Entrepreneurship and

Management of Small and

Medium Enterprises

Suvarna Sable
Evaluation
 Entrepreneurship
(Unit-1)
• Concept, Meaning and Definition of Entrepreneur
& Entrepreneurship
• Concept of Intrapreneur
• Char. And qualities of entrepreneurs
• Classification & types of entrepreneurs
• Women entrepreneurs
• Theories
• Contribution of Mc Clelland and Joseph
Schumpeter
• Renowned Entrepreneurs-5
• Tendulkar has opened two restaurants:
'Tendulkar's‘ (@ Colaba) and 'Sachin's‘ (@ Mulund) also in Bangalore called
Sachin's.
- Sachin owns these restaurants in partnership with Sanjay Narang of Mars
Restaurants. He has also got a new restaurant.
• In 2007, Tendulkar also announced a JV with the Future Group and Manipal
Group to launch healthcare and sports fitness products under the brand name 'S
Drive and Sach'.

• A series of comic books by Virgin Comics is also due to be published featuring

him as a superhero.
 Entrepreneur
• VIDEO-1
 Sabir Bhatia
• Indian American entrepreneur who co-founded Hotmail.
• HoTMaiL (upper case letter HTML)
• In less than six months, the website attracted over 1 million subscribers
• Microsoft eventually took notice and on December 30, 1997 ,Hotmail was
sold to Microsoft for -$400million
• worked for Microsoft for a year & then he founded Arzoo.com-1999-travel
portal.
• 2008-announced the launch of his latest venture SabSeBolo.com-free
web-based teleconferencing system
“ I never topped in my school days..But today Toppers
of Best Universities are my Employees..”
Larry Page
Sergey Bin
Mark Zuckerberg
Jerry Yang
• Future entrepreneurs
• Exercise-Entrepreneurs Quiz
• Entrepreneurs –backbone of nation’s progress
• Organize different factors of production-Land,
Labour & capital
• Creates wealth ,provides employment
• Many underdeveloped countries realized that
governments in these countries are unable to
produce goods & services needed by people
and offer employment
• Many underdeveloped countries realized that
governments in these countries are unable to
produce goods & services needed by people
and offer employment
• Globalisation
• Privatisation/Public –Examples(Indian
Railways)
• Liberalisation
• Globalization in India has allowed companies
to increase their base of operations, expand
their workforce with minimal investments,
and provide new services to a broad range of
consumers.
• Ex: Rajiv Gandhi Setu
 Project(2000-2009)
• commissioned by –
Maharashtra State Road Development
Corporation Ltd (MSRDC)
• Designed by-
DAR Consultants
• Built by
Hindustan Construction Company (HCC).
 HCC

• Seth Walchand Hirachand-1926 (public)

• HCC is India’s foremost engineering and
construction company.
• Built by a
skilled team comprising of the best engineers experts-India, Britain,
Canada, China, Egypt, Hong Kong, Indonesia, Philippines, Serbia,
Singapore and Switzerland.
• Manpower-
-involved over 3,000 workers
• Material components-
-270,000 ton bridge(=50000 African elephants)
-2,342 pre-cast segments, 40,000 metric ton (MT) of reinforced
concrete, and 5,400 MT of iron bars.
• A consortium led by Anil Dhirubhai Ambani
Group's Reliance Energy Ltd (REL) along with
Veolia Transport Co. together with Mumbai
Metropolitan Region Development Authority
(MMRDA) bagged the contract for the 2,356
crore (US$ 534.81 million) Versova-Andheri-
Ghatkopar corridor.
• India requires a good entrepreneurial class for
development of large and small scale
industries.
• VIDEO-2
 Entrepreneur
• Derived from French word- “enterprendre”
(undertake)
• Around 1700 A.D. the term was used for architects
and contractors of public works
Entrepreneur Concept:
• Definition:
Person who detects and evaluates a new situation in his environment
Directs the making of such adjustments in the economic system as he feels
necessary
Conceives idea of establishing an industrial enterprise(Reliance,Tata,Birla,Godrej)
Displays initiative, determination in bringing his project to fruition.
• Perceives opportunities for profitable investment
• Explores the prospects of starting such a venture
• Obtains required licenses
• Arrange for initial capital
• Promises to meet the shortfalls in the capital
• Provides personal guarantees to financial institutions
• Supplies technical know-how

Term “Entrepreneur” –Small industrialists, small business, traders and

industrialist
 “Entrepreneurship”
• Peter Drucker defines –
Entrepreneurship is neither a science nor an art. It is
practice. It has knowledge base.
-Ability to built founding team to complement the
Entrepreneurs skills and talents
-Entrepreneur –business Leader
-Entrepreneurship- function performed by him
 Characteristics of an Entrepreneur
• Mental Ability:
-Intelligent, creative thinking
-Able to analyze various problems and situations
-Able to anticipate changes
Ex: Steve jobs
• Business Secrecy:
-Guard Business Secrets
-Competitor should not know the business secrets
• Clear Objectives:
- Exact nature of business
- Nature of goods to be produced
• Human Relations:
- Maintain good relation with his customers, Employees
- Emotional Stability, personal relations, tactfulness and consideration
• Communication Ability:
- Sender & receiver of message understands each other
- Succeed if he can communicate effectively with employees , creditors, suppliers and
customers Ex: Dhirubhai Ambani
• Technical Knowledge: Bill gates
• Moderate Risk Taker: capability to take risk in critical situation and learn
quickly from failures.
• High energy Level, Motivator,Goal setter, self confidence
• Creative:
-He many conceive new idea, envision how it will be useful not necessarily
take action to make it reality. Ex: Apple Inc.
• Innovative Ex: Intel, Electronics
“Microsoft is not about greed. It's about innovation and fairness” - Bill Gates
• Dynamism
• Leadership: Ex: D.Ambani
• Team Building
• Motivation
• Problem solving
• Goal setter
• Commitment- people, organization, customer, oneself
• Risk taking- Ramlingam Raju (Satyam – next slide)
Example: Intel Corporation
• Satyam
Revenue: Rs 8,473.49 crore; a growth of 30.7% over fiscal 2007
Net Profit after Tax: Rs 1,687.89 crore; a growth of 20.2% over fiscal 2007
Entrepreneur Entrepreneurship
Person Process
Organizer Organization
Visualiser Vision
Creator Creation
Initiator Initiative
Innovator Innovation
Technician Technology
Decision Maker Decision
Leader Leadership
Planner Planning
Motivator Motivation
Risk Taker Risk Taking
Programmer Action
Communicator Communication
Administrator Administration
 Classification/Types of Entrepreneurs

Entrepreneurs are classified according to :

A) Type of Business
B) Use of Technology
C) Motivation
D) Growth
E) Stages of development
F) Other types
 Type of Business
Business Entrepreneurs:
Convert ideas into reality; deal with both manufacturing and trading aspect of
business

-Individuals who conceive an idea for new product/service

-create a business
-turns idea into reality
• May set up large or small size business
• Small business entrepreneurs are found in readymade garments, printing
houses, advertising agency etc.
• Trading Entrepreneurs:

Undertakes trading activities; concerned with marketing (Domestic and

international level)

-Identifies potential markets , stimulates demand for his product line and
creates a desire and interest among the buyers to purchase his product.
Industrial entrepreneur:
• Undertakes manufacturing activities only
• Product oriented man-starts industrial unit for making new product.
• Manufacturer –identifies the potential needs of customers and tailors a
product or service to meet the marketing needs.
• Ability to convert economic resources and technology into profitable
venture.
• new product development etc (textile, electronics, etc)
• EX:
Corporate entrepreneur:
-Corporate: form of business organization which is registered under the Act
-Person who demonstrates his innovative skill in organizing and managing a
corporate body.
-Interested in management part of organization; exceptional organizing,
coordinating skills to manage a corporate undertaking
(Ambani, Tata families, Godrej etc)
Agricultural entrepreneurs:

• Production and marketing of agricultural inputs

and outputs (Dairy, horticulture, fertilizers etc)
•
• National Agro Industries, Ludhiana is a partnership firm.
Mr. Sukhdev Singh, Mr. Man Mohan Singh & Mr. Sukh Sohan Singh
-We are pioneer manufacturer of Seed Drills in India.
-National Agro Industries are the first innovator & manufacturer of
Ferti-Seed Drill in India.
-manufacture more than 800 drills in every sowing season.
 Use of Technology
Technical entrepreneur:
• Production oriented, possesses innovative
• skills in manufacturing, quality control etc.
Ex: Henry Ford
• was a prominent American industrialist,
• the founder of the Ford Motor Company,
• Developer of the assembly line technique of mass production.
• Revolutionized transportation and American industry.
• Video
Non-Technical entrepreneur:
• Develops marketing, distribution facilities and strategies
• Not concerned with technical aspects of product.

Professional Entrepreneur :
• Establishes business
• Sells out running business and starts another venture with same proceeds.
• They start new businesses. They write business plans.
• They build their business to annual revenues of $10 million to $100 million
within 5 years.
• They either sell their business to a larger company or take their company
public, and become billionaires or multi-millionaires.
• Ex: Microsoft- Bill Gates
Stepped down from Microsoft and ventured into :”Bill and Melinda Gates
Foundation”
 According to Motivation
Pure entrepreneur:
Individual is motivated by Psychological and economic rewards
Induced entrepreneur:
-Induces to take entrepreneurial task due to various policy measures, Incentives,
concessions, benefits offered by government to start a venture.
-Person with project is provided with package of assistance for his project.
-Today governments offers concessions, incentives and financial assistance to
small scale industries to start business.
Motivated entrepreneur:
-Sense of achievement and fulfillment motivates them
- Possibility of making and marketing some new products for use of consumers.
Spontaneous entrepreneur:
-Born entrepreneurs with inborn traits of confidence, vision, initiative
 According to Growth
Growth entrepreneur:
-One who enters a sector with a high growth rate; is a positive thinker
Super growth entrepreneur:
-One who enters a business and shows a quick, steep and upward growth curve
-growth is measured – funds, profitability and gearing
Ex: Anil Ambani –Takeover BSES(Bombay Suburban Electric Supply Company )
Thermal power
According to Stages of Development
• First generation entrepreneur:
Innovator, risk taker, among the firsts in family to enter business
Ex: Jamsetji Nusserwanji Tata-founder of Tata Group
• Modern entrepreneur:
Who considers feasibility of business, which
can adapt to change and dynamic market
• Classical entrepreneur:
One who gives more importance to consistent
returns than to growth; concerned about
customer and marketing needs
• According to Area:
Urban Entrepreneurs
Rural Entrepreneurs
• According to Gender and Age
Men Entrepreneurs
Women Entrepreneurs
• According to scale of Operation
small scale Entrepreneurs
Large scale Entrepreneurs
Women Entrepreneurs
“ When women move forward, the family
moves, the village moves and the Nation
moves.”
• Nita Ambani currently plays the role of co-
owner of Indian Premier League team Mumbai
Indians
• he is also the chairperson of Dhirubhai
Ambani International School and is geared up
to head the Reliance University in the near
future.
• Mrs. Sudha Murty, w/o Narayana Murthy, has been contributing to the
society very actively through Infosys Foundation.
• In 1996, started Infosys Foundation & till date has been the Trustee of
Infosys
• She has initiated a move whereby all Govt. schools in the state of
Karnataka has a computer and a library.
• Currently the Chairperson of the Trent(Trent is a retail operations
company that owns and manages a number of retail chains in India)
Limited, is an Indian businesswoman
• she came to India in 1955, and joined Lakmé as Managing Director
in 1961, rising to become its Chairperson in 1982.
• In 1996 Tata sold off Lakmé to Hindustan Lever Limited (HLL),
and created Trent from the money it made through the sale
• The Westside brand and stores belongs to Trent.
 • Naina Lal Kidwai,
Investment Banker
• Fortune magazine listed
her as one of the world’s
most powerful
businesswomen in 2003.
India Inc recognises her
as one of its most
powerful investment
bankers. But Naina Lal
Kidwai, HSBC’s deputy
CEO, can’t be reduced to
simple woman-banker
equations; her
professional vision
transcends gender

Department of Economics, Faculty of Social Sciences,

Banaras Hindu University
 Defining Women Entrepreneur
“An enterprise owned and controlled by a women having a
minimum financial interest of 51% of capital and giving at
least 51% of the employment generated by the enterprise to
women.”
- Government of India
- Ex: Ekta Kapoor (Balaji Telefilms)

“A women entrepreneur can be defined as a confident, innovative

and creative women capable of achieving self economic
independence individually or in collaboration, generates
employment opportunities for others through initiating,
establishing and running the enterprise by keeping pace with
her personal, family and social life.”
- Kamal Singh
 Importance of WE
• Constitutes 50% of the population
• Most of traditional occupation open to women were mainly based on:
- caste and creed
-Nature of Employment
-Standard of living
• Today, women's are not only generating employment for themselves but
also providing employment to others.Ex: Ekta kapoor.Simone Tata
• They must be made part of the economic development, because it will not
only ensure the economic & social development of the women along with
providing more human resources to strengthen the economy of the country.
• The economic status of women is now accepted as an indicator of a
society’s stage of development- government frames policies for the
development of entrepreneurship among women
 Functions/role of WE
• Explore the prospects of starting new enterprise
• Introduction of new innovations or invitation of successful ones in
existence
• Undertaking of risks and the handling of economic and non economic
uncertainties
• Coordination, administration and control
• Supervision and providing leadership in all aspects of the business
Rural Women Entrepreneurs
 Problems faced by WE
• Family responsibilities:
-primary responsibility for children, home and older dependent family members, few women
can devote all their time and energies to their business“
-The financial institutions discourage women entrepreneurs on the belief that they can at any
time leave their business and become housewives again. 
• Social Attitude:
-Despite constitutional equality there is discrimination against women.
-In tradition bound society women suffers from male reservation
-In rural areas resistance is from male as well as elderly females

• Low mobility:
-barrier mobility of travelling from place to place
• Lack of Education/Awareness:
-Literacy rate among women is low.
-women are unaware of technological development ,marketing knowledge,
information etc
• The literacy rate of women in India is found at low level compared to male population.
• Many women in developing nations lack the education needed to spur successful
entrepreneurship.
• They are ignorant of new technologies or unskilled in their use, and often unable to do
research and gain the necessary training
• The studies indicates that uneducated women do not have the knowledge of
measurement and basic accounting.
• Shortage of finance:
-Entrepreneurs usually require financial assistance of some kind to launch their ventures
- be it a formal bank loan or money from a savings account.
- Women in developing nations have little access to funds, due to the fact that they are
concentrated in poor rural communities with few opportunities to borrow money
-The women entrepreneurs are suffering from inadequate financial resources and
working capital. 
-The women entrepreneurs lack access to external funds due to their inability to provide
tangible security. Very few women have the tangible property in hand.
The result is that they are forced to rely on their own savings, and loan from relatives and
family friends.
 Shortage of raw materials

• Knowledge of alternative source of raw materials availability and high

negotiation skills are the basic requirement to run a business. 
• Getting the raw materials from different source with discount prices is the factor
that determines the profit margin.
• Lack of knowledge of availability of the raw materials and low-level negotiation
and bargaining skills are the factors, which affect women entrepreneur's business
adventures.
• EX:Failure of cooperative in 1971 such as –basket making mainly due to
inadequate availability of forest based raw materials.
Strategies for the development of
Women Entrepreneurs
• Education and Awareness
-Necessary to change negative social attitude towards women
-awareness from elders, in laws-females potential of girls and role in
society.
• Better Time Management:
-Dual responsibilities of entrepreneur and homemaker
-strike balance
-support & cooperation from family and society
• Set up home based business
-so that she can coordinate her household and business responsibilities.
Ex: Papad, Pickle, Cosmetics etc.
• Efficient use of IT:
-use of Internet, computer
• Organize workshops and seminars:
-between financial and support agencies and women entrepreneurs
• Group Entrepreneurship:
-for weaker section of society
-it helps women to overcome their poverty
-it empowers women and provides necessary confidence
• Simplified Procedures:
-procedures for financial assistance should be simple
-Women inspectors if available should be asked to inspect Women Enterprise
• Dispense Collateral Security:
-as women’s hardly have any property or assets to keep as guarantee
-finance cells should be opened at various public financial institution to
provide easy finance to women entrepreneurs
-finance should be provided at concessional rate of interest
Theories of Entrepreneurship
• Entrepreneurship is an evolved thing. With the advancement of science and
technology it has undergone metamorphosis change and emerged as a
critical input for socio-economic development.
• Various writers have developed various theories on entrepreneurship and
popularized the concept among the common people. The theories
propounded by them can be categorized as under-

• Economic theories
• Sociological theories
• Psychological theories
 Economic theories
• Entrepreneurship and economic growth will take place in those situations where
economic conditions (inflation, FDI,GDP etc)are favorable.
• Taxation policy, Industrial policy of government demand and supply, sources of
finance, infrastructural facilities, availability of raw material adequate
knowledge of technology etc.
Functions of entrepreneur by various economist:
J.B.Say
• Entrepreneur –combine the forces of production into a new production
organization
J.S.Mills
• Superintendence, control and direction
-Superintendence-assemble the means to supervise the work and to turn out
maximum at the minimum cost.
-Control- controlling the flow of goods, use of finance,utilisation of machinery
and activities of subordinates
-Direction- goal oriented person , he should constantly direct the organization
on the path of his objectives. Producing in present, what future will demand.
B.C.Tandon
-Ability to organize and administration
-Technological knowledge, alertness to know opportunities, willingness to
accept change and initiative
-capacity to assume risk and self-confidence
-patience and power of observance
 Sociological Theory
• Emphasizes social change instead of profits.
• The sociological theory entrepreneurship holds social cultures as the driving
force of entrepreneurship.
• Society’s values, religious beliefs, customs, influence the behavior of
individuals in a society
• The entrepreneur is a role performer according to the role expectations by
the society
• Yunus (social entrepreneur)is the founder of Grameen Bank in Bangladesh

• Sufia Khatun - stool-maker- she earned only 2 cents a day for her beautiful
craftsmanship- forced to borrow from a moneylender who demanded that she
sell her finished stools back to him at a price he set – a price so low that she
made only 2 cents a day profit- With her loan of less than $1 the stool-maker's
profits soared from 2 cents a day to $1.25(Rs.55.47) a day.(approximately
500%)
• 1cent= 0.43 paisa

• Microcredit-which makes tiny loans for self-employment to some of the

poorest people in that country.
• Microcredit given generally to street vending and farming.
• Award the Nobel Peace Prize for 2006- Muhammad Yunus and Grameen Bank
for their efforts to create economic and social development from below
• Theory of religious belief- Max Weber
• According to Max Weber, entrepreneurism is a function of religious belief and the
impact of religion shapes the entrepreneurial culture.
India- Marwaris and parsis considered to be dominant social classes as a source of
entrepreneurship.
Japan- samurai
Industralist in Pakistan - Halai Memon
• He emphasized that the entrepreneurial energies are exogenous supplied by means
of religious belief
• Spirit of capitalism(free enterprise): Spirit of capitalism is the guiding factor which
guides the
entrepreneur to get engaged in activities that can bring about more and more profit.
• Adventurous spirit: Spirit of capitalism is influenced by strict discipline, where as,
adventure spirit is affected by the force of impulse .
 Psychological Theory
• Entrepreneurship gets a boost when society has sufficient supply of
individuals with necessary psychological characteristics
• The psychological characteristics include need for high achievement, a vision
or foresight, ability to face opposition.
• These characteristics are formed during the individual’s upbringing which
stress on standards of excellence, self reliance and low father dominance
• Individual with high achievement motive-take great risk, desire for
responsibility and desire for concrete measure to task performance.

• Ex: Dhirubhai Ambani

• India's greatest entrepreneur ever
• Dhirubhai rose from humble beginnings to found India's largest industrial
empire and, in the process, became one of the world's richest men. He
transformed the way big business operates and thinks in India.
• Dhirubhai's is not just the usual rags-to-riches story. He will be remembered as
the one who rewrote Indian corporate history and built a truly global corporate
group.
• only thing which mattered at the end were results and the benefits which
accrued directly to the shareholders.
Characteristics:
• his phenomenal risk-taking ability
• His biggest success was his ability to carry people with him-belief that
business is nothing but a web of relationships and obligations.
 McClelland contribution to
Entrepreneurship
• McClelland identified 2 characteristics of entrepreneurship
• –Doing things in a new and better way
• –Decision making under uncertainty
• He stressed that people with high achievement orientation (need to succeed) were
more likely to become entrepreneurs
• Such people are not influenced by money or external incentives
• They consider profit to be a measure of success and competency
• According to McClelland, a person has three types of needs at any given time,
which are:
–Need for achievement (get success with one’s own efforts)
–Need for power (to dominate, influence others)
–Need for affiliation (maintain friendly relations with others)

• The need for achievement is the highest for entrepreneurs

 Schumpeter contribution for
Entrepreneurship
• Entrepreneurship Innovation theory
• Theory by Joseph Schumpeter who believes that entrepreneur helps the process of
development in an economy
• He says that an entrepreneur is the one who is innovative, creative and has a
foresight
• According to him, innovation occurs when the entrepreneur
– Introduces a new product or introduction of a new quality of existing product.
Ex:Apple, Automobile
– Introduces a new production method Ex: Henry Ford, Toyota
– Opens up a new market where it has not entered Ex: Tata-Defence
– Finds out a new source of raw material supply
– Introduces new organization in any industry (creating or breaking a monopoly)
• The theory emphasizes on innovation, ignoring the risk taking and organizing
abilities of an entrepreneur
• Schumpeter’s entrepreneur is a large scale businessman, who is
rarely found in developing countries, where entrepreneurs are small scale
businessmen who need to imitate rather than innovate
 Intrapreneur

Becoming an Entrepreneur
on the Job
• John Warnock and Charles Geschke.
• A classic case of intrapreneurs is that of the founders of Adobe
• They both were employees of Xerox. As employees of Xerox,
they were frustrated because their new product ideas were not
encouraged.
• They quit Xerox in the early 1980s to begin their own
business.
• Currently, Adobe has an annual turnover of over $3 billion.
• a science-based company
• produce thousands of imaginative products-Safety, Security and Protection
Services, Electro and Communications, Display and Graphics etc)

• 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.
• innovation-friendly atmosphere and intrapreneurial reputation
• Besides 3M, Intel also has a tradition of implementing intrapreneurship
 Definition
• Intrapreneurs are “dreamers who do”, those
who take hands-on responsibility for creating
innovation of any kind within an organization.
• Creator or inventor
• Finds out how to turn an idea into a
profitability reality.
 Characteristics of Intrapreneurial
Environment
• Innovative ideas
• Encourage Experimenting
• Initial opportunity parameter
• Availability of resources
• Encourage Team Work
• No force
• Rewards
• Support of top management
 Classification
• Innovative Intrapreneurs
• Technical Intrapreneurs
• Financial Intrapreneurs
• Marketing Intrapreneurs
• Manufacturing Intrapreneurs
• Service Intrapreneurs
 Intrapreneur Characteristics/Qualities

• Results driven • Persistent

• Ambitious • Influencing
• Creative • High Energy
• Original • Action oriented
• Self Confident • Interpersonal
• Risk Tolerant • Innovative
 Companies that get it
• 3M (a science-based company. produce thousands of imaginative products-Safety,
Security and Protection Services, Electro and Communications, Display and
Graphics etc)
– Post-It Notes

• Apple
– I pod
• Google
– Orkut
– Google News