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Part B

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Entrepreneurship

The word Entrepreneurship is derived from the French verb “ENTERPRENDRE”.

The French men who organized and led military expeditions in the early 16th Century were referred to as Entrepreneurs.

Around 1700 A.D. the term Entrepreneur was used for architects and contractors of public work.

DEFINITION OF ENTREPRENEUR

According to Oxford Dictionary “One who undertakes an enterprise, especially a contractor – acting as intermediary between capital and labour”

According to Peter .P. Drucker “Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for different business or a different service”

WHO IS AN ENTREPRENEUR?

An entrepreneur is a person with a dream, originality and daring, who acts as the boss, who decides as to how the commercial organization shall run, who co-ordinates all activities or other factors of production, who anticipates the future trend of demand and prices of products.

An entrepreneur is one of the important segments of economic growth. Basically he is a person responsible for setting up a business or an enterprise. In fact, he is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green-field projects that create wealth, open up Many employment opportunities and leads to the growth of other sectors.

The entrepreneur displays courage to take risk of putting his money into an idea, courage to face the competition and courage to take a leap into unknown future and create new enterprises/business. This creative process is the life blood of the strong enterprise that leads to the growth and contributes to the national development.

The entrepreneur will always work towards the creation and enhancement of entrepreneurial society.

A classic example is that of Mr. Dhirubhai Ambani because he had all the Dynamic qualities of a successful entrepreneur, as a result of which today, he was the owner of the largest private company in India. All decisions which he had taken to grow were instinct and no one had taught him to take decisions.

We can define entrepreneur as one who innovates, raises money, assembles inputs, choose managers and sets the organization going with his ability to identify them.

CONCEPT OF ENTRPRENEUR

ENTREPRENEUR IS DERIVED FROM FRENCH WORD “ENTERPRENDRE” WHICH MEANS TO UNDERTAKE.

FRENCH MEN WHO ORGANISED AND LED MILITARY EXPEDITIONS WERE REFFERED AS “ENTREPRENEURS”

CHARACTERISTICS OF ENTREPRENEURS Accepting Challenges Decision Making Risk Taking Innovation Entrepreneurship

CHARACTERISTICS OF ENTREPRENEURS

Accepting Challenges

Decision Making Risk Taking Innovation Entrepreneurship
Decision
Making
Risk Taking
Innovation
Entrepreneurship

Characteristics

1. Mental Ability-

2. 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

Organisation

Skillful management

Making the enterprise a success

CHARACTERISTICS OF AN ENTREPRENEUR

Mental Ability – Entrepreneur must have creative thinking and must be able to analyze problems and situations. He should be able to anticipate changes.

Business Secrecy –He should guard his business secrets from his competitors.

Clear Objectives – He must have clear objectives as to the exact nature of business or the nature of goods to be produced.

Human Relations –He must maintain good relation with his customers, employees, etc. To maintain good relationship he should have emotional stability, personal relations, tactfulness and consideration.

Communication Ability – He should have good communication skills means both the sender and the receiver should understand each others message.

Technical Knowledge –He should have sufficient technical knowledge.

PERSONAL CHARACTERISTICS OF AN ENTREPRENEUR

Long term involvement – An entrepreneur must be committed to the project. Motivator Moderate risk taker Initiative High energy level –He should be able to work for long hours, for which his energy level should be high. Goal setter Self confidence

LATEST CONCEPT ON ENTREPRENEUR

PERCEIVES OPPORTUNITIES FOR PROFITABLE INVESTMENTS.

ARRANGES CAPITAL.

PROVIDES PERSONAL GUARANTEES.

SUPPLIES TECHNICAL KNOW HOW.

FOR PROFITABLE INVESTMENTS. • ARRANGES CAPITAL. • PROVIDES PERSONAL GUARANTEES. • SUPPLIES TECHNICAL KNOW HOW.
What are the essential Functions of an Entrepreneur ? (2) An entrepreneur performs a series

What are the essential Functions of an Entrepreneur ? (2)

An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He carries out the whole set of activities of the business for its success. He recognises the commercial potential of a product or a service, formulates operating policies for production, product design, marketing and organisational structure. He is thus a nucleus of high growth of the enterprise.

According some economists, the functions of an entrepreneur is classified into five broad categories:

1. Risk-bearing function,

2. Organisational function,

3. Innovative function,

4. Managerial function, and

5. Decision making function.

1. Risk-bearing function:

The functions of an entrepreneur as risk bearer is specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modern techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.

Thus, risk bearing or uncertainty bearing still remains the most important function of an entrepreneur which he tries to minimise by his initiative, skill and good judgement.

2. Organisational Function:

Entrepreneur brings together various factors of production, ensures continuing management and renders risk-bearing functions as well. Entrepreneur is one with the functions of coordination, organisation and

supervision

By selling the product in the market, he pays interest on capital, rent on land and wages to

labourers and what remains is his/her profit. In this way, he describes an entrepreneur as an organiser

who alone determines the lines of business to expand and capital to employ more judiciously. He is the ultimate judge in the conduct of the business.

3. Innovative Function:

The basic function an entrepreneur performs is to innovate new products, services, ideas and information for the enterprise. As an innovator, the entrepreneur foresees the potentially profitable opportunity and

Whenever a new idea occurs

tries to exploit it. He is always involved in the process of doing new things

entrepreneurial efforts are essential to convert the idea into practical application.

J.A. Schumpeter considered economic development as a discrete dynamic change brought by entrepreneurs by instituting new combinations of production, i.e. innovation. According to him innovation may occur in any one of the following five forms.

The introduction of a new product in the market with which the customers are not get familiar with.

Introduction of a new method of production technology which is not yet tested by experience in the branch of manufacture concerned.

The opening of a new market into which the specific product has not previously entered.

The discovery of a new source of supply of raw material, irrespective of whether this source already exists or has first to be created.

The carrying out of the new form of organization of any industry by creating of a monopoly position or the breaking up of it.

4. Managerial Function:

Entrepreneur also performs a variety of managerial function like determination of business objectives, formulation of production plans, product analysis and market research, organisation of sales procurring machine and material, recruitment of men and undertaking, of business operations. He also undertakes the basic managerial functions of planning, organising, co-ordinating, staffing, directing, motivating and controlling in the enterprise. He provides a logical and scientific basis to the above functions for the smooth operation of the enterprise thereby avoids chaos in the field of production, marketing, purchasing, recruiting and selection, etc. In large establishments, these managerial functions of the entrepreneur are delegated to the paid managers for more effective and efficient execution.

5. Decision Making Function:

The most vital function an entrepreneur discharges refers to decision making in various fields of the business enterprise. He is the decision maker of all activities of the enterprise. A. H. Cole described an entrepreneur as a decision maker and attributed the following functions to him.

He determines the business objectives suitable for the enterprise.

He develops an organization and creates an atmosphere for maintaining a cordial relationship with subordinates and all employees of the organization.

He decides in securing adequate financial resources for the organisation and maintains good relations with the existing and potential investors and financiers.

He decides in introducing advanced modern technology in the enterprise to cope up with changing scenario of manufacturing process.

He decides the development of a market for his product, develops new product or modify the existing product in accordance with the changing consumer's fashion, taste and preference.

He also decides to maintain good relations with the public authorities as well as with the society at large for improving the firms image before others.

DEFINITION OF ENTREPRENEURSHIP

According to A.H. Cole

“Entrepreneurship is the purposeful activity of an individual or group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods or services”.

According to Peter .P. Drucker

“Entrepreneurship is neither a science nor an art. It is a practice. It is knowledge base. Knowledge in entrepreneurship is a means to an end, that is ,by the practice”.

It is a practice. It is knowledge base. Knowledge in entrepreneurship is a means to an

EVOLUTION OF ENTREPRENEURSHIP IN INDIA

The concept of entrepreneur and entrepreneurship includes basic qualities of leadership enterprise, innovation, vision, hard work and profit maximization.

In India 70% of the total sales comes from family business e.g.Tata’s makes trucks, Mahindra’s make jeeps etc.

The Indian entrepreneur, intrapreneur or manager of the 90’s have to molded in psycho- philosophy not in the Indian context and values.

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.

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

If

the culture is economically or monetarily oriented entrepreneurship would be applauded and praised.

In less developed countries people are not economically motivated. People have ample opportunities of

attaining social distinction by non economic pursuits.

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.

IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY

The nature of a developing economy is quite different from a developed economy. The developing economy can be an agricultural country moving towards the industrialization or it may be the one where in the industry may be in its infancy lacking advance technology.

The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and fast developing communication technology. The globalization of industry and commerce is bringing a vast change in various aspects of life.

Economic development of a country is the outcome of purposeful human activity.

The modern era is an era of changes. The whole world is becoming a village due to the industrial revolution and fast developing communication technology. The globalization of industry and commerce is bringing a vast change in various aspects of life.

Economic development of a country is the outcome of purposeful human activity.

Economic development is a highly dynamic process characterized by the pattern of demand shifts, new products are needed, appear for the production of goods within a country.

A developing country needs entrepreneurs who are competent to perceive new opportunities and are willing to incur the necessary risk in exploiting them.

A developing economy is required to be brought out of the vicious circle of low income and poverty.

Entrepreneur can break this vicious circle.

Entrepreneurs and helping government can change a developing economy in developed economy.

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

FOUR KEY ELEMENTS OF ENTREPRENEURSHIP

ARE

INNOVATION.

RISK TAKING.

VISION.

ORGANISING SKILL.

DIAGRAMATIC

RELATION.

DIAGRAMATIC RELATION.
DIAGRAMATIC RELATION.

Entrepreneur

Entrepreneurship

Refers to person

Refers to process

1. Administrator

1. Administration

2. Creator

2. Creation

3. Communicator

3. Communication

4. Decision-maker

4. Decision

5. Initiator

5. Initiation

6. Innovator

6. Innovation

7. Leader

7. Leadership

8. Motivator

8. Motivation

9. Organiser

9. Organisation

10. Planner

10. Planning

11. Programmer

11. Action

12. Risk-taker

12. Risk-taking

13. Technician

13. Technology

14. Visualiser

14. Vision

TYPES OF ENTREPRENEURS

According to type of Business

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

Business Entrepreneur

Trading Entrepreneur

Industrial Entrepreneur

Corporate Entrepreneur

Agricultural Entrepreneur

According to use of technology

According to motivation

According to Growth

According to stages of development

Others

to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur
to Growth According to stages of development Others Technical Entrepreneur Non Technical Entrepreneur

Technical Entrepreneur

Non Technical Entrepreneur

Professional Entrepreneur

Pure Entrepreneur

Induced Entrepreneur

Motivated Entrepreneur

Spontaneous Entrepreneur

Growth Entrepreneur

Super Growth Entrepreneur

1st Generation Entrepreneur

Modern Entrepreneur

Classical Entrepreneur

Innovating Entrepreneur

Imitative

Types of Entrepreneurs(2)

The various types of entrepreneurs are classified hereunder:

I. According to the type of business

1. Business entrepreneur

2. Trading entrepreneur

3. Industrial entrepreneur

(i)

Large

(ii)

Medium

(iii)

Small, and

(iv)

Tiny

4. Corporate entrepreneur

5. Agricultural entrepreneur

(i)

Plantation

(ii)

Horticulture

(iii)

Dairy

(iv)

Forestry

6. Retail entrepreneur

7. Service entrepreneur

II. According to the use of technology

1. Technical entrepreneur

2. Non-Technical entrepreneur

3. Professional entrepreneur

4. High-tech entrepreneur

5. Low-tech entrepreneur

III. According to Motivation

1. Pure entrepreneur

2. Induced entrepreneur

3. Motivated entrepreneur

4. Spontaneous entrepreneur

IV. According to the growth

1. Growth entrepreneur

2. Super-growth entrepreneur

V. According to the stages of development:

2.

Modern entrepreneur

3. Classical entrepreneur

VI. According to area:

1. Urban entrepreneur

2. Rural entrepreneur

VII. According to gender and age:

1. Men entrepreneurs

2. Women entrepreneurs

(i)

Young entrepreneurs

(ii)

Old entrepreneurs

(iii)

Middle-aged entrepreneurs

VIII. Others or unclassified:

1. Professional entrepreneurs

2. Non-Professional entrepreneurs

3. Modern entrepreneurs

4. Traditional entrepreneurs

5. Skilled entrepreneurs

6. Non-skilled entrepreneurs

7. Mitating entrepreneurs

8. Inherited entrepreneurs

9. Forced entrepreneurs

10. National entrepreneurs

11. International entrepreneurs

12. Bureacratic entrepreneurs

13. Intrapreneur entrepreneurs

14. Immigrant entrepreneurs

According to the Type of Business

Entrepreneurs are found in various types of business occupations of varying size. broadly classify them as follows:

Business Entrepreneur:

Business entrepreneurs are individuals who conceive an idea for a new product or service and then create a business to materialize their idea into reality. They tap both production and marketing resources in their search to develop a new business opportunity. They may set up a big establishment or a small business unit. Trading entrepreneur is one who undertakes trading activities and is not

We may

concerned with the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire and interest among buyers to go in for his product. He is engaged in both domestic and overseas trade.

Industrial Entrepreneur:

Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.

Corporate Entrepreneur

Corporate entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.

Corporate Entrepreneur

Corporate entrepreneur is a person who demonstrates his innovative skill in organising and managing a corporate undertaking. A corporate undertaking is a form of business organisation which is registered under some statute or Act which gives it a separate legal entity.

Agricultural Entrepreneur:

Agricultural entrepreneurs are those entrepreneurs who undertake such agricultural activities as raising and marketing of crops, fertilizers and other inputs of agriculture.

According to the use of Technology.

Technical Entrepreneur:

A technical entrepreneur is essentially an entrepreneur of Craftsman type . He develops a new and improved quality of goods because of his craftsmanship. He concentrates more on production than marketing. He does not care much to generate sales by applying various sales promotional techniques. He demonstrates his innovative capabilities in matters of production of goods and rendering services.

Non-technical Entrepreneur:

Non-technical entrepreneurs 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:

Professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established.

According to Motivation

Motivation is the force that influences the efforts of the entrepreneur to achieve his objectives. An entrepreneur is motivated to achieve or prove his excellence in job performance. He is also motivated to influence others by demonstrating his power thus satisfying his ego.

Pure entrepreneur

A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work ego or status.

Induced Entrepreneur

Induced entrepreneur is one who is induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture. Most of the entrepreneurs are induced entrepreneurs who enter business due to financial, technical and several other facilities provided to them by the state agencies to promote entrepreneurship. Motivated Entrepreneur: New entrepreneurs are motivated by the desire for self-fulfilment. They come into being because of the possibility of making and marketing some new product for the use of consumers. If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in terms of profit.

Spontaneous Entrepreneur

They are persons with

initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity.

Growth Entrepreneur

Growth entrepreneurs are those who necessarily take up a high growth industry. entrepreneurs choose an industry which has substantial growth prospects.

Super-Growth Entrepreneur

Super-growth entrepreneur are those who have shown enormous growth of performance in their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.

According to Stages of Development

First-Generation Entrepreneur

A first generation entrepreneur is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator, combining different technologies to produce a marketable product or service.

Modern Entrepreneur

These

These entrepreneurs start their business out of their natural talents.

A modern entrepreneur is one who undertakes those ventures which go well along with the

changing demand in the market. needs.

Classical Entrepreneur:

A classical entrepreneur is one who is concerned with the customers and marketing needs through the development of a self supporting venture. He is a stereotype entrepreneur whose aim is to maximise his economic returns at a level consistent with the survival of the firm with or without an element of growth.

Other

Innovating Entrepreneurs:

Innovating entrepreneurship is characterized by aggressive assemblage of information and analysis of results, deriving from a novel combination of factors. Men/women in this group are generally aggressive in experimentation who exhibit cleverness in putting attractive possibilities into practice. One need not invent but convert even old established products or services, by changing their utility, their value, their economic characteristics, into something new, attractive and utilitarian. Therein lies the key to their phenomenal success. Such an entrepreneur is one who sees the opportunity for introducing a new technique of production process or a new commodity or a new market or a new service or even reorganization of an existing enterprise. Initiative Entrepreneurs:

Imitative entrepreneurship is characterized by readiness to adopt successful innovations by innovating entrepreneurs. They first imitate techniques and technology innovated by others.

They undertake those ventures which suit the current marketing

imitate techniques and technology innovated by others. They undertake those ventures which suit the current marketing

The Role of Entrepreneurs in Economic Development

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important input in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy is discussed in a systematic and orderly manner as follows.

(1) Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities lead to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.

(2) Creates Large-Scale Employment Opportunities:

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up of more and more units by entrepreneurs, both on small and large- scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.

(3) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead to more development of backward regions and thereby promotes balanced regional development.

(4) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial development normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.

(5) Wealth Creation and Distribution:

It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy.

(6) Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the look out for opportunities. They explore and exploit opportunities,, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for

growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth.

(6) Improvement in the Standard of Living:

Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.

(7) Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.

(8) Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximise profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country.

(9) Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialisation is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.

NEED AND SCOPE OF ENTREPRENEURSHIP DEVELOPMENT

The word Entrepreneurship is very often confused with the word Entrepreneur . They look alike but carry different meanings. Entrepreneurship is nothing but all those activities which are to be undertaken by an entrepreneur. The prevailing socio, political and economic activities act as a propelling force for the aspiring personalities to become entrepreneurs. Entrepreneurship development is the outcome of the entrepreneurs. In other words, the entrepreneurs give birth to entrepreneurship. This statement is partially true because certain activities of the entrepreneurs are due to the existing policies and programmes of the Central as well as the state governments and not only by the entrepreneurs themselves. Under such circumstances, it is not the entrepreneurs who give birth to entrepreneurship. Instead, it is the existing entrepreneurship development programmes that give birth to entrepreneurs. At occasions, the emergence of entrepreneurs and the level of

entrepreneurship development are due to the far reaching changes that are taken place in the social and political activities rather than changes taken place in the economic activities.

No entrepreneur can emerge from the vacuum. Entrepreneurship development depends upon the environment (both external and internal) with which the entrepreneurs do their business. Entrepreneurs are closely associated with the existing as well as the past entrepreneurial activities of the society. Business opportunities are identified from the social, political and economic crisis and in turn these crisis become the favourable climate for the entrepreneurs to innovate new business ventures. From this perspective, it is true that entrepreneurial activities are the resultant efforts of the prevailing entrepreneurship development programmes.

On the other hand, entrepreneurs keenly observe the society and its economic activities and try to elicit innovative business opportunities. They try to make use of the latest technology and manufacture new products which are hitherto unknown to the market and enable the consumers to buy them and thereby improving their living standard. Entrepreneurs thus find new market, new product and introduce a new form of organization. One would say therefore that the entrepreneurship development is due to the innovative thoughts and actions of the entrepreneurs. Thus the term entrepreneur and entrepreneurship though different are not contradictory but complementary with each other. Let us see the need and scope of entrepreneurship development in the forthcoming pages.

Scope of Entrepreneurship Development

Entrepreneurship development has been found in existence in all walks of the society and in all fields of activities. The scope of entrepreneurship development has been discussed on the following lines:

1. To Identify Entrepreneurial Activities:

1. The entrepreneurial activities 'and opportunities could be identified by the planner of the Government. The Government through various economic policies and programmes like 'Globalisation', 'Privatisation', 'Liberalisation', 'Free Export and Import of Goods and Services' inviting NRI's capital introduction of innovation in the stock market activities, and the establishment of SSI identifies entrepreneurship opportunities. These programmes give ample opportunities for the entrepreneurship development.

2. To liberalise the existing licensing policies and offer incentives and thereby attract multinational companies of various countries to develop new industries in the backward regions.

3. To encourage the researchers of entrepreneurship development to find new opportunities for the business and industrial development.

4. To identify the existing and the emerging economic, social and political crisis and find out a suitable remedial measure to overcome the crisis.

6.

To find out the entrepreneurial activities of the neighbouring countries and the international financial institutions and other associated activities like bilateral agreements, SAARC countries Agreement, Common Wealth Countries agreements and Non-Aligned Nations agreements and the like.

7. To encourage the institutions engaged in the industrial development to find avenues for entrepreneurship development. The institutions informing entrepreneurial opportunities are:

1. The Government's sponsored institutes.

2. University Departments and entrepreneurship development institutions.

3. Voluntary organisations and research agencies.

4. The commercial banks and

5. Industrial Development Institutions.

2. Imparting Training to Develop Entrepreneurial Talents:

Entrepreneurs can be made by means of allowing them to undergo rigorous training. The level of entrepreneurship development especially in all underdeveloped countries depends upon the extent with which the aspiring men are given training. Through training, they can be able to improve their power of achievement and power of affiliation. Training of this type shall be given to the young pupil even at the school level. The training enables entrepreneurs:

a. to know as how to search the innovative business ideas.

b. to know the various sources available for new business ideas.

c. how to process and find out the best ideas.

d. to know the various input requirements for the proposed business.

e. to find out the location for the proposed business.

f. to know as how to fulfill the various legal formalities.

g. to know as how best to make use of the existing infrastructural facilities.

h. know the various sources of finance available for the new business venture.

i. to know as how best to overcome the resistance, and

j. to know as how to assess the market and future trend.

3. To Develop Infrastructural Facilities

Entrepreneurship development could be possible through the setting up of infrastructural facilities for the aspiring entrepreneurs. The following infrastructural facilities are worth noting:

1. Impart entrepreneurship education to the pupils at the school level so as to enable them to develop the entrepreneurial talents.

2. Establish a separate Department of Entrepreneurship Development or School of Entrepreneurship Development at the College/University level and allow the academics to' undertake researches on 'Entrepreneurship Development' and its allied activities.

3.

Conduct the 'Entrepreneurship Development Programme's through the setting up of Entrepreneurship Training Institutions atleast at the taluk level in all parts of the country.

4. The State Governments shall give special attention to the entrepreneurship development programme. They can in collaboration with the neighbouring states, chalk out a programme of action for developing entrepreneurial activities in a phased manner.

5. The existing financial institutions especially the commercial banks situated in rural areas shall take utmost care in identifying the aspiring entrepreneurs and offer not only the required financial assistance but also the required managerial techniques so as to enable them to establish new business and withstand in the market.

6. Institutions which are engaged in the development of small industries shall frame long range planning in developing entrepreneurial talents. They should monitor the changing industrial and business scenarios and determine the future course of actions to be taken to improve the entrepreneurship development.

7. The role of R & D institutions is not only to innovate but also to inform the entrepreneurs as how best to make use of the innovation and apply in the manufacturing process. These institutions should act as entrepreneur and all its activities constitute entrepreneurship.

8. Entrepreneurship development depends upon the existence of a stable Government so that industrialists and business magnets could have long range planning. Foreign investors would not hesitate to go over to any other country if there is an existence of a stable Government.

9. The availability of finance in time is yet another support for the entrepreneurship development. The existing tools for the better financial management are not adequate. They could be used in the giant business concerns only. Hence, the immediate need of the hour is to develop new tools that must be suitable for the effective utilisation of finance in the small scale industrial units.

Identification of the effective utilisation of the available finance itself creates ground for the development of entrepreneurial activities. The entrepreneurs could be able to mobilise funds from existing stock market arid the market shall imbibe confidence in the minds of small investors that their investments are protected and "'used for profitable business opportunities.

10. There must be an existence of the skilled labourers and experts who are able to make use of the latest technology. Timely, adaptation of the new technology ensures entrepreneurship development, since there are chances for making use of the new technology for alternative purposes.

11. Entrepreneurship could be developed through an effective communication net work. It avoids scarcity of information and ensures equilibrium in updating the knowledge of the people of the entire globe. It enables a uniform growth of the economy. The entire globe in these days is considered as a village owing to the fast communication new work system.

The above said infrastructure can be classified into two viz.,

1.

Social infrastructure and

2. Economic infrastructure.

Infrastructure

Social

Economic

Entrepreneurship education

Financial institutions

Competitive spirit

Industrial development institutions

Stable Government

Research and Development

Social set up.

Stable and growing capital market

Entrepreneurship development programme.

Communication net work

Economic and Trade Policies

Training institutions

Technological changes

Skilled personnel

Innovation.

Absence of one or more of the above said infrastructures hinder the growth of entrepreneurship development. What is needed at present is a comprehensive planning as how best to help the young entrepreneurs to avail these infrastructure facilities.

4. Demand for and Supply of Entrepreneurs:

It is true that the economic growth depends upon the existence of the technical progress. The level of technical progress in turn depends upon the existence of the entrepreneurs. In other words, the economic growth is the resultant effect of the existing as well as future demand for and supply of entrepreneurs. Disequilibrium between these two affects the economic growth. Excess supply of entrepreneurs over demand leads to exploitation of natural resources beyond the required level. Of course it leads to 'super development'. This is one side of argument. The other side of the argument is how to measure the excess supply. If the measure it with the help of the variable' development', we can say that excess supply is found in all the industrially advanced countries. In real life, what is advanced to-day in industrially advanced countries becomes a common phenomenon tomorrow in all other developing and less developed countries. If such is the case, it is proved that excess supply of entrepreneurs is only an imagination and it will never become true. In other words the demand for entrepreneur is a constant factor and is in existence for ever. The supply of entrepreneurs could be enhanced through motivation. As propounded my Mc Clelland, any society with generally high level of achievement will produce more real entrepreneurs who in turn accelerate the growth of the economy. Max Weber suggested that entrepreneurship is the outcome of the existing social conditions of the society. He was of the opinion that the entrepreneurs' personality has been determined and shaped by the existing social customs and values of the society. The living conditions of the society have been

influenced by the existing cultural and religious norms, economic status of the people, their castes and inter group relations.

However it has been observed from the history that achievement of individuals is always greater than the achievement of groups. Entrepreneurship development too could be achieved more by individuals.

Entrepreneurship in India

Entrepreneurship is happening in India, but there isn’t enough of it and there isn’t enough of capital being invested into early-stage companies.

There are two issues: lack of angel funding (whatever little was there has now almost dried up) and lack of the first-round funding. Ventures need about Rs 1-5 crore to get started, and about Rs 5-15 crore in first- round funding. Most VC funds in India are either not investing in tech-focused cos. or need to invest $5 million (Rs 25 crore) given their fund size and the commitments they can make. India needs smaller funds with smaller overheads, with more operationally focused partners to mentor and guide early-stage companies.

The digital opportunities in the Internet and mobile space both have challenges. The Internet cos. are dependent entirely on advertising (which has stagnated) and the mobile cos. are hamstrung by low revenue shares from mobile operator payouts.

I continue to believe that the big opportunity in India is in building direct-to-consumer cos. in the mobile space, but this requires courage and capital.

Also, exits in India are few and far between. M&A needs to be part of the process and that is simply not happening in India.

Result: we have lots of small companies (since one can start) but few achieve scale. That is what needs to change.

6 Stages of Entrepreneurship

There are six stages of an entrepreneurial venture that founders of companies will encounter. If you choose to purchase an existing business, you may skip a few steps, but you will still be forced to address several of them. The six steps are:

1)

CONVICTION

(Willingness)

2)

IDEA

(Focus)

 

3)

CONCEPT

(Structure)

4)

VENTURE

(Investment)

5)

BUSINESS

(Revenue)

6)

SUSTAINABLE BUSINESS

(Time)

Stage 1: CONVICTION

No matter the stage of the business when an individual begins his/her entrepreneurial journey, every entrepreneur must address his/her conviction to be an entrepreneur. This

sounds trivial, but I believe it is the most important step in the process. It SHOULD be the first step; however, many entrepreneurs wait until the VENTURE stage to address it. This

can lead to grave problems.

out if he/she has the conviction to withstand the fundamental issues of entrepreneurship.

In the CONVICTION stage, an entrepreneur needs to figure

Stage 2: IDEA The IDEA stage is the easiest stage. Everyone has an idea for a business. This is also the most fun stage because the cost is zero and the excitement level high. Of course, the IDEA stage is the basis for every other stage so it cannot be dismissed; however, as an entrepreneur, you should never confuse an "idea" for a "concept". As you will see in the next step, a concept has much more structure than an idea and subsequently warrants a different concerns and decision making.

Stage 3: CONCEPT As mentioned above, a concept is characterized by structure. In the CONCEPT stage, you take your idea and employ a certain intellectual rigor which includes:

- Extensive market research

- Development of the business model

- Conceptualization of the type of the team required to execute

- Engagement of informal and formal advisors

Stage 4: VENTURE This is the most challenging stage of the business and for many entrepreneurs the most

fun

investment. This investment typically comes in two forms: money and time. In most cases, as the entrepreneur, it is "your" money and "your" time; and those can often be significant.

well

at least in the beginning. The VENTURE stage is characterized by significant

Stage 5: BUSINESS The BUSINESS stage is where all entrepreneurs strive to be. This is the stage where you have revenues that are commensurate with your expenses. Of course, there may be unprofitable months or years, but in general, the business can support itself with little outside capital. This is the stage where you are most likely to find investors.

Stage 6: SUSTAINABLE BUSINESS Although most entrepreneurs are satisfied to build a Business, they should strive to become a Sustainable Business. There are unique challenges to creating a sustainable business and it can be defined in different ways. It is typically characterized by time. Ventures that last 10+ years may be thought of as sustainable; however, the real challenge is for a business to outlast the involvement of its founders. That is a more relevant definition of a sustainable business.

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Barriers of Entrepreneurship

The Entrepreneurship could not be taken up due to several reasons. The following are some of the barriers of entrepreneurship.

(1)

Lack of Capital

(2)

Lack of technical knowledge

(3)

Economic business cycles

(4)

Non-availability of raw materials and resources

(5)

Government regulations

(6)

Obsolescence of technology or idea.

(7)

Unstable and unpredictable markets.

(8)

Globalisation and entry of foreign goods

(9)

Risk factor

Environmental Helps

Barriers

1. Market Contacts A. Lackof Viable Concept 2. Local Incubator Companies B. Lack of Market
1. Market Contacts
A. Lackof Viable Concept
2. Local Incubator Companies
B. Lack of Market Familiarity
3. Capable Local Manpower
C. Lackof Technical Skills
4. Technical Education&
D. Lackof Seed Capital
Support
E. Lackof Business Knowhow
5. Supplier Assistance
F. Complacency, Nomotivation
Personal
Personal
Pushes
&Credit
Pushes
G. Social Stigma
6. Local Venture Capitalists
H. Job“Lock-ins”, “Golden
Handcuffs”
7. Venture – Savvy Bankers
I. Time Pressures, Distractions
8. Capable Local Advisors
9. Entrepreneurial Education
J. Legal Constraints, Regulation,
RedTape
10.Successful RoleModels
K. Protectionism,Monompoly
L. Patent Inhibitions

Barriers to Entrepreneurship

Venture
Venture