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UNIT I Concept: Entrepreneur plays a vital role in the economic development of a country. He generates employment, income, production and contributes towards the overall development of economy. It is an initiative, dedication, skill, tolerance, confidence, courage, enthusiasm, sense of responsibility, honesty which makes one a successful entrepreneur.

Definition Of Entrepreneur: The Oxford Advanced Learners Dictionary defines entrepreneur as a person who makes money by starting or running businesses, especially when this involves taking financial risks. J.E.Stepanek states regarding entrepreneur, it is a person who has capacity to take risk, ability to organize and desire to diversify and make innovations in the enterprise.

Higgines writes, an entrepreneur is a person who performs the function of seeing investment and production opportunity, undertakes a new production process, raising capital,hiring labour, arranging the supply of raw materials, finding site, introducing a new technique and commodities, discovering new sources of raw materials and selecting top managers for day to day operation of entrepreneur.

ENTREPRENEURSHIP Concept: Entrepreneurship means degree of intelligence to run a business. It means application of ones ability, experience, innovations, intelligence, initiative creativity in order to prove oneself a successful entrepreneur. Definition: Benjamin Higgins defines entrepreneurship as Entrepreneurship means the function of foreseeing investment and production opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labour, arranging for the supply of raw materials and selecting top managers for the day to day operations of the entreprise.

Entrepreneur and Entrepreneurship (Difference) Entrepreneurship & entrepreneur are interchangeably used. They are different.
Entrepreneur Innovator Initiator Creator Risk Taker Motivator Leader Organiser Programmer Visualiser Decision taker Manager Entrepreneurship Innovation Initiative Creation Risk Taking Motivation Leadership Organisation Action Vision Decision taking Management

The above comparison reveals that entrepreneur refers to a person and entrepreneurship refers to a process. Entrepreneurship refers to the functions of creating something new, organizing and coordinating and undertaking risk and handling economic uncertainty.

ROLE OF ENTREPRENEUR: Various definitions of entrepreneur/entrepreneurship refers to the role of an entrepreneur.Schempeter refers to innovation as a role of entrepreneur others as Cantillou, JB Say and others say that risk bearing is the main role of an entrepreneur. Modern view is that an entrepreneur has to perform many functions-planning, decision making, risk-taking, innovation, achieving skill,organizing, motivating, leading and managing overall affairs of the organization.

Role of Entrepreneur in Economic Development: An Entrepreneur occupies an important place in the whole process of economic development. An entrepreneur identifies an opportunity, makes investment, invests all efforts to get rewards out of it which ultimately lead to improvement of economy.

The entrepreneur is the innovating individual who introduces something new in the economy, a new method of production not yet tested by experience in the branch of manufacturing concern, a production with which consumers are not yet familiar, a new market not yet exploited. It means an entrepreneur does something new, something unique.

TYPES OF ENTREPRENEURS 1. Innovating Entrepreneurs 2. Adaptive or Immitative Entrepreneurs 3. Drone Entrepreneurs 4. Fabian Entrepreneurs 1. Innovating Entrepreneurs: Innovation is the most important function which speaks of the quality of entrepreneueship. Innovation means to create something new. Innovation means implementation of invention in the production process. An entrepreneur who happens to be in search of introducing something new in order

to ensure the survival in the age of competition is called Innovating Entrepreneur. These types of entrepreneurs are very much helpful for their country because they bring about a renovation in lifestyle. 2. Adaptive or Immitative Entrepreneurs: Immitative entrepreneurs are those who follow the policy of wait and watch. They observe the results of innovations already launched by the innovative entrepreneurs.On observing the positive results implement the same in their enterprises. These types of entrepreneurs are found in developing countries. Immitative entrepreneurs have the capability to know and apply the principles of successful innovations. These entrepreneurs are very much helpful in less developed countries as they contribute significantly in the growth of enterprise and entrepreneurial culture in these countries. Also they generate ample employment avenues for countries and therefore they are treated as the agent of the economic development. 3. Drone Entrepreneurs: These are the entrepreneurs who are not ready to respond to

changes. They feel comfortable with their old fashioned technology of production. As a result, they suffer losses. So, they dont contribute towards the economy of a nation. 4. Fabian Entrepreneurs: These entrepreneurs are very much sceptical in their approach in adopting or innovating new technology in their enterprise. They are not adaptable to the changing environment. They love to remain in the existing business with age old techniques of production. They only adapt to new technologies when they feel it is necessary otherwise our business will collapse. QUALITIES OF ENTREPRENEURS The qualities of a good entrepreneur. 1. Are you a good decision taker: The ability to make good decisions is the key to be a successful entrepreneur. Entrepreneurs of most profit-making organizations are always faced with a wide range of important decisions in the areas of pricing, product choice, cost control, capital investment and





so on. Entrepreneurs decide such matters as what goals, opportunities they will pursue, what resources they will use and so on. How good their decisions are will determine the quality of an entrepreneur. Are you a real guide: Entrepreneur should have the quality of guiding others. He should be in a position to issue right instructions to the right persons on right time.An entrepreneur should possess a quality to teach his workers and guide them Are you emotionally stable: An entrepreneur should not be moved by emotions or sentiments. He should analyse the problem rationally and take a decision without bias. He should not have short temper. Are you sociable: A sociable entrepreneur can easily mingle with workers. Workers should be encouraged to discuss their problems and difficulties. Entrepreneur should give patient hearing to them. Have you mental vigour: An entrepreneur should be mentally strong. He should have a capacity to work for long hours than others.







Using feed back: An entrepreneur should be in a position to assess the impacts of decisions. Observation of the effects of activities/decisions is called feed back. Personal likes/dislikes are to be ignored. Are you realistic: An entrepreneur should not be emotional in nature. Personal likes and dislikes should not be counted while reaching the factual position. Do you have desire to be a winner: It means that one should invest all efforts to turn the dreams into reality, to adjust in changing environment. Do you have quality of stick to: One should be in position to fight against all difficulties, problems, challenges that may arise from time to time. One should not get discouraged. Are you risk-taker: An entrepreneur is a risktaker, not a gambler. All the decisions being taken by an entrepreneur are supposed to be sound & justified & not blind. Have you ability to find and explore opportunity: Conditions are changing fast



especially under the slogan of free trade. What is fit today may be misfit tomorrow. Therefore, an entrepreneur has to be in search of new & new opportunities, finding new opportunities is a continuous process. It means that an entrepreneur should be research minded, knowledgeable, experienced. Have you technical knowledge about the job: An entrepreneur to be successful should possess a thorough knowledge of the unit. Besides, he should know the current development along with technical knowledge & expected future changes. Are you a motivator: An entrepreneur should know the motivation techniques & how to use them. He should have the qualities to influence his employees & people.

FUNCTIONS OF ENTREPRENEUR Functions of an entrepreneur include all activities being performed from the stage of generation of idea

till the implementation of the same. The basic function of entrepreneur is to search for an appropriate business idea having good investment opportunities. It is complicated function in the sense that an entrepreneur comes across many investment opportunities. To choose the best one requires ingenuity, skill, foresight. He has to perform many other functions viz. Planning, decision-making, risktaking, innovation, organizing, motivating, leading & managing overall affairs of the enterprise. Arthur H. Cole lists the functions of an entrepreneur as under: 1.Generation of ideas. 2.Determination of objectives & change of objectives as required from time to time. 3.Securing of adequate financial resources. 4.The requisition of efficient technological equipment & adoption of changes in technology. 5.To develop market for the products. 6.To maintain good relations with authorities & with society at large.

The functions of an entrepreneur can be classified in brief, as under: 1. Decision-making 2. Planning 3. Organising 4. Financing 5. Marketing 6. Innovating 7. Risk-taking 8. Researching 9. Managing overall affairs of the concern.

ENTREPRENEUR SKILLS 1. Technical Skill: An entrepreneur should have complete knowledge about the processes involved in the production of goods/services. He should have complete knowledge about the technology being used in the unit.This skill is of great importance at the supervisory level. 2. Managerial Skill: An entrepreneur should have managerial skill in order to get the things done effectively. He should have motivational skill in

order to develop interest & team spirit among employees. All qualities of leadership should be possessed by him in order to create a conducive environment in which people feel secure & motivated. Managerial skill also includes the knowledge about the laws governing the unit, decision taking capacity, planning, coordinating & controlling efficiency. This skill is helpful in frequent interactions with subordinates. 3. Drawing Skills: An entrepreneur is also a designer. He should have skill to decide how things being manufactured in the unit such as shoes, clothes etc. will look or work by making drawings, plans or patterns. He should not only identify the problem but should have a skill to give practical solution to problem. 4. Conceptual Skill: This skill relates to framework within which needs are assessed & accordingly plans are reframed to satisfy the needs. Therefore, an entrepreneur should have ability to understand the significant element in the situation.He should have ability to predict the expected changes in the situation & take steps on appropriate time to welcome & adjust under

those changes with all success.This all requires experience, exposure, wits & full information about the environment entrepreneur is working in.

FACTORS AFFECTING ENTREPRENEUR GROWTH It is the environment prevailing in the country that encourages or discourages the entrepreneurs.
Environmental Factors Economic Factors Social Cultural Personality Institutional External Factors Factors Factors Factors Factors

Economic Factors: The economic factors that affect the growth of entrepreneurship are: (a) (b) (c) (d) Capital formation Infrastructural facilities Great risks Non-availability of labour & skills

(a) Capital Formation: Capital Formation is considered as an important factor in the economic development of a country. Capital

formation can accelerate the pace of development through fuller utilization of available resources. Entrepreneurs require to store large stock of inventories to provide adequate industrial supplies. (b) Infrastructural Facilities: The infrastructural facilities like communication,transport, power, irrigation facilities, technical & economic information etc.also affects the growth of entrepreneurs. (c) Great Risks: Risks in business are greater in a less developed country than in a developed nation. Three reasons are related to this situation: (i) There is the lack of reliable information on cost, size of the market, conditions of demand etc. (ii) The market for goods & services is small. (iii) The entrepreneurs are faced with situations where the capacity of their plant & the size of their investments are placed at the mercy of unforeseeable events.Entrepreneurs have a tendency to prefer short-term investments to long-term industrial ventures.

(d) Non-availability of labour & skills: Entrepreneurs, often find difficulty to secure sufficient labour. They are forced to make elaborate & costly arrangements to recruit the necessary labour.When labour is not trained they lacks industrial skills. The traditional skills of the workmen, are highly insufficient for modern industrial jobs.

2. Social Factors: Social factors can go a long way in encouraging entrepreneurship. In fact it was a highly helpful society that made the Industrial Revolution a glorious success in Europe. A society that is rational in decision-making would be favourable to entrepreneurial growth. 3. Cultural Factors: Entrepreneurial growth requires proper motives like profit-making, acquisition of prestige & attainment of social status. Ambitious & talented men would take risks & innovate if these motives are strong. The strength of these motives depends upon the culture of the society.

4. Personality Factors: This leads to the emergence of planning as means of achieving economic progress in which the state has to play a pivotal role. 5. Psychological & Sociological Factors: Psychosocial theories of entrepreneurship stress the motives or goals of the entrepreneur. 6.External Factors: (a) Industrial Estates: The programme of industrial estates was launched with a view to offer all facilities to entrepreneurs at one place. The land & other facilities are offered at subsidized rates in Industrial Estates. These estates have helped in creating employment opportunities, raising efficiency of the units. The modernized industrial estates can give boost to entrepreneurship. (b) Raw Materials: Abundant stock & regular supply of raw materials also affect the growth of entrepreneurship. The better arrangements for regular supply of raw materials, the more would be influence on entrepreneurial emergence. Establishment of raw material banks could prove motivational factors for potential entrepreneurs.

(c) Machinery on hire purchase: Replacement of outdated & installation of modern technology ensures the survival of unit & production with quality & low cost. Arrangements made by the government for supply of modern technology on hire purchase basis can motivate technocrats & other potential entrepreneurs even from backward areas for the establishment of units & give a boost to entrepreneurship. (d) Attitude of large scale units: Encouragement from large scale units also contribute to the growth of entrepreneurship. Large business units can be the big buyers of SSI products & boost small scale entrepreneurship. (e) Political conditions/Government policy: Heavy stress on rapid industrialization, control on imports encourage exports, expansion in domestic demand. This also contribute to entrepreneurial growth.

WOMEN ENTREPRENEURSHIP Women entrepreneurship may be defined as women with intelligence, initiatives, innovations, experience,

managerial efficiency, qualities of leadership, vision, skill, capability to take decisions, risk. According to the policy of Industries Reforms (1997), amended in 1999, women entrepreneurs mean, A Small Scale Industrial Unit/Industry related service or business enterprise managed by one or more women entrepreneurs in proprietary concerns or where she/ they individually or jointly have share capital of not less than 5 percent as partners/shareholders/directors of private limited company/members of cooperative society. DEFINITION Any woman or group of women which innovates, imitates or adapts an economic activity may be called woman entrepreneurship._________Frederick Harbison ROLE OF WOMEN ENTREPRENEUR Involvement of women in the field of industries is a recent development. With the spread of education among females & increase in the number of women working outside homes especially in urban area, the thinking & role of women has altogether changed. The democratic nature of constitution & steps taken

in various five year plans for the empowerment of women contributed a lot towards the change in the position of women in India. Factors like political consciousness, spread of formal & informal education, development in the field of transport, roads, communication, socio-cultural awakening created an environment where we see the women folk coming forward as industrialists,economists, politicians, social reformers, scientists, pilots, engineers etc. Efforts put in by the Government agencies to organise Entrepreneurial Development Programmes to develop awareness among women regarding the potentialities of various industries in the local area added a lot towards women entrepreneurship. As a result of these steps, we see the women coming forward for the establishment of industries on modern lines. PROBLEMS FACED BY WOMEN ENTREPRENEURS Women entrepreneurs face many problems in their efforts to develop their enterprises. The main problems faced by the women entrepreneurs are as :

1. Shortage of finance: Women entrepreneurs always suffer from inadequate financial resources & working capital. The complicated procedure of bank loans also create lot of problems in getting the required finance. Women entrepreneurs even face problems in getting requisite working capital for financing day-to-day business activities. Women entrepreneurs have to depend upon their personal savings & loans from family friends. Most of the women entrepreneurs fail due to lack of proper financing facilities, because finance is the life blood of every business activity. 2. Marketing problems: Women entrepreneurs often depend upon the middlemen for marketing their products.They exploit the women entrepreneurs. Women entrepreneurs also find it difficult to study the market trend. A lot of money is needed for advertisement in these days of stiff competition from male entrepreneurs. Women entrepreneurs also lack energy & extra efforts needed to be invest & to win the confidence of customers & popularise the products.

3. Shortage of raw materials: The shortage of required raw-materials is also one of the big problems faced by women entrepreneurs. Women entrepreneurs find it difficult to procure the required raw materials & other necessary inputs for production in sufficient quantity & quality. 4. Stiff competition: Women entrepreneurs have to face severe competition from organised industries & male entrepreneurs having vast experience in a globalised market. 5. Limited managerial ability: Women entrepreneurs may not be expert in each & every function of the enterprise. She will not be able to devote sufficient time for all types of activities. 6. High cost of production: The high cost of production is another problem which undermines the efficiency & restricts the development of women entrepreneurs. It is necessary to increase efficiency, expand productive capacity to reduce the cost of production. 7. Lack of entrepreneurial aptitude: One of the biggest problems of women is the lack of entrepreneurial aptitude. They have no

entrepreneurial bent of mind. The basic characteristics of an entrepreneur such as innovation, risk bearing etc. are absent in a women entrepreneur. 8. Low risk-taking ability: Women entrepreneurs suffer from the problem of low risk taking ability as compared to their male counterparts. Inferiority complex, unplanned growth, lack of infrastructure,hesitationin taking quick decisions also increases the rate of risk & chances of loss. 9. Family responsibilities: One of the main duty of a woman in India is to look after the children & other family members. A very little time & energy is left for business activities. A married woman entrepreneur has to make a perfect balance between domestic activities & business activities. The woman entrepreneur cannot succeed without the support & approval of husband. Their success in this regard also depend upon supporting husband & family. 10. Social attitudes: One of the biggest problems of a woman entrepreneur is the social attitude in which she has to live & work. There is discrimination against women in India despite

constitutional equality. Women do not get equal treatment in a male-dominated Indian society & male ego puts barriers in their progress. 11. Lack of education: The education level among women in India is very low. Majority of women are not aware about the technological developments, marketing knowledge etc. due to lack of education. Illiteracy further creates problems in setting up & smooth running of enterprises. 12. Lack of entrepreneurial training: Large number of women have no proper & sufficient technical & professional training to set-up a new venture. 13. Legal formalities: Women entrepreneurs find it extremely difficult in complying with various legal formalities in obtaining licences etc. 14. Travelling: Women entrepreneurs cannot travel from one place to another as freely as men do. Women have some peculiar problems like staying out in the nights at distant places etc.