Module: 1

Entrepreneur

Who Are Entrepreneurs?Entrepreneurs are:

People who start and/or operate a business.

Individuals who discover market needs and launch new firms to meet those needs.

Risk takers who provide an impetus for change, innovation, and progress.

All active owner-managers (founders and/or managers of small businesses).

Entrepreneur

• “Entrepreneur” is a person who creates an enterprise.

• The process of creation is called as entrepreneurship.

• The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake’

• This refers to those “undertook” the risk of new enterprise.

Definitions of an Entrepreneur

• A individual who bears the risk of operating a business in the face of uncertainty about the future conditions.

Encyclopedia Britannica

• He searches for change, responds to it and exploits opportunities, innovation is the specific tool of entrepreneur.

Peter F. Drucker

• He is one who is endowed with more than average capacities in the task of organizing and coordinating the various factors of production. He is a pioneer and captain of industry.

International Labor Organization

ENTREPRENEURSHIPWhat is Entrepreneurship? It is the process of mind to take calculated

risk with confidence to achieve pre-determined objectives.

Conventional view Entrepreneurs are born and it is hereditary Entrepreneurship is a monopoly of some communities and restricted to certain regions.

ENTREPRENEURSHIP

Modern view It does not belong to any particular

region, community, education, sex, age etc.,

Salient FeaturesEntrepreneurship is need-based functionProduction is not for self –consumptionProfit orientedEntrepreneur posses distinct qualities like

risk bearing, goal setting, information seeking, time planning , maintaining good interpersonal relations, innovator and team builder

Continue….He posses the different D’s for success.

ie., Desire, Discipline, Determination, Dedication, Devotion, Dignity.

He is a creator of wealthHe takes decision about What to produce --- Product selection How to produce --- Technology Where to produce --- Location When to produce --- Time

planning/Duration For whom to produce --- Target

consumers/ Market

Entrepreneurial Incentives

Why People Become Entrepreneurs

Reluctant EntrepreneurA person who becomes an entrepreneur as a

result of some severe hardshipRefugee

A person who becomes an entrepreneur to escape an undesirable situation

Misconceptions about Entrepreneurs Entrepreneurs are born They are profit-hungry They are dishonest They are favoured by luck. Only rich people can become

entrepreneurs It is a monopoly of certain communities

Misconceptions about Entrepreneurs

Most of what you hear about entrepreneurship, says America’s leading management thinker, is all wrong. It’s not magic; it’s not mysterious; and it has nothing to do with genes. It’s a discipline and, like any discipline, it can be learned.

- Peter F. Drucker

Distinction between Entrepreneurs and Managers

Entrerpreneur :1. Entrepreneurial function is organizing

production2. Decision making & calculated risk bearing 3. Has all round responsibility4. Public relation skills & team building5. High level of achievement and motivation6. Innovative, creative, imaginative soul7. Challenges established values and

attitudes

Continue…. Managers :1. Managers are employees (specific role)2. Limited scope for innovation &

creativity3. Managerial jobs are transferable4. Managers do not bear risk5. Managers Need team building &

leadership role6. Managers need knowledge, insight and

expertise (KIE)

Role of Entrepreneurship in Economic development

Increasing per capita output and IncomeInvolves initiating and constituting change

in the structure of business and societyThe theory of economic growth depicts

innovation as the key not only for developing new products but also in stimulating investment interest in the new ventures

Role of Entrepreneurship in Economic development

Production evaluation process: Process for developing & commercializing an innovation

Iterative Synthesis: The intersection of knowledge & social need that starts the product development process

Ordinary innovations: New products with little technological change

Technological innovations: New products with significant technological advancement

Role of Entrepreneurship in Economic development

Reduces unemployment.Reduces poverty.Improves the life style of people.

Functions of Entrepreneur• An entrepreneur frequently has to wear many

hats. He has to perceive opportunity, plan, organize resources, and oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk. The mainfunctions of an entrepreneur are as follows:

1.Innovation: – Innovation is one of the most important functions of an

entrepreneur An entrepreneur uses information, knowledge and intuition to come up with new products, new methods of reducing costs of a product, improvement in design or function of a product, discovering new markets or new ways of organization of industry.

– Through innovation, an entrepreneur converts a material into a resource or combines existing resources into new and more productive configurations.

Functions of Entrepreneur– It is the creativity of an entrepreneur

that results in invention [creation of new knowledge] and innovation [application of knowledge to create new products, services or processes.]

– Systematic innovation means monitoring the innovative opportunity and exploiting the opportunity:

Functions of Entrepreneur2. Risk and uncertainty bearing:

– According to Hozelist an entrepreneur performs the function of risk and uncertainty bearing. Every decision pertaining to development of new products, adapting new technologies, opening up new markets involves risk.

– Decision-making in an environment of uncertainty requires anticipation of risk.

– Profit is said to be the reward for anticipating and taking such risks.

– However it is pertinent to mention that the entrepreneur is not a gambler, he only takes calculated risks.

– An entrepreneur develops the art of decision-making under conditions of uncertainty as a matter of survival

Functions of Entrepreneur3. Organization building:

– An entrepreneur has to organize men, material and other resources. He has to perform the functions of planning, co-ordination and control.

– He has to use his leadership qualities to build a team, generate resources and solve problems.

– With his organizational skills an entrepreneur builds an enterprise from scratch, nurtures it and makes it grow.

– His vision sows the seeds for a sound and vibrant organization and synergies are built in the enterprise.

Characteristics of a Successful EntrepreneurCreativityInnovationDynamismLeadershipTeambuildingAchievement motivationProblem solvingGoal orientationRisk taking and decision making abilitycommitment

Creativity

Creativity is the “the ability to bring something new into existence”

Creativity process

Innovation

Innovation is the process of doing new things but creativity is a prerequisite to innovation

Innovation is the specific instrument of entrepreneurship.

Is the act that endows resources with a new capacity to create wealth.

DynamismInnovation together dynamism constitutes

a potential combination for prosperity.Dynamism revises the targets of the

enterprise upwards time and again.A dynamic entrepreneur is always

pragmatic(practical matters).He sets attainable goalsApproaches problem to solve than to run

away

LeadershipLeadership is the basic quality of an

entrepreneur..Leadership qualities will enable a person to

stand apart in whatever profession he might be in.

The quality of leadership is clear from personal relationship, mode of handling a problem, generating resources and taking others in to ones stride.

Team BuildingAn entrepreneur should have an ability to

build a team.A team is a group of individuals with a

common purpose, that is focused and aligned to achieve a specific task or set of outcomes.

A good team will be able to share knowledge, core competency and goals

Achievement motivationEntrepreneurs have a high need for

achievement and are guided by their inner self, motivating their behaviour towards accomplishments

Entrepreneurs can be classified into three categoriesDreamersDoubterDoers

Problem solvingIt is important that an entrepreneur should

be able to solve problems and not avoid them.

The formal model of problem solvingDefine the problemGather informationIdentify various alternativesEvaluate alternatives and select the best

optionTake actionEvaluate the action taken

Goal orientationGoal setting is the achievement of targets and

objectives for successful performance of an entrepreneur, both long run and short run.

It helps to measure how well individuals and groups are meeting the performance standards

Human behaviour is goal directed. Therefore goal setting is a necessary part of all activities.

The goal setting requires three stepsDefinition of goalSpecific goalsFeedback about goals

Risk taking and decision making ability

Entrepreneurs are persons who take decisions under conditions of uncertainty and therefore are willing to bear risk but never gamble with results.

Risk bearing and decisions making calls for absolute clarity in thinking and coordinated actions.

Commitment

Strong determination with sound thinking fortifies will power.

Varieties of EntrepreneurshipFounder (“Pure” Entrepreneur)

A person who brings a new firm into existenceAdministrative Entrepreneur

An entrepreneur who oversees the operations of a ongoing business

FranchiseeAn entrepreneur whose power is limited by

the contractual relationship with a franchising organization

Entrepreneurial TeamTwo or more people who work together as

entrepreneurs

Classification & Types of EntrepreneursBased on Functional characteristics

Innovative entrepreneurImitative or adaptive entrepreneurFabian entrepreneurDrone entrepreneur

Classification & Types of Entrepreneurs……..contdBased on the Developmental Angle

Prime moverManagerMinor innovatorSatelliteLocal trading

Classification & Types of Entrepreneurs……..contdBased on types of entrepreneurial business

ManufacturingWholesalingRetailingservice

Classification & Types of Entrepreneurs……..contdBased on the Nine Personality types of

EntrepreneursThe improverThe advisorThe superstarThe artistThe visionaryThe analystThe fireballThe heroThe healer

Classification & Types of Entrepreneurs……..contdThe improver

If you operate your business predominately in the improver mode, you are focused on using your company as a means to improve the world. Your overarching motto is: morally correct companies will be rewarded working on a noble cause.

Improvers have an unwavering ability to run their business with high integrity and ethics.

The advisorThis personality type will provide an extremely high

level of assistance and advice to customers.The advisors motto is: the customer is right and we

must do everything to please them.

Classification & Types of Entrepreneurs……..contdThe superstar

Here the business is centered on the charisma and high energy of the superstar CEO. This personality often will cause you to build business around your own personal brand.

The ArtistThis business personality is the reserved but a

highly creative type. Often found in business demanding creativity such as web design and ad agencies.

As an artist type you’ll tend to build your business around the unique talents and creativities that you have.

Classification & Types of Entrepreneurs……..contdThe visionary

A business built by a visionary will often be based on the future vision and thoughts of the founder.

The analystIf a run a business as an analyst, your company

focus is on fixing problems in a systematic way.

Analyst companies excel at problem solving.The fireball

A business owned and operated by a fire ball is full of life, energy and optimisim.

Classification & Types of Entrepreneurs……..contdThe hero

They have an incredible will and ability to lead the world and their business through challenge.

The healerIf you are a healer, you provide nurturing and

harmony to your business. You have an uncanny ability to survive and persist with an inner clam

Classification & Types of Entrepreneurs……..contdBased on Schools of Thought on

EntrepreneurshipAssessing personal qualities

The great person school of entrepreneurshipThe psychological characteristics school of

entrepreneurshipRecognizing opportunities

The classical school of entrepreneurship

Classification & Types of Entrepreneurs……..contd

Acting and managingThe management school of entrepreneurshipThe leadership school of entrepreneurship

Reassessing and adoptingThe intrapreneurship school of entrepreneurship

The great person school of entrepreneurship.This school believes that an entrepreneur is

born with an intuitive ability, sixth sense, traits and instincts.

The successful entrepreneur is described as having a strong drive for independence and success, with high levels of vigor, persistence and self esteem.

These kind of entrepreneurs are suitable for start up organizations

The psychological characteristics school of entrepreneurshipThis school of thought focuses on

personality factors and believes that entrepreneurs have unique values and attitudes towards work and life.

The personality characteristics that they have are personal values, risk taking, need for achievement and others.

These kind of entrepreneurs are suitable for start up organizations

The classical school of entrepreneurshipInnovation, creativity or discovery are the

key factors underlying the classical body of thought and research on entrepreneurship.

These kind of entrepreneurs are suitable for start up and early growth organizations .

The management school of entrepreneurshipEntrepreneurs are organizers of an

economic venture; they are people who organize own, manage and assume the risk.

They have different skills like production planning, people organization, capitalization and budgeting.

These kind of entrepreneurs are suitable for early growth and mature organizations.

The leadership school of entrepreneurshipAn entrepreneur is often a leader who

relies on people to accomplish his purpose and objectives.

Entrepreneurs are leaders of people; they have the ability to adapt their style to needs of people.

They have motivating, directing and leading skills.

These kind of entrepreneurs are suitable for early growth and mature organizations.

The intrapreneurship school of entrepreneurs.The intrapreneurship school evolved in

response to the lack of innovativeness within organisations.

In corporations intrapreneurship is the development of independent units to create, market and expand services.

The skills that they have are alertness to opportunities

These kind of entrepreneurs are suitable for mature and organizations that operate in changing environment and uncertanity.

Concept of Entrepreneurship

What do you mean by Entrepreneurial culture?

Entrepreneurial CultureAn Entrepreneurial Organizational Culture

(EOC) is a system of shared values, beliefs and norms of members of an organization, including valuing creativity and tolerance of creative people, believing that innovating and seizing market opportunities are appropriate behaviors to deal with problems of survival and prosperity, environmental uncertainty, and competitors’ threats, and expecting organizational members to behave accordingly.

Elements of Entrepreneurial CulturePeople and empowerment focused Value creation through innovation and

change Attention to the basics Hands-on management Doing the right thing Freedom to grow and to fail Commitment and personal responsibility Emphasis on the future

Sub-cultures of EntrepreneurshipCulture of a business

Culture represents the manner in which members of a group regulate their behaviour in order to be in harmony with each other and with other groups in the corporates

Business ethicsIt is concerned with rightness or wrongness,

goodness or badness of human conduct. Ethics is supposed to provide the basis for deciding whether a particular course of action is morally correct or bad

Sub-cultures of EntrepreneurshipProductivity culture

Productivity improvement is not just doing things better; more importantly it is doing the right things better.

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 cultureTOC is the way of marking an integration of all efforts in

the organization between Hard Ss (strategy, structure & systems)and Soft Ss(shared values, skills, staff & style) in achieving total quality and customer care.

Sub-cultures of EntrepreneurshipOrganization's culture

It is the integral pattern of human behaviour that includes thought, speech and action and depends on man’s capacity for learning and transmitting knowledge to succeeding generations.

Culture enables organizations to function as a collective unit

Cultural change – key to mastering of changeChange can be mastered by the leaders and their

people only as they develop cultures which are relatively more stable and enduring in terms of their values

Create an Entrepreneurial Culture Among Your EmployeesOne motivation cited by many small

business owners is the opportunity to be one’s own boss. But that doesn’t mean you’re free to forget what it is like to be an employee. 

Think about the people working for you now.  Are they contributing to your company’s growth through their energy and ideas? Or, are they merely putting in the hours until a better opportunity comes along?

Create an Entrepreneurial Culture Among Your EmployeesPeople want to contribute to a cause they

believe in, and one that recognizes the value of their participation. Your small business is no different. Along with being the “eyes and ears” of your business, employees can help solve (and, often, avoid) problems, identify opportunities to improve efficiency and strengthen your niche, and offer insights that you might otherwise have overlooked.

In other words, your employees should approach their jobs the same way you tackle the roles of founder and owner—as entrepreneurs. 

Create an Entrepreneurial Culture Among Your EmployeesIt’s All About People

Instilling that kind of thinking is not difficult, but it doesn’t happen just because you include “we will be entrepreneurs” in your mission statement.

An entrepreneurial culture is created in part from your leadership. That doesn't mean you should try to be like Ratan Tata or Dhirubai ambani etc.

Simply be yourself. The most effective leaders are those who set a good example—timeliness, throughness, integrity, consistency in words and actions, unconditional respect for others’ opinions and an openness to new ideas—including those that may be unworkable.

Create an Entrepreneurial Culture Among Your EmployeesLikewise, entrepreneurial employees must

be creative, proactive thinkers. Open Season

All entrepreneurs need information to succeed, so it makes sense to make information sharing a routine part of your entrepreneurial culture. Communication also reduces the potential for mistakes, miscommunications, intra-office politics and other problems that can hold companies back or poison the working dynamic.

Create an Entrepreneurial Culture Among Your EmployeesInformation-sharing trait is not intrinsic to all

entrepreneurs, I believe it’s one they should adopt if they want retain their employees and thrive in business…Sharing information about your business with employees can help them become better collaborators as you work to create your vision.

Returns on InvestmentEmployees are better able to contribute when they understand the expectations and desired outcomes of their work, both individually and for the business as a whole.

Create an Entrepreneurial Culture Among Your EmployeesEncouraging entrepreneurship among your

employees will also remove some of the mental burden from your shoulders. You can draw on more resources to overcome challenges, capitalize on opportunities, and improve productivity. With that kind of approach, the whole truly is greater than the sum of its parts

Stages in Entrepreneurial Development process

What is Intrapreneurship?Intrapreneurship is the practice of

entrepreneurship by employees within an organization.

An intrapreneur is an individual employed by an organization for remuneration, which is based on the financial success of the unit he is responsible for.

IntrapreneurshipIntrapreneurs share the same traits as

entrepreneurs such as conviction, zeal and insight.

As the intrapreneur continues to expresses his ideas vigorously, it will reveal the gap between the philosophy of the organization and the employee. If the organization supports him in pursuing his ideas, he succeeds. If not, he is likely to leave the organization and set up his own business.