Entrepreneurship

Unit – 01
Dr. L.R.S. Mani
Who is an entrepreneur?
Origin of the word entrepreneur
Scope of entrepreneurship in India
Job seeker vs Job provider
Pull vs Push
Shift in emphasis
Advantages & Disadvantages
The combination of entrepreneurship ,
education in schools and colleges , the
hassle free flow of venture capital and
evolution of good market will give
momentum for national growth.

A.P.J. Abdul Kalam

Republic Day Address 2004
 Managers & Entrepreneurs – Similarities & Differences
Areas of similarity Differing focus
Managers
To produce results Short term & medium
term
To produce results through Handling people oriented
people to day-to-day
management (tactical)
To take decisions Operational and
administrative
To cooperate under Organizational / internal
constraints such as machine capacity
productivity, financial
limitations etc.
To follow sound principles Internal control like
of management delegation, accountability,
reporting & information
systems.
Entrepreneurs
Long term & very long
term
Deal with people who can
conceptualize with
aggregate perspectives
(strategic)
Strategic such as
expansion, diversification,
mergers.
External such as policies
regarding import, licenses,
financial institutions.
Macro – social aspects
like social responsibility,
Government policies,
ethical practices etc.
Inner urge

Business idea

Opportunity recognition

Scanning the environment

Project report

Funding sources

Business plan

Venture capitalist

Market study

Starting the venture

Innovation

Monitoring & control

ABC of Starting an Entrepreneurship
Step 1 – Analysis Stage
From Idea to Launch: Getting Product Development Right

• Evaluating Innovative business ideas that can grow exponentially

• Market analysis and industry research
• Taking stock of the competition
• Researching pricing & sales strategies
• Instituting a business model to maximize value retention
ABC of Starting an Entrepreneurship
Step 2 – Business Plan Stage
Getting started & early funding
• Establishing business goals and objectives
• Investigating new processes and technologies
• Determining the MRP, market and distribution channels
• Drafting the business plan
• Securing early stage funding
ABC of Starting an Entrepreneurship
Step 3 – Communication Stage
Getting ready to scale-up
• Go to Market Strategy
• Managing the finances and securing growth finance
• Communicating the opportunity
• Fostering a culture of innovation & execution
• Building cross-cultural competence: Global & Glocal strategies
Entrepreneurship
• Process of creating something new and assuming the risks and
rewards.
• Dynamic process of creating incremental wealth.
• Process of creating something new with value by devoting the
necessary time and effort, assuming the accompanying
financial, psychic, and social risks, and receiving the resulting
rewards of monetary and personal satisfaction and
independence.
Entrepreneur
• Originally French word Entreprende Means Between-taker or
Go-between.
• Entrepreneur is one who reforms or revolutionizes the pattern of
production by exploiting an invention or, more generally, an
untried technological method of producing a new commodity or
producing an old one in a new way, opening a new source of
supply of materials or a new outlet for products, by organizing a
new industry.
Entrepreneur
• Entrepreneur is one who
a. Takes initiative
b. Organizes / Reorganizes social and economic mechanisms
to turn resources and situations to practical account.
c. Accepts Risks/ Failures.
Entrepreneur
• Economist defines entrepreneur as one who brings resources,
labor, materials, and other assets into combinations that make
their value greater than before, and also one who introduces
changes, innovations, and a new order.
• To a psychologist, such a person is a typically driven by certain
forces -- the need to obtain or attain something, to experiment,
to accomplish, or perhaps to escape the authority of others.
Entrepreneur
• To one businessman, an entrepreneur appears as a threat, an
aggressive competitor, whereas to another businessman the
same entrepreneur may be an ally, a source of supply, a
customer, or someone who creates wealth for others, as well as
finds better ways to utilize resources, reduce waste, and
provide jobs others are glad to get.
DEFINITION OF AN ENTREPRENEUR
According to the dictionary the word “Entrepreneur” can be defined as “one
who reorganizes and manages only enterprise specially involving high risk”.

THE CHANGING DEFINITION OF ENTREPERENEUR/ENTREPRENEURSHIP

1755 Cantillon “A person bearing risk”
1800 Say “Agent combining all factors of production”
1921 Knight “Recipient of pure profits”
1930 Weber Innovator
1934 Joseph Schumpter “Ability to identify new opportunities”

Kirzner “Contributes to movement towards equilibrium by pursuing

1973 opportunities through equilibrium”
“Judgment decision maker in co-coordinating scarce
1982 Mark Casson resources”
1987 Stevenson & Sahlman “The relentless pursuit of opportunity”
1990 Gartner “Actions taken to create organization”
1991 Bygrave & Hofer “Characteristics of the entrepreneurial process”
 Definition of Entrepreneurship To-day
• To-day’s entrepreneur has two linked perceptions of the
world:
1. First, he/she sees it as a world full of opportunities.
2. Second, as a world of actions in which he/she can make
things happen.
• Hence the equation is:
Opportunity + actions = entrepreneur of to-day
 Definition of Entrepreneurship To-day

• Two features typically characterize today’s entrepreneur:

Creativity and innovativeness
Other attributes of an entrepreneur are:
a. Self confidence
b. Entrepreneurs value their sense of freedom
c. Entrepreneurs are hard working and goal oriented
d. Entrepreneurs are determined in the face of adversity
e. Entrepreneurs manage risk
Importance of Entrepreneurship
• Entrepreneurs are the backbone of any economy. The prosperity of a
nation depends on economic development. The economic
development improves the standards of living of the people and
reduces poverty levels. Entrepreneurship contributes to the
development of a country’s economy in the following ways:
1. Wealth creation for individuals
2. Employment generation to large number of people
3. Increased prospects for individual self development
4. Creates challenging opportunities for the individuals
5. Improves the R & D system
Kanter’s Five F
• According to Kanter, there are five Fs that characterize successful
entrepreneurial organizations:
1. Focus – on essential core competencies and long term values.
2. Flexible – searching for new opportunities and new internal and external
synergies.
3. Friendly – recognizing the power of alliances in search for new competencies.
4. Fast – able to act at the right time to get ahead of competitors.
5. Fun – culture which allows the people to be different and free to express
themselves.
Four Basic Aspects of
Entrepreneur
a. Creation process – creating something new of value
b. Devotion of necessary time & effort
c. Assuming the necessary risks
d. Rewards – independence, personal satisfaction, monetary.
Role of entrepreneurship in economic
development
• Not just increasing per capita output and income,
but initiating and constituting change in the
structure of business and society, e.g BPO
industry in India
• Wealth generation and distribution
• Innovation the key in stimulating investment
Reasons for entrepreneurial economy
Peter Drucker :
• Rapid evolution of knowledge and technology spurred hi-tech
entrepreneurial start-ups
• Demographic trends such as two-income families, higher
education, aging population spurred it further
• Emergence of venture capital market
• Experience in managing entrepreneurships
Winds of change
• Global economy heralding profound and substantial changes in
their external and internal environments
• Restructuring of existing businesses is a survival strategy
• Emergence of the entrepreneurial economy in the 1980s and
1990s
• Corporate strategies focused heavily on innovation
Nature and Development of
Entrepreneurship
Period Definition Activity

Earliest Period Go - Between Established Trade

Routes to Far East,
Capitalist – Passive
Risks bearer
Merchant – Active
Trading. Physical
& Emotional Risks

Middle Ages Manager of Managing project. Utilizing

Large Production Projects Resources provided. No risk.
Cleric – In charge of great
Architectural
Works – Castles
Public Buildings
17th century Contractor Contractual agreement
With Govt. Profit or Loss
that of Entrepreneur.

18th century Users of capital Capital providers or

Entrepreneurs distinguished Venture capitalists
From capital provider makes
Risks investments.
Entrepreneurs
develop inventions
But unable to finance.
E.g. Edison

19th & 20th Person organizing Pays for materials, land,

Centuries And operating Services, Capital etc
An enterprise for Contributes initiative & skill.
personal gain Net residue retained.
Role of Entrepreneurship in Economic
Development
Innovation

Developing new Stimulating interest

Products / services In investment

Supply side Demand side

New capital created New spending
leads to capacity Utilizes the
Expansion new capacity and output

Results in economic development

a. Increases percapita income
b. Increases percapita output
c. Change in the structure of business & society
d. Growth & increased output
Role of Entrepreneurship in Economic Development

Product Evolution Process

Intersection of
Knowledge & social need

Product Development Process

Ordinary Technological Breakthrough

Innovations Innovations Innovations

Technology transfer
Commercialization
Through
•Government
•Intrapreneurship
•Entrepreneurship
Intrapreneurship
• Entrepreneurship within an existing business structure
• Existing businesses have financial resources, business skills,
marketing & distribution etc. With these, innovations can be
commercialized.
• Businesses recognize the need for creativity and innovation and
try to establish an intrapreneurial spirit in the organization.
• One method of stimulating, and then capitalizing on, individuals
in an organization who think that something can be done
differently and better.
Entrepreneurial Careers & Education
• Many small cottage companies have been formed.
• Formation of new ventures by female entrepreneurs.
• Entrepreneurs less educated than the general population is a
Myth.
• Childhood influences. The family, particularly the father or
mother, plays an important role in establishing the desirability
and credibility of entrepreneurship as a career path.
• Employment history also has an impact.
Entrepreneurial Careers & Education
• Students, while in college, think of pursuing entrepreneurship.
Some immediately after education and some after working for
some time in industry.
• Most universities have a course on entrepreneurship. EDI
collaborates with some.
The Future of Entrepreneurship
• Bright since endorsed by Educational Institutions, Government, Society etc.
• Number of Universities offering courses in entrepreneurship increases every
year.
• Increase in academic research, endowment chairs, creation of centers of
entrepreneurial activity.
• Incubation centers in management institutions.
• Governments taking increased interest in promoting the growth of
entrepreneurship. Tax incentives, Provision of infrastructure.
• Society’s support of entrepreneurship strong.
• Media plays powerful & construction role in reporting the general entrepreneurial
spirit.
 The Scope of Entrepreneurship in
India
In developing economies like that of India, the scope and
need of entrepreneurship are higher. The reasons are many.
Unemployment, disguised employment and
underemployment, poverty are growing in the developing
nations and entrepreneurship can be an answer to all of them
as entrepreneurship not only provides employment and
source of earning to the entrepreneur but to all those who
become associated with the business enterprise. Moreover,
the increase in the number of entrepreneurs can reduce the
monopoly of rich businessmen and lead to balanced regional
development and growth of the entire economy.
Myths about Entrepreneurship

• Over the period, people have coined many myths about

Entrepreneurship. The study and research on Entrepreneurship
continues and different findings are continuing to emerge from
time to time. Ten most commonly held myths are detailed in the
next slides.
 1. Entrepreneurs are born, not made.
• Once upon a time, most people used to strongly believe that “Leaders are born and not made”. This has been proved
wrong as many leaders have emerged through education and training. Same is the case with entrepreneurs.

• The earlier thinking that Entrepreneurs are born in a business family and cannot be taught or trained is no more valid.
The Engineering Colleges and B Schools teach Entrepreneurship as a course. It has concepts, models, frameworks
and case studies which enables students to acquire knowledge and put them into practice.

• Famous Management scientist David McClelland with his team conducted experiments in Kakinada and Vellore and
concluded that entrepreneurs can be developed through achievement motivation training. Entrepreneurship
Development Institute headquartered in Ahmedabad is another proof that confirms that Entrepreneurship knowledge
can be imparted through classroom training and skills can be developed through practical sessions.
2. All Entrepreneurs are inventors.

• Some inventors have turned Entrepreneurs but all Entrepreneurs have not
made original inventions. All Entrepreneurs are innovators and they
encompass all sorts of innovative activities. The largest fast food franchise
enterprise in the world, McDonalds was not invented or founded by Ray
Kroc, the man behind the success of that enterprise.
• His innovative efforts made all this possible for McDonalds. Same is the
case with Starbucks. The success of Starbucks goes to Howard Schultz
although he is not one of the founders. A large number of IT and other
startups in India have adopted the innovative models from US and
generated employment opportunities to large number of people.
3. The first and only thing Entrepreneurs
need is money.
• It may be true that any Entrepreneurial initiative need is money. It is also
true that many start-ups have failed due to non-availability of finance in the
required amount and in time. However, money is not the only weapon to
prevent failure. There are instances of failures even though there was no
shortage of funds. There are many other reasons for failure. Some of them
could be lack of financial knowledge, questionable character, managerial
incompetence, poor strategic planning and wrong product mix selection.
Many successful Entrepreneurs had their own ways of overcoming any
hurdles with respect to funds. Hence, most Entrepreneurs are clear that
money is a resource but never an end in itself.
4. The one and only thing Entrepreneurs
need is luck.
• People looking from outside may think that some successful
Entrepreneurs were very lucky. When an entrepreneur is
prepared and that preparation matches with opportunity is what
looks like luck. Of course, being in the right place at the right
time is always an advantage. What appears to be luck for an
outsider is actually Preparation, Perseverance, Patience,
Passion, Determination, Knowledge and Innovativeness on the
part of the entrepreneur.
5. Entrepreneurs are action oriented and
not thinkers.
• It is a fact that entrepreneurs act fast and busy most of the time
doing something. At the same time, they are also thinkers. To-day
most entrepreneurs start with preparation of Business Plan. How can
Entrepreneurs do this without proper thinking? Even before Business
Plan, Entrepreneurs keep thinking of doing something new and
something different. They also keep evaluating ideas in their mind.
Entrepreneurs are basically visionaries and all visionaries start as
thinkers and dreamers. A proper combination of thinking as well as
doing is what makes a successful Entrepreneur. There is a nice
quote which says “Mere doing makes perhaps a gambler and mere
thinking a philosopher”.
6. Entrepreneurs are academic and social
misfits.

• It is a fact that some persons have become successful entrepreneurs

after dropping out of school or college. Historically, educational and
social organizations did not recognize the entrepreneur.
Entrepreneurs were looked down as a misfit in the world of corporate
giants. To-day, there are many entrepreneurs who are highly
educated in different fields. In fact, Rashmi Bansal, an Entrepreneur
cum author in her book “Stay Hungry Stay Foolish” profiles
Entrepreneurs who have passed out from IIM-A. Air Deccan,
Biocon, Flipkart, Redbus, Infosys are some examples of ventures
started by very well educated persons.
7. Entrepreneurs must fit a specific profile.

• There is no universally accepted profile for an Entrepreneur.

Many writers have tried to present characteristics required for a
successful Entrepreneur. These articles are not comprehensive
or complete. In to-day’s context, a standard Entrepreneurial
profile is hard to compile. Based on the interactive effects of the
Venture, Environment and the Entrepreneur, different
entrepreneurial profiles emerge.
8. Entrepreneurs are extreme risk takers.

• Undoubtedly, risk is one of the major element in the

Entrepreneurial process. Entrepreneurs are not gamblers. They
undertake moderate risk based on certain calculations. Their
proper planning, preparation, hard work and smart work helps
them to minimize the risks.
9. Entrepreneurship is not organized and
not structured
• Most people wrongly think that Entrepreneurs are unstructured
and disorganized. Entrepreneurs have well established system
to ensure effectiveness and efficiency in their work. They may
not have very elaborate systems as large organizations but it is
not required. Most entrepreneurs are well organized individuals.
10. Very few entrepreneurial initiatives
succeed
• It is true that good number of entrepreneurs fail several times
before they succeed. Entrepreneurs try to learn from their
failures but not give up. The failure rate may be high for those
giving up within three years. The failure rate is much less
among those who persevere and continue beyond three years.
Hence it is wrong to conclude that most entrepreneurial
initiatives fail.
Types of Entrepreneurs
• Some important traits that contribute to the success of
entrepreneurs are emotional stability, personal relations and
tactfulness. It is also related to their ability in maintaining
balanced relationship with all stakeholders including customers.
• The types of entrepreneurs are classified in different ways by
different people. Some of the types of entrepreneurs are
detailed in the next few slides.
1 Serial Entrepreneur
• A Serial Entrepreneur is an entrepreneur who continuously comes up
with new ideas and starts new businesses. Once the enterprise is up
and running it is handed over to professionals or family members to
take care of day to day operations and they get busy to start another
enterprise. Serial Entrepreneurs are highly innovative and they don’t
like to get bogged down with daily routines. They are always
prepared to take up new challenges. They work closely with people
and partners. Shiv Khera once said “Winners don’t do different
things. They do things differently”. Serial Entrepreneurs indulge in
both. They do things differently and also do different things.
2. Social Entrepreneur
• Social Entrepreneur is a person who starts an innovative enterprise
that will help solve some problems of society. They are always willing
to take risks and create positive changes in society. Profit is not the
main motive for such entrepreneurs but one of the motives. They are
more interested in the greater social good. Many social
entrepreneurs seek to provide environment friendly products. One of
the objectives of a social entrepreneur is to bring about widespread
improvements in society.
3. Pull Entrepreneur
• Pull Entrepreneurs get attracted by business opportunities and
initiate new ventures. They are pulled into entrepreneurship.
Pull Entrepreneurs are also called Opportunity Based
Entrepreneurs. The motivations for Pull Entrepreneurs include
need for Achievement, Desire to be Independent and
opportunities for Social Development.
4. Push Entrepreneur

• Push Entrepreneurs are also called Necessity Based

Entrepreneurs. Due to some pressing necessity, they are
pushed into entrepreneurship. Persons opting for VRS, persons
who have lost interest in their jobs, Retired persons wanting to
keep themselves busy and Homemakers after settling their
families are some examples of Push Entrepreneurs.
5.Business Entrepreneur
• Individuals who come forward with an idea for a new product or
service and then set up a business unit to convert their idea into
reality. They strike both production and marketing resources in
their search for developing a new business opportunity.
6. Trading Entrepreneur
• Trading Entrepreneurs do not indulge in manufacturing but
undertake only trading activities. They identify potential
markets, stimulate demands for their product lines and create
the interest among the buyers to buy their product.
7. Pure Entrepreneur
• Pure Entrepreneurs are individuals motivated by psychological
and economic rewards. To achieve personal satisfaction, status
or ego is the main aim of undertaking entrepreneurial activities
by a pure entrepreneur.
8. Induced Entrepreneur
• Induced Entrepreneurs are those who get attracted by the
policies of the government and start new ventures. The
assistance, incentives and concessions provided by the
government induced them to undertake entrepreneurial
activities. They are motivated to achieve and prove their
excellence.
9. Spontaneous Entrepreneur
• Entrepreneurs who start their business out of their natural talent
and instinct are called Spontaneous Entrepreneurs. They are
mostly discoverers and inventors. Their boldness and
confidence motivates them to undertake entrepreneurial
activities.
10. First Generation Entrepreneur
• They are the first one in their family to undertake
entrepreneurship. They start the unit through their innovative
skills and they combine different technologies to produce a
marketable product or service.
11. Innovative Entrepreneur
• A highly creative person wanting to be different and introduce a
product or service for the first time and which will be appreciated by
customers is called an Innovative Entrepreneur. Blue Ocean
Strategy is adopted by these entrepreneurs. Innovative
entrepreneurs look for and get ideas from several sources.
Innovation is not only about the product but could also be about the
process and people. They are research oriented persons.
12. Imitative Entrepreneurs

• Those entrepreneurs who are innovative but do not have the

time and/or funds to conduct extensive research try to study the
products of innovative entrepreneurs, make modifications and
offer something different to select customer segments. They are
called Imitative entrepreneurs. They do not copy the innovative
entrepreneur in toto.
13. Fabian Entrepreneur

• Fabian Entrepreneurs try to adopt innovation only as a last

resort and when it becomes the question of survival.
14. Drone Entrepreneur

• Drone Entrepreneurs are those who continue with what they

are doing and do not bring about changes even when faced
with a problem of low sales. They may close down but will not
go in for innovation.
15. Napkin Entrepreneur

• Some entrepreneurs rely more on their intuition and take

decisions based on rough calculations rather than detailed
calculations. While sitting in a restaurant, they may just pick up
a napkin and start scribbling on the same. That is how this
name has come about.
Women Entrepreneurship in India
• Women Entrepreneurship is defined as “An enterprise owned
and controlled by a woman, having minimum financial interest
of 51% of the capital and giving at least 51% of the employment
generated in the enterprise to women”
• Women have ventured in successfully in sectors such as
fashion designing, jewellery designing, interior designing,
handlooms, handicrafts, food products, ceramics,s printing,
fabrics etc.
Women Entrepreneurship in India
• Many women in India have taken up entrepreneurship and have
achieved remarkable success. EDPs (Entrepreneurship
Development Programmes) are conducted by MSME-DO (Micro,
Small and Medium Enterprises Development Organization to cater to
the needs of potential women entrepreneurs.
• Lot of incentives have been introduced to motivate women
entrepreneurs. Encouragement is also through awards such as
“Outstanding Women Entrepreneur of the Year”. SIDBI (Small
Industries, Development Bank of India) have implemented special
schemes for women entrepreneurs.