ENTREPRENEURSHIP

MBA 4th Sem

 “Entrepreneurship is the attempt to create value through
recognition of business opportunity, the management of risk taking
appropriate to the opportunity and through the communicative and
management skills to mobilize human, financial and material
resources necessary to bring a project to fruition”.

• A.H. Cole has defined entrepreneurship as “the purposeful activity

of an individual or group of associated individuals, undertaken to
initiate, maintain or earn profit by production and distribution of
economic goods and services”
• According to Joseph A Schempeter entrepreneurship is essentially
a creative activity. It consists of doing such things as are not
generally done in ordinary course of business. An entrepreneur is
one who innovates i.e., carries out new business.
• According to Peter Drucker: Entrepreneurship is defined as ‘a
systematic innovation, which consists in the purposeful and
organized search for changes, and it is the systematic analysis of the
opportunities such changes might offer for economic and social
innovation.’
Features
• Entrepreneurship can be described as a process of
action an entrepreneur undertakes to establish his
enterprise.
• Entrepreneurship is a creative activity. It is the ability
to create and build something from practically nothing.
It is a knack of sensing opportunity where others see
chaos, contradiction and confusion. Entrepreneurship
is the attitude of mind to seek opportunities, take
calculated risks and derive benefits by setting up a
venture. It comprises of numerous activities involved in
conception, creation and running an enterprise.
• Entrepreneurship is a process. It is not a combination of some stray
incidents. It is the purposeful and organized search for change,
conducted after systematic analysis of opportunities in the
environment.
• Entrepreneurship is a philosophy- it is the way one thinks, one acts
and therefore it can exist in any situation be it business or
government or in the field of education, science and technology or
poverty alleviation or any others.
• Entrepreneurship is a discipline with a knowledge base theory. It
is an outcome of complex socio-economic, psychological,
technological, legal and other factors. Itis a dynamic and risky
process. It involves a fusion of capital, technology and human
talent.
• Entrepreneurship is equally applicable to big and small
businesses, to economic and non-economic activities. Different
entrepreneurs might have some common traits but all of them will
have some different and unique features.If we just concentrate on
the entrepreneurs then there will be as many models as there are
ventures and we will not be able to predict or plan, how and where,
andwhen these entrepreneurs will start their ventures.
 CONCEPT OF ENTREPRENEUR
• Entrepreneur is used in various ways and various views. These
views are broadly classified into three groups, namely risk bearer, o

• Entrepreneur as risk bearer: Richard Cantilon defined

entrepreneur as an agent who buys factors as production at certain
prices in order to combine them into a product with a view to
selling it at uncertain prices in future organizer and innovator.
• Entrepreneur as an organizer: According to J Baptist Say “an
entrepreneur is one who combines the land of one, the labor 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 laborers and what remains is his/her profit”.
• Entrepreneur as an innovator: Joseph A Schumpeter in 1934
assigned a crucial role of ‘innovation’ to the entrepreneur. He
considered economic development as a dynamic change brought by
entrepreneur by instituting new combinations of factors of
production, i.e. innovations.
• Hence the concept of entrepreneur is associated with three
elements risk bearing, organizing and innovating. Hence an
entrepreneur can be defined as a person who tries to
create something new, organizes production and
undertakes risks and handles economic uncertainty
involved in enterprise.

• According to F.A.Walker: “Entrepreneur is one who is

endowed with more than average capacities in the task of
organizing and coordinating the factors of production, i.e.
land, labour capital and enterprises”.

• Peter F. Drucker defines an entrepreneur as one who

always searches for change, responds to it and exploits it
as an opportunity. Innovation is the basic tool of
entrepreneurs, the means by which they exploit change as
an opportunity for a different business or service.
 Classification and Types of
Entrepreneurs
• Classification on the basis of:
• Type of business
• Use of Technology
• Motivation
• Growth
• Stages in Development
• Others
• Type of business
• Business entrepreneur: Convert ideas into reality; deal with
both manufacturing and trading aspect of business (Small
trading and manufacturing business)
• Trading entrepreneur: Undertakes trading activities;
concerned with marketing (Domestic and international
level)
• Industrial entrepreneur: Undertakes manufacturing
activities only; new product development etc (textile,
electronics, etc)
• Corporate entrepreneur: Interested in management part of
organization; exceptional organizing, coordinating skills to
manage a corporate undertaking (Ambani, Tata families)
• Agricultural entrepreneur: Production and marketing of
agricultural inputs and outputs (Dairy, horticulture,
forestry)
Use of Technology
Technical entrepreneur: Production oriented, possesses innovative skills in
manufacturing, quality control etc.
Non technical entrepreneur: Develops marketing, distribution facilities and
strategies
Professional entrepreneur: Uses the proceeds from sale of one business to
start another one. Brimming with ideas to start new ventures

Motivation
Pure entrepreneur: Psychological and economic rewards motivate him
Induced entrepreneur: Incentives, concessions, benefits offered by
government for entrepreneurs motivates him
Motivated entrepreneur: Sense of achievement and fulfillment motivate
him
Spontaneous entrepreneur: Born entrepreneurs with inborn traits of
confidence, vision, initiative
• 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

• Stages in Development
• First generation entrepreneur: Innovator, risk taker, among the
firsts in family to enter business
• 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
• Others
• Area- Rural and Urban entrepreneur
• Gender/Age- Men and Women entrepreneur
• Scale- Small and Large scale entrepreneur
 FACTORS AFFECTING ENTREPRENEURSHIP
GROWTH
• I. ECONOMIC FACTORS
• Economic environment exercises the most direct and immediate influence on
entrepreneurship. The economic factors that affect the growth of entrepreneurship are
the following :
• Capital,Labour,Raw Materials,Market ,Infrastructure
• a) Lack of adequate overhead facilities:
• Profitable innovations require basic facilities like transportation, communication power
supply etc. They reduce cost of production and increase profit.
• b) Non availability of capital
• Inventions are capital oriented. In less developed countries most capital equipment
• have to be imported which involves foreign exchange which acts as a difficult problem.
• c) Great risk
• Risk is high in case of less developed countries as there is lack of reliable information,
markets for good and services is small etc.
• d) Non availability of labor and skills
• Though there is abundant labor supply there is generally scarcity of skills at all levels.’
• 2. SOCIAL FACTORS
• A society that is rational in decision making would be favorable for
decision making. Education, research and training is given less
importance in less developed countries therefore there is very little
vertical mobility of labor.
• Caste Factor :
• Family background
• Education
• Attitude of the Society
• Cultural Value
• 3. PSYCHOLOGICAL FACTORS
• Need Achievement:
• Withdrawal of Status Respect
• Motives
• 4. POLITICAL FACTORS
• 5 CULTURAL FACTORS
• Religious, social and cultural factors also influence the individual taking up an
entrepreneurial career, in some countries there is religious and cultural belief that
high profit is unethical. This type of belief inhibits growth of entrepreneurship.

• 6 PERSONALITY FACTORS
In less developed countries the entrepreneur is looked upon with suspicion. Public
opinion in the less developed nations sees in the entrepreneur only a profit maker
and exploited.

• 7. MOTIVATION
• Motivation is the act of stimulating someone or oneself to get a desired course of
• action, to push the right button to get the desired results.
• MOTIVATING FACTORS
• Education background
• Occupational experience
• Family background
• Desire to work independently in manufacturing line
• Assistance from financial institution
• Availability of technology
• Other factors
 Entrepreneurial competencies
• Entrepreneurial competencies
A competence is an underlying characteristic of persons,
which results in effective and /or superior performance in a
job. A job competence is an underlying characteristics of a
person, in that it may be motive ,traits, skills ,aspect of
one’s self-image a body of knowledge ,set of skills and
cluster of appropriate motives/ traits that an individual
possess to perform a given task.
The knowledge of entrepreneurial competence has been
sharpened over the last 3 decades. The following is a list of
major competencies that contribute towards top
performance.
• 1. INITIATIVE: Takes action that goes beyond job requirements or the of
the situation.
Does things before being asked or forced to by events.
Acts to extend the business into new areas, products, or service.

• 2. SEES AND ACTS ON OPPORTINITIES:

Looks for and action on opportunities.
Sees and acts on opportunities (business, educational or personal growth).
Seizes unusual opportunities to obtain financing equipment, land, work
space. Or assistance.

• 3. PERSISTENCE:
Takes repeated action to overcome obstacles that get in the way of
reaching goals.
Takes repeated or different action to overcome obstacle.
Takes action in the face of a significant obstacle.

• 4 INFORMATION SEEKING:
Takes action on own to get information to help reach objectives or clarify
problems.
Does personal research on how to provide a product or service.
Consults experts for business or technical advice.
• 5. CONCERN FOR QUALITY OF WORKS: acts to do things that meet or beat
existing standards of excellence.
States a desire to produce work of high quality.
Compares own work or own company’s work favorably to that of others.

• 6.COMMITMENT TO WORK CONTRACT: acts to do things that place the

highest priority on getting a job completed.
Accepts full responsibility for problems in completing a job for others.
Pitches in with workers or works in their place to get the job done.
Expresses a concern for satisfying the customer.

• 7.EFFICIENCY ORIENTATION :finds ways to do things faster or with fewer

resources or at a lower cost.
Looks for or finds ways to do things faster or at less cost .
Uses information or business tools to improve efficiency.
Expresses concern about costs vs. .benefits of some improvements, change, or
course of action.

• 8.SYSTEMATIC PLANNING: develops and uses logical ,step-by-step plans to

reach goals.
Plans by breaking a large task down into sub-tasks.
Develops plans that anticipate obstacles.
Evaluates alternatives.
Takes a logical and systematic approach to activities.
• 9.PROBLEM SOLVING: identifies new and potentially ideas to reach
goals.
Switches to an alternative strategy to reach a goal.
Generates new ideas or innovative solutions.
• 10.SELF-CONFIDENCE:
Has a strong belief in self and own abilities .
Expresses confidence is own ability to complete a task or meet a
challenge.
Sticks to own judgment in the face of opposition or rarely lack of
success.
Does something that he says is risky.
11. ASSERTIVENESS: confronts problems and issues with others
directly.
Tells others what they have to do .
reprimand or disciplines those failing to perform as expected.
12. USE OF INFLUENCE STRATEGIES: uses a variety of strategies to
influence others.
Acts to develop business contacts.
Uses influential people as agents to accomplish own objectives.
Selectively limits the information given to others.
• 14.MONITORING:
Develops or uses procedures to ensure that work
is completed or that work gets standards or
quality.
Personally supervises all aspects of a project.
•
15. CONCERN FOR EMPLOYEE WELFARE:
Takes action to improve the welfare of
employees.
Takes positive action in response to employee’s
personal concerns.
Express concern about the welfare of employees.
Developing Entrepreneurial competencies:
 Entrepreneurial Training
• Training is the systematic instruction of staff at all level in new attitude or new
skills; random bits of continuing education or mere learning on the job cannot be
called training: the term implies a scheme of instruction which is more or less
formal and ongoing, which is planned, systematic consistent pervasive and
monitored to measure its effectiveness.

• Entrepreneurial Training is designed to teach entrepreneurs the skills and

knowledge that they need to know before embarking on a new business venture.

• Entrepreneurial training provides a scientific and comprehensive approach to the

development of entrepreneurship in the non conventional communities and people.
And more importantly it motivates individuals to become entrepreneurs to create
wealth and offer new products and services to the community.
• Training is an integral input of managerial development . The lack of adequate and
skilled personnel is one of the bottlenecks in a developing economy. Staff training
is essential for entrepreneurs
 Objective of Training
• To impart knowledge of Industry, product & production method.
• To build the necessary skills of new entrepreneurs and workers.
• To augment the supply of new entrepreneurs through educational
training.
• To expose entrepreneurs of various opportunities suitable for them.
• To update entrepreneurs about latest developments which affects
him.
• To assist the entrepreneur to function effectively by exposing him to
latest concept, techniques and information
• To impart customer education
• To impart knowledge of the marketing goods.
• To build up second line of workers and prepare them to shoulder additional
responsibilities and/ or watch on the production of new products, if there is
any diversification.
 Importance of Training
• Makes available skilled workers at all levels of management.
• Improves the performance of workers.
• Improves quality standards.
• Minimizes excessive scraps, defects and wastage in the production process.
• Instills a drive for innovation.
• Develops achievement motivation.
• Builds self-confidence.
• Increase the potential abilities of workers and thus to improve their
performance to the maximum attainable level through the training process.
• It enables the workers to perform the work more efficiently and precisely so as
to maintain the quality of products.
• Standardization can be opted in a factory where trained employees are
available.
• New technologies can be easily adopted through trained employees.
• Training reduces fatigues.
• Training enable employees to occupy higher position of authority.
 Methods of Training
• Individual Instruction
• Group Instruction
• Lecture method
• Demonstration method
• Written Instructional method
• Conference
• Meetings
 Training programme: Course
Contents and Curriculum
a)Introduction of Entrepreneurship.
b)Motivation training
c)Essentials of Management
General Management
Production Management
Marketing Management
Financial Management
d)Fundamentals of project feasibility study
e)Organizing the business
f)Plant visit
ENTREPRENEUR V/S PROFESSIONAL
MANAGERS