ENTREPRENEURSHIP

Meaning and definition of entrepreneur and entrepreneurship Characteristics of entrepreneurship Qualities of a successful entrepreneur Risk faced by the present entrepreneur Classification , types of entrepreneur Role of entrepreneurship

 Entrepreneur is an economic agent who play an important role in economic development of a country. He possesses required knowledge, skills, initiative, drive and spirit of innovation and aims to achieve goals. He is dynamic persons, who brings changes in process of production, innovation in business, new ideas etc. The term Entrepreneur is derived from French word Entreprendre = ahn + tra + pra + nur = which means is a person who organises and manages a business undertaking, assuming the risk for the sake of profit.

 Generally speaking, entrepreneur refers to a person who establishes his own business or industrial undertaking with a view to making profits. An entrepreneur is considered to be an originator of a business venture. He takes the role of an organiser in the process of production. In the beginning the term entrepreneur used by musical or other entertainment. Later in 16th century it was used for army leaders

 In 17th century Civil Engineering uses this for construction activities. Only in 18th century the word entrepreneur was coined by Richard Cantillon (1680-1734) an Irish Economists entrepreneur refers to economic activities. An entrepreneur is considered to be an originator of a business venture. He takes the role of an organiser in the process of production.

Definitions English Dictionary, 1987 An entrepreneur is a person who sets up business deals in order to make a profits. J.B Say (1803) An entrepreneur is the economic agent who unites all means of production. Richard Cantillon An entrepreneur is the agent who buys factors of production at certain prices with a view to setting its product at uncertain prices. He bearer risk, which is noninsurable.

 Peter F. Drucker Entrepreneur is one who always searches for change, responds to it and exploits it as an opportunities. Innovation is a specific tool of entrepreneurs, the means by which they exploit change as an opportunity for different business or service. E.E. Hagen (1958) Defines an entrepreneur is an economic man who tries to maximise his profits by innovations. Innovations involve problem solving and the entrepreneur gets satisfaction from using his capabilities in attacking problems.

 Schumpeter (1952) An entrepreneur in an advanced economy is an individual who introduces something new in the economy a method of production not yet tested by experience in the branch of manufacture concerned, a product with which consumers are not yet familiar, a new source of raw-materials or of new markets and the life. Accordingly to him the functions of an entrepreneurship are
Introduction of new product Introduction of new methods of production Development of new markets and finding fresh sources of raw-materials and Making changes.

 Thus, an entrepreneur is always action-oriented. He has the ability to visualise the necessary steps involved from idea generation to its actualisation. He is both a thinker and doer, planner and worker. He is accepts risk and manages it. To summarise, an entrepreneur is the person who bears risk, unites various factors of production, to explore the perceived opportunities in order to evoke demand, create wealth and employment.

Concept of Entrepreneur As said above definitions on entrepreneur are broadly classified into three groups
Risk Bearer

Entrepreneur

Organiser

Innovator

Innovation

New process & production Creation of new market New Technology New sources of raw material New sources of transport & communications

RiskBearing

Functions of Entrepreneur

Assembling Factors of Production

Organization & Management

Decide project Raise Finance Plan Production Manage Enterprise Earn Profit

1. Entrepreneur as risk bearer Richard Cantillon defined entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. He pays contractual income rent for land, wages and salaries to labourers interest to capital. Hence both of them are risk-bearing agents of production. P.H. Knight described entrepreneur to be a specialized group of persons who bear uncertainty.

2. Entrepreneur as an organiser According to J.B. Say an entrepreneur is one who combines the land of one, labour of another and capital of yet another and thus produces a product. By selling the product in the market, he pays interest on capital, rent on land and wages to labour and what remains is his profit. This concept of entrepreneur is associated with the functions of co-ordination, organisation and supervision.

3. Entrepreneur as an innovator J.A Schumpeter (1934) considered economic development as a dynamic change brought by entrepreneur by instituting new combinations of factors of production i.e., innovation. The introduction of a new combination according to him
1. Introduction of new product in the market 2. Use of new method of production, which is not yet tested. 3. Opening of new market 4. Discovery of new source of raw-materials. 5. Bringing out of new form of organisation.

 Schumpeter also made distinction between inventor and innovator An inventor is one who discovers new methods and new materials. An innovator utilises inventions and discovers in order to make new combinations. Hence, an entrepreneur can be defined as a person who tries to create something new, organises production and undertakes risks and handles economic uncertainty involved in enterprise.

Invention

The creation of something new

Results in new knowledge

Innovation

The transformation of an idea or resource into useful application

Results in new product, services or process

World famous and Successful Entrepreneurs

Sl No. Name of the successful Entrepreneurs Areas of enterprises
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Steve Wozniak Bill Gates Oprah Winfrey Michael H & Jay Arrington Steven Spielberg Vera Wang Donald Trump Russel Simmons Gordon Moore Tyler Perry Bill Hewlett Mark Burnett Larry Page & Sergey Brin Ted Turner Apple Computers Microsoft Harpo inc. Harpes Arring to Publishing and media Film Industry Vera Wang Fashions Trump Enterprises Pat Farm Clothing Intel Corporation Tyler Perry Productions Hewlett Packard Television Show Producer Google Turner Broadcasting

10 most famous Entrepreneurs from India

Sl No. 1. 2. Name of the successful Entrepreneurs Tulsi Tanti Shiv Nadar Area of enterprises (industry) Suzion Energy Limited Hindustan Computers Limited (HCL)

3.
4. 5. 6. 7. 8. 9. 10.

Rahul Bajaj
Dr. Pratap Reddy Naresh Goyal Narayana Murthy Anil Dhirubhai Azim Premji Ekta Kapoor Kiran Mazumdar Shaw

Bajaj Group
Apollo Hospital Groups Jet Airways Infosys Technology Limited Anil Dhirubhai Ambani Groups Wipro Technologies Queen of Indian Television Biotechnology Company in India

Evolution of Entrepreneur The term entrepreneur is derived from the French word Entreprendre which mean to undertake business activities for the sake of profits. However the current meaning of entrepreneur has evolved through centuries of various usages of the same word. Some stages of the evolution of the concept entrepreneur are as follows In the beginning the term entrepreneur used by musical entertainment. Middle Age Actor or person-in-charge of large scale production project.

 16th Century people who organised and led military expeditions in France. 17th Century Person bearing the risk of either profit or loss in a fixed-price contract with the government. 18th Century An entrepreneur as a person is risktaking and different from the person who supplies capital. 19th Century An entrepreneur is distinct from both a financier as well as manager. A Financier receives interest for funds supplied while a manager receives salary for responsibilities discharged. 20th Century An entrepreneur came to be know as an innovator and risk-taker during the middle of 20th century.

Characteristics of entrepreneur
An entrepreneur is a highly goal oriented, enthusiastic and energetic individual. Anybody can become an entrepreneur provided he has got a certain set of behaviour traits and mental aptitudes. His success depends more on hard work than good luck. He must be a DOER and not a DREAMER. The success of an entrepreneur depends largely on his intelligence, imagination, capacity to innovate and his ability to turn visions into realities.

 It is not necessary that he should possess

a professors intelligence, a prophets foreseeing capacity, a salesmans persuasiveness, a bankers financial talent, a politicians power, a filmstars magnetic personality.

The only capacity, very essential to become an entrepreneur is the willingness to work hard.

1. Action-oriented highly motivated and ready to take risk at all levels to achieve the goal. 2. Should have unwavering (solid) determination and commitment. 3. Creativeness and result oriented, hardworking 4. Accepts responsibilities with enthusiasm 5. Self confident, dedicated and self disciplined 6. Both thinker and doer, planner and worker 7. Future vision, intelligent, imaginative and self directed.

Characteristics of Entrepreneur
E N T R E P R E N E U R Effective communication Negotiating skills Total commitment/tactical/team man Risk-taking ability Emotional Stability/Ethical Problem solving Result oriented Energetic Net working ability Excellence in Economics Unambiguous (unmistakable; definite) Real Innovator

Accepting Challenges

Decision Making

Organisation

Risk Taking

Skillful Management
Management of the enterprise A Success

Innovation

Entrepreneurship

1. Vision An entrepreneur has a dream and visualizes to achieve that dream. In doing so he visualises marked demand, socioeconomic and technical environment. Without a vision of making a big mark on the mobile industry Dhirubhai and now Ambani could not have made what Reliance Communication is today. 2. Knowledge An entrepreneur has sound conceptual knowledge about all the technicalities of his business. Technological, operational, financial or market dynamics. For example without sound knowledge of computers Narayanamurty could not have made Infosys what it is today.

3. Desire to succeed An entrepreneur has a strong desire to succeed in life. Their dreams are not just limited to achieving one single goal but they constantly work to achieve higher goals. For example Mukesh Ambani Retail, Real Estates and Bio-tech. 4. Independence An entrepreneur needs independence in work and decision-making. They dont follow the rules of thumb but make their own rules and destiny. Shabeer Bhatia quite his job and start new business on his own Hotmail, internet Portal and Arzoo.Com.

5. Optimism Entrepreneurs are highly optimistic about achieving their vision Narayanamurthy Infosys for example. 6. Value Addition Entrepreneurs do not follow the conventional rules of thumb. They have a constant desire to introduce something new to the existing business. They create, innovate or add value to the existing products and services. Without the value addition of introducing life time free incoming call Tata Indicom.

7. Leadership An entrepreneur exhibits the qualities of leader. They are good planners, organisers, good communication skills, empathetic towards their employees, good decision makers, initiative to implement plans and result-oriented. 8. Hardworking work is worship They put in continuous efforts to achieve success and know that there is no substitute for hard work. Put in hard work from now to find changes in your own aspirations, growth and sustainability.

9. Desire to have control over their own fate Entrepreneurs do not want to move in herds like sheep but want to pave their own paths. They do not believe in luck or destiny but create their own destiny. Sarath babu of IIM, Ahmadabad. 10. Risk taking ability Frank-Knight has identified risk-taking ability as the most integral element in defining entrepreneurial characteristics.

Types of Entrepreneurs
1. 2. 3. 4. Low growth Entrepreneur Medium growth Entrepreneur High growth Entrepreneur Very high Entrepreneur

Growth of Entrepreneurs

Types of Business

1. 2. 3. 4. 5. 6. 7.

Business Entrepreneur Trading Entrepreneur Industrial Entrepreneur Corporate Entrepreneur Agricultural Entrepreneur Retail Entrepreneur Service Entrepreneur

Use of Technology

1. 2. 3. 4. 5.

Technical Entrepreneur Non-technical Entrepreneur Professional Entrepreneur High-tech Entrepreneur Low-tech Entrepreneur

According to Area

1. Urban Entrepreneur 2. Rural Entrepreneur

Gender and Age

1. 2. 3. 4.

Men Entrepreneur Women Entrepreneur Young Entrepreneur Old Entrepreneur

Stage of Development

1. First Generation of entrepreneur 2. Classical Entrepreneur 3. Modern Entrepreneur

1. Small Scale Entrepreneur 2. Medium Scale Entrepreneur 3. Large Scale Entrepreneur 1. 2. 3. 4. Innovating Entrepreneurs Adoptive Entrepreneurs Fabien Entrepreneurs Drone Entrepreneurs

Scale of Entrepreneur

Others

Scale of Production

Small Scale Entrepreneur

Medium Scale Entrepreneur

Large Scale Entrepreneur

1. Innovative Entrepreneur An innovating entrepreneur is one who introduces new goods. Inaugurates new method of production. Discovers new market and re-organizes of the enterprise. Peter F. Drucker - an innovating entrepreneur is one who always searches for change, responds to it, and exploits it as an opportunity. He creates new values or increases the value of what already exists.

 Joseph Schumpeter, only the innovating persons are designated as entrepreneur. The ordinary producers repeat the same production for years where as innovators produce new goods in new ways and enter into new strategies.
1. Introduction of new product in the market 2. Use of new method of production, which is not yet tested. 3. Opening of new market 4. Discovery of new source of raw-materials. 5. Bringing out of new form of organisation.

2. Adoptive or imitative Entrepreneur Imitative entrepreneur is one who is ready to adopt the successful innovations already inaugurated by innovating entrepreneurs. In other words, an imitative entrepreneur does not innovate anything by himself, but he only imitates techniques and technologies innovated by others. He follows the innovators after carefully observing how the later fare and to what extent their innovation has caught the imagination of the society. Such types of entrepreneurs are particularly suitable for the under-developed regions. For example the Cochin Shipyard has been constructed by using the innovative technology provided by Mitsubishi Heavy Industries Ltd by Japan.

3. Fabian Entrepreneur These are traditionally bounded entrepreneur who always be cautious and they neither introduce new changes nor adopt new methods innovated by the most enterprising entrepreneurs. They are lazy, follow old customs, traditional sentiments etc. Hence, they are totally uninterested in taking risk and imitating successful entrepreneurs.

4. Drone Entrepreneurs Drone entrepreneur is one who blindly follows the traditional methods of production even when it causes loss to him. He is not prepared to introduce any change under any circumstances in the method of production he has already introduced. He continue to carry out his business in the traditional way even when he suffers losses Coir Industry in Kerala is dominated by drone entrepreneurs

Types of Business 1. Industrial Entrepreneur Industrial entrepreneur is an entrepreneur who is into manufacturing of a product. He identifies the needs and wants of customers and accordingly manufactures products to satisfy these needs and wants. It would include all the entrepreneurs essentially into manufacturing. 2. Trade Entrepreneurs Trading entrepreneur is one who undertakes trading activities (buying and selling of goods and services) and is not concerned with manufacturing of products. He identifies potential markets, stimulates demands and generates interest among buyers to purchase a product.

3. Agricultural Entrepreneurs Agricultural entrepreneurs are those entrepreneurs who undertake business related to agricultural activities. Like farm equipments, fertilizers and other inputs of agriculture. They provide supportive products that can increase the agricultural production through biotechnologies, mechanization and improvement in agricultural yield. 4. Service Entrepreneurs Such entrepreneurs engage in service activities like repair, consultancy, beauty parlor etc where entrepreneurs provide service to people. 5. Corporate entrepreneurs Corporate entrepreneurs undertake their business activities under legally registered company or trust.

 Stages of Development First Generation Entrepreneur A First Generation Entrepreneur is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable product or service. Classical Entrepreneur A Classical Entrepreneur a stereo-type entrepreneur is one whose aim is to maximize the economic returns at a level consistent with the survival of the firm, with or without element of growth. Modern Entrepreneur Modern Entrepreneur is one who undertakes business to satisfy the contemporary demands of the market. They undertake those venture which suit the current socio-cultural trends.

Use of Technology Technical Entrepreneur - is essentially compared to a master craftsman who develops and improved quality of goods because of his technological expertise. In this type concentration is more on production than on marketing. Non-technical Entrepreneurs are those who are not concerned with the technical aspects of the product, but concerned only with marketing and distribution for promoting their business. High-tech Entrepreneurs who concerned with updated technical aspects of their product. Professional Entrepreneurs is a person who is interested in establishing a unit, but does not have interest in managing it , once it is established.

 Rural Entrepreneurs Entrepreneurs selecting rural based industrial opportunity in either khadi or village industries sector or in farm entrepreneurship are regarded as rural entrepreneurs. According to khadi and village industry commission (KVIC) Village or rural industry means any industry located in rural area, population of which do not exceed 10,000 which produces any goods and services in which fixed investment of an artisan or a worker does not exceed Rs. 1,000. Women Entrepreneurs According to GOI an entrepreneurs is defined as an enterprise owned and controlled by 16 women and having minimum financial interests of 51% of the capital and giving at least 51% of the employment generated in the enterprise to women. Women entrepreneurs play an important role in economy especially in rural areas.

Qualities of Successful Entrepreneurs There are different belief on what makes successful entrepreneurs. The study conducted by Entrepreneurship Development Institute of India (EDI) has identified the following entrepreneurial competencies High achievement and success, Risk-taking, Opportunity explorer, Planner, Stress taker, Facing uncertainties, Independent, Flexible, Self confidence, Motivation

 James J. Berne has stressed the following qualities of good entrepreneur 1. He is an enterprising individual energetic, hardworking, resourceful, aware of new opportunities and able to adjust himself to changing world. 2. He is interested in a advancing technologically and improving the quality of his product or services. 3. He is interested in expanding the scale of operation. 4. He can adopt himself to changing world. 5. He is a firm believer in planning and systematic work. 6. He works for the society at large and for the good of his fellow-being.

Success and Achievement

Risk-bearing

Opportunity & explorer

Motivation

Planner

Qualities of Entrepreneurs
Self-confident Stress taker

Flexible

Independent

Facing Uncertainties

1. Success and achievement The entrepreneurs are self directed to achieve goals. Strong desire to do something different from others Standard of excellence and success High self-esteem. 2. Risk-bearer Takes calculated risks career risk, financial risk, psychological risk, technological risks etc. Does not like to undertake tasks which are either very easy or impossible to achieve Undertakes tasks or makes decisions that involve a moderate probability of success and where he is sure that his efforts can influence success

3. Opportunity explorer He always identifies opportunities and explores them. New product, new technology, new market, discovering new sources of raw-materials and new means of transportation and communication. 4. Planner He is a good planner and doer. He plans and follows the plans sincerely to achieve the goals. planning is a first step of entrepreneur. He prepares his plan of proposed project or business in a very systematic way

5. Stress taker He should accept and bear any amount of stresses that may evolve in the business. Fully commits himself to the project and rests only when achieved longer hours works. What ever problem arises he can take it positive ways. 6. Facing uncertainty They should face the uncertainties and unexpected outcomes and accept them sudden price increases, policy can be change, business recession etc.

7. Independent He is an independent person and likes to be his own master - He is a job given and not job seeker. An entrepreneur needs independence in work and decision-making. The entrepreneurs dislike controls from outsiders government, politicians etc. 8. Flexible He is an open minded person, flexible to adopt to demanding situational changes economic policy and budget policy etc.

9. Self-confidence He directs his abilities towards the accomplishment of goals. What ever steps taken by him, he feel confident about his ability. 10. Motivation A Successful entrepreneur should be a good administrator. He should know the art of getting things done by other people without hurting their feelings or selfrespect. He initiates and influences people, motivates the people to accomplish the goals.

Entrepreneurial Skills Entrepreneurs do not shoot in dark room, they are not gamblers, yes they do take risks but only calculated risk. Some experts think of entrepreneurs are willing to take risks that other people are not. Types of risks 1. Career Risk 2. Financial Risk 3. Psychological risk 4. Business Management risk 5. Technological risk

1. Career risk own risk He has risked his means to earn a living for himself and his family. He takes a career risk either by not opting to take up a job or by leaving a job. In doing so, on one hand his livelihood is at risk and on the other hand, his professional reputation is at risk. The career risks are
1. To work for someone else 2. To be a self-employed professional 3. To be an entrepreneur

2. Financial Risk Any business venture needs finances for creation, functioning and growth. And since there is an element of uncertainty involved in the success of business, the finance which he has arranged from his savings and borrowings is at stake. 3. Psychological Risk Business involves a series of uncertainty due to consumer demands, competitors strategies, new innovations and substitute products, government polices, changing economic conditions and demographic trends etc.

Technical Skills
Writing, Oral Communication, Monitoring environment, Technical Business Management, Technology, Interpersonal, Listening, Ability to organise, Network building, Management style, Coaching and Being a team player

Business management Skills

Planning and goal setting, Decision making, Human relations, Marketing, Finance, Accounting, Management, Control, Negotiation skill, Venture launch, Managing growth

Role of Entrepreneurs in Economic Development Entrepreneurs play an important role in the economic development of a region. Economic development implies development of agriculture, industry and service sectors resulting in an increase in the per capita income of the country. The economic development largely depends on human resources. Again human resources alone cannot produce economic development. It requires an agent who is nothing but a dynamic entrepreneur. The entrepreneur really acts as a captain of a ship of economic development

 Economic development cannot be attained by a country without achieving balanced regional development - large scale employment generation. The regional imbalance in a developing economy like India is overcome by decentralized industrial structures. Various state government and central government have designed variety of schemes such as Entrepreneurship Development Institute Technical Training Institute Training Consultancy Organization Export Promotion Boards and Councils etc.

Role of Entrepreneurs in economic development of the country is summarized below 1. Coordinating Role 2. Capital formation 3. Generation of Employment 4. Improvement of Per capita Income 5. Reduces concentration of wealth and income 6. Balanced Regional Development 7. Resource Mobilisation 8. Improvement in Standard of Living 9. National Self-reliance 10.Harnessing Natural Resources

1. Coordinating role The essential function of an entrepreneur is to coordinate the various factors of production. Coordination involves selection of the right type of factors, employment of each factor in the right quantity, use of the best technology, division of labour etc. Schumpeter feels that economic development will be a reality if new combinations of factors of production are undertaken. In the absence of this coordinating role, the factors of production will remain idle in the country.

2. Capital formation Entrepreneurs promote capital formation by mobilising the idle savings of the public. Again, the profits they earn lead to savings of wealth which ultimately goes to capital formation. Entrepreneurs have been referred to as the human agents needed to mobilse capital to exploit natural resources, to create markets and to carry on trade. Without capital formation, economic development would remain static.

3. Generation of Employment By creating a new venture, entrepreneurs generate employment opportunities for others. Unemployment is a major issue, especially in the context of developing economies like India. Educated youth often are unable to get a suitable employment for themselves. Thus, entrepreneurs do the service by not only employing themselves into entrepreneurial ventures, but also by employing others.

4. Improvement in Per capita income Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase Net National Product and Per Capita Income in the country, which are important yardsticks for measuring economic development. 5. Reduces Concentration of Wealth Entrepreneurs help in reduction of concentration of wealth and economic power in the hands of few people.

6. Balanced Regional Development Entrepreneurs help in remove regional disparities in economic development. Entrepreneurs play a dominant role to achieve balanced regional development by starting small-scale industries. Small scale industries provide immediate large scale employment, ensure a more equitable distribution of national income and thus facilitate balance regional development. In addition, various concessions and subsidies, they setup industries in backward areas, facilitating the development of that area ensuring balanced regional development. They help in equitable distribution of resources, wealth, income and political power in the entrust of the country.

7. Resource Mobilisation Entrepreneurs encourage effective resource mobilization of funds and skill which may otherwise remain unutilized or underutilized. 8. Improvement in Standard of Living Entrepreneurs help in removing scarcity of essential commodities and introduce new products which help to improve the standard of living of a common man. Besides this employment generation also helps in improving the living standards.

9. Role of Innovation Innovation is a key to entrepreneurship. Innovation implies the commercial application of an invention. As an innovator, the entrepreneur assumes the role of a pioneer and an industrial leader. Entrepreneurs have contributed many innovations in developing new products and the existing products and services. All these have resulted in economic development by providing more employment and more income etc. Infact, the innovational activity raises the productive efficiency of the economy resulting in greater output and income.

10. Export Promotion role Entrepreneurs also promote a countrys export trade which is an important ingredient to economic development. 11. Harnessing Natural Resources Entrepreneurs help in harnessing vast natural resources of the country for its economic growth. 12. National Self-reliance Entrepreneurs help in manufacturing import substitutes thereby reducing dependence on foreign countries. They contribute substantially in the countrys export trade and help to earn scares and vital foreign exchange for the country. This leads to economic independence of the country.