1. CONCEPT OF ENTREPRENEURSHIP A.

Introduction Changing business scenario is governed by 3 driving forces Competition, change and Customer Economic reforms in India were initiated to move the economy to higher growth plane by relying more on market oriented processes. Primary objective of a country like India is to achieve rapid, balanced and sustained rate of economic growth. 12 trends affecting the direction of economic growth are. Technology as a reservoir Competition in domestic and international markets Role of inventions Government as stimulator Entrepreneurial and Intrapreneurial development. Innovative capital formation Active financial sector Progressive management Quality as a goal Supremacy of the customer Collaborative relationships Man is crucial to economic development than other economic factors Industrialization is one of the important means to usher economic and social transformation in developing countries. Industrialization results fro interaction of technological change, innovation, entrepreneurial growth, specialization and trade. Entrepreneurs are the backbone of a nations progress. They organize the factors of production, create wealth and generate employment.

B. Concept of entrepreneur Derived from French word Entreprendre-To undertake. New encyclopedia Britannica Entrepreneur is an individual who bears the risk of operating a business in face of uncertainty about the future conditions. Joseph A Schumpeter The Entrepreneur in an advanced economy is an individual who introduces something new in the economyA method of production not yet tested by experience in the branch of manufature A product which the consumers are not yet familiar A new source of raw material New market An Entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets an organization going with his ability. Innovation occurs. 1. Introduction of new quality in a product 2. A new product. 3. Discovery of fresh demand or a fresh source of supply. 4. Changes in the organization and management. An Entrepreneur in a developing country is one who starts an industry (Old or new), undertakes risks, bears uncertainties and also performs managerial functions like decision-making and coordination. Ricardo Entrepreneurial ability is an independent factor of production and profit is reward for entrepreneurial ability. Peter Drucker. Entrepreneurs are innovators. Entrepreneur is one who always searches for changes, responds to it as an opportunity. According to Drucker 3 conditions to be fulfilled 1. Innovation has to be market driven 2. Innovation is work. 3. Innovation must be built on the strength to succeed. New concept of Entrepreneur One who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary. He conceives the idea of an enterprise displays considerable grit, initiative and determination in bringing his project to fruition and in this process performs following functions

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

Perceives opportunities for profitable investment Explores the prospects o\f starting such a manufacturing enterprise. Obtains necessary industrial licenses. Arranges initial capital. Provides personal guarantee to financial institutions. Promises to meet the shortfalls in the capital. Supplies technical know-how.

Social Responsibility is a part of entrepreneurial outlook of life. Key elements of Entrepreneur Risk taking Vision Values Character Innovation Organising skill Ethics All this leading to operational excellence.

C. Concept of Entrepreneurship. Process undertaken by the entrepreneur to establish a business. Resultant mix of many qualities and traits like imagination, readiness to take risk and ability to bring together and put to use the factors of production Entrepreneurship. is the propensity of the mind to take calculated risks with confidence to achieve a pre determined business or industrial objective. It is the risk taking ability of an individual coupled with correct decision making. CONCEPT OF ENTREPRENEURSHIP. Entrepreneurship.
Process of action

Entrepreneur Person

Enterprise Object

A.H Cole Entrepreneurship is a purposeful activity of an individual or group of individuals undertaken to initiate, maintain or increase profits by production or distribution of economic goods or services. Peter Drucker Entrepreneurship is neither science nor art. It is a practice and has a knowledge base. Knowledge in Entrepreneurship is a means to an end that is by practice. B C Tandon. Entrepreneurship means function of creating something new, organizing and coordinating, undertaking risks and handling economic uncertainty. Thus Entrepreneurship. Is the process of creating something new with value by devoting necessary time an effort, assuming the accompanying financial, psychic and social risk and receiving the resultant rewards of monetary and personal satisfaction and independence.

EMERGENCE OF THE ENTREPRENEURIAL CLASS During earlier times Indias prosperity attracted communities across boundaries Strategies adopted by Mughals and Turkish Turk Mughals settled down in India and shared the prosperity. . They bought currency with them and disrupted the barter system Strategy of the British Wanted to offload surplus supply due to Industrial Revolution in India to balance the demand and supply situation in U.K Managed to acquire power and became the ruler. Banned manufacturing in India. Sent all raw materials (cotton, oilseeds etc) to UK for conversion and value addition thus transferring wealth to UK 18th Century Indian Industry remained non started. Major thrust was on cash crops neglecting food grains resulting in severe famine.Indian Economy was dominated by British economy. 1920 World war prevented transfer of raw materials to Manchester. British decided to manufacture in India itself . Initiated the first Indian Industry. The Mumbai Textile Mills 1930s to mid 1940s Mahatma Gandhi directed his captains to set the basic Infrastrure for Industrial and Economic development. Theses are the founder entrepreneurs of India. They developed various areas of basic infrastructure. a)JRD Tata: Aviation, steel, railway, post & telegraph, power, roads, textile etc b)G.D Birla-Textgile, vehicles, power, cement, chemicals, heavy industries, aluminum, cement etc c) S. L Kirloskar-Machine tools, farm equipments, pumps etc d) Jamnalal Baja-Two wheelers, 3 wheelers etc Independence 1947 British went back leaving the business to their employees/agents/market intermediaries. Late 1960s Nationalisation of banks and Insurance companies made available huge funds for SSI and entrepreneurial developemt.It made investment available to common man challenging business monopoly

1970s to mid 1985 Emergence of new generation entrepreneurs because of funds and supporting govt policies. Technocrats , artisans , rural craftsman, educated, uneducated youngsters created the greatest ever SSI development. Resulted in excellent interdependence of SSI ands organized sector creating highest ever growth rate of 8.9% and very high addition to GDP. Organised sector could expand, diversify without any direct investment and SSI could share the prosperity. Mid 1980s Indian industry remained protected by license raj, permits, quotas, monopolistic market resulting into losing export and entry of cheaper better goods in gray market(Germany & Japan) resulting in worse BOP Situation and industrial sickness. Closure of several industries in organized sector. 1990s Liberalisation sets reforms rolling by scrapping export regulations.Delicensing, making import and export simpler, direct FDI in all sectors, concessions for technical know-how and collaboration. Indian entrepreneurship started. Mid 1990s Third generation of entrepreneurs Rahul Baja, Mahindra, Ambani, Ratan Tata, Kumarmangalam Birla proved their competencies in managing various large companies 2000 Indian Entrepreneurship took great leap in the global market entering in to service Industry (IT, BPO, Bio Technology, hospitality etc) India established leadership in several areasBajaj-Largest manufacture of 2 wheelers Ambuja cement-cheapest manufacturing of cement Job market is changing; Companies are passing through highly unstable phase. It may call for drastic changes in their business form that will lead to change in the employee pool. Jobs and remuneration eill be more result based. Thos will demand high enterprising capabilities and entrepreneurship attitude.

THEORIES OF ENTREPRENEURSHIP Theory of High Achievement

3 Basic Needs

Need for achievement

Need for affiliation

Need for recognition

McClelland identified 2 characteristics of Entrepreneurship. 1. Doing things in a new and better way 2. Decision making under uncertainty Achievement orientation is defined as tendency to strive for success in situation involving an evaluation of ones performance in relation to some standards of excellence. Need for achievement is needed for successful entrepreneurs. People with high achievement are not motivated by money alone. Money is just a measure of success for them. Highly successful entrepreneurs have high need for achievement. They do things that make them stand out and what to achieve things not done before. They strive hard to achieve. Take failures as learning experience and bounce back Dynamic Entrepreneurship Innovation theory or Schumpeters theory of creative destruction Was not widely accepted in 1930,s as dominance of sellers market Theory was only mere fancy till 19990 when mega corporates failed due to over emphasis on operation which worked well in past. The theory advocates discontinuance of anything organsiation/product/service/philosophy which has worked well in past. Advocates change by creative destruction in response to market condition Theory advocates the age of discontinuity and more on formulating the right questions and then the right answers for survival.

CHARACTERISTICS OF ENTREPRENEURS

Decision Making

Accepting Challenges

Organisation Skillful management

Risk Taking Innovation

Entrepreneurship

Making the enterprise a success

Characteristics 1. Mental Ability2. Clear objectives 3. Business secrecy 4. Human relations ability 5. Communication ability 6. Technical knowledge 7. Long term involvement 8. High energy levels 9. Administrative ability 10. Need for Independence 11. Dignity of labour 12. Social consciousness QUALITIES OF AN ENTREPRENEUR Hardworking Energetic Resourceful Visualizes change Planner and believes in systematic work Motivation towards achievement Creative Clarity Confidence Dreamer Instinct

FUNCTIONS OF AN ENTREPRENEUR

Risk Taking Reduces uncertainties by initiative and skill judgment

Business decision

Managerial Functions Formulate production plans

Function of innovation

Location Techniques of production Changes in Business

New goods

Bears losses

Organises personnel Arrange finance

New markets New source of raw material

ROLE OF CULTURE IN ENTREPRENEURIAL DEVELOPMENT Perception that starting new venture is desirable stems from an Individuals culture, subculture family and peers A culture that values an individual who creates an enterprise will spawn more venture formations American Culture-independence, individual opportunities, making money More individuals plan new enterprises in these supportive environments.

REWARDS AND MOTIVATION OIF ENTREPRENEUR Independence Money Job Satisfaction

CHANGE IN LIFESTYLE Decision to leave secure career is not easy R & D and marketing, main areas for new venture Role of disruption-Retirement, relocation, been fired, completion of educational degree.

TYPES OF ENTREPRENEURS
Business Entrepreneur Trading Entrepreneur According to type of Business

Industrial Entrepreneur Corporate Entrepreneur Agricultural Entrepreneur

According to use of technology

Technical Entrepreneur Non Technical Entrepreneur Professional Entrepreneur

According to motivation

Pure Entrepreneur Induced Entrepreneur Motivated Entrepreneur Spontaneous Entrepreneur

According to Growth

Growth Entrepreneur Super Growth Entrepreneur

According to stages of development

1st Generation Entrepreneur Modern Entrepreneur Classical Entrepreneur

Others

Innovating Entrepreneur Imitative

Entrepreneurial Process Stage 1. Change in socio economic environment in the country leading to want of new goods and services Stage 2. Starting a new Venture Stage 3. Intrapreneurship Stage 4. Coordinating various activities to achieve entrepreneurial goal Or. Identify and evaluate the opportunity Developing the business plan Determine resources required Manage the enterprise

Entrepreneurial decision process

Change from Present lifestyle-work Environment and Distruptions

Form New Enterprise Desirable Cultural Sub cultural Family Teachers peers Possible Government Background Marketing Financing Role Models