Unit 1

Introduction to Entrepreneurship
Dr. Upma Paliwal
Definitions
Derived from French word Entreprendre
means “to undertake”.
Richard Carleton: “a person who buys
factors of production at certain prices in
order to combine them into a product with a
view to sell them at uncertain prices.”
Considered as a risk bearer. Ex. Farmer pays
definite price for seeds, fertilizers, pesticides,
labours etc but not certain at which price he
could sell his produce.
F.H. Knight: “a person who bears
uncertainty (risk which cannot be insured
& is incalculable) can be reduced by
taking insurance.”
J.B. Say: “one who combines the land of
one, labour of another & capital of yet
another & thus produces a product. By
selling product pays rent, wages and
interest.”
Peter F Drucker: “One who considers the
changes that take place in market as an
opportunity to do business. Innovation is his
tool.”
Joseph Schwnpeter: “Individuals who
introduce something new in the market or
economy.”
New encyclopaedia: An individual who
bears the risk of operating business in the
face of uncertainty about the future
conditions.
Meaning of Entrepreneur
Entrepreneurs are individuals who
actively form or lead their own
business and nurture them for growth
and prosperity.
Entrepreneurs: Born or Made?
Is there inborn talent required?

Assume that the answer is YES:

◦ then we can identify the main characteristics
◦ if we have them, fine - no others need to apply!
◦ we could start spotting talent in kindergarten
◦ we could "stream" these people
◦ we could discourage people without these talents
Entrepreneurs: Born or Made?
Assume the answer is NO:
◦ then schools could teach anyone
◦ would be a "profession" like law or medicine
◦ companies could establish "nurseries" for them
◦ government "incubators" would be successes

The real answer lies somewhere in-between

◦ Talent and education is the way
 Who is an Entrepreneur?
Situational more than personality

Flexibility Ability

Age
Distribution
for
Starting Company

20 25 30 35 40 45

Age
Who is an Entrepreneur?
Manager’s Opportunities
Future Goals
Change Status Quo

Satisfied
Possible Entrepreneur
manager

Perceived
Capability
Frustrated Classic
Blocked manager bureaucrat
QUALITIES OF
ENTREPRENUERS
 Mental ability: intelligent person.
 Organising ability: good organisation.
 Hard work: ready to work for long
hours.
 Discipline: highly disciplined-
everything to be in order for them.
 Clear objectives: regarding nature of
business & products to be produced.
Need for high achievement- they have a
strong desire for achieving something great.
Optimistic: highly optimistic- not disturbed
by present problems-hope favourable future.
Risk taking: they like challenges.
H.R. ability: maintain good relations with
other people (employee, vendors, customers,
bankers).
Emotional stability: have considerable
amount of self-control- business pressure can
be handled.
Communication ability: good
communication.
Self-confidence: tackle problems
immediately with self-confidence.
Adaptability: highly flexible- adapt
themselves for any conditions.
 Positive attitude: always think positively,
they do not leave hopes even under difficult
conditions.
They are also good managers, pro-active,
realistic, have comprehensive awareness &
conceptual ability.
FUNCTIONS OF
ENTREPRENUERS:
Market research
Idea generation
Product/ service analysis
Form of business: individual,
partnership.
Determination of business objectives:
main objectives, subsidiaries objectives,
short term, long term.
Promotional formality: getting license,
clearance of govt. Formalities.
Raising Capital: Own capital/Issue of
share/Borrowing loan.
Providing Infrastructure: Buying plant,
Machinery, Land.
Selection of human resources: right people
at right place.
 Carrying out the Operations: where to
purchase, scale of production, fixing price,
and advertisement mean etc.
Risk Bearing
Organisation of the Resources:
combining various factors of production.
Innovation
Exploration of new opportunities
Providing Leadership& Motivating the
people
WHAT IS
ENTREPRENURESHIP?
B. HIGGINS: “ The function of seeing
investment & production opportunities;
organising an enterprise to undertake a new
production process; raising capital; hiring
labour, arranging for raw material, finding a
site & combining these factors of production
into a going concern; introducing new
techniques, new commodities, discovering
new sources of natural resources & selecting
top-managers for day-to-day operations.”
SCHUMPETER: “Entrepreneurship is based on
purposeful & systematic innovation. It includes
not only the independent businessman but also
company directions & managers who actually
carryout innovative functions.”
AMERICAN CONFERENCE ON
ENTREPRENUERSHIP: “Entrepreneurship is
attempt to create value through recognition of
business opportunity, the management of risk
taking appropriate to the opportunity & through
the communicative & management skills to
mobilise human, financial & material resources,
necessary to bring a project to fruition.”
Thus Entrepreneurship is a combination
of various qualities like organisation
skills, innovativeness, risk-bearing,
managing uncertainty, ability to bring
together & use factor of production,
analysing market opportunities, observing
the change taking place in the market,
methods & technologies & studying the
tastes & preferences of consumers.
Path followed by Entrepreneur
 Five elements for entrepreneurship to happen…

The environment

1
The entrepreneurial The
The organizational context
process entrepreneur

The concept The resources

Figure 1.1:
The Entrepreneurship Process
 Entrepreneurship Vs
Management
Entrepreneurship
◦ Creating something new
◦ New product, new method of production, new
markets, new source of raw material
◦ Challenges the ‘norm’
Management
◦ Protects
◦ Stewardship of existing resources
Comparing Entrepreneurs to
Managers and Leaders
Entrepreneur Manager Leader

Innovates Administers Innovates

Creates Maintains Develops

Sees See problems Sees the future

opportunities
Asks how and Asks how and Asks what and
when when why
Makes it happen Does things Uses influence
right
Builds the team Relies on control Inspires trust
Intrapreneurship
There are people working in big org holding
key positions. They are quite innovative &
bring many changes in products & methods
of production. They possess all qualities of
an entrepreneur. Top managements in big
organisations encourage people holding key
positions to come out with new ideas so that
they can bring some changes in products &
services. They are also known as enter
corporate entrepreneurs or intraprenuers.
They serve as champions to others in the
organisation.
 Entrepreneur Intraprenuer

1. Entrepreneur is employer 1. Intraprener is employee

2. Independent in operation 2. Depends on the organization to
implement his ideas.
3. Bears all the risk involved in 3. Does not bear all the risk.
enterprise.
4. Exhibits higher need for 4. May not have high need
achievement. achievement
5. Profit is the reward. 5. Attractive salary, promotion &
incentives are the reward.
6. May not have formal 6. Should have some professional or
qualification. technical qualification.
7. Do not have any boundary for 7. He has to operate within the
operations. organisational policies.
CLASSIFICATION OF
ENTREPRENUERS
INNOVATIVE ENTREPRENEUR: he is
the one who introduces a new product or a
new method of production or opens a new
market or explore new source of supply of
raw material or carry out a new type of
organization. as per the Schumpeter
innovative entrepreneur are real
entrepreneur.
IMITATIVE/ ADOPTIVE
ENTREPRENEUR: are those who imitate
the successful entrepreneurs in techniques
innovated by others.
DRONE ENTREPRENEUR: Drone
entrepreneur are those who never allow any
change in their production & style of functioning.
They never explore anything. They are also called
Laggards. They are pushed out of market when
product loses its marketability.
FABIAN ENTREPRENEUR: are always
cautious. They neither introduce new changes nor
adopt new methods invented by others. They are
lazy. They follow old customs, old method of
production, techniques.
ENTREPRENEURIAL
MOTIVATION
INTERNAL FACTORS
Strong desire to do something new.
To be independent in Life.
Making the maximum use of
technical/professional knowledge.
Occupational experience/background.
Passionate about particular activity.
Dissatisfaction with present job.
To attain self-satisfaction.
EXTERNAL FACTORS
Utilizing Government grants & subsidiaries.
To continue ancestor business.
Financial assistance from Institutions.
Availability of resources.
Encouragement from big business houses.
Availability of sick units/ easy financial
terms.
Encouragement from family members.
Role of Entrepreneur in Economy

New product in market

Money circulation
New technology
Creation of employment
Discover new source of material
Better Standard of living

New ideas bring huge changes

Develop new market

Mobilize capital resources

ENTREPRENUERS &
ECONOMIC DEVELOPMENT:
OPTIMUM UTILISATION OF
RESOURCES- Resources are put to proper
use by Entrepreneurs. They combine various
resources Land, Labour, Capital, and
Organisation to produce goods.
GENERATION OF EMPLOYMENT-
provides employment, reducing
unemployment problem.
IMPROVEMENT IN STANDARD OF
LIVING OF PEOPLE- by providing
quality goods & services.
BALANCED REGIONAL
DEVELOPMENT- Government incentives
encourage entrepreneurs to establish industry
units in rural & backward areas- create
employment opportunities in industrially
backward areas.
NEW/ IMPROVED GOODS &
SERVICES: for the benefit of customers-
by regulating taking market research.
HELP AGRI SECTOR- providing high
yielding variety of seeds, fertiliser,
pesticides, agricultural implements etc
many entrepreneurs buy agricultural
produce for further processing.
 PROMOTE INTERNATIONAL
TRADE- exporting goods mfg by them
help govt to earn FE.
HELP COMMUNITY AT LARGE- by
providing welfare activities- adopting villages,
schools, stating educational institutes, healthcare
services, sports.
 CAPITAL FORMATION- pooling the savings
of people by issuing shares/ debentures- offering
more returns comparatively.
 DISTRIBUTION OF INCOME & WEALTH-
by establishing in rural / backward areas, not only
balance regional development but also
redistribution of income & wealth.
Role of Entrepreneurship in Economic
Development
Industry Structure
New technologies
Deregulation and privatization
Formation of new business communities
Increasing demand for variety
Government incentives and subsidies
Increasing flow of information
Easier access to resources
Entrepreneurial education
Return on innovation
Entrepreneur as a Hero
Self-employment is highly valued
Rising dissatisfaction at job
Acceptance of ex-entrepreneurs in the job
market
 Entrepreneurial Initiatives in India
 Institutes of national importance that have been
setup through an act of parliament (IITs, IIMs,
NITs, AIIMS, IISc etc.) are the main leaders in the
field of knowledge transfer.
Examples:
o Organizing Competitions like “Great Idea”,
helping and incubating ideas.
o IIT Kharagpur: Nina Saxena Excellence in
Technical award (Yearly).
 Entrepreneurial Initiatives in India-
“Top Incubation Center”

1. Centre for Innovation, Incubation&

Entrepreneurship (CIIE) - IIM Ahmedabad
 Set up in 2001
 Since inception CIIE has 15-odd innovations grow out of the
incubation centre in varied technologies
2. Society for Innovation and
Entrepreneurship (SINE)- IIT Bombay
 Set up in 2004
 It currently has 16 companies under its incubation programme
 Entrepreneurial Initiatives in India-
“Top Incubation Center”

3. Cell for Tech Innovation, Development &

entrepreneurship support- IIT Chennai
 Set up in 2000
 Organises national level competitions, ‘Breakthrough’ (general
business plan competition) and ‘Genesis’ (social entrepreneurship
plan competition)
4. Society for Innovation and Development
(SID) - IISc, Bangalore
 Set up in 2006
 The investigator is given a seed capital for Rs 20 lakh a year for
two years as soft loan for the approved plan
 Entrepreneurial Initiatives in India-
“Top Incubation Center”

5. The SP Jain Centre for Entrepreneurship

Development- SPJIMR
 16-week 'Start Your Own Business' programme-a public
programme held every six months.
6. Technology Business Incubator (TBI) - BITS
Pilani
 In association with DST, BITS has established Technology
Business Incubator in 2004
 So far, TBI has helped ten companies.
 Entrepreneurial Initiatives in India-
“Top Incubation Center”

7. Technology Incubation and Entrepreneurial

Training Society (TIETS) – IIT Kharagpur
 Set up in 2005, So far, the institute has been able to incubate
two companies over the last three years. Besides, an in house
panel has helped 11-12 ventures take wing.
8. Nirma Labs, Nirma University, Ahmedabad
 Established in 2004, Nirma Labs used to pride itself in a three-
step model for students who were interested to start their own
businesses-training, incubation and funding.
 Entrepreneurial Initiatives in India-
“Industry-Academia Interface”
Biocon Ltd and Indian School of Business
(ISB) have launched a cell for innovation
management.
Hewlett-Packard (HP) India recently
announced the winners of the second
annual edition of ‘HP innovate 2009’. The
award has been instituted to recognise and
reward outstanding creative ideas of young
engineering graduates in India
 Entrepreneurial Initiatives in India-
“Government and Non Government Support”
NASSCOM has signed a Memorandum of
Understanding (MoU) with University Grants
Commission (UGC), for
Faculty Development Programme (FDP)
Re-skilling the faculty in IT
Framework for co-operation to catalyze industry-
academia interface
 Entrepreneurial Initiatives in India
“The National Entrepreneurship Network (NEN)”
The National Entrepreneurship Network
(NEN) is a network of academic institutions
across India performing research &
developing and delivering world-class
education, skill-building programs,
networking activities and company-starting
assistance to new, high-growth
entrepreneurs.
 Entrepreneurial Initiatives in India
“The National Entrepreneurship Network (NEN)”

 NEN was launched in 2003 through an India-wide

selection process to select the Founding Partner
Institutions to anchor this network. The five NEN
Partners are:
◦ Birla Institute of Technology and Science- Pilani
◦ Indian Institute of Technology- Bombay
◦ Indian Institute of Management- Ahmedabad
◦ Institute of Bioinformatics andApplied Biotechnology- Banglore
◦ S P Jain Institute of Management andResearch- Mumbai
 Goal:
◦ NEN’s goal is to launch 2,500 entrepreneurs who will create a minimum
of 500,000 jobs by 2014.
Famous Entrepreneurs
 Bill Gates 1955

 By linking his
Microsoft software to
IBM's first PCs, he
dominated the industry.

 He developed a two-
prong strategy of
expanding the market
while maintaining a
strong hold on
competitors.
 Michael Dell 1965

 Created a new model for

PC sales

 Cutting out the retail

middleman and custom-
building computers to
suit buyer‘s needs put
Dell at the front of the
class of PC makers.
 Tom Anderson & Chris DeWolfe

 Founders of MySpace.com

 Registering 160,000 people

per day with no marketing.

 As of September 2007, there

are over 200 million
accounts.
 Oprah Winfrey1954

Oprah Winfrey turned her

name into one of the most
successful and respected
brands in the world.

Leveraged that fame into

other interests:
magazines, Web sites,
film and television
production and Social
Entrepreneurship.
 Muhammad Yunus 1940

 Founded a Grameen bankin

1983 in Bangladesh

 To lend small amounts of

money to the rural poor
in Bangladeshi villages.

 2006 Nobel Peace Prize

winner,
 Chad Hurley, Steve Chen & Jawed Karim

 Founders of YouTube

 Broadcasts 100
million short videos
daily on myriad
subjects

 Sold to Google
Ashutosh Gupta, 19

 Owner of Gupta
Financial Consulting

 Has clients with

revenues between
$200,000 and $3.3
million

 Estimates his business

will have revenues
between $150,000 and
$300,000
Sarah Schupp, 25

 Founder of University
Parent Media which
produces
visitor/information
guides for parents of
college students

 Expects around
$800,000 in
revenues in 2007.
 1930, Harland Sanders

Opened Sanders
Court & Cafe in the
front room of a gas
station.

Colonel Sanders
began franchising in
1952.

 Awarded the first

franchise to Pete Harman
in Salt Lak City, Utah.
 Dick and Mac

The business began in 1940, with a

restaurant opened by brothers Dick and Mac
McDonald in San Bernardino, California.

Their introduction of the "Speedee Service

System" in 1948 established the principles
of the modern fast-food restaurant. The
original mascot of McDonald's was a man
with a chef's hat on top of a hamburger
shaped head whose name was "Speedee.
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