Entrepreneurship
Business man who starts business( new idea)
Introduction
Entrepreneurship is the act of and the art of being and
entrepreneur or one who undertakes innovations or may be revitalizing which
your organization in response to a proceed opportunity.
The most oblivious forms of entrepreneurship is static a new
business .when entrepreneurship is describing activities within a firm or large
organization it is refer to as intra-pre-neurship. Which includes corporate
venturing when large entities come together.
The person who starts business is called
entrepreneur and process is called entrepreneurship.
Definition of
entrepreneur
According to new
encyclopedia Britannica an individual who bear the risk of operating a business
in the face of uncertainty about the future conditions.
Entrepreneur
qualities / features
Entrepreneur
behaviors:
- Grasping opportunity: to find out new opportunity.( new
things)
- Taking initiatives: decide whether go through or not
- Solving problem
creatively: solve
different situation ( take action immediately)
- Managing
autonomously: manage
resources, people in organization
- -
managing in what they have(limited)
- Taking
responsibility for ownership of things: should be answerable (developing team.)
- Seeing things
through: seeing development
of business and future of business.
- Putting things /
resources together creatively: putting together resources ( HRM, finance , marketing)
- Calculating the
risk: should have quality
of calculating risk.
Entrepreneurial
attributes
- Achievement oriented
and ambitions:
qualities of achieving target (things)
- Self confidence and
self esteem:
- Action orientation: having information on law to do work
using others.
- Preference for
learning by doing:
- Hardworking :to achieve target
- Determination: identifying situation (guess)
- Creativity:
Socio
economic origins of entrepreneurship
1. Cast origins: (categories of people.) To begin with
some social groups produced a large and more capable body of entrepreneurs than
other groups. This is due to the influence of privening social factors. It has
often being suggested that certain religions and caste encourages the growth of
entrepreneurial talent.
2. Entry into
entrepreneurship: the time
and age at which the entry is made into entrepreneurship are important factors.
Some communities entered the field of entrepreneurship earliest when compared
with other communities. It reviews the resource fellness and enterprising
quality of that community.
3. Family background: (family support or family status) this
factor includes size of family, type of family and economic status of family.
Some studies reviled that the individuals family help to gain access to
political power and exhibited higher level of entrepreneurship. To some extent
the joint family provides the family property to invest and expand the family
firms.
4. Religious back
ground: (attract due to
religious) religions exercise are strong influence on attitudes towards
material gains relatively to efforts. Max Weber who propound (found) the theory
that the “protestanethic” ethics among Christian foster the right attitude for
entrepreneurship on the other hand Islam and Hindu religions do not foster
(influence) such an attitude.
5. Education and
technical knowhow: (base of
education level of people) education, entrepreneurship and development are
interrelated. Education is the best means of developing the individual’s resources
fullness which encompasses different dimensions of entrepreneurship. It may be
expected that the high level of education may enable the entrepreneurs to exercise
their entrepreneurial talent more efficiently and effectively.
6. Occupational
background: (because of jobs)
the employed people were more attracted towards entrepreneurship than those
engage in agriculture or business. The maximum number of entrepreneurs were the
unemployed youth who starts their own industrial units.
7. Migratory character: (moving one country to another , moving
for doing business) as much as 4/5 of the entrepreneurs were imigrance or
foregoers who comes from different places or country.
8. Type of industry to
started: (because of
industry in that place ) nearly 2/3 of
the entrepreneurs started industrial units in ingeiary works a little more than
1/10 prefers to start units in non-metallic products. While 7.5% starts units
related to plastic works industry.
9. The type of
ownership preferred: (
availability of resources) more than ½ of the units were partnership firms,
nearly 1/3 were sold trading concern and about 1/10 were Pvt.ltd. companies . Most
of the entrepreneurs prefers partnership to avoid legal formalities involved in
the starting of company.
Environment
factors affecting entrepreneurship (difficulties)
1. Sudden changes in government policy
2. Sudden political upsurge
- - sudden change in political parties
3. Out break of war or regional conflict
(during war – difficulties for entrepreneur)
4. Political industry/ hostile government
attitudes towards industry. (attitude of political parties ot government
–parties in the GOV.
5. Excessive red-tapsim and corruption among
government bodies / agency.( if there is corruption in government)
6. Ideological and social conflicts. (Eg:
new entrepreneur want enter the market but there is some product which society
already aware.
7. Unreliable supply of power-material,
finance, laboure and other inputs. ( limited supply for business)
8. Rise in the cost of inputs( raw material
cost high)
9. Unfavorable market fluctuation (economic
problem –recession-)
10. Non co-operative attitude of bank and
financial institutes.
Requirement
of entrepreneurial structure.
The main requirement
of the entrepreneurial structure are as follows:
1. The new business should be organized
separately from the existing business. People responsible for an existing
business try to postpone actions an anything new and cannot become
entrepreneurs.
2. There should be a separate law for the
new venture within the organization. A new project should be the specific
responsibility of same body in top management.
3. A new innovative project requires
different set of policies, rules and evaluation criteria than the existing one.
4. The returns on new innovation will be
quit different from those of the existing business and will have to be measured
differently.
5. A person or a group should be clearly
accountable for the success or failure for the innovations.
Entrepreneurs
and managers
1. Innovation
The entrepreneurs does not live with the status qvo. He works to
change in accordance with his or her personal vision and values. He is more
than an inventor, an inventor only originates the invention. But the entrepreneur
goes much further by exploiting the invention commercially. But a manager only deals with day to day affaires of going concern.
An entrepreneur is change agent while a manager is the product of
change.
2. Risk taking
An entrepreneur takes calculated risk but he is not a gambler(
those who take risk) but he faces uncertainty and assumes risks. When compare
to the manager he is less tolerant of uncertainty. He doesn’t face the
uncertainty of a new venture with its potential for failure and financial loss.
3. Rewards
An entrepreneur is motivated by profits while the manager is
motivated by externally inposed goals and rewards. The gains of an entrepreneur
are uncertain at irregular and can be negative. The salary of a manager can be
temporary , fixed or regular and can never be negative.
4. Skills
The role of entrepreneur and manager demand different types of
personal skills. An entrepreneur needs creative thinking and innovative ability
among other skills. On the other hand a manager depends more on human relations
and concept abilities.
5. Status
Anrepreneur is self employed individual and he is his own boss. On
the other hand a manager is a salaried person and he is not independent.
6. Response to
authority
One of the main features that distinguish managers from
entrepreneurs os their ability to identify in a positive constructive way with
authority use by them as role models.
Management involves combining or coordinating resources to produce
where as entrepreneurship involves combining to initiate changes in production.
Theories of entrepreneurial supply (origin)
1. Sociological theory: entrepreneur is the part of society, origin of entrepreneur is
society
The sociologist argue that entrepreneur
is most likely to emerge under a specific social culture. According to there
social sanction culture values, and role expectation are responsible for the imagine of
entrepreneurship. According to Cochran “ the entrepreneur respects social model
personality. His performance depends upon his own attitude towards his
occupation. In several countries entrepreneurs have emerged from a particular
socio economic class.
Eg)
- samurai in Japan (society in Japan)
- family
pattern in France
- Christian in Lebanon
- Yoruba in Nigeria
2.
Psychological theory: attitude of doing new things or particular things
According to the advocates of this theory
entrepreneurship is most likely to emerge (born) when a society has sufficient
supply of individuals possessing (having) particular psychological characteristics.
According to Schampeter “ entrepreneurs are primary motivated by will to power,
will to found a private kingdom of their own. Their main characteristics are:
A) An insititutional capacity to see things
in way which after words probes correct.
B) Energy of will and mind to overcome fixed
habits of thought.
C) The capacity to with stand social
ppporsitions.
3.
Economic theory: the person who regularly analyze the economy.
According to the economist
entrepreneurship and economic growth will take place in those situation where
particular economic conditions are most favorable. According to TR Harris the
main advocate of this, theory according to his economic incentives are the main
drive for the entrepreneurial activities. In some cases it is not so evident
but the persons in a drives have always being associated with economic gains.
There for these incentives and gains are regarded as the sufficient condition
for the emerging of industrial entrepreneurs.
Classification types of entrepreneurs
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1. Entrepreneur
according to type of business.
1. Business
entrepreneurs:- business
entrepreneurs are individuals who creates the idea for a new product or service
and then create the business to materialized the idea into reality. They may
setup a big establishment or a small business units. They are called small
business entrepreneurs when found on small business units such as printing
press, textile processing house, advertizing agency etc..
2. Trading
entrepreneur:- the
trading entrepreneur is an individual who undertakes trading activities and is
not concern with the manufacturing work. He identifies potential markets,
stimulates demands for his product line which creates a desire an interest
among buyers to go in for his product line. He is engaged in worth domestic and
over seas trade.
3. Industrial
entrepreneur :- it is
essentially a manufacture who identifies the potential needs of customers and
creates the product oriented man who states in an industrial units because of
the possibility for new product.
4. Corporate
entrepreneur :-
corporate entrepreneur are those individuals who demance strata there
innovative skills in organization and managing corporate undertakes. A
corporate undertaken is a form of business organization which is registered
under some act which gives a separate legal entity. For example : a trust
registered under trust act or company registered under the companies act is
example for cooperate undertaken.
5. Agricultural
entrepreneur :-
agricultural entrepreneur are those individuals who undertake agricultural
activities like raising and marketing of crop, fertilizes and other imputes.
There are motivated to raise agriculture through mechanization, irrigation and
application of technologies for fry land agricultural products.
2. According to
technology
1. Technical
entrepreneur : a
technical entrepreneur is essentially compare to a craftsman. He develops
improve quality of goods because of the craftsmanship and technical knowledge.
He concentrates more on production then marketing activities.
2. Non technical
entrepreneur: this are
people non technical entrepreneurs. This are people who are not concern with
the technical accept of the product in which they deal. There are concern only
with developing alternative marketing strategies and distribution strategies to
promote the business.
3. Professional
entrepreneur:
professional entrepreneurs are those individuals who are interested in
establishing a business, but does not have interest in managing or operating it
once it is establish. The professional entrepreneur sells out the running business
and states another venture with the sales
proceeds.
3. Entrepreneur and
motivation
1. Pure entrepreneur :- a pure entrepreneur is an individual
who is motivated by psychological economic reward. He undertakes an
entrepreneur activity for hid personal satisfaction in work, ego and status.
2. Induced entrepreneur : he is a person who is induced to take
up and entrepreneurial task due to the policy measures of the government that
provides assistance, incentives, concessions and necessary over head facilities
to start the enterprise due to financial, technical and several other
facilities provided to them by the local government to promote
entrepreneurship.
3. Motivated
entrepreneur: all the
new entrepreneur are motivated by the desire for fulfillment. They come into
existent because of the possibility of making and marketing some new product
foe the use of customer. If the product is develop to selling stage then the
entrepreneur Is further motivated by reward in terms of profit.
4. Spontaneous
entrepreneur: these
entrepreneurs starts there business because of there natural inborn talents.
This individuals are persons with initiative, boldness and confidence in there
ability which motivates them to undertakes entrepreneurial activity.
4. Growth and
entrepreneur
1. Growth entrepreneur: growth entrepreneurs are those
individuals who necessarily take up growth industries which has substantial
growth prospects.
2. Super growth
entrepreneur: are
those individuals who starts multiple number of businesses which are also
having enormous growth of performance in there venture. There growth
performance is indentified by the liquidity of funds, allocation of resources
for running the multiple numbers of businesses together.
5.
Entrepreneurs and stages of development
1. First generation
entrepreneur: the
first generation entrepreneur are those individuals who are the first persons
who would be starting there own enterprise. There are essentially innovators
who combines different methods or technologies to produce a marketable product
or service.
2. Modern
entrepreneurs: a modern
entrepreneur are individuals who under takes those venture which go well alone
with the changing demand in the market. They initiate those ventures which suit
the current marketing needs.
3. Classical
entrepreneurs: the
classical entrepreneur is an individual who is concern with the customer
satisfaction and marketing needs through the development of self supporting
venture. This entrepreneurs aims on maximizing there economic returns at a
consistent level with the survival of the firm with the element of growth.
Entrepreneur decision process
l. pull
factors
1) Perception of
advantage: if a person feels
that he can earn better or overall games in terms of money , status , security
and future etc.. as an entrepreneur have better working conditions than the
employee there for this leads him to become an entrepreneur.
2) Spotting an
opportunity: Many
employee spots and business opportunity in the course of there Employeement or
worth and decide to exploit that opportunity rather than passing it own to
there employer. Many employees buy unsuccessful business at which very cheap
prices from there farmer employers and turn them into huge profit given
business.
3) Government policies: in some countries there government very
often formulate policies to promote surtain business activities by providing
tax concession , cash subsidies , cheap land which improve the success and
profit prospect.
4) Motivation: some individuals are motivated by the
biographies or success stories of the present entrepreneurs which attracts him
to become an entrepreneur.
5) Influence by (
environmental, social, family, peers etc) : most of the individuals are attracted towards
entrepreneurship because of the impact by culture, community , family background
, teachers and beers etc
ll. push factors
1. Job dissatisfaction: many people start their own venture
because they feel dissatisfied with their existing jobs, superior or work
environment.
2. Relocation /
transfer: in some jobs there are
frequent or repeated transfers or relocations which leads the individuals to
starts his own enterprise to settle in the preferred area.
3. Joblessness: this is the biggest source of micro
level entrepreneurship in which many parents helps there academically poor
children who fail to find a job to start their own micro ventures.
4. Lay off: lay off often lower the market value of
an employee to half if a person is laid off and is unable to find a suitable
job for him. He might think of starting his own business.
5. Retirement : many refried but physically and mentally
fit people start their own business either to supplement their pension or
saving or just to keep them self gainfully occupied.
6. Bordom : this is applicable to many ladies from
the well financial family where there have a number of servants to take care of
all home activities, they find and avenue to keep the bordom away and starts
the ventures like boutique or fashion designing etc.
Entrepreneur and economic development
- Provides employment: entrepreneurs setup enterprises which
provide employment not only to themselves but to many others directly and
indirectly and thereby put into utilization of human resources of the country.
- Prosperity to the
country:
entrepreneurs combine resources and put there time or efforts and produces the
goods or services. Therefore , the value additions that they do to resources
brings prosperity to the country.
- Low cost strategy: Entrepreneurship is a low cost strategy
. an entrepreneur works with maximum financial efficiency in order to maximize
his profits. Entrepreneurs rarely indulge themselves in luxury of business
class travel or five star hotel comforts which the managers aveat without
saving. Therefore , many such cost are either avoided or kept in check which
helps in saving in finances which can be used to the other required function.
- Creativity and
innovative attitude: the spread of entrepreneurship brings in creativity and innovative
attitude to help the individuals for getting a regular source of income.
- Development of the
places / locations: a dynamic society and the spreads like a chain reaction. Many
entrepreneurs have pride to be the initiators for growth of the smaller
entrepreneurs.
Eg) Jamshedpur was a small town before the TATA steel plant was
setup, once the plant come up in the place many people setup there small
enterprises to cater to the needs of the growing population.
Function of entrepreneur
1. Planning of the
project: entrepreneur is the
organizer who can served the idea of launching the project and to program the
structure of the business.
2. Managing the
business: the entrepreneur is
also responsible for the management of business where he always try a least
cost combination of factors of production.
3. To face risk: the entrepreneur faces uncertainty and
bears the risk in his business , uncertainty comprising those risk against
which it is not possible to ensure. He also faces the risk of other produces
who may enter the market.
4. Distribution of
rewards: he is responsible
for distributing the rewards to all factors of production. He pays the rewards
inform of rent, wages, and interest and also bears the risk of profit or loss
himself.
5. Marketing of the
product: an entrepreneur is
also responsible for all marketing and advertising decisions where he always
wants to maximize his profit while selling his product in the market
effectively.
6. Determining scale of
production: the
entrepreneur decide the scale of business in according with the provisions of
capital. Then hr takes the decision of what, where and how to produce goods.
7. Identifying
entrepreneurial opportunity: there are many opportunities in the world of business which is
based on human needs like food, fashion, education etc which are constantly
changing. This opportunities are not realized by common man but an entrepreneur
senses the opportunities faster than others.
8. Turning ideas into
action: an entrepreneur
should be capable of turning his ideas into reality where he collects
information regarding the ideas , products and practices to match the demand in
the market. Further steps are taken to achieve goals on the bases of
information collected.
9. Feasibility study: the entrepreneur conducts studies to
access the market feasibility of the propost product or services. He
anticipates problems and access quantity, quality, cost and sources of input
require to run the enterprise.
10. Resourcing : the entrepreneur needs various resources
in terms of money, machine, material and men to run the enterprise
successfully. An essential functions of an entrepreneur is to ensure the
availability of all the resources.
11. Growth and development: once the enterprise achieves its
desired result the entrepreneur has to explore another higher goal for its
proper growth and development. The entrepreneur is not satisfied only which
achieving a set goal constantly strives for achieving Excellency.
