Entrepreneur

The word ‘entrepreneur’ is derived from the French verb ‘enterprendre’. It means “to undertake”The Frenchmen who organized and led military expeditions were referred to as “entrepreneurs”.Around 1700 A.D. the term was used for architects and contractor of public works.

The entrepreneur

In many countries, the entrepreneur is oftenassociated with a person who starts his ownnew business.

Business encompasses manufacturing,transport, trade and all other self employedvocation in the service sector.

Entrepreneurship is the ability to create andbuild a vision from practically nothing. It is adynamic process of creating incrementalwealth.

Encyclopedia Britannica

“An individual who bears the risk of operating a business in the face of uncertainty about the future conditions.”

Oxford Dictionary

A person who sets up a business or businesses, taking on financial risks in the hope of profit

Schumpeter's Definition-An economist

“The entrepreneur in an advanced economy is an individual who introduce something new in the economy- a method of production not yet tested by experience in the branch of manufacturing, a product with which consumers are not yet familiar, a new source of raw material or of new markets and the like.”

Drucker’s Views on Entrepreneur-Management guru

Peter Drucker has aptly observed that, “An entrepreneur is one who always

searches for change, respond to it and exploit it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or different service”

“Innovation is an instruments of entrepreneurship”

Richard Cantillon-French economist

“A person who pays certain price for a product to resell it at an uncertain price thereby making decision about obtaining and using resources while assuming the risk of enterprise”

Adam Smith-An economist

The entrepreneur as an individual who forms an organization for commercial purpose. He/She is proprietary capitalist, a supplier of capital and at the same time a manager who intervenes between the labor and the consumer.

“Entrepreneur is an employer, master, merchant but explicitly consider it as capitalist”

In nut shell

Entrepreneur-a person who sets up venture/ business

Entrepreneurship-the process or action of setting up of new venture/Business

Enterprise-the venture so set up (venture/Business)

Entrepreneurship has been considered as the propensity of mind to take calculated risk with confidence to achieve a predetermined business objectives

Entrepreneurial characteristics

1.Need to Achieve- Desire to be a winner2.Perseverance- Quality to stick to it3.Modrate risk taker- Prefer middle of the

road4.Use of feedback- Knowing how they

perform5.Facing Uncertainty- Tolerance for

ambiguity and unfamiliar situations6.Stress Taker- Posses drive and energy

Entrepreneurial characteristicsContd…..

7. Self-confidence- Faith in their abilities8. Initiative- Seeking responsibility9.Positive self concept- aware of oneself and

internal locus of control10. Motivators- Posses interpersonal skills11.Flexibility- Flexible in decisions12.Analitical ability- Unaffected by personal likes

and dislikes 13.Independance- Dislikes working for others14.Ability to find and explore opportunity

Corporate manager

Manager is one who manages all the resources to match with the organizational needs. In the managerial role resources are allocate to solve the problem and improve the administrative efficiency.

Entrepreneur Vs Entrepreneurship

EntrepreneurRefer to a personVisualiserCreatorOrganizerInnovatorTechnicianInitiatorDecision-makerPlannerLeaderMotivatorProgrammerRisk taker

EntrepreneurshipRefers to processVisionCreationOrganizationInnovationTechnologyInitiativeDecisionPlanningLeadershipMotivationActionRisk taking

Corporate/Traditional Manager Vs Entrepreneur

Manager1.Want promotion,

traditional corporate rewards & power.

2.Respond to quotas & budgets, weekly, monthly etc planning horizons.

3.Deligates, more of supervision than self involvement.

4.Decision making in accordance with the likesof senior manager

Entrepreneur1.Wants freedom, goal

oriented, self reliant and self- motivated.

2.End goals of 5-10 years growth of business in view as guide.

3.Direct involvement. Gets hands dirty

4.Follow dreams with vision

Corporate/Traditional Manager Vs Entrepreneur

Cont…..

Manager

5.Is primarily on events inside corporation

6.Avoid risk

7.Strive to avoid mistakes and surprises.

Entrepreneur

5.Is primarily on technology and market place

6.Like moderate risk

7.Deal with mistake and failure as learning experience.

Five core elements of Entrepreneurship

1.Creativity & innovation -identify opportunity

2.Ability to apply Creativity -translate into action i.e. ability of getting things done

3.Drive & passion –to change the status quo

4.Focus on creating values -by doing things in cheaper, better & faster manner.

5.Risk taker -doing things different

In a research study Morris and Schindehutte (1997) found that entrepreneurs had Entrepreneurial role models at the time of starting business (It was very high in case of Japanese entrepreneurs).

It was the second highest background factor after ‘work experience’ -‘entrepreneurial parents’

Role Models as Facilitators for New Entrepreneurs

Entrepreneurs Role Models

Dhirubhai Ambani (Reliance)

Ramanbhai Patel (Cadila)

Uttambhai Mehta (Torrent)

Karsanbhai Patel (Nirma)

Anji Reddy (Dr Reddy’s Lab)

BM Munjal (Hero Honda)

Vergese Kurien (Amul)

Vijay Mallya (Kingfisher)

Pranav Roy (NDTV)

Lakshmi N Mittal (Mittal Steel)

Jaswantiben Popat (Lizzat)

Subrata Roy (Sahara)

Subhash Dandekar (Camlin)

KM Mammen Mappillai (MRF)

Ramchandra Gandhi (Vadilal)

Sunil Mittal (Bharti)

Narayan Murthy (Infosys)

Azim Premji (Wipro)

Kiran Mazumdar Shaw (Biocon)

Ekta Kapoor (Balaji Telefilms)

Pratap Reddy (Apollo Hospitals)

Chirag Mehta (IceNet)

Naina Lal Kidwai (HSBC)

Master Chandra Sekar (Youngest Microsoft Engineer)

Krishna Murthy (Mudra Ads)

Subhash Chandra (Zee TV)

Dark Side Traits

• Excessive need for control– Tendency to micromanage

• Suspicion – others will steal my idea

• Impatience• Need for applause• Defensive attitude

Entrepreneurial Potential

• All of us have entrepreneurial potential. Degree might differ. It is just a matter of developing that potential.

Factors shaping entrepreneurial response

i. Socio-Cultural Values, Religious Influences

ii. Socio-Political Structure and Conditioniii. Economic Infrastructure and social

Overheads; Communication, Education, Credit etc.

iv. National Goals and governmental policies

v. Demonstration Effects, Contacts and reference Groups

THE PROCESS• No individual may have all the personal

attributes and skills needed• Know what’s missing: attributes or skills

and how to compensate for what is missing• Knowing how to compensate can be as

valuable as already having the skill• Develop entrepreneurial competencies• Have entrepreneur role models• Don’t fear failure

Pure entrepreneurs

Who create venture from the raw material of their own ideas and hard work.

They convert it into a successful business with their instinct for opportunity and sense of timing, their hard work and idea producing ability.

-Dhirubhai Ambani-Narayan Murthy Who takeover the business after founder retire,

die or sell out and continue to built and innovate are qualify as entrepreneur but not pure entrepreneur

Entrepreneurial Attitude

a) Tendency to take moderate risk

b) An eye for economic opportunity

c) Imaginative

d) Initiative

e) Believe they can change the environment

f) Enjoy freedom of expression

g) Find satisfaction from successful completion of task

Entrepreneurship in a developing economy

• Need pure entrepreneurs

• There is scope and need of non pure entrepreneurs

Entrepreneurship as career option

Wage employment

1.Limited scope

2.Routine type

3.Status quo

4.Problem avoiding

5.Dependant

6.Consume national wealth

7.Fixed earning

Entrepreneurial employment

1.Unlimited scope

2.Creative job

3.Innovative

4.Problem solving

5.Independent decisions

6.Generate national wealth

7.Growing earning

Need of entrepreneurship

1.Employement generation

2.Improves national income

3.Dispersal of economic power

4.Balance regional development

Entrepreneurial values

Values are generalized and organized conception influencing the behavior and nature of human being. it is set of beliefs about the various aspect of the world. value provide standards that guide behavior. values are also reflective of a culture and are widely shared by those belonging to that culture.

Entrepreneurial values

1.Innovativness- can be seen through in the following actions.1.Enjoying change2.Experimenting with new ideas3.Facing uncertainty in order to try new idea4.Finding problems to solve5.Working on problem causing great difficulties to others6.Looking for unstructured assignment7.Appreciating and contributing to new ideas generated by others8.Using existing methods, equipments, material & services for unconventional services

Entrepreneurial values

Contd…….

2.Independence

3.Outstanding performance

4.Respect for work

Entrepreneurial Motivation

Motivation-The process of arousing action, sustaining

the activity in progress and regulating the pattern of activity.

An inner state that energies activities and direct or channels behavior towards goal

Factors that motivate entrepreneur

1. Entrepreneurial Ambition• To make money • To gain social prestige• To secure self-employment or independent living

2. Compelling Reasons• Unemployment • Dissatisfaction with existing job or occupation• To put the idle funds in entrepreneurship• To use technical or professional knowledge and skills

3. Facilitating Factors • Previous knowledge, experience or association with

same or similar line of business activity• Influence and encouragement by family members,

friends and relatives

Factors promoting entrepreneur

Internal Factor Desire to work independently Occupational experience Technical/Trade/Qualification and knowledgeExternal factors Supportive government policies Availability of financial assistance Ancillary support Availability of infrastructural facilities like

industrial plot, electricity, technical facilities etc.

Classification of entrepreneursAccording to the types of business1. Trading entrepreneurs2. Industrial entrepreneurs

Large/Medium/Small/Tiny3. Corporate entrepreneurs4. Agricultural entrepreneurs

Plantation/Horticulture/Dairy/Forestry5. Retail entrepreneurs6. service entrepreneurs

According to the use of Technology

1. Technical entrepreneurs

2. Non-technical entrepreneurs

3. High-tech entrepreneurs

4. Low-tech entrepreneurs

According to the Motivation

1. Pure entrepreneurs

2. Induced entrepreneurs

3. Motivated entrepreneurs

4. Spontaneous entrepreneurs

According to the Growth

1. Growth entrepreneurs

2. Super-Growth entrepreneurs

According to the stages of Development

1. First generation entrepreneurs

2. Modern entrepreneurs

3. Classical entrepreneurs

According to the to the Area

1. Urban entrepreneurs

2. Rural entrepreneurs

According to gender and age

1. Men entrepreneurs

2. Women entrepreneurs

Young/Old/Middle-age

Other or Unclassified

1. Professional entrepreneurs

2. Traditional entrepreneurs

3. Skilled/Unskilled entrepreneurs

4. Imitating entrepreneurs

5. Inherited entrepreneurs

6. Forced entrepreneurs

7. National/International entrepreneurs

8. Immigrant entrepreneurs

Type of entrepreneur-According to Business today

The reactorsKumar Manglam BirlaSulajja MotwaniSanjiv GoenkaAzim Premji

The path breakersDhirubhai AmbaniBrij Mohan MunjalNarayan Murthy

Type of entrepreneur-According to Business today

The pioneersDilip Chhabria-Car DesignRaman Roy- Spectramind eServicesEkta Kapoor- Balaji Telifilms

The gamblersSanjay Reddy- GVK IndustriesSuhag Khelmani- Techno Clean India

Socio-Economic origins of Entrepreneurship

Cast/ReligionFamily backgroundLevel of educationLevel of perceptionOccupational backgroundMigratory characterInvestment capacityAmbition/Motivation

Culture

Culture represents the manner in which members of a group (whether in society or a business group) regulate their behavior in order to be in harmony with each other and with other groups in that society

It manifests itself in their pattern of behavior, form or art and music, language, customs and practices and in the belief that are shared

Elements of culture

Culture consist of tangible man-made objects clothing, building, eating habit and intangible concept such as laws, morals and knowledge. In addition, culture includes the values, character, skills acceptable within the particular society

Culture in a society is learned and passed on from one generation to next

Entrepreneurial culture

Entrepreneurial culture implies vision, values, norms & traits that are conducive for the development of the economy

Sub-cultures of Entrepreneurship

Culture of business- It is sum total of the norms, beliefs and values that regulate the behavior of individuals and groups within any given corporation, how they work together and pursue the goals

many organizations not aware of their culture

Business ethics- ethics is that branch of philosophy which is concerned with rightness or wrongness, goodness or badness of human conduct

Ethics are supposed to provide the basis for deciding whether a particular course of action is morally correct or wrong.

Productivity culture- All productivity improvements stems from people productivity as people constitute the motive power for all resources

A key to productivity is the attitude of employees who work together

Total quality culture- TQC is way of marking an integration of all efforts in the organization in achieving total quality and customer care

TQC helps in improvement of quality of work life employees satisfaction and customer satisfaction

Barriers to entrepreneurship

1. Economic barriers

2. Non economic barriers

3. Personal barriers

Economic barriers

• Capital

• Labor

• Raw material

Non economic barriers

• Cultural block/Tradition binding

• Practical values

• Importance of logic

• Respect for entrepreneurs

• Emotional block

Personal barriers

• Lack of sustained motivation

• Difficulty with ambiguity

• Inability to dream and use subconscious

• Risk avoidance

• Lack of clean perception

• Impatience in solving problem

Blowing of the Myths

• Age factor• Sex-Male/Female• Money• Experience• Undergoing an EDP• Entrepreneurship means manufacturing• Education and entrepreneurship• Government incentive

Woman entrepreneurs-Ministry of Industry

Woman entrepreneurs are those who operates and control an enterprise, and whose holding in the enterprise is at least 51 percent.

Financial Assistance

Mahila udyog nidhiStree shakti package

Occupational Background

HousewifeService related occupational background

Sources of funds Family and personal fundsPersonal loans

Reasons for becoming an entrepreneur

Earning extra money for the familyKeeping oneself gainfully occupiedInability to seek wage employmentLack of growth in the present job

Motivation Flexibility in the working hoursTo be independent

Personality Flexibility and tolerantGoal orientedAdequate self confidanteEnthusiastic and energeticCreative and realistic

Support group Close friendsFamily and husbandWoman organizations

Barriers of Woman Entrepreneurs

• Family ties• Social attitude towards woman• Low mobility• Male dominance• Lack of education• Non-availability of finance• Sever competition• No risk bearing capacity• Too much dependence on middlemen

IntrapreneurshipCorporate entrepreneurship

The process by which other new ventures are born within the confines of an existing corporation.It involves expansion by exploring new opportunities through new combination of existing resources.The top executives inside the organization should be encouraged to be entrepreneurswithin the enterprise rather than going outside

• Intrapreneurs are the powerhouses within companies that create new businesses, that keep a company or organisation moving forwards, they motivate colleagues and keep profits up.

• Intrapreneurial employees are energetic, enthusiastic, imaginative and inventive. They have ideas for creating new products or services often working on them in their own time. They can see how savings can be made. How processes can be improved.

Intrapreneurship Vs Entrepreneurship

EntrepreneurshipIs an independent

businessman Himself raises the

capital from various sources

Guarantees the return to investors/creditors

Bear full risk of business

IntrapreneurshipSemi dependant on the

promoters/ownersDose not raises the

capital from various sources

Dose not guarantees the return to investors

Dose not fully bear risk of business

Intrapreneurial climate

1. Concentrate on R & D (Technology)2. Encourage trial and error and experimentation3. Not insist on any preconceived parameters4. Make resources easily available & accessible5. Encourage multi disciplinary team approach6. Establish long-term horizon for evaluating success7. Allow to carry on by own 8. Appropriately rewarded9. Flexibility of changing the corporate objective10.Whole hearted support of top management

Businesses need intrapreneurs

Threat from smaller aggressive entrepreneurial driven firms

In large corporate house the organizational culture thwarts creativity and innovation

Intrapreneurial characteristics

• Being visionary

• Creativity

• Encouraging team work

• Build group of supporter

• Persistence

Intrapreneurs Activity

• Corporate venturing

• Innovativeness

• Self renewal

• Pro activeness

Classification of corporate entrepreneurship

1. Administrative entrepreneurship

2. Opportunistic entrepreneurship

3. Acquisitive entrepreneurship

4. Imitative entrepreneurship

5. Incubative entrepreneurship

Fostering intrapreneurial culture

• Corporate strategy should aim at developing intrapreneurial confidence

• Big corporate to learn to act like small enterprise

• Assure intrspreneurship is valued

• Encourage diverse thinking

Creativity, Innovation and Idea Generation

Brings change in the use of resources in the society

Helps to find out solution of social problems

Opportunities are identified and new ventures, that add value to the society are established.

Creativity

• Ability to conceive• To be creative person must work for

long hours and hard to generate multiple solution

• Preservation of curiosity• Creativity is prerequisite for innovation • Creative ability is universally

distributed

Innovation

“It is the process of doing new things”

Ideas have little value until thy are converted into useful products or services

Innovation transforms creative ideas into useful applications.

The creative process

Stage 1- Task presentationUnderstanding problem & getting motivated

Stage 2- PreparationCollecting information and knowledge

Stage 3- IncubationSubconscious assimilation of knowledge

The creative processCont…..

Stage 4- Idea GenerationEvolving alternative ideas or solution

Stage 5- Idea validationVerified as realistic & useful application

Stage 6- Outcome AssessmentAssessment of creative process

Component of creative performance

1. Intrinsic Motivationi. Processing diverse informationii. Seeing no obvious side of an issueiii. Exploring alternative solution paths2. Skills in the task domaini. Knowledge of the problem area3. Skill in creative thinkingi. Make random association between ideasii. Visualize potential solutionsiii. See the divergent uses of single ideaiv. Generate number of diverse alternatives

Creativity, Innovation & Entrepreneurship

Entrepreneurship is the creative activity. An entrepreneur is an innovator who introduces something new in an economy innovation may be in

Introducing a new manufacturing process Introducing a new productLocating new source of raw material/semi

finished product Opening new markerDeveloping a new combination of means of

production

Creative Enterprise

Having open channel of communicationUsing teams for solving problemsDecentralized organization structurePlayful culture and freedom of discussionAllocation of resources to creative

personal and projects without caring for immediate payoff

The Business Idea-Selection criteria

1. Enable entrepreneurs to utilize the skills

2. Enable the use of locally available raw materials

3. Helps making product that have demand

4. Enable the use of any technical know how

5. Enable the entrepreneur to solve a current problem existing in the market

Sources of the business ideas

• Discussion with other people

• Looking through book

• Visiting shops & attending trade shows

• Information from research institutes

• Brainstorming

• Converting hobby into business

Entrepreneurship product match

1. Skills needed for the business idea are available with the entrepreneur

2. fund available match the fund needed for the business idea

3. Entrepreneurs weakness dose not badly effect making and selling the product

4. Ensure the opportunities sought by entrepreneurs are the opportunities offered by the business

Dynamics of project identification

1. Need of the society

2. Capability of the entrepreneurs

3. Resources available in the environment

Problems of New Ventures

• Financial Problems

• Administrative Problems

• Marketing Problems

• Production Problems

Financial Problems

• Long term capital

• Working capital

• Recovery

• Taxation

• Inadequate finance

Administrative Problems

• Lack of proper planning• Poor project implementation• Poor management• Inadequate capacity utilization• Low level of technical skills• Lack of strategies• Problem of inadequate infrastructure (location,

power, water, communication)• Bureaucratic red tape and regulations

Marketing Problems

• Lack of knowledge about the market• Competition from large industries• Branding problems• Distribution problems• Inadequate advertising and sales promotion• Poor bargaining power• Unfamiliarity with export procedures and market

Production Problems

• Shortage of raw material

• Underutilized capacity

• Poor quality control

• Inadequate utility services

• Problem of outdated technology

• Low scale of production

• Lack of standardization

Sickness in Industry and Business

• Demand recession• Under-utilized capacity• Industrial unrest• Plant breakdown• Obsolete technology• Obsolete machinery• Shortage of raw material• Competition and trade wars• Inadequate finance• Diversion of funds• Dependence on single product and single customer• Incompetent management

Turnaround Strategies

Emergency stage-Liquidation of surplus assetsManpower cutDebt restructuringBetter housekeeping

Stabilization stage-Cost cuttingImproved effectivenessRenovation of plantProduct differentiation

Return to normal stage-Plan new productsEnter new marketEstablishing strategic alliance

The four entrepreneurial pitfalls- Peter Drucker

Entrepreneurial pitfalls – where the new and growing business typically gets into trouble

All four are foreseeable and avoidable

First PitfallThe first come when the entrepreneur has to face the fact that the new product or service is not successful where he or she thought it would be but is successful in a totally different marker

Many businesses disappear because the founder-entrepreneur insist that he or she knows better than the market

Second Pitfall

Entrepreneur believes that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most

Growing bodies need to be fed, and business that that grows fast devours cash

The businesses pays attention to cash flow, gets beyond the cash crunch, and grows rapidly beyond expectation

Third Pitfall

When the business grows, the person who founded it is incredibly busy. Rapid growth puts an enormous strain on a business. You outgrow your production facilities. And you doesn't see that you are outgrowing your management base.

You should create the management team

Fourth Pitfall

After the long time when the business is successful entrepreneur asked himself

“What do I want to do? What is my role?”

Those are the wrong questions instead of that you should be asking

“What does the business need at this stage?”

“Do I have those qualities?”

Ten myths about entrepreneurs

Myth 1: Small and medium-sized enterprises (SMEs) are the job creators.

Reality : Only a certain type of SME-the ‘dynamic companies and entrepreneurs’ are the high growers and job generators.

Myth 2: New companies are the fundamental source of growth in employment

Reality :High job growth is produced by both old and new companies.

Myth 3: Growing companies come from new and high-growth sectors

Reality : Dynamic companies come from all sectors

Myth 4: Entrepreneurs of growing companies are young and well educated

Reality :Dynamic entrepreneurs are of all ages and educational levels

Myth 5: Growing companies are developed by an energetic and self-sufficient entrepreneurs

Reality :Dynamic companies are built by teams or a partnership of entrepreneurs with a professional approach to management.

Myth 6: Growing companies target large and growing markets.

Reality :Dynamic companies target market segments where they can be leaders or strong challengers.

Myth 7: Growing companies target mainly domestic markets where they can dominate such market.

Reality : Dynamic companies target a significant proportion of their sales to export markets where they can learn and grow.

Myth 8: successful growing companies use low-cost strategies to compete .

Reality : Dynamic companies compete with high-quality products and superior services.

Myth 9: Successfully growing companies rely primarily on unique technology.

Reality : Dynamic companies rely primarily on people, whom they carefully recruit, train and develop

Myth 10: Growing companies use sophisticated sources of financing to built their companies.

Reality : Dynamic companies are predominantly self-funded, with assistance from bank loans.