INTRODUCTION TO ENTREPRENEURSHIP

 A person who buys a local franchise

outlet.
 A person who opens a small retail shop.
 A person who operate a self-employed
service business.
 People who introduce a new product or
operational change in an existing
organization.
• Founders of businesses that become
large-scale enterprises.
A person who organizes and manages an
enterprise, especially a business, usually
with considerable initiative and risk in
order to make profit.
Initiative: Readiness and ability in initiating action.
Risk: The hazard or chance of loss.
Individual who takes risks and starts
something new.
A person who foresees a potentially
profitable opportunity and tries to exploit
it ( Joseph A. Schumpeter).
Thus the entrepreneur is an innovator,
endowed with an innate ability to innovate
something new or do the same in a different
manner.
 Businessman:
A person who is engaged in carrying out any
activity, related to commercial and industrial
purposes is known as Businessman. He sets up
his business as a new entrant in the market as for
the existing business. When it comes to originality
of ideas, most of the businessmen go for a
business which is highly in demand or which can
make huge profits for them irrespective of
uniqueness.
facing tough competition- As there are
hundreds of rivals already existing in the
market undertaking the same business.
Risk factor is low- As he walks on a path that is
already tested by the rivals so the chances of
failure are relatively low.
Entrepreneur:
An entrepreneur is a person who conceives a
unique idea or concept to start an enterprise and
brings it into reality. He is the person who bears
risks and uncertainties of the business. The
venture established by the entrepreneur is known
as Startup Company, which is formed for the very
first time regarding the idea, innovation or
business process.
They introduce innovation and coordinate the
resources.
They offer such products and services which bring
about a change in the world.
- brings his unique idea to run a startup company
- creates the market for his own business
In the long run, these entrepreneurs become a
businessman.
BASIS FOR COMPARISON BUSINESSMAN ENTREPRENEUR

Meaning A businessman is someone who sets An entrepreneur is a person who starts

up a business with an existing idea an enterprise with a new idea or
offering products and services to the concept, undertaking commercial
customers. activities.

Market Position Market Player Market Leader

Nature Calculative Intuitive

Market Creates place in existing markets Creates new market

Risk factor Less Comparatively high

Methods applied for doing things Conventional Unconventional

Orientation Profit People

Competition Very high Low

1. Sense of Achievement
2. Calculated Risk taker
3. Seize Opportunity
4. Independent thinking
5. Optimist and positive self concept
6. Open to feedback
7. Vision
Internal Motivating Factors
Desire to do something new &
independently
Educational background
Occupational background or
experience
Family background
To earn profit & to possess wealth
To engage family members along
with himself
To possess social prestige
External Motivating Factors
Assistance from government or
financial institutions
Financial help from non-govt.
sources
Wanted to utilize excess money
Demand for particular product 0r
service
Availability of technology/ raw
materials
Danhof’s categorization based on adaptability
Clarence Danhof, classifies entrepreneurs into
four classes based on their readiness to adapt
to new technologies, products, or markets.
 These type of entrepreneurs are very innovative
and show high tendency of undertaking risks.
 They are aggressive in experimentation and
putting it into practice.
 These entrepreneurs are always on the look out
for new products, new manufacturing methods &
new markets to be explored.
 They are very positive about what they create
which can or not exist in the market as
demanded.
 These entrepreneurs are usually aggressive in
nature and present their product or service with
zeal and devotion.
 Such entrepreneurs are most commonly
found in developed countries, which possess
improved facilities for R&D and offer a
stimulative environment conducive to
innovative entrepreneurship.
 Example: Hennery Ford wanted to replace the
petrol fuel or the diesel engine with the
Kerosene fuel system.
 These are the people that iterate a certain feature
or innovation in a particular product to make it
more appealing and have a competitive edge over
the current market.
 They do not go in making new products or
services, but try to improve or even copy an
already existing successful product or service
with minor variations.
 They looks for short cut to penetrate market and
develop a quick and usable product.
 This type of entrepreneur is much preferred in
the underdeveloped countries as there are very
few risk takers, the population is not well
educated and there is lack of awareness.
 Example: China is a growing economy that
provides large opportunity to its citizens.
Among them the cellular market is growing
through adaptation and modification of the
innovative product by the Innovative
Companies. Apple launched a mobile that had
a few buttons and was largely operated by the
software; it came to be known as iPhone.
Chinese developer sold the touch screen
innovation with the addition to support 2 or
more GSM (Global System Mobile) connection
in a very affordable price.
 They are the second generation Entrepreneur and
they are very skeptic about taking a step unless
and until they are definite.
 They only imitate if they see fit and have a clear
and broad picture of things.
 They are do not prefer to take risk, are very rigid
and fundamental in there thinking to take risks.
 They neither have the desire to introduce new
changes nor the will to adopt new methods of
production.
 They are highly traditional in nature and many of
them prefer their traditional areas of operation.
Example: Fabian are more applicable in the
Indian rural agriculture environment, where
traditional acquired land is passed down to
their successors, the new Landlord try to run
their business in a pre-historic manner with
traditional methods of book keeping and less
changes
 They are stubborn to the changes, even if
they have to bear a certain amount of
decrease in the profits.
 They prefer to run the enterprise the way it is
regardless of the change in demand and the
trend in the market.
 His entrepreneurial activity may be restricted
to just one or two innovations.
 They are laggards as they continue to operate
in their traditional way and resist changes.
Example: There is a “Beeree” (Old fashion
tobacco making process) producer Co-
operative that uses employee to make the
tobacco by hand. Even though it is a dying
industry but it does not stop them.
Entrepreneurship is the attempt to create value
through recognition of business opportunity, the
management of risk taking appropriate to the
opportunity and through the communicative and
management skill to mobilize human, financial
and managerial and material resources necessary
to bring project to fruition.
Entrepreneurship can be described as a purposeful
activity of an individual or a group of individuals
undertaken to initiate, maintain or aggrandize a
profit-oriented business unit for the production
or distribution of goods and services.
 They bear the costs and face the risks of
starting a new enterprise.
 Adapting new technologies, or developing
new products, or opening up new markets.
 They work hard to add value to their goods
and services.
 Brings frequent changes in the production
process, marketing strategies, technology,
etc., to improve the quality of the product or
service.
 Lead to better product and affect the welfare
of societies.
Entrepreneur Entrepreneurship Enterprise

Person Process Object

An Individual Collection of activities Result of the effort

creates an enterprise
of an entrepreneur
 National production
 Balanced Regional Development
 Dispersal of Economic Power
 Reinvestments of Profits
 Employment Generation
 Harnessing youth’ energy
 In accordance with the provision of Micro, Small &
Medium Enterprises Development (MSMED) Act, 2006
the Micro, Small and Medium Enterprises (MSME) are
classified in two Classes:
1. Manufacturing Enterprises-The enterprises engaged
in the manufacture or production of goods
pertaining to any industry specified in the first
schedule to the industries (Development and
regulation) Act, 1951) or employing plant and
machinery in the process of value addition to the
final product having a distinct name or character or
use. The Manufacturing Enterprise are defined in
terms of investment in Plant & Machinery.
2. Service Enterprises:-The enterprises engaged in
providing or rendering of services and are defined
in terms of investment in equipment.
Enterprises engaged in the manufacture or
production, processing or preservation of goods
as specified below:
1. A micro enterprise is an enterprise where
investment in plant and machinery does not
exceed Rs. 25 lakh;
2. A small enterprise is an enterprise where the
investment in plant and machinery is more than
Rs. 25 lakh but does not exceed Rs. 5 crore;
3. A medium enterprise is an enterprise where the
investment in plant and machinery is more than
Rs.5 crore but does not exceed Rs.10 crore.
Enterprises engaged in providing or rendering of
services and whose investment in equipment (original
cost excluding land and building and furniture,
fittings and other items not directly related to the
service rendered or as may be notified under the
MSMED Act, 2006 are specified below.
1. A micro enterprise is an enterprise where the
investment in equipment does not exceed Rs. 10
lakh;
2. A small enterprise is an enterprise where the
investment in equipment is more than Rs.10 lakh
but does not exceed Rs. 2 crore;
3. A medium enterprise is an enterprise where the
investment in equipment is more than Rs. 2 crore
but does not exceed Rs. 5 crore.