Entrepreneurial Management (EM 01) - Entrepreneurship

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Management01 - Entrepreneurship

Suhas Dutta1Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.2

Sir Richard Bransonon EntrepreneurshipSyllabus CoverageIntroductionMeaning & Definition of Entrepreneurship, Entrepreneur & Enterprise Differences between Entrepreneurship, Entrepreneur & EnterpriseFunctions of EntrepreneurRole of Entrepreneur for Economic DevelopmentFactors influencing EntrepreneurshipPros and Cons of being an Entrepreneur Differences between Manager and EntrepreneurQualities of an Entrepreneur Types of EntrepreneurContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.3

Learning objectivesWho is an entrepreneur andWhat are his /her functions, qualities, contributionWhat are the types of entrepreneursDistinction between a manager and an entrepreneurHighs / lows of being an entrepreneurWhat is entrepreneurshipWhat influences entrepreneurshipWhat are entrepreneurial competencies and how can the be developedEntrepreneur Vs. Entrepreneurship Vs. EnterpriseContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.4

EntrepreneurCredit for coining the term, generally, goes to the French economist Jean-Baptiste Say, But in fact the Irish-French economist Richard Cantillon defined it first

Cantillon defined the term as a person who pays a certain price for a product and resells it at an uncertain price: "making decisions about obtaining and using the resources while consequently admitting the risk of enterprise." Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.5Entrepreneur is originally a French word - an individual who organizes or operates a business or businesses.

The word first appeared in the French dictionary entitled "Dictionnaire Universel de Commerce" compiled by Jacques des Bruslons and published in 1723.Definitions of Entrepreneur1734: Richard CantillonEntrepreneurs are non-fixed income earners who pay known costs of production but earn uncertain incomes1803: Jean-Baptiste SayAn entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.1934: SchumpeterEntrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.1961: David McClellandAn entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker.1964: Peter DruckerAn entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.1975: Howard H. Stevenson (HBS)Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.1975: Albert ShaperoEntrepreneurs take initiative, accept risk of failure and have an internal locus of control.2013: Ronald MayAn Entrepreneur is someone who commercializes his or her innovation.Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.6Definitions of Entrepreneur (Contd.)The common elements are:InnovationRisk takingCommercialization New products / servicesContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.7

Relevance of an entrepreneurThe need arises from the need to speed up and activate the factors of productionLeads to economic growthDevelops backward and tribal areas by creating employment opportunitiesImproves the standard of living of the weaker sections of the societyContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.8Relevance of an entrepreneurContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.9471892365

1Commercializing new inventions, develop technologies2Re-structuring and transforming the economy3Breathe vitality into large organizations, serve the government4Reduce ossification of social institutions, and concentration of economic power5Make markets more competitive, stabilise static and dynamic market efficiencyStimulate redistribution of wealth, income and political power6Improve social welfare of a country by harnessing overlooked talent7Create new markets and facilitate international expansion8Help in job creation, raise productivity9Functions of an entrepreneurContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.10PUBLIC RELATIONSPROJECT DECISIONRAISING FINANCEPRODUCTION PLANNINGMARKET RESEARCHRISK BEARINGINNOVATIONMANAGERIAL FUNCTIONS

Characteristics of a successful entrepreneurContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.11Hard workSelf confidenceAmbitionIndependentInnovationInvolvementIntelligenceInitiativeCreativityBusiness secrecyForesightAccepting challengesCommunication abilityRisk takingTechnical knowledgeMotivatingAdministration & Organizational capabilityDetermination & perseverancePublic relationsGoal oriented

Qualities of an entrepreneurContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.12

MotivationDynamismSelf confidenceAmbitionCreativityAptitudeIntelligenceStress takingVisionAdaptabilityKnowledgeClarityOrganising abilityWill powerCommitmentOpportunity explorerPrideDeterminationInstinctIntegrityRisk takingTactfulnessForesightDedicationOptimisticTypes of entrepreneursContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.13Aggressive assemblage of ideasDevelops a business by novel combination of factorsINNOVATIVE ENTREPRENEURThe adoptive entrepreneurImitates other successful modelsIMITATIVE ENTREPRENEURTimid and cautious Imitates other models carefullyFABIAN ENTREPRENEURRestricts entrepreneurial activity to one or two innovationsDRONE ENTREPRENEUR

Clarence H DanhofTypes of entrepreneurs (contd.)Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.14Little revolutionary, follows heuristicsEMPRICIAL ENTREPRENEURQualified, well informed and introduces revolutionary changesRATIONAL ENTREPRENEURTimid, well informed and introduces some new things after seeking advice and services of expertsCOGINITIVE ENTREPRENEURArthur H. Cole

Content (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.15

Types of entrepreneurs (contd.)AREAUrbanRuralGENDERMaleWomanTECHNOLOGYTechnicalNon-technicalProfessionalBUSINESSBusinessTrading Industrial CorporateAgricultural GROWTHGrowth Super-growthMOTIVATIONPure InducedMotivatedSpontaneousOWNERSHIPPrivatePublicDEVELOPMENTFirst generationModernClassicalOTHERSInheritedForcedImmigrantContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.16Entrepreneur Vs. ManagerAreasEntrepreneurManagerStatusOwner of the enterpriseShould be able to perform all functionsWorks for an enterpriseAppointed to manageRiskBears all risksNo, or low risksMotivePersonal or social gainRenders service in lieu of compensationRewardsRewards for risk bearingSalary as reward for workInnovationIs the innovatorIs the executorQualificationsShould possess entrepreneurial qualitiesShould possess specific qualification for the jobContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.17The entrepreneur differs from the professional manager in that he undertakes a venture for his personal gratification. Usually!Women entrepreneursA small scale industrial unit / industry related service or business enterprise, managed by one or more women entrepreneurs in proprietary concerns, or in which she /they individually or jointly have a share capital of not less than 51% as partners /shareholders / directors of private limited company / members of corporate societyContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.18

Ekta KapoorBalaji Telefilms

Shahnaz HussainShahnaz Herbals

Swati PiramalPiramal Healthcare

Kiran Mazumdar ShawBiocon

Amira ShahMetropolis Healthcare

Sairee ChahalFlexi-momsProblems of women entrepreneursProblem of financeLow risk bearing capacityLimited mobilityMale dominated societyFamily involvementCompetitionLack of educationScarcity of raw materialsSexual harassmentShortage of powerHigh cost of productionRecession Initial hesitation and inhibitionLack of experience and informationLack of freedomLack of encouragementFalse sense of securityFear of failureContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.19Pros and Cons of being an entrepreneurPros (Advantages)Cons (Disadvantages)Love for doing independent businessRisksSelf employmentTime keepingSource of incomeLong hoursAlternative wage employmentMaking decisionsBeing ones own bossStressFreedomContent (c) Copyright 3nayan Consulting. All rights reserved, 2014 - 18.20Definitions of entrepreneurshipSourceDefinitionKnight (1921)Profits from bearing uncertainty and riskSchumpeter (1934)Carrying out of new combinations of firm organizationnew products, new services, new sources of raw material, new methods of production, new markets, new forms of organizationHoselitz (1952)Uncertainty bearing...coordination of productive resources... Introduction of innovations and the provision of capitalCole (1959)Purposeful activity to initiate and develop a profit-oriented businessMcClelland (1961)Moderate risk takingCasson (1982)Decisions and judgments about the coordination of scarce resourcesGartner (1985)Creation of new organizationsStevenson, Roberts, & Grousbeck (1989);The pursuit of opportunity without regard to resources currently controlledShane & Venkataraman (2000)A field of business seeks to understand how opportunities create something newKuratko & Hodgett