Chapter-1

Introduction to Entrepreneurship
A u t h o r : A l p a n a Tr e h a n

"efine Entrepreneurship

Entrepreneurship is about taking risks and the behaviour of the entrepreneur reflects a kind of person who wishes to put his career and financial security on the line and take risks in the name of an idea spending much time as well as capital on an uncertain venture! --- H. Knight and Peter Drucker

Entrepreneurship is doing things in a better way and decision-making under the condition of uncertainty! --- D.C. McClelland

(ignificance of Entrepreneurship

'enerating Employment "eveloping the Economy of a Country Improving (tandard of living )acilitating proper utili*ation of resources Creating new market )uelling technological innovations Increasing productivity

Theories of Entrepreneurship

"iscovery Theory
Emphasi*es on identification of opportunities by individuals Assumes that different individuals has different ability of identifying opportunities Assumes that risk bearing is an essential part of the entrepreneurial process

Creation Theory
)ocuses on entrepreneurs and the creation of enterprises Assumes that opportunities are not recogni*ed by individuals but created by them Assumes that individuals bear uncertainty not risk

-odels of Entrepreneurship "evelopment

&sychological -odel
This model signifies that psychological factors are responsible for the development of entrepreneurial behavior in individuals! -a.or contributors are -cClelland and "! '! /inter!

(ociological -odel
This model considers societal factors responsible for the development of entrepreneurial behavior in individuals! -a.or contributor is )rank /! 0oung!

&opulation-Ecology -odel
This model analy*es the determinants of entrepreneurship development! -a.or Contributors are 1annan and )reeman!

"efine Entrepreneur

An entrepreneur searches for change responds to it and e3ploits opportunities! Innovation is the specific tool of an entrepreneur! --- Peter F. Drucker

An entrepreneur is a businessman who assumes the risk of bringing together the means of production including capital labor and material and receives his reward in profit from the market value of his product!--- Encyclopedia Americana

'reat Entrepreneurs

Henry Ford of )ord -otor Company Akio Morita of (ony Corporation Bill Gates of -icrosoft Walt Disney of The /alt "isney Company Soichiro Honda of 1onda -otor Company 5td! Harland David Sanders of 6entucky )ried Chicken Ray Kroc of -c"onald7s Corporation

Traits and Characteristics of a (uccessful Entrepreneur

C r e a t i vi t y I n n o va t i o n 5eadership " yn a m i s m "ecision--aking Ability ( e l f - -o t i va t i o n (elf-Confidence Ti m e -a n a g e m e n t 9i s i o n &ersistence Te c h n i c a l 6 n o w l e d g e &roblem-(olving (kills ) l e 3i b i l i t y

)unctions of an Entrepreneur

Identifying business opportunity -aking customers aware of the products and services offered ;earing risks involved in establishing a new enterprise or starting a new business venture Arranging finance for setting up the enterprise Employing individuals with the re<uired skill-sets for operating in the different functions of the organi*ations

Types of Entrepreneurs : >n the basis of functional characteristics

Innovative Entrepreneurs
Entrepreneurs who continuously strive to introduce new products in the market new technologies and new markets to do business!

Im itative Entrepreneurs
Entrepreneurs who imitate techni<ues and technologies innovated by others to start their own enterprise!

)abian Entrepreneurs
Entrepreneurs who are cautious and skeptic about bringing any change in their modus operandi or enterprises!

"rone Entrepreneurs
Entrepreneurs who believe in status per <uo!

Types of Entrepreneurs: >n the basis of nature of business

-anufacturing Entrepreneurs
Entrepreneurs who are involved in producing goods and mobili*ing resources and supplies to sell those products!

(ervice Entrepreneurs
Entrepreneurs who are involved in producing and rendering services!

Tr a d i n g E n t r e p r e n e u r s
Entrepreneurs who are involved in trading activities only!

&rivate Entrepreneurs
Entrepreneurs who establish and operate private enterprises free from the control of the government!

(tate or &ublic Entrepreneurs

Entrepreneurs who are involved in enterprises that are owned and controlled by the state government!

?oint Entrepreneurs
Entrepreneurs who establish and operate enterprises in partnership!

Types of Entrepreneurs: >n the basis of developmental angle

5arge-(cale Entrepreneurs
Entrepreneurs who are involved in entrepreneurial activities at large scale!

(mall-(cale Entrepreneurs
Entrepreneurs whose activities are limited to local markets only!

(atellites
Entrepreneurs who start as suppliers and moves towards a productive enterprise!

-anagers
Entrepreneurs who do not initiate e3pansion and are satisfied .ust in managing and staying in business!

-inor Innovators
Entrepreneurs who participate in the economic progress by finding the making the better use of the e3isting resources!

Types of Entrepreneurs: >n the basis of personality traits

Advisors
Entrepreneurs who provide an e3tremely high level of assistance and advice to customers!

Administrators or >rgani*ers
Entrepreneurs who manage various events and processes!

;uilders or Creators
Entrepreneurs who are involved in building or creative works!

Communicators or Trainers
Entrepreneurs who provide information services!

Caretakers
Entrepreneurs who have helping personalities and are involved in taking care of people and property!

Types of Entrepreneurs: (ome others

Entertainers@1osts
The entrepreneurs who thrive on being with people and are involved in hospitality or service industries!

Investors@>wners
The entrepreneurs who invest money to generate profits! They invest their capital in stocks real estate or businesses!

(ellers
The entrepreneurs who make profits in the form of commissions ac<uired on purchases by customers!

Technologists
The entrepreneurs who provide technological services! )or e3ample software developers and engineers!

)actors Influencing Entrepreneurs

Internal )actors
The factors that take place inside the organi*ation and affect the way the entrepreneur operates!

E3ternal )actors
The factors that take place outside the organi*ation and are beyond the control of entrepreneurs!

&rofessional 9s! )amily Entrepreneurs

&rofessional They are usually involved in firms that are larger in si*e! They are open to new ideas and thoughts! They are ready to adopt new things! )amily They are engaged in family-owned businesses that are comparatively of small si*e! They lack open mindedness! They avoid e3perimenting on new things!

They do not show partiality in managing They employ their relatives or friends in the human resource! responsible positions! They are organi*ation oriented! The decision making process involves the participation of all the employees! They give first priority to their family concerns and interests! They make the decisions themselves or with the help of family members!

Entrepreneurial 5eaders 9s! -anagers

Entrepreneurial 5eaders They are their own bosses! They bear all the risks and the uncertainties involved in the business! Their ob.ective is to introduce innovations and act as change agents! Their income is not fi3ed and depends on the performance of the enterprise They believe in e3perimenting new ideas! They take own decisions! -anagers They are salaried employees! They need not bear any risk! Their ob.ective is to supervise and create routines as well as implement entrepreneurAs plans and ideas! They get fi3ed salaries and rewards for performing well They put efforts to avoid mistakes! They e3ecute the decision of the owner!

Entrepreneurs 9s! Intrapreneurs

Entrepreneurs They work inside as well as outside the enterprise! They generate ideas! They employ intrapreneurs and pays them in e3change of their services! They work overtime to run his@her own business! The rewards of entrepreneurs depend on the success and profit margins of the enterprise! They work inside as well as outside the enterprise! Intrapreneurs They are bound to perform within the enterprise! They adopt the idea generated! They are paid for using their creative thinking! They work overtime helping to run someoneAs else business! An intrapreneur is a person employed by an organi*ation whose compensation is fi3ed! They are bound to perform within the enterprise!

Entrepreneurial &rocess
1 $ + , 2

"eciding to become an entrepreneur Identifying and evaluating the opportunity "eveloping a business plan "etermining the re<uired resources Converting the idea to an enterprise

Entrepreneurial -otivation

Beed for Achievement CnAchD

An independent motive of an individual to gain e3cellence beat competition achieve personal goals and overcome problems!

Beed for &ower CB-&owD

The motivation of an authority oriented individual!

Beed for Affiliation CB-AffD

The interpersonal need of an individual!

Entrepreneurial -otivational )actors

Eisk-Taking Ability Tolerance for Ambiguity 5ocus of Control (elf-Efficacy 'oal (etting Independence Egoistic &assion

Entrepreneurial ;arriers
Economic ;arriers
Capital 5abor Eaw -aterials

Bon-Econom ic ;arriers
(ocial
(ocial Borms &ractical 9alues Emotion al ;locks

&ersonal
5ack of (us tained -otivation Fnclear or Ambiguous Ideas 5ack of 9ision 5ack of Clear &erception

/omen as an Entrepreneur

A woman entrepreneur can be defined as a confident innovative and creative woman capable of achieving selfeconomic independence individually or in collaboration generates employment opportunities for others through initiating establishing and running the enterprise by keeping pace with the personal family and social life! --- Kamal Singh

/hen women moves forward the family moves the village moves and the nation moves! --- Pandit Jawaharlal ehru

;arriers to /omen Entrepreneurs

)inancial ;arriers
An women entrepreneur have difficulty in mobili*ing enough fund to run and grow the enterprise!

-arketing ;arriers
An women entrepreneur have difficulty in marketing the products or services!

(ocio-Cultural ;arriers
There are number of constraints and barriers imposed on women entrepreneurs by the society!

5ack of Confidence
There are multiple personal problem of women entrepreneurs!

recap
Entrepreneurship is an act of bearing risks bringing innovation generating employment and mobili*ing resources! The development of entrepreneurship re<uires proper attention and supervision by the entrepreneur! An entrepreneur is a person who undertakes risks mobili*es resources and generates employment by establishing and running an enterprise! An entrepreneur alone cannot make the enterprise successfulG he@she needs a number of individuals to make the enterprise run smoothly! /omen entrepreneurship has been recogni*ed as an important untapped source of economic growth!