PART B

UNIT 5
ENTREPRENEUR

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 Learning objectives
 By the end of this chapter the student should be
able to:
 Understand the meaning of entrepreneur
 Analyze how the concept has evolved
 Identify the functions of entrepreneur
 Define different types of entrepreneur
 Understand the concept of intrapreneur
 Study the different stages of entrepreneurial
process
 Deal with the importance of entrepreneurship in
economic development in India
 Understand the barriers to entrepreneurship 2
 Meaning
A person who organizes, operates, and
assumes the risk for a business venture.
Entrepreneurs are people who are too
naive to see the obstacles that are obvious
to others.
Entrepreneur is a person who organizes,
and manages a business undertaking and
assumes risk for the sake of profit.

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 Evolution of the concept
 Richard Cantillon, a noted economist developed
the concept during 18th century
 The concept started with farmers, merchants,
craftsman who risked to earn profit.
 After the Second World War entrepreneurship
received new meaning for attaining economic
development within the shortest possible time.
 But in the process they were seriously
handicapped by the rigid institutional setup,
political instability, marketing imperfection and
traditional value system
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 Functions of an entrepreneur
An entrepreneur contributes to the development of a nation
through various qualities like:
1. Achievement motivation
2. Innovation
3. Team building
4. Propensity to take risk
5. Creativity
6. Dynamism
7. Problem solving ability
8. Leadership
9. Commitment
10. Goal orientation

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 Achievement motivation:
Entrepreneurs can be - dreamers, doubters, doers.
 Innovation:
Developing new product, improved design,
marketing technique, etc.
 Team building:
Should be able to combine different people with
different skills to achieve the target
 Propensity to take risk:
Profit is the reward for taking risks. Doer at least
knows how things fail.
 Creativity:
The ability to bring new things. It is the prerequisite
to innovation. 6
 Dynamism:
We cannot take decision in vacuum. Up-gradation
is the most essential parameter
 Problem solving ability:
An entrepreneur should not avoid problems but
solve them with techniques like brainstorming.
 Leadership:
An entrepreneur should establish himself above all
and take people with him.
 Commitment:
An entrepreneur should be committed to the
assigned work and ready to face any situation
 Goal orientation:
The synergy should be achieved. It follows
Definition of goals, specific goals, feedback
about achieved goals 7
 Types of entrepreneur
Entrepreneurs can be classified based on:
1. Functional characteristics
2. Types of entrepreneurial business
3. Based on developmental angle
4. Personality of the entrepreneur

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 1. Functional characteristics
a. Innovative entrepreneur
These types of entrepreneurs introduce
new products or new method of production
or marketing methods. These type of
entrepreneurs usually develop upon what
has already been achieved

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b. Imitative or adoptive entrepreneur
such type of entrepreneurs rather than
innovating, imitate others who have already
developed the technique or technology.
c. Fabian entrepreneur
These type of entrepreneurs are very
cautious and take risk only at critical stage
d. Drone entrepreneur
These type of entrepreneurs are very
conservative and ready to lose the business
than changing.
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 2. Types of entrepreneurial
business
a. Manufacturing sector
b. Wholesaling
c. Retailing
d. Service providers

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 3. Based on developmental angle
Prime mover: sets in motion the sequence of
development, expansion, diversification,
etc.
Manager: does not expand but stays in the
business
Minor innovator: uses the existing resources
in a better way
Satellite: assumes a supplier’s role
Local trading: limits the activities to the local
market 12
 4. Personality of the entrepreneur
The improver: will run the business with
high integrity and ethics – J.R.D.Tata
The advisor: believes that the customer
is always right.- H. Ford
The superstar: the business runs on
the charisma of the CEO – Narendra
Modi
The artist: such persons tend to
develop the business on the talents
that he possess. – Sabeer Bhatia,
developer of hotmail
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The visionary: always aims at realising the
dream of the founder. – Bill Gates
The analyst: tries to fix the problem in a
systematic way. – Gordon Moore, Intel
founder
The fireball: keeps the organization with full
energy, optimism. – Anil Ambani
The hero: has the ability to lead the world
and face any challenge.- Jack welch
The healer: preserves stability of mind and
brings harmony in business. –
A.B.Vajpayee
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 Intrapreneur
 The term itself dates to the 1983 PhD dissertation
by Burgelman and later defined in a 1985 book by
Gifford Pinchot III, "Intrapreneuring"
 "Intrapreneurship refers to employee initiatives in
organizations to undertake something new,
without being asked to do so".
 This Intrapreneur focuses on innovation and
creativity and who transforms a dream or an idea
into a profitable venture, by operating within the
organizational environment.
 Intrapreneurs are Inside entrepreneurs who follow
the goal of the organization.
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 Example
Example could be 3M (Minnesota Mining
and Manufacturing Company), in which
they 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. Besides 3M, Intel also has
a tradition of implementing
intrapreneurship
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 Entrepreneurship
 Entrepreneurship is the process of creation of
an enterprise.
 It is derived from the French word
‘enterprendre’ which means ‘to undertake’
 A theory of evolution of economic activities.
 A continuous process of economic
development.
 An ingredient to economic development.
 Essentially a creative activity or an innovative
function.
 A risk taking factor which is responsible for an
end result. 17
Generates Self-employment and additional
employment .
It is the seed of industrial development
which bears the fruit in the form of
increased employment opportunities
 Usually understood with reference to
individual business.
The name given to the factor of production,
which performs the functions of an
enterprise.
Creates awareness among people about
economic activity.
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WHY ENTREPRENEURSHIP?

To improve backwardness of the people.

Economic development of the region.
To analyse resource utilization.
Proper utilization of human potentiality.
Special attention to take up new activities.
To create self-employment and generation
of employment opportunity.
Eradication of regional imbalances.
Better economic gain 19
 Development of entrepreneurship
 The early history of entrepreneurship in India reflect
from the culture, customs and tradition of the Indian
people.
 To process of entrepreneurship therefore passed
through the potential roots of the society and all
those who accepted entrepreneurial role had the
cultural heritage of trade and business.
 Occupational pursuits opted by the individual under
the caste system received different meaning of
value attached to entrepreneurship. Which is based
on social sanctions.

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Vaishyas and Marwaries are considered as
major caste to venture into business
pursuits. As society grew and the process
of business occupation depended and the
value work tended towards change and the
various occupational role interchanged with
non-role group and sub-groups. People
from different castes and status also
entered into the entrepreneurial role.
The emergence of entrepreneurship in this
part of the country got localized and spread
effect, took its own time. The concept of
growth theory seems to be closely related in
explaining the theory of entrepreneurship
development as well.
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After the Second World War
entrepreneurship received new meaning
for attaining economic development within
the shortest possible time.
But in the process they were seriously
handicapped by the rigid institutional
setup, political instability, marketing
imperfection and traditional value system.
British for their own ulterior motive
destabilized the then self sufficient Indian
economy. England flourished and India
had to pay for that. In the process India
suffered heavy industrial loss.
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 In 2009, a new type of entrepreneurship
emerged known as ‘LILO entrepreneurship’.
 LILO stands for "a little in, a lot out".
 This type of entrepreneurship does not use
business plans; opting for an immediate try-out
at minimal expense instead.
 LILO enterprises are set up with a minimum of
start-up capital and are designed to operate at
very low cost. Some of the companies set up via
LILO entrepreneurship are no more costly than a
hobby.

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 Entrepreneurial process
The process of entrepreneurship is carried
out in six stages.
1. Identifying opportunity
2. Establish vision
3. Persuade others
4. Gather resources
5. Organize resources
6. Create new venture

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 Identifying opportunity
Opportunities come seldom
We need to search for opportunities and
the other way will not happen
Sense the opportunity in such situations
which are confusion to others
The entrepreneur should be creative in his
ideas while seizing the opportunity

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 Establish vision
The vision will help an entrepreneur to
decide about the future of the company
It is the dream picture which can be
realised when the opportunities are
properly tapped
The progress of the company may vary
due to environmental changes but with
clear vision, an entrepreneur can realise
his dream
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 Persuade others
It is not smartness to live alone or try to
achieve alone
We need to take help from others as this
will enhance the scope of our company
The help can be in the form of skills,
technology, risk management, etc.
By persuading others realizing our dream
can be fast
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 Gather resources
While the opportunity ,vision and help from others
helps an entrepreneur to develop the picture he
cherished to have, it is very important for him to
identify the different resources that are required
to realise his vision
Different resources can be:
a. financial resource
b. operating resource
c. human resource
d. knowledge resource
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 Organize resources
The different resources gathered during
last stage have to be organised
Any enterprise needs the financial support
first
The sources of financial resource can be;
Own capital, friends and relatives, retained
capital, raising shares from public,
partnerships, venture capital, corporate
banking, retail banking, Government.
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 Operating resources can be tangible or
intangible
 Tangible resources can be machines, buildings,
materials, vehicles, equipments for office.
 Intangible resources can be operating
procedure, relationship with suppliers, web-site
management.
 Human resource is the most valuable resource
as this will decide the health of any organisation.
 While selecting the human resource the principle
of staffing has to be followed
 Knowledge resource can be explicit, which can
be transferred like patent or tacit which is
owned by the individual.
 Some times the very existence of the company
will depend on the knowledge bank of the
organisation 30
 Create new venture
 Once the resources are arranged it is very
important to run the business successfully
 This requires lot of perseverance, self belief,
positive thinking, etc.
 In addition we need to change ourselves with
the demanding changes of the environment.
 Since the present day customer is very smart we
need to treat him as the king, which demands an
entrepreneur to change as per the demand.

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 Role of entrepreneurs in
economic development
 Entrepreneurs play an important role in the economic growth
of any nation
 They bring about the wealth distribution
 They are responsible for socio-economic transformation
 The entrepreneurs change the direction of the national
economy
 Entrepreneurs process the change in per capita income of the
country.
 Qatar 85,868 Luxembourg 82,306 Norway 53,451
Singapore 51,142 Brunei 50,117 United States 46,859
United Kingdom 36,523 Japan 34,100 India 2,762-119th
Democratic Republic of the Congo 328 – last position
 Entrepreneurs help a region to grow as one big industry
nourishes thousands of ancillaries
 Growth in one region helps the other region also to grow
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 Entrepreneurship in India
The scope of entrepreneurship in
developing countries like India are always
high
Entrepreneurship gets the impetus when
opportunity for employment reduces,
Government encourages the
entrepreneurs.
Entrepreneurship does not always need
innovation but commitment to success
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The Liberalisation, Privatisation,
Globalisation (LPG) has made India as
one of the hubs for entrepreneurs and
venture capitalists
Even the boom in IT sector in past decade
has also played an important role in
making entrepreneurship an important
aspect of Indian economy
The knowledge pool of India is also
helping the entrepreneurship to boom

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 Barriers to entrepreneurship
The factors that hinder the growth of
entrepreneurship are numerous. These
can be classified as external and internal
External factors are beyond the control of
entrepreneurs while internal factors are
within the control of entrepreneurs

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 Internal factors
Technical feasibility
 The entrepreneurship may get a set back if the
technical know how of the product is not
known properly.
 In some cases the technology might have
become outdated which may not be conducive
for present day competition
 Even the locational factors may not be
encouraging for the growth of entrepreneurship

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b. Economic feasibility
The delayed investment may make the
project to slow down
The financial requirements if not
forecasted properly will jeopardize the
growth of entrepreneurship.
But these factors if planned properly can
be controlled
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 External factors
Government policies
Performance of competitors
EXIM policy
Foreign investments
Technology
 industrial and financial regulations
Availability of raw material
Taxation policies
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