Entrepreneurship

Entrepreneurship Development

S.Vinoth, RVSIMSR, ED


Syllabus

S.Vinoth, RVSIMSR, ED - Syllabus

Unit - I

• Entrepreneur - meaning - importance - Qualities, nature, functions, types and traits.

• Entrepreneurship – Definition • Promotion of Entrepreneurship – Role of Socio-Cultural, Economic and

Political Environment. • Intrapreneur - Similarities and differences between entrepreneur and

intrapreneur


Unit - II

• Entrepreneurial Motivation Theories• Entrepreneurial Competencies – Developing Competencies – Role of

Entrepreneur• Development Programs – Assistance Programme for Small Scale Units

– Institutional Framework • Role of SSI Sector in the Economy • SSI Units – Failure, Causes and Preventive Measures – Turnaround

Strategies


Unit - III

• Identification of Business Opportunity• Preparation of Feasibility Report – Financial and Technical Evaluation• Project Formulation – Common Errors in Project Formulation • Specimen Project Report • Ownership Structures – Proprietorship, Partnership, Company, Co-

operative, Franchise.


Unit - IV

• Project finance: Sources of finance • Institutional finance - Role of IFC, IDBI, ICICI, LIC, SFC, SIPCOT• Commercial Bank - Appraisal of bank for loans.• Institutional aids for entrepreneurship development - Role of DICS,

SIDCO, NSICS, IRCI, NIDC, SIDBI, SISI, SIPCOT • Approaching Institutions for assistance


Unit - V

• Women Entrepreneurship – Need, Growth of women Entrepreneurship, Problems faced by Women Entrepreneurs, Development of women Entrepreneurship

• Entrepreneurship in Informal Sector • Rural Entrepreneurship


References

• S.S.Khanka, Entrepreneurial Development, S.Chand and Co• C.B.Gupta and N.P.Srinivasan,Entrepreneurial Development, Sulthan

Chand & Sons• P. Saravanavel, Entrepreneurial Development, Ess Pee kay• Vasant Desai, Small Business in Entrepreneurship, Himalaya

Publications• Clifford M.Baumback & Joseph R.Mancuso, Entrepreneurship and

Venture Management, Prentice Hall• C.V.Bakshi, Entrepreneurship Development, Excel• P.C.Jain, Handbook for New Entrepreneurs, Oxford University Press



Unit - 1

S.Vinoth, RVSIMSR, ED – Unit 1

Unit - I

• Entrepreneur - meaning - importance - Qualities, nature, functions, types and traits.

• Entrepreneurship – Definition • Promotion of Entrepreneurship – Role of Socio-Cultural, Economic and

Political Environment. • Intrapreneur - Similarities and differences between entrepreneur and

intrapreneur


Entrepreneur

• Evolution of the Concept of Entrepreneur:• Derived from French Language –”Entreprendre” and German

word-”Uternehmen”- both referring to individuals who are undertakers.

• Oxford English Dictionary (1897)- “The director or manager of a public musical institution, one who gets-up entertainment, especially musical instrument”

• Early 16th century- Term referred to those in military expeditions• 17th century- Extended to cover civil engineering activities• 18th Century-Economic aspects• No commonly arrived definition• The Gartner study(1990) analyzed 90 definitions obtained form

academic ad business leaders with “NO REAL AGREEMENT””

S.Vinoth, RVSIMSR, ED - Unit 1

Entrepreneur

• Economist view- Entrepreneur is one who brings human resources, labour, raw materials and other assets into combinations that increases their value from before and also one who introduces changes, innovation and new order (refers to the function of an entrepreneur)

• Psychologist view- Entrepreneur is a person who is typically driven by some forces which create a desire to obtain or attain something (refers to the personality of entrepreneur)

• Sociologist view- Entrepreneur is a person whose actions would determine his social status and who contributes to the development of the society (refers to his role in the society)


Entrepreneur

• Management view- Entrepreneur is a person who has a vision and generates an action plan to attain it (refers to the tasks he undertakes)

• Commonalities in views:• Entrepreneur as-• A risk bearer• An organiser• An innovator


Entrepreneur

• Meaning:• An entrepreneur can be defined as a person who tries to create

something new, organizes production and undertakes risks and handles economic uncertainty involved in enterprise.

• The entrepreneur is intimately associated with the three elements – risk-bearing, organizing and innovating.

• Entrepreneur has been defined in various ways – an innovator, a risk-taker, an organizer and so on. Truly, an entrepreneur is all combined into one.

• The term ‘entrepreneur’ is used in various ways and various views. Theses views are broadly classified into three groups, namely, risk-bearer, organizer and innovator.


Entrepreneur

• Meaning:• ‘An entrepreneur is an individual who brings together the factors of production in an

innovative way (usually in the form of a new business venture) to generate economic value’.• The entrepreneur is rewarded from the economic rent generated as a return for accepting

risk’.• The entrepreneur is an individual who fulfils a particular economic function by

undertaking certain Tasks.• The entrepreneur’s tasks• Owning the business• Founding new organisations• Bringing innovation’s to the market• Identifying opportunities• Applying expertise• Providing leadership


Entrepreneur

• Characteristics of an Entrepreneur:• Hard Work• Desire for high Achievement• Highly Optimistic• Independence• Foresight• Good Organizer• Innovative• Risk tolerance• Communication skills• Technical knowledge• Clarity of objectives


Entrepreneur

• Qualities of an Entrepreneur:


• Initiative & Personality

• Technical Competence

• Leadership

• Commitment & Determination

• Self-Confidence

• Honesty and Sincerity

• Confidence in Employees

• Ability to delegate authority & responsibility

• Decision-making ability - Problems

• Opportunity and Goal Oriented

• Integrity and reliability

• Acceptance mentality of Criticism and feed back

• Low need for status and power

• Internal focus on Control

• Resourcefulness

• Patience, Willingness to Learn

Entrepreneur

• Functions of an Entrepreneur:• Innovation• Risk-taking• Decision Making• Organization and Management


Entrepreneur

• Types of Entrepreneur:• Innovating Entrepreneurs• Adoptive or Imitative Entrepreneurs• Fabian Entrepreneurs (Shy and Lazy)• Drone Entrepreneurs – refuse to adopt the changes.• Others:• (a). Individual and Institutional Entrepreneurs• (b). Entrepreneurs by Inheritance (Family Business)• (c). Technologist Entrepreneurs• (d). Forced Entrepreneurs• (e). Rural and Urban Entrepreneurs• (f). Women Entrepreneurs• (g). Small Scale and Large Entrepreneurs


Entrepreneur

• Types of Entrepreneur:• Business entrepreneur: Convert ideas into reality; deal with both

manufacturing and trading aspect of business (Small trading and manufacturing business)

• Trading entrepreneur: Undertakes trading activities; concerned with marketing (Domestic and international level)

• Industrial entrepreneur: Undertakes manufacturing activities only; new product development etc (textile, electronics, etc)

• Corporate entrepreneur: Interested in management part of organisation; exceptional organising, coordinating skills to manage a corporate undertaking

• Agricultural entrepreneur: Production and marketing of agricultural inputs and outputs (Dairy, horticulture, forestry)


Entrepreneur

• Types of Entrepreneur:• Technical entrepreneur: Production oriented, possesses innovative

skills in manufacturing, quality control etc.• Non technical entrepreneur: Develops marketing, distribution

facilities and strategies• Professional entrepreneur: Uses the proceeds from sale of one

business to start another one. Brimming with ideas to start new ventures


Entrepreneur

• Types of Entrepreneur:• Pure entrepreneur: Psychological and economic rewards motivate

him• Induced entrepreneur: Incentives, concessions, benefits offered by

government for entrepreneurs motivates him• Motivated entrepreneur: Sense of achievement and fulfillment

motivate him• Spontaneous entrepreneur: Born entrepreneurs with inborn traits of

confidence, vision, initiative• Forced entrepreneur


Entrepreneurship

• “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 skills to mobilize human, financial and material resources necessary to bring a project to fruition” –CoE, USA

• Creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity.

• It is the tendency of a person to organise the business of his own and to run it profitability, using all the qualities of leadership. Decisions making and managerial caliber etc.


Entrepreneurship

• “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 skills to mobilize human, financial and material resources necessary to bring a project to fruition” –CoE (Conference of Entrepreneurship), USA

• Creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity.

• It is the tendency of a person to organise the business of his own and to run it profitability, using all the qualities of leadership. Decisions making and managerial caliber etc.


Entrepreneurship

• According to Schumpeter, “Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions”

• According to A.H.Cole, “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or distribution of economic goods and services”

• Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise.

• Innovation and risk-bearing are regarded as the two basic elements involved in Entrepreneurship.


Entrepreneurship

• Promotion of Entrepreneurship – A Function of Social, Political and Economic Structure:

• Entrepreneurs are not equally distributed in the population. Minorities (religious, ethnic, migrated, displaced elites) have been provided most of the entrepreneurial talent.

• The supply of entrepreneurship depends upon four structures found in a society or community:

(i). Limitation Structure – behavioral pattern of the individual is restricted.(ii). Demand Structure – Based on economic changes and government policies(iii).Opportunity Structure – Availability of capital, management and technological skills, information concerning production methods labour and markets.(iv). Labour Structure - Supply of Labour and willing.


Entrepreneurship

• Promotion of Entrepreneurship


•Political- • Political atmosphere• Quality of leadership

•Legal• Rules and regulations

•Economic• Policies• Labour• Trade tariffs• Incentives• Subsidies

•Social• Consumer- labour attitudes,

opinions and motives•Technological• Competition & Risk• Efficiency• Productivity and profitability

•Cultural• Structure• Aspirations and values

Entrepreneurship

Role of Entrepreneurship in Economic Development:• It promotes capital formation by mobilizing the idle saving of the

public.• It provides immediate large-scale employment – it reduce the

unemployment problem in the country• It promotes balanced regional development• It helps reduce the concentration of economic power• It stimulates the equitable redistribution of wealth, income and even

political power in the interest of the country.• It encourages effective resource mobilization of capital and skill which

might otherwise remain unutilized and idle.• It also induces backward and forward linkages which stimulate the

process of economic development in the country• It promotes country’s export trade


Entrepreneurship

Environmental Factors Affecting Entrepreneurship:• Sudden changes in Government Policy• Sudden Political upsurge• Outbreak of war or regional conflicts• Political instability or hostile Government attitude towards industry• Excessive red-tapism and corruption among Government agencies• Ideological and Social Conflicts• Unreliable supply of Power, Materials, Finance, Labour and other

inputs• Rise in the Cost of Inputs• Unfavorable market fluctuations• Non-Cooperative attitude of Banks and Financial Institutions


Intrapreneurs

Intrapreneurs• It was coined in US in the late Seventies. Many bright executives in big

corporations started leaving their jobs due to entrepreneurial trend and started their own enterprises.

• The term Intrapreneurs to describe the persons who registered from their well paid executive positions to launch their own ventures.

• Intrapreneurs introduce new products, services and processes which enable the company to grow and succeed in a changing environment.

• Many big corporations in America started practicing the intrapreneur concept. E.g., Dupont, AT & T (American Telephone & Telegraphic Co.), Texas Instruments …


Intrapreneurs

Entrepreneur Vs Intrapreneur – Similarities:• Innovator• Risk-Taking• Technical Knowledge• Self-Confidence• Business Planning• Focus on Control• Communication Ability


Intrapreneurs

Entrepreneur Vs Intrapreneur


Difference Entrepreneur Intrapreneur

Dependency Independent in his operations

Dependent on the entrepreneur ie., the owner

Raising of funds Raises funds for his organization

Does not raise funds for the company for which he works

Risk Bears the risks of his business

Does not fully bear the risks of his business

Operations Operates from outside Operates from within the organization

Orientation Mostly Strategy Mostly Operations

Managers Vs. Entrepreneurs Vs. Intrapreneurs


Traditional managers Entrepreneurs Intrapreneurs

Primary Motive Promotion, traditional rewards

Independence, money, innovation

Independence, ability to advance in corporate rewards

Time orientation Short term- within planned horizons

Survival, 5-10 years of growth

Depends on urgency between corporate and self-imposed demands

Activity Delegates and supervises more

Direct involvement Direct involvement more than delegation

Risk status Careful Moderate risk taker Moderate risk taker

Status Concerned about status symbol

Not concerned about status symbol

Not concerned about status symbol

Managers Vs. Entrepreneurs Vs. Intrapreneurs


Traditional managers

Entrepreneurs Intrapreneurs

Failures and mistakes Tries to avoid them Deals with them Hides risky projects until they are ready

Decisions Gets along with upper management decisions

Follow their dreams

Make others agree to help achieve their dreams

Serves Others Self and customers Self, customers and sponsors

Family history Mostly employed in large organizations

Small business, Entrepreneurial, professional, farm background

Small business, Entrepreneurial, professional, farm background

Relationship with others

Hierarchical Transactions and deal making

Transactions within hierarchy

Entrepreneurship

Documents

Transcript of Entrepreneurship