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Unit-1 Introduction

Who is an Entrepreneur? An entrepreneur is someone who has an original idea and is able to change that idea into a business opportunity and make it work One who starts his own business One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. Evolution of Concept and Entrepreneurial personality The word entrepreneurs is derived from the French verb entreprendre. It means to undertake it originally means that to designate an organize of musical or other entertainments. As per Peter Drucker- An entrepreneur is one who always searches for change, responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship. Oxford dictionary in 18 the director or a manager of a public musical institution, one who gets up entertainment, especially musical performance. In it the early 16th century entrepreneur was applied to those who were engaged in military expeditions. In the 17th century it was considered as to cover civil engineering activities such as construction and notification. It was only in 18th century the word entrepreneur was used to cover economic aspects. The term entrepreneur is used in various ways and terms. The views are broadly classified in three ways. Risk bearer

Organizer and
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Innovator

1. Risk Bearer: In 18th century Richard Cantillon an Irish man living in France, was first used entrepreneur and defined as An agent who buys factors of production at certain prices in order to combine them in to a product with a view entrepreneurs are risk bearing agents of product. Knight also described entrepreneur to be a specialized group of persons who bear uncertainty. Uncertainty can be defined as a risk which cannot be in insured against and is incalculable. 2. As an Organizer: Jean Baptiste says One who combines the land of one the 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 wages to laborers and what remains is his/her profit. Thus he made a clear distinction between the role of capitalist as a financed and entrepreneurs as a organizer. 3. As an Innovator: Joseph A Schumpeter in 1934 in his book theory of economic development he says economic development as a discrete dynamic change brought entrepreneur by instituting new combination of production i.e, .innovations. According to him introduction of new product may occur in any of following five norms: 1. Introduction of new product in the market 2. The instituting of new production technology which is not yet tested by experience in the branch of manufacture. 3. Opening of new market into which the specific product has not previously entered. 4. The discovery of new source of supply raw material

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5. The carrying out of the new form of organization of any industry by creating of monopoly position or the breaking of it. 1individual who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes. The attributes underlying entrepreneurship include: _ Self-direction _ Self-nurturing _ Action-oriented _ High energy level _ Tolerant of uncertainty

Entrepreneurship as a Career.
Entrepreneurship can play a major role in alleviating poverty, unemployment and underemployment in many developing countries. Entrepreneurship is becoming an increasingly popular alternative career choice in the current economic slowdown. If you are planning to become an entrepreneur you will not be alone and will have plenty of company. Many have gone the entrepreneur route due to external factors including layoffs, frustration in their current workplace culture, or the need for greater flexibility in their lives. However, it is most important to go with your own "internal factors," which include passion, wanting to be independent, wanting to accomplish, building an enterprise, enjoying freedom, a burning desire to make a profession out of a hobby and enjoying the challenges. Positive aspects of entrepreneurship

Being the boss if his own business, he enjoys unlimited powers.


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He can do things in his own way and he need not take orders from someone else. He can make his own decisions and act on them. There are numerous opportunities for his self- development.

Working on ones own and thus getting rewards yields immense satisfaction and pleasure for more than what he can get in a job.

Monetary rewards can be more than commensurate with his capacity and capabilities. He can command deference and respect of his immediate family and friends. It is a kind of intangible reward. Instead of depending on others, he generates employment for others.

He can make significant contribution to the development of the country and be proud of taking part in nation building activities. He can be a great achiever realising his goals and proving his achievements to the world. He can be recognised for his outstanding efforts. Negative aspects

Though an entrepreneur is his own boss, in some respects he is not. It is so because he is constrained by various people like his financiers, labourers, suppliers, customers and so on.

He may have to face frustration since the scope of his operations is limited by his limited resources. He has to work long and hard hours from morning to dusk and his venture tends to absorb all his energy and time. This may affect his social and family life.

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At times he may have to face disappointments and frustrations since everything in his venture may not always work the way he would like it to. He has to always work with tension since there is always the risk of failure.

Entrepreneurship as a Career Option?


The greatest challenge before the youngsters in India today is to build the country into an economic global giant. The obvious questions that come to the minds of most of them are "Why should we in India think of being an entrepreneur? Why not work as part of a larger organisation where the opportunities and resources to scale ideas are perhaps far greater? Entrepreneurship is important for two reasons. One, it furthers innovation to find new solutions to existing and emerging demands. Two, it offers far greater opportunities for wealth creation for self and the society than anything else. Entrepreneurship has its challenges. It is about 20 per cent luck and 80 per cent effort, clarity, courage, confidence, passion and above all smartness. What leads a person to take up entrepreneurship as a career option? There can be a number of reasons including displacement from a job, frustration in the present job, not getting a job of his/her choice, etc. Sometimes a person realizes much in advance that his/her job is in jeopardy, as the organization is moving towards closure. At times a deserving employee getting superseded in promotion is compelled to quit the job and look for doing something on his own. Some people object to a system wherein reward is often based on seniority rather than merit.

Characteristics of an Entrepreneur:
The features of successful entrepreneurs are: 1. Hard work:

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Willingness to work hard differentiates a successful entrepreneur from unsuccessful one. The entrepreneur with his teious saeat-filled hours and perseverance revive their business even from on verge of failure. 2. Desire for high achievement The entrepreneurs have strong desires to achieve high goals in business. 3. Highly optimistic The successful entreoreneurs are not disturbed by the present problems faced by them. They are highly optimistic for future that the situations will become favourable to business in future. 4. Independence One of the common characteristics of the successful entrepreneurs has been that they do not like to be guided by others and to follow their routine. 5. Foresight The entrepreneurs have a good foresight to know about future business environment. They visualize the changes in market conditions, consumers, and technology developments. 6. Good organizer Different resources required for production are divorced from each other.It is the ability of the entrepreneurs that brings together all resources required for starting up an enterprise and then to produce goods. 7. Innovation Production is meant for meant to meet customers requirements.In view of the changing taste of customers from time to time the entrepreneurs initiate research and innovative activities to produce goods to satisfy the customers changing demand for the products. 8. Capacity to take risk
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9. Mobility and drive 10. Creative Thinking. 11. Strong need for achievement 12. Ability to Marshall resources 13. High degree of ambition 14. Will to prove superior to others.

Functions of Entrepreneurs:
An entrepreneur does perform all the functions necessary right from the genesis of an idea upt the establishment of an enterprise. These can be listed in the following manner: 1. Idea generation and scanning of the best suitable idea. 2. Determination of the business objectives. 3. Product analysis and market research 4. Determination of form of ownership/ organization 5. Completion of promotional formalities 6. Raising necessary funds. 7. Procuring machine and material 8. Recruitment of men. 9. Undertaking the business operations. The functions of entrepreneurs can be also classified as under: 1. Risk bearing 2. Organization 3. Innovation

Classification of Entrepreneurs(Types)
The entrepreneurs have been broadly classified according to, Types of business Use of professional skill
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Motivation Stages of development 1. Entrepreneurs According to Types of Business Business entrepreneurs are those individuals for a new product or service and then translate the same into business reality. Tap both production and marketing resources to develop a new business opportunity. Setup big establishment or small unit such as printing press, textile processing house, advertising agency, readymade garments or confectionery. Trading entrepreneur: Undertakes trading activities; concerned with marketing (Domestic and international level) Industrial entrepreneurs are essentially a manufacturer who identifies potential needs of customers and products or service to meet the marketing needs. He should have the ability to convert economic resources and technology into a profitable venture. Undertakes manufacturing activities only; new product development etc (textile, electronics, etc) Corporate entrepreneur is an individual who demonstrates his innovative skill in organizing and managing corporate undertaking. He plans, develop and manage a corporate body. Interested in management part of organisation; (Ambani, Tata families) Agricultural entrepreneur are the ones who undertake agricultural activities such as raising and marketing of crops, fertilizers and other inputs of agriculture. They are motivated to improve agriculture through mechanization, irrigation, and application of technologies for dry land agricultural products. 2. Entrepreneurs in Technology Technical entrepreneur is the one who is essentially a craftsman. He develops improved quality of goods because of his craftsmanship. He concentrates more on production than on marketing. He demonstrates his innovative capabilities in matter of production of goods and rendering of services.
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Non- technical entrepreneur are those who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business. Professional entrepreneur is interested in establishing a business but does not have interest in managing or operating it once it is established. He sells out the running business and starts another venture with the sales proceeds. (Uses the proceeds from sale of one business to start another one. Brimming with ideas to start new ventures)

3. Entrepreneur and Motivation An entrepreneur is motivated to achieve or prove his excellence in job performance. He influences others by demonstrating his business acumen. Pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes entrepreneurial activity for his personal satisfaction in work, ego and status. Induced entrepreneur is one who is induced to take up an entrepreneurial task due to policy measures of the government that provides assistance, incentives, and concessions and other facilities to start a venture. Enter business due to financial, technical and other facilities provided to them by the state agencies to promote entrepreneurship. Motivated entrepreneur: they come into being because of the challenge involved in developing and marketing a new product for the satisfaction of consumers. If the product succeeds, the entrepreneur is further motivated for launching of newer products. 4. Entrepreneur and Stages of Development

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First generation entrepreneur is the one who starts an industrial unit by his innovative skill. He is the one who combines different technologies to produce a marketable product or services. Modern entrepreneur is one who undertakes those ventures which go well with the changing demand in the market. He undertakes those ventures that suit the current market needs Classical entrepreneur is one who is concerned with maximizing the economic returns at consistent level. He is concerned more about the survival of the firm with or without an element of growth. Apart from the above, there are entrepreneurs who can be classified into innovative and imitative categories. Others Area-Rural and Urban entrepreneur Gender-Age Men and Women entrepreneur Scale -Small and Large scale entrepreneur 5. Clarence Danhof, have classified the entrepreneurs as follows: 1. Innovating Entrepreneurs: An innovating entrepreneur is one who introduces new goods, inaugurates new method of production, discovers new market and reorganizes the enterprise. 2. Imitative Entrepreneurs: These are characterized by readiness to adopt successful innovations inaugurated by innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes themselves, they only imitate techniques and technology innovated by others. 3. Fabian Entrepreneurs: Fabian entrepreneurs are characterized by very great caution and skeptic in experimenting any change in their enterprises. They imitate only when it becomes perfectly clear
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that failure to do so would result in a loss of the relative position in the enterprise. 4. Drone Entrepreneurs: These are characterized by a refusal to adopt opportunities to make changes in production formulae even at the cost of severely reduced returns relative to other like producers. Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing production methods. Following are some more types of entrepreneurs listed by some other behavioral scientists: i. Solo operators: These are the entrepreneurs who essentially work alone and it needed at all, employ a few employees. In the beginning most of entrepreneurs start their enterprise like them. ii .Active partners Active partners are those entrepreneurs who start/carry on an enterprise as a joint venture. It is important that all of them actively participate in the operations of the business. iii. Inventors: Such entrepreneurs with their competence and inventiveness invent new products. Their basic interest lies in research and innovative activities. iv. Buyers These are those entrepreneurs who do not like to bear much risk. Hence, in order to reduce risk involved in setting up a new enterprise, they like to buy the ongoing one. v. Life timers: These entrepreneurs take business as an integral part of their life. Usually, the family enterprise and businesses which mainly depend on exercise of personal skill fall in this type/category of entrepreneurs.

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Distinction Manager:

between

an

Entrepreneur

and

Professional

A professional manager is one who specializes in the work of planning, organizing, leading and controlling the efforts of others by the systematic used of classified knowledge and principles. Both managers and entrepreneurs are answerable for producing results. Both have to produce results through people working with them though they deal with different sets of people. Both are decision makers but the decisions are different as their tasks vary. Both have to operate under constraints which are understandably different. To be effective in their respective roles, both have to follow sound principles of management like planning, staffing, delegation and control.

Difference between Entrepreneur & Manager

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Points Motive

Entrepreneur The main motive of an entrepreneur is to start a venture by setting up of an enterprise. He standards the venture for his personal gratification.

Manager Here, the motive of manager is to render his services in an enterprise already set up by entrepreneur

Functions

The major functions of an entrepreneur are risk bearing, organizing and innovation.

The major functions of a manager are planning, organizing, staffing, directing, controlling and other such managerial functions.

Status

An entrepreneur is the A manager is the servant in owner of the enterprise the enterprise owned by the entrepreneur.

Risk bearing

An entrepreneur being the A manager as a servant does owner of the enterprise not bear any risk involved in assumes all the risks and the enterprise uncertainty involved in running the enterprise

Rewards

The reward of the A manager gets salary as entrepreneur is profit reward for the services which is highly uncertain. rendered by him in the enterprise. The salary is certain and fixed Innovation Entrepreneur himself thinks over what and how to produce goods to meet the changing demands of the A manager simply executes the plans prepared by the entrepreneur. Thus, a manager simply translates the entrepreneurs ideas into Customers. Hence, he acts practice. as an innovator also called a change agent.

Innovation

Qualificatio An entrepreneur needs to A manager needs to posses Mrs.A.Padmapriya M.B.A,M.A,M.Phil,UGC-NET(PhD)/CCET Page 13 n possess qualities and distinct qualifications in terms qualifications like high of sound knowledge in achievement motive, management theory and

Entrepreneur and Entrepreneurship The process undertaken by an entrepreneur to augment his business interests gave birth to ENTREPRENEURSHIP. The entrepreneurship is the elusive concept. Many others defined it in many ways such as risk bearing, innovating, and thrill-seeking. Lets see some definitions. In the opinion of A. H Cole: Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services. Entrepreneurship is the process undertaken by an entrepreneur to augment his business interests. It is an exercise involving and creativity that will go towards establishing hi/her enterprise. Characteristics of Entrepreneurship 1. Accepting challenges 2. Decision making 3. Risk-taking 4. Innovation 5. Organization 6. Skilful management 7. Making the enterprise a success Relationship between Entrepreneurship Entrepreneur Entrepreneurship

Entrepreneur

and

the -

Person Organizer

Process Organization
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Risk-bearer Motivator Creator Visualiser Leader Imitator

Risk bearing Motivation Creation Visualisation leadership Imitation

Intrapreneur
Meaning A new breed of entrepreneurs is coming to the fore in large industrial organizations. They are called intrapreneurs. They emerge from within the confines of an existing enterprise. In big organizations, the top executives area encouraged to catch hold of new ideas and then convert these into products through research and development activities within the framework of organization. The concept of Intrapreneurship has become very popular in developed countries like America. It was Gifford Pinchot III, an American Management expert, who used the term intrapreneur for the first time in 1983. A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk taking and innovation . Intrapreneurs have entrepreneurial skills blended with managerial skills but operate within the confines of an organization. "Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so". This Intrapreneur focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment. Thus,
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Intrapreneurs are inside entrepreneurs who follow the goal of the organization.

Differences between Entrepreneur and Intrapreneur Points Ownership Entrepreneur Intrapreneur

entrepreneur is the owner An intrapreneur is an of the organization employee of the enterprise

Status

An entrepreneur is An intrapreneur independent in his status dependent on employer or owner

is his

Raising of capital:

an entrepreneur raises the An intrapreneur does not required capital for his raise the capital business

Risk

An entrepreneur bears the An intrapreneur does not risk involved in his bear any risk involved in business his business An entrepreneur operates An intrapreneur operates in his business from from within his business outside organization An entrepreneur gives An intrapreneur does not
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Operations.

Guarantee

Mrs.A.Padmapriya M.B.A,M.A,M.Phil,UGC-NET(PhD)/CCET

of payment

guarantee of payment of required to do so money to the lenders

Convention of new ideas

An entrepreneur converts his new ideas or high intrapreneurs ideas into reality.

An intrapreneur has only to create his new ideas but he cannot convert them on his own account.

Importance of Entrepreneurship
The importance of entrepreneurship to any economy is like that of entrepreneurship in any community. Entrepreneurial activity and the resultant financial gain are always of benefit to a country. If you have entrepreneurial skills then you will recognize a genuine opportunity when you come across one. Now the reasons why entrepreneurship holds a dominant position in the society? The following reasons are responsible for the same: 1) Provides employment to huge mass of people: People often hold a view that all those who do not get employed anywhere jump into entrepreneurship, a real contrast to this is that 76% of establishments of new business in the year 2003 were due to an aspiration to chase openings. This emphasizes the fact that entrepreneurship is not at all an encumbrance to an economy. Whats more is that approximately 34 million of fresh employment opportunities were created by entrepreneurs from the period of 1980. This data makes it clear that entrepreneurship heads nation towards better opportunities, which is a significant input to an economy. 2) Contributed system: towards research and development

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Almost 2/3% of all innovations are due to the entrepreneurs. Without the boom of inventions the world would have been a much dry place to live in. Inventions provide an easier way of getting things done through better and standardized technology. 3) Creates wealth for nation and for individuals as well: All individuals who search business opportunities usually, create wealth by entering into entrepreneurship. The wealth created by the same play a considerable role in the development of nation. The business as well as the entrepreneur contributes in some or other way to the economy, may be in the form of products or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, and inventions are also a great help to the nation. 4) Sky scraping heights of apparent prospects: The individual gets maximum scope for growth and opportunity if he enters into entrepreneurship. He not only earns, the right term would be he learns while he earns. This is a real motivating factor for any entrepreneur as the knowledge and skills he develops while owning his enterprise are his assets for life time which usually, lacks when a person is under employment. The individual goes through a grooming process when he becomes an entrepreneur. In this way it not only benefits him but also the economy as a whole. 5) It is a challenging opportunity for the people: Although entrepreneurship is a challenging task but in most of the cases the rewards it gives are much more than what one anticipates. It does not only reward an entrepreneur at financial levels but also on individual level. It provides self satisfaction to the entrepreneur. 6) Entrepreneurship provides self sufficiency: The entrepreneur not only become self sufficient but also provide great standards of living to its employees. It provides
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opportunity to a number of people working in the organization. The basic factors which become a cause of happiness may be liberty, monetary rewards, and the feeling of contentment that one gets after doing the job. Therefore the contribution of entrepreneurs makes the economy an improved place to live in. Drawbacks of Entrepreneurship Uncertainty of income Risk of losing your entire investment Long hours and hard work Lower quality of life until the business gets established _ High levels of stress _ Complete responsibility _ Discouragement Ten Deadly Mistakes of Entrepreneurs 1. Management mistakes 2. Lack of experience 3. Poor financial control 4. Weak marketing efforts 5. Failure to develop a strategic plan 6. Uncontrolled growth 7. Poor location 8. Improper inventory control 9. Incorrect pricing 10. Inability to make the entrepreneurial transition

Role of entrepreneurship in economic development:


Economic development means the process of upward change; thereby the real per capita income of a country increases over a period of time. Entrepreneurship plays a very important role in economic development. It serves as a catalyst in the process of industrialization and economic growth.
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According to Joseph Scum peter the rate of economic progress of a nation depends upon its rate of innovation which intern depends upon the distribution of entrepreneurial talent in the population 1. Capital formation: Entrepreneurs encourage or mobilize the idle savings of the public through the issue of various securities like equity shares, preference shares, public deposits, debentures, etc. Even in case of sole proprietary concerns an entrepreneur helps in capital formation by way of using ones own and others idle funds. High rate of the over all economic growth 2. Generation of employment: Entrepreneurs create employment both directly and indirectly. It is not always possible for the government to provide employment to eligible individuals. It is the industries and business houses, which generate employment opportunities. An entrepreneurial venture creates employment, not only for the entrepreneur but for a few others also. Apart from the direct employment, thus created indirect employment is also encouraged because of backward and forward linkages. 3. Improvement in per capita income: They help to increase the gross national product [GNP] and the per capita income, which is an important yard stick for measuring economic development. 4. Important in standard of living: Entrepreneurial activities result in creation of income and wealth for the entrepreneur family and at the same time such ventures remove the scarcity for commodities by way of introducing innovative products and services. 5. Economic independence; Entrepreneurs help in the manufacture of indigenous substitutes for certain imports, thereby encouraging economic independence.
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6. Balanced regional development: By encouraging people to take up entrepreneurial ventures for lively hood brings about a balanced regional development specially when such ventures are set-up in economically backward regions. The government offers a member of incentives to entrepreneurs establishing ventures in remote and backward regions. 7. Backward and forward linkages: An industries establishment has various backward, forward linkages. Ex: Establishment of steel plant generators several ancillary units and expands the demand for iron ore and coal. This is a backward linkage. At the same time the plant encourages the growth of the machine, building, manufacture of tools and implements and such other units, which make use of an increase supply of steel. This is a forward linkage. Therefore entrepreneurial activities initiate change and create a chain reaction with several links. Entrepreneurial competencies (or Qualities, or Traits) 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 ones 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.
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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 opportunities: Looks for and action on opportunities. sees and acts on opportunities (business, educational or personal growth). Seizes unusual opportunities to obtain 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 companys 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. financing

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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 . 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.
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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.

Reprimands 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 employees personal concerns. Express concern about the welfare of employees. Developing Entrepreneurial Competencies: Entrepreneurial competencies can be developed by understanding what a particular competence when, someone else exhibits the same.

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Having understood a given competence and having been able to recognize the same when someone else exhibits, the next step is to find out where one stands with respects to a given competency. self rating questionnaire may be used to understand ones level of competencies and those that are not a part of ones personality but one would like to acquire those competencies and strengthen others. Any new behavior one acquires would basis in various activities Approaches to Entrepreneurship Development
Commonly

adopted approach to entrepreneurship development is Training. (training, incentives, consultancy services etc)

4 Major Approaches 1. Develop and arrange course content 2. Choosing training methods 3. Decide Subject area, trainee population, materials etc. 4. Achieve training objectives

Factors Affecting Entrepreneurial Growth


1. Economic factors 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.
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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. 3. 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. 4. 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. 5. 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.

Factors Influencing Entrepreneurship


The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and economic factors. Family tradition: Individuals who for some reason, initiate, establish maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of
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their families and society and accept certain values and norms from these sources. Religious, social and 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. Psychological factors: The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship among individuals. On the other hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship. Political factors: The political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes free market, individual freedom and private enterprise, will promote entrepreneurship. Economic policies: The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct influence on entrepreneurship. In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw materials, transportation cost etc i. Individual factors (Desire to do something new, Educational background, Occupational Background)
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ii. Environmental Factors (Political and Legal, Economical, Technological, Social and Cultural Factors (Family Background, Friends, Relatives and Teachers, Religions) iii. Support Systems (The support system for developing entrepreneurs, government has taken certain steps)

Causes of Slow Growth of Entrepreneurship In India


Entrepreneurship developed only in the beginning of the 19th century and though the base for industrialization had been laid a century ago. The following be the main reasons, which could be responsible for lack of initiative and entrepreneurial spirit among the Indians. 1. Caste System: This decided occupation for members from each caste. The altitudes were restrictive and therefore there were no changes of accumulating wealth and promoting production. 2. Agriculture: Agriculture was the main occupation. Farmers and cultivators were always in the clutches of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on enjoyment and luxury and never risked money in industry. Banking and commercial system was also absent so even if there were savings, they could not be utilized for productive use. 3. Educational System: Talented young men were prepared to take white collared jobs or join government or professional services. Many were attracted towards politics. The result was that very few young men got attracted towards becoming efficient, industrialists, technicians, managers etc. 4. Colonial Rules: The British rulers adopted discriminatory policy Rich Indian businessman had special connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking
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services catered to the needs of some rich Indian businessman, Britishers in India did also not encourage Industrialization. 5. Managing Agents: There were just a handful of people who were known to be having managerial skills. On common basis, these agents would lend their skills to some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filled their pockets with big chunks of the companies profits and took full advantage of Indian industrialists till the managing agency system was abolished in 1970. 6. Joint Family System: Younger members of the family always depended on the Head who never gave any kind of independence or encouraged units other than family business ones. A number of young men were discouraged from diversifying from family business and doing something new and different. 7. Religious attitude: Indians were very religious minded. They gave more time to religion than to earning material wealth. Religion got priority over business. Some religions even condemned excess earnings and indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious Indians. 8. Mindset: The mindset of the average Indian was never entrepreneurial. Our religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial activities. 9. Recognition by the society: In earlier days, the heroes India were the social reformers and the politicians. Now it is the era of sportsmen, models and film stars. It is sad that successful or the struggling entrepreneurs

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have never been recognized as heroes. Entrepreneurial activity did not get due importance in the India society. 10. Family Background: Empirical studies have shown that a good number of entrepreneurs come from families with industrial backgrounds. Unfortunately, only a few entrepreneurial communities in India made entrepreneurial contribution. These communities could also not make headway in the entrepreneurial field on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development could only take place after independence in India Challenges and opportunities for entrepreneurs Challenges Strengthening the Overall Economy Small businesses continue to struggle in the economic Down turn, and it will be important for policy leaders to get the economy moving again. Small businesses will be a large part of that, as entrepreneurs will spur new innovation and employment in the coming years. These firms will continue to be the job generators that we have become accustomed to. With that said, industries will recover from the downturn in different ways, and some industries have clearly been hit harder this time than in past business cycles. Taxes and Regulation Business conditions have a fundamental impact on entrepreneurial activity, and small business owners frequently cite tax and regulatory policies as a concern. Moving forward, it will be important for policymakers to consider the impact of taxes and regulations on small business owners and would-be entrepreneurs. Cost and Availability of Health Insurance. Health insurance premiums have risen substantially in this decade. The Kaiser Family Foundation reports that the cost of
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employee-sponsored health insurance plans has increased 119 percent since 1999. It is also well-documented that employees at smaller firms are less likely to be offered health care coverage. Finding ways to control the cost of providing health insurance to employees and increasing coverage will remain a priority for our national and state leaders. Attracting and Retaining a Quality Workforce. Small businesses must compete for labor with their larger counterparts. This is more difficult in light of the disparity in total compensation, especially benefits, and the result is greater employee turnover. Demographic trends in the coming years might also exacerbate these challenges. Global Competition. American businesses face competitors on a number of fronts, both at home and abroad. The U.S. government has worked to increase the ability of our firms to compete overseas by lowering trade barriers. There are also some structural disadvantages that work to make our products less competitive, and many companies have reduced their costs by outsourcing some processes and tasks abroad. While insourcing also exists, many of these issuesespecially the assertion that firms are outsourcing jobsremains controversial; yet, firms argue that these are necessary strategies for survival in a global marketplace. Opportunities Increased Investments in Technology and Innovation. There are strong linkages between innovation and new firm formation, and policymakers fully understand that risk-taking entrepreneurs have positive impacts on regional economic development. With many regional officials seeking the next big thing that will drive their local and regional economies for years to come, there is an appreciation that small businesses are leading the way toward new inventions, processes, and products. Such innovations are vital to our economic growth, and they will

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provide the tools to make our economy more competitive in an increasingly globalized marketplace. Economic Entrepreneurs. Gardening and Grooming Local

Proponents of economic gardening, which has communities plow the dollars that would have been spent on luring big businesses to their town to promote local small businesses instead, argue that grooming existing firms can ultimately to greater payoffs in terms of job creation. Pursuing New Markets Overseas. One of the strengths in our current economic climate is the export sector, and international trade represents an opportunity for small businesses. Historically, many small business owners have not been proactive about trading with foreign partners. While 28.9 percent of the known export value stemmed from small firms, entrepreneurs have yet to fully tap the potential for growth in the export arena. Promoting Business Demographic Groups. Ownership among Selected

Women and minorities have been extremely entrepreneurial over the past few yearsa trend that is expected to continue. One of the driving factors for minorities has been the influx of immigrants coming to this country. Recent studies show a strong connection between immigration and high-technology entrepreneurship, suggesting enormous benefits for embracing these new citizens. In addition, many of the veterans returning home from Iraq and Afghanistan, are likely to devote themselves to entrepreneurship, as previous generations of veterans have done. Policymakers should find ways to promote greater business ownership among each of these groups.

Advancing Education and Training.


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Education and training are important as there are strong linkages between entrepreneurship and human capital. Moreover, small business owners devote significant resources to training their workforce. These firms are able to increase their labor productivity and reduce their labor turnover. In this way, small business owners should look at education not just as a means of retraining their workers, but also as methods of building new skills, developing new human talent, and preserving employee morale. Failure to do so might result in a reduced competitive position for the most talented employees.

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