Module-I

Concept of Entrepreneurship
The word entrepreneur is derived from the French Word entreprendre which means the undertake. Oxford English Dictionary ( in 1897 ) defined as the director or manager of a public musical institution. In 16th century, it was applied to those who were engaged in military expedition. In 17th century it was extended to cover civil engineering activities. In 18th century it was used to refer to econimic aspects.

 Since then, the term is used in various ways and various views. These views are broadly classified into three groups :

(i)Risk-bearer : Richard Cantillon in 18

th

century

Entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future.

(ii) Organizer : Jean-Baptiste

Entrepreneur is one who combines the land of one, the labour of another, and the capital of yet another and produces a product to keep profit with him after paying interest, rent, etc.

(iii) Innovator : Joseph A. Schumpeter ( 1883-1950) ; wrote a

book Theory of Economic Development. He made it clear that entrepreneur doesnt have to be a single person but can equally be an organization, either a political or an economic one.

 Thus, an entrepreneur can be defined as a person who tries to create something new, organises production and undertakes risks and handles economic uncertainty involved in enterprise.

Peter F.Drucker defines

An entrepreneur as the one who always search for change, responds to it and exploits it as an opportunity. Further he says that :
a. An entrepreneur must be an innovator as well as a leader. b. Innovation requires knowledge, ingenuity, diligence, persistence and commitment. c. He must be capable of analysing the opportunities and exploit them successfully.

Entrepreneurship
It 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. The term entrepreneur is often used interchangeably with entrepreneurship. But they are different. In a way, entrepreneur precedes entrepreneurship.

Entrepreneur

Entrepreneurship

Enterprise

Person

Process Collection of activities

Object

An Individual Organiser, Innovator, Risk-bearer, Motivator, Creator, Visualiser, Leader,

Result of the effort

Organisation, Innovation, Riskbearing, Motivation, Creation, Vision, Leadership

Entrepreneur is a person who creates an enterprise. The process of creation is called as entrepreneurship.

What does an entrepreneur do ? In general, combine the available resources and produce goods and services. They put in a very valuable input in the form of their time and effort in organising these resources. He brings changes in the production process, marketing strategies, technology, etc., to improve the quality of the product or services.

Partnership with partners Fellowship with fellow Friendship with friend Scholarship with scholars Teachership with teachers Salesmanship with salesmen

Characteristics of Entrepreneurs :
1. Creativity 2. Innovation 3. Dynamism 4. Leadership 5. Teambuilding 6. Achievement motivation 7. Problem Solving 8. Goal Orientation 9. Risk taking and Decision-making ability 10.commitment

Entrepreneurial Skills
1.Personal Skills "It takes 20 years to build a reputation and only five Minutes to ruin it. If you think about that, you will do things differently." Warren Buffett "Great men are ordinary men with extra ordinary determination." Abraham Lincoln "Men of genius are admired, men of wealth are envied, men of power are feared, but only men of character are trusted." Arthur Friedman "Courage is what it takes to stand up and speak, courage is also what it takes to sit down and listen." Winston Churchill 2.Communication skill "The test of a real comedian is whether you laugh at him before he opens his mouth." George Jean Natha "If the customer says they are not interested, it means you are not interesting." Jeffrey Citomer

3. Negotiation skill In the course of building a business, you are bound to negotiate deals. You negotiate with customers and suppliers over goods and services offered. You negotiate with bankers over bank loans terms and conditions, just as you negotiate with investors over equity and stakes. "If you cannot negotiate, you will end up getting good deals at exorbitant prices or worse still, you will get nothing. - Ajaero Tony Martins. Bill Gates became the richest man in the world in his thirties because he strategically negotiated a deal with IBM in his early 20s. 4. Leadership skill "In business, leadership skill is not an option. It's a necessity." Rich Dad "The ability to deal with people is as purchasable as a commodity as sugar or coffee and I will pay more for that ability than for any other thing under the sun." John D. Rockefeller 5. Sales skill "If you cannot sell, you will be sold." Ajaero Tony Martins "A man's success in business today turns upon his power of getting people to believe he has something they want." Gerland Stanley

Entrepreneurial Motivation
Motivation is the set of inner striving conditions described as needs, drives, desires, motives, urges and so on.
Needs Wants Which cause Tensions

Give rise to

Which give rise to

Actions

Which result in

Satisfaction

Internal Motivating Factors

1. Unemployment 2. Continue the family business 3. Make money 4. Self-actualization 5. Providing employment to others 6. Encashing on business opportunities 7. Role model followership 8. Innovating 9. Make use of idle funds & production capacity 10.Dissatisfaction with the existing job or occupation pursued

External Motivating Factors

1. 2. 3. 4. 5. 6. societys encouragement Support from large-scale units Government plans and Policies Success stories of entrepreneurs Working on sick units Past experience out of employment or previous association 7. Fulfill familys wish 8. Discarded children 9. take full advantage of SWORT analysis of SMEs 10.inherited properties

Promise toothpaste-A success Story

Aspi Balsra hails from a business family and his father was an importer of sanitary-ware and involved in selling them through a shop in the Bombay port area. He lost his mother when he was still in the school. When he was graduated his father became sick and he was forced to enter into business. Aspi Balsara did not want to continue the old business and wanted to do something different. So he started a manufacturing division with the name Balsara Hygiene Product. He invested Rs. 25,000/- with a work force of 12. this mission of his company was to manufacture and distribute hygiene related products. With this mission, in 1960, he started manufacturing several hygiene related products. i. the first product was ODONIL- an Air Freshener cake which became very popular. Ii. The next product was ODOPIC- a cleaning agent which helped the indian House wives to keep their homes cleaner. This also became very popular. Iii. The third product was ODOMOS the mosquito repellent cream which remains as number one in the product category. Iv. Subsequently in 1978, balsara Hygiene Products Ltd. entered into the toothpase market and manufactured the sensational toothpaste PROMISE. This product gave a National image for Mr. Balsara. The PROMISE toothpase has taken the market of Multi National Companies such as Colgate, Palmolive, CibaGeigy, Hindustan lever, etc.

 What made Mr. Balsara to achieve the above success ?

Mr. Balsara adopted the following Entrepreneurial initiatives to succeed in his venture : 1. He believed in innovation and creativity. He wanted to be different from others. When his father was importing and distributing Sanitary-ware, he wanted to manufacture Hygiene related products, which are known as house hold items. 2. He believed in high technology and strict quality control. With these traits, he was able to impress a market and shake the MNCs. 3. He started his venture with an investment of rs. 25,000/- during 1960 and with a workforce of 12. during the year 1985-86, his turnover was Rs. 40 crores with a work force of 1000 and he established his market in India and 35 overseas countries. This is because of his hard work and commitment. 4. The outstanding success of Balsara is an ideal example for thousands of SSI units in India.

NIRMA a success story

Karsanghai K. Patel was born in 1944, in a small village in Gujarat. He took his B.Sc. Chemistry degree and joined as laboratory Technician in the New Cotton Mills and later in the Gujarat Governments Department of Mining and Geology. In his free time in the evening, with the limited technical know how, he attempted to produce detergent power in the backyard of his house and succeeded. Seeing the success in his experiments, he decided to establish a company of his own for producing detergent powers. He started a manufacturing company nirma Chemicals Works in 1969 named after his one year old daughter Nirma. His initial investment was Rs.1000/- borrowed from his friends and relatives. Initially Karsanbhai pedaled a cycle to sell his products in the village around his home town. He introduced a new sales concept while selling Nirma power among the house wives i.e., Satisfaction or Refund Basis. Thus, a new market of middle class consumers was created by Karsanbhai Patel.

One of the important reason for sensational success of NIRMA was its PRICE. Affordable of the product has been a constant consideration of Nirma. Another important reason was the network of agents. Nirma had 400 agents nation wide and each agents had access to 1000 retail outlets i.e Nirma was made available through 400,000 retail outlets throughout the country. Nirma later introduce Nirma Detergent Cake and nirma Toilet Soap and recently introduced Nirma Toothpaste. His business philosophy id Good quality at an affordable price make selling automatic. Nirma which started in the year 1969 with a modest investment of Rs.1000/became a giant with a turnover of Rs. 1000 crores in the 1990s. Now, Nirma has established the Nirma University.

Q : Briefly outline the entrepreneurship skills and competencies possed by karsanbhai Patel .

Types of Entrepreneurs
a. b. c. d. e. Techno Entrepreneur Women Entrepreneur Rural Entrepreneur Social Entrepreneur Intra-preneur

a. b. c.

d.

e.

The entrepreneurship ventures undertaken by the technology graduates are known as techno-preneurship ventures. The Entrepreneurship ventures undertaken by the women are known are Women Entrepreneurship ventures. The Entrepreneurship ventures undertaken in the rural areas for the purpose of generating rural employment and to give value addition to the agricultural product and other rural based raw materials. Social entrepreneurship is the work of a social entrepreneur. A social entrepreneur is some one who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. The executives exhibiting Entrepreneurial talents in the given job situation, availing freedom to perform and contributing to the overall profit of the organization are known as Intra-preneurs. Their projects are known as Intra-preneurship projects.

According to Clarence Danhof

1. 2. 3. 4. Innovating Entrepreneurs Imitative Entrepreneurs Fabian Entrepreneurs Drone Entrepreneurs

1.

2.

3.

4.

Innovating Entrepreneur is a person who habitually creates and innovates to build something of recognized value around perceived opportunities. They are aggressive in experimentation and putting it into practice. These entrepreneurs are not very innovative. They do not go in for making products or services, but try to improve or copy an already existing successful product or services with minor variation. A Fabian entrepreneur is one who adopts a great caution and skepticism in introducing and change in the business. He doesnt take any risk at all and imitates only when it is clear that failure to do so would result in heavy loss for him. Drone entrepreneurs refuse to adopt and use opportunities to make changes in production. Such entrepreneurs may some times suffer losses. But they have to make changes in their production methods.

The Entrepreneurial Process :

The entrepreneurial process consists of five steps : Step-1 : Deciding to become an entrepreneur Step-2 : Developing successful business ideas Step-3 : Moving from an idea to an entrepreneurial firm Step-4 : Managing and growing the entrepreneurial firm Step-5 : Recognizing himself as an entrepreneur.

Step-1 : Deciding
People become entrepreneurs to be their own bosses, to pursue their own ideas, and to realize financial rewards. Usually, a triggering event prompts an individual to become an entrepreneur. Ex: Loss of Job, Receive an inheritance lifestyle.

Step-2 : Developing
It includes the followings :
Developing An Effective Business model

Recognizing Opportunities & generating ideas

Feasibility analysis

Writing a Business Plan

Industry & Competitor analysis

Step-3 : Moving
Moving from an idea to an entrepreneurial firm :
Assessing a new ventures financial strength and viability

Preparing the Proper ethical and legal foundation

Building a newventure team

Getting financing or funding

Step-4 : Moving

Unique marketing issues

The importance of intellectual property

Preparing for and evaluating the challenges of growth

Strategies for firm growth

Franchising

Step-5 : Recognising

Entrepreneurial Failures
The idea is not well thought and researched The execution is not planned well Not enough networking Not learning new things. Products have not been marketed well Positioning of the idea is wrong Not listening to customer feedback and complaints Product specifications are changed too often The idea is too big for the budget Not having enough dedicated people Not having the right experience to take the idea forward Failing to anticipate the competition

Entrepreneurial Success
So how does an entrepreneur make sure that he does not commit these mistakes. In a business there will always be challenges. However with proper planning and execution most of them can be overcome. Here are some strategies using which an entrepreneur can overcome the challenges that I mentioned above.

Become more adaptable, flexible and applying the leanings Use customer feedback to improve your product Go back to drawing board Cut costs mercilessly Network more, advertise more Reposition your product Develop mental toughness and ability to think for yourself.