taking the initiative, even within the boundaries of an
organisation, in pursuit of an innovative product or service. The intrapreneur has the
comfort of knowing that failure does not have a personal cost as it does for an
entrepreneur, since the organisation absorbs losses arising from failure.

An intrapreneur is an employee who is given the authority and support to create a

new product without having to be concerned about whether or not the product will
actually become a source of revenue for the company. Unlike an entrepreneur, who
faces personal risk when a product fails to produce revenue, an intrepreneur will
continue to receive a salary even if the product fails to make it to production.
DIFFERENCE BETWEEN INTRAPRENEUR AND ENTREPRENEUR.

INTRAPRENEUR ENTREPRENEUR
Intrapreneurship is the Entrepreneurship is the dynamic
entrepreneurship within an existing process of creating incremental
organization. wealth.
To increase competitive strength To innovate something new of
and market sustainability of the socio economic value.
organization.
Enhance rewarding capacity of the Innovation, financial gain tad
organization and autonomy. independence.
Direct participation, which is more Direct and total participation in the
that delegation of authority. process of innovation. _
Hears moderate risk. Bears all types of risk.
Organizational employee expecting Free and sovereign person doesn’t
freedom in work. bother with status.
Keeps risky projects secret unless it Recognizes mistake and failures so
is prepared due to high concern for as to take new innovative efforts.
failure and mistakes.
Collaborative decisions to execute Independent decisions to execute
dreams. dreams.
Organization and intrapreneur Customers and entrepreneur
himself. himself.
May not have or a little Professional or small business
professional post. family heritage.
Authority structure delineates the Basic relationship based on
relation. interaction and negotiation.
Self-imposed or organtzauonally There is no time bound.
stipulated time limits.
Technology and market. Increasing sales and sustaining
competition.
Follows self-style beyond given Adaptive self-style considering
structure. Structure as inhabitants.
Strong self-confidence and hope Strong commitment to self-initiated
for achieving goals. efforts and goals.
Operates from inside the Operates from outside the
organization. organization.

CHARACTERISTICS OF INTRAPRENEUR
Entrepreneurs bridge gap between inventors and managers.
They have vision and courage to realise it.
They can imagine what business prospects will follow from the way customers
respond to their innovators
They have ability to plan necessary steps for actualisation of the idea
They have high need for achievement
They take moderate risk
They are dedicated to there work that they take it up

MYTHS OF ENTREPRENEURSHIP

1. Entrepreneurs tend to carefully seek the best risk/reward action.

2. Entrepreneurs Are Born
3. Entrepreneurs Are Mainly Motivated to Get Rich
4. Entrepreneurs Give Little Attention to Their Personal Life
5. Entrepreneurs Are Often High-Tech Wizards
6. Entrepreneurs Are Loners and Introverts
7. Entrepreneurs Are Job Hoppers
8. Entrepreneurs Finance Their Business with Venture Capital
9. Entrepreneurs Are Often Ruthless or Deceptive
10. Entrepreneurs Have Limited Dedication
11. If my product or service is good, I’ll be successful
12. Entrepreneurship will give me back complete control over my schedule
13. Never give away your product or service: It’ll dilute your brand
14. Early on, I need to do it all myself.
15. The more clients, the better
16. It takes a lot of money to finance a new business
17. Venture capitalists are a good place to go for startup money
18. Most business angels are rich.
19. Startups can’t be financed with debt
20. Banks don’t lend money to startups
21. Most entrepreneurs start businesses in attractive industries
22. The growth of a startup depends more on an entrepreneur’s talent than on the
business he chooses
23. Most entrepreneurs are successful financially
24. It takes a lot of Money To Start a Successful Business
25. I will Be Happier in Life as an Entrepreneur
26. I will not have a Boss When I Become an Entrepreneur
27. I will Have More Freedom and Work-Life Balance
DIFFERENCE BETWEEN ENTREPRENEUR AND ENTREPRENEURSHIP

ENTREPRENEUR ENTREPRENEURSHIP
Person Process
Visualiser Vision
Creator Creation
Organiser Organisation
Innovator Innovation
Technician TEchnology
Initiator Initiative
Decision maker Decision
Planner Planning
Leader Leadership
Motivator Motivation
Programmer Action
Risk taker Risk taking
 Communicator Communication
Administrator Administration

ENTREPRENEURIAL DEVELOPMENT CYCLE

Stimulatory
1 Entrepreneurial Education.
2 Planned publicity for entrepreneurial opportunities.
3 Identification of potential entrepreneurs through scientific methods.
4 Motivational training to new entrepreneurs.
5 Help and guidance in selecting products and preparing project reports. J
6.Making available techno-economic information and product profits.
6 Evolving locally suitable new products and processes.
7 Availability of local agencies with trained personnel for entrepreneurial
counselling and promotions.
8 Organising entrepreneurial forum.

Support
1 Registration of unit
2 Arranging finance
3 Providing land, shed, power, water etc
4 Guidance for selecting and obtaining machinery
 5 Supply of scarce raw materials
6 Getting licenses/import licenses
7 Providing common facilities
8 Granting tax relief or other subsidy
9 Offering management consultancy
10 Help marketing product

Sustaining
1 Help modernisation
2 Help diversification/ expansion/substitute production
3 Defining repayment/interest
4 Define repayment/interest
5 Diagnostic industrial extension/consultancy source
6 Production units’ legislation/policy change reservation/Creating new avenues
for marketing
7 Oath testing and improving services
8 Need-based control facilities centre

Entrepreneurship development cycle contributes to the development of

entrepreneurs.
It consist of 3 stages.

1st Stage:
In this initial stage, for the development of entrepreneurial, education is
provided to them. Then they provide different opportunities through planned
publicity. Than identification of potential entrepreneurs is done through
scientific method .Special training is provided to them to motivate them. They
also help and guide them to select product and preparing project reports. They
also make available Techno-Economic Information and Product Profits to them
as well as Local agencies with trained personnel to them. It creates an
entrepreneurial forum. And helps them to recognise entrepreneurial skills.

2nd Stage:-
After getting educated, motivated and trained, in this stage financing,
marketing and other steps are performed by entrepreneurs. Here, registration of
unit is done along with arrangement of finance. It also provides land, shed,
 power, water, scarce raw materials, different information, common facilities etc
to them. They guide entrepreneurs for selecting and obtaining machinery, for
importing the licenses and also for marketing the product.

3rd Stage:-
After marketing the product in market n above stage, this stage helps in
modernisation, accepting diversification, expansion and substitute production.
Additional financing is done for full capacity utilisation. There is differing
repayment or interest. There is a diagnostic and different industrial extension or
consultancy source. There is Production unit’s legislation that is policy can be
change. Product is copyright and patent or reserved and creating new avenues
for marketing. After this quality is tested and try to improve the services and to
provide best quality product in the market. Needs-Based Centres are provided
with common facilities.
In this way entrepreneurial cycle contributes to the development of
entrepreneurs step by step. Initially by providing education, training,
motivation then by making proper allocation of resource and finance and
proper marketing of the product and then by accepting modernisation,
changing policies, new technologies advancement.
It leads to a successful, well trained, motivated entrepreneur.

PROBLEMS FACED BY ENTREPRENEURS IN INDIA

1. Bureaucracy
2. Corruption
3. Labour ( Skilled labour)
4. Regional Sentiments
5. Grey Market and Counterfeit Goods
6. Social Capital
7. Cash flow management
8. Hiring employees
9. Time management
10. Delegating tasks
11. Choosing what to sell
12. Marketing strategy
13. Capital
14. Business growth
15. Strapped budget
16. Self-doubt
17. Less Stability
18. High Rates of Risk
19. Taxes and Overhead
20. Teambuilding
21. Loneliness
22. Inability to market their business