CHAPTER 1

ENTREPRENEURSHIP, 2e

UNDERSTANDING
ENTREPRENEURSHIP

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 Chapter Objectives
• To understand the evolution of the term –
‘entrepreneur’
• To study the reasons for the current growth in
entrepreneurship
• To list various reasons driving a person to
starting a business
• To explore the characteristics and skills of
successful entrepreneurs
• To classify different types of entrepreneurs
• To look at the reasons for entrepreneurial failure
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 The Entrepreneur
entreprende, which means – ‘to undertake’
Webster dictionary – one who organizes, manages
and assumes the risks of a business or
enterprise
Richard Cantillion – an entrepreneur is someone
who takes the risk of running an enterprise by
paying a certain price for securing and using
resources to make a product and reselling the
product for an uncertain price.

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Joseph Schumpeter - an innovator playing
the role of a dynamic businessman adding
material growth to economic development

Timmons - Entrepreneurship is the process

of creating or seizing an opportunity and
pursuing it regardless of the resources
currently controlled

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 Reasons for Growth of
Entrepreneurship
• Industry Structure
• New technologies
• Deregulation and privatization
• Formation of new business communities
• Increasing demand for variety
• Government incentives and subsidies
• Increasing flow of information

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• Easier access to resources
• Entrepreneurial education
• Return on innovation
• Entrepreneur as a Hero
• Self-employment is highly valued
• Rising dissatisfaction at job
• Acceptance of ex-entrepreneurs in the job
market

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 Gurubhai and Dhirubhai
• Both start their career from the gulf
• Both come to Mumbai to deal in synthetic yarn
• Guru’s battle against an anglicized scion of an
established business family seems to mirror Ambani’s
spat with Nusli Wadia.
• Guru’s success in getting people to invest in his IPO is
similar to what happened in Ambani’s case.
• Mithun Chakraborty plays a newspaper owner in the film
and his character resembles Ramnath Goenka. The
virulent attacks of the newspaper on Guru are similar to
what is alleged of Indian Express and Reliance in real
life.

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Impact of Entrepreneurial Firms
• Job Creation
• Economic growth
• New Technology
• Serving small markets

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 Why Start a Business?
• Control
• The idea
• Flexibility
• Money

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 Pros & Cons
• You are the boss
• All profits are yours
• There will be great variety
in roles and tasks
• Increases self confidence
• Work can be very
satisfying
• Success will give you
immense satisfaction
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• You are alone
• All decisions are yours
• All losses are yours
• Work may not be
satisfying
• You will need to put in
long hours
• Lack of success will effect
self esteem
• Exiting the business is
difficult
• Pressures will affect
social and family life
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 Entrepreneurial Characteristics
Timmons:
1. commitment and determination;
2. leadership;
3. opportunity obsession;
4. tolerance of risk, ambiguity and uncertainty;
5. creativity, self-reliance and ability to adapt; and
6. motivation to excel.

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Bianchi
1. being an offspring of self-employed parents;
2. being fired from more than one job;
3. being an immigrant or a child of immigrants;
4. previous employment in a firm with more than
100 people;
5. being the oldest child in the family; and
6. being a college graduate.

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 Entrepreneurial Skills
• Creativity and Opportunity Evaluation
• Real-time Strategy and Decision Making
• Comfort with Change and Chaos
• Teamwork
• Evangelism, Selling, Negotiation, and Motivation
through Influence and Persuasion
• Oral and Written Communication
• Basics of Start-Up Finance, Accounting and Law

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 Entrepreneurial Attitudes
• Comfortable with lifestyle changes
• Willingness to break / bend / stretch laws
• Patience to start small
• Prepared to make enemies
• Comfort with confrontations
• Dealing with failure
• Willingness to learn

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 Entrepreneurial Motivation
Environment
IDEA

Personal
Goals

Entrepreneurial Entrepreneurial
Motivation Activity

Personal
Characteristics

Expectations Match Outcomes

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 Types of Entrepreneurs
Based on Timing of Venture Creation:
• Early starters
• Experienced
• Mature

Based on Socio-cultural Variables:

• 1st generation entrepreneurs
• From Business families
• Minority entrepreneurs
• Women Entrepreneurs

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Based on Entrepreneurial Activity:
• Novice
• Serial
• Portfolio

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Reasons for Entrepreneurial Failure
• Lack of experienced management
• Few trained or experienced human resource
• Poor financial management
• Rapid growth
• Lack of business linkages
• Weak marketing efforts
• Lack of information
• Incorrect pricing
• Improper inventory control
• Short term outlook

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