KOE-060
IDEA TO BUSINESS MODEL
UNIT -2
Introduction
TO
Entrepreneurship
UNIT-2 EntrEprEnEurship
Topics of unit
Introduction to Entrepreneurship
Meaning and concept of entrepreneurship
Difference between Entrepreneurship & wage employment
Functions of an Entrepreneur
Entrepreneur vs Manager role of entrepreneurship in economic
development
Barriers to entrepreneurship 3
EntErprisE
• An enterprise is the business organization that is
formed and which provides goods and services,
creates jobs, contributes to national income,
exports and overall economic development.
• Entrepreneur is a person who starts an enterprise.
The process of creation of enterprise is called
entrepreneurship.
• Entrepreneur is the actor, entrepreneurship is the
act. The outcome of the actor and the act is called
the enterprise. 4
EntrEprEnEur
A number of definitions have been given for an entrepreneur-
• The economists view him/her as a fourth factor of
production along with land labor and capital.
• Technical people feel that entrepreneurs are innovators who
come up with new ideas for products, markets or
techniques.
• To put it very simply an entrepreneur is someone who
perceives opportunity, organizes resources and exploits the
opportunities. Computers, mobile phones, credit Cards and
ready to eat foods are all examples of entrepreneurial ideas
that got converted into products or services. 5
MEaning of EntrEprEnEur
• The entrepreneur is defined as someone who has the
ability and desire to establish, administer and succeed
in a startup venture along with risk entitled to it, to
make profits.
• The best example of entrepreneurship is the starting of a
new business venture.
• The entrepreneurs are often known as a source of new
ideas or innovators, and bring new ideas in the market
by replacing old with a new invention. 6
EntrEprEnEurship
• Entrepreneurship can be described as a process of action
an entrepreneur undertakes to establish his/her enterprise.
• It is a creative activity. It is the ability to create and build something
from practically nothing.
• Entrepreneurship is the attitude of mind to seek opportunities,
take calculated risks and derive benefits by setting up a venture.
It comprises of numerous activities involved in conception,
creation and running an enterprise.
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EntrEprEnEur Vs ManagEr
Entrepreneur Manager
An entrepreneur is involved with the start- manager with running business over the
up process period of time
An entrepreneur assumes financial, A manager does not have to bear risks
material and psychological risks
An entrepreneur is driven A manager is functioning by the resources
by perception of opportunity he currently possesses.
An entrepreneur initiates change A manager follows rules and procedures.
An entrepreneur is his own boss A manager is a hired employee.
An entrepreneur gets uncertain rewards A manager gets fixed rewards and salary.
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W h Y EntrEprEnEurship?
• Unemployment
Wh Y EntrEprEnEurship?
• Profit
making
Wh Y EntrEprEnEurship?
• The need to learn more
WhY EntrEprEnEurship?
LACK OF A FORMAL EDUCATION
Some people become entrepreneurs because they haven’t had the privilege
of receiving an extensive education. Entrepreneurship is an arena where
the Idea and results take precedence over educational background.
BEEN THROUGH THE SCHOOL OF HARD KNOCKS
School of hard knocks is an idiomatic phrase meaning the experience
gained from living, especially from disappointment and hard work – often
regarded as a means of education.
WhY EntrEprEnEurship?
has been through more than enough to not be
afraid to branch out on one’s own. Everyone
goes through the school of hard knocks; its
always a question of what one does with the
experience.
CharaCtEristiCs of
EntrEprEnEurship
• Ability to take a risk- Starting any new
venture involves a considerable amount of
failure risk. Therefore, an entrepreneur
needs to be courageous and able to evaluate
and take risks, which is an essential part of
being an entrepreneur. 14
CharaCtEristiCs of
EntrEprEnEurship
• Innovation- It should be highly innovative
to generate new ideas, start a company and
earn profits out of it. Change can be the
launching of a new product that is new to
the market or a process that does the same
thing but in a more efficient and economical
way.
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CharaCtEristiCs of
EntrEprEnEurship
• Visionary and Leadership quality- To be
successful, the entrepreneur should have a
clear vision of his new venture. However, to
turn the idea into reality, a lot of resources
and employees are required. Here,
leadership quality is paramount because
leaders impart and guide their employees
towards the right path of success. 16
CharaCtEristiCs of
EntrEprEnEurship
• Open-Minded- In a business, every
circumstance can be an opportunity and used
for the benefit of a company. For example,
Paytm recognized the gravity of
demonetization and acknowledged the need
for online transactions would be more, so it
utilized the situation and expanded
massively during this time. 17
CharaCtEristiCs of EntrEprEnEurship
• Flexible- An entrepreneur should be flexible and open to
change according to the situation. To be on the top, a
businessperson should be equipped to embrace change in a
product and service, as and when needed.
• Know your Product- Company owner should know the
product offerings and also be aware of the latest trend in the
market. It is essential to know if the available product or
service meets the demands of the current market, or whether
it is time to tweak it a little. Being able to be accountable and
then alter as needed is a vital part of entrepreneurship.
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DiffErEnCE bEtWEEn WagE EMploYMEnt anD
EntrEprEnEurship
Wage Employment Entrepreneurship
Work for other Own boss
Follow instructions Make own plans
Routine job Creative activity
Earning is fixed, never negative Can be negative sometimes, generally is
surplus
Does not create wealth Creates wealth, contributes to GDP
Can choose form- Can choose from-
Government service Industry Trade or Service enterprise
Public sector, private sector
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funCtions of
EntrEprEnEurship
The various functions of entrepreneurship are
• Innovation and creativity,
• Risk taking and achievement
• organization and management,
• Catalyst of Economic Development,
• Overcoming Resistance to Change and Research.
These have been depicted, at a glance, with the help of the
given Figure and are being discussed, in brief in next 20
slides
funCtions of EntrEprEnEurship
1. Innovation and Creativity – Innovation generally refers
to changing processes or creating more effective
processes, products and ideas. For businesses, this could
mean implementing new ideas, creating dynamic
products or improving your existing services.
Creativity is defined as “the tendency to generate or
recognize ideas, alternatives, or possibilities that may be
useful in solving problems, communicating with others.
Entrepreneurs think outside of the box and explore new
areas for cost-effective business solutions.
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2. Risk taking and Achievement – Entrepreneurship is a process in
which the entrepreneur establishes new jobs and firms, new
Creative and growing organization which is associated
with risk, new opportunities and achievement. It results in
introducing a new product or service to society.
In general, entrepreneurs accept four types of risks namely
(a) Financial Risk
(b) Job Risk
(c) Social and Family Risk
(d) Mental Health Risk
funCtions of EntrEprEnEurship
3.Organization and Management – The entrepreneurial organization is
a simple organizational form that includes, one large operational unit,
with one or a few individuals in top management.
• Entrepreneurial management means the skills necessary to
successfully develop and manage a business enterprise. A small
business start-up under an owner-manager is an example of
an entrepreneurial organization. Here, the owner-manager generally
maintains strict control over business operations. This includes
directing the enterprise’s core management functions.
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4.
4. Research – An entrepreneur is a practical dreamer and does a lot of
ground-work before taking a leap in his/her ventures. In other words,
an entrepreneur finalizes an idea only after considering a variety of
options, analyzing their strengths and weaknesses by applying
analytical techniques, testing their applicability, supplementing them
with empirical findings, and then choosing the best alternative. It is
then that he/she applies the ideas in practice. The selection of an idea,
thus, involves the application of research methodology.
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QUALITIES OF A SUCCESSFUL ENTREPRENEUR
COMMITMENT
RISK TAKER
SELF-BELIEF, HARD WORK AND DISCIPLINED DEDICATION
RESOURCEFULNESS
OBJECTIVITY
ADAPTABLE AND FLEXIBLE
KNOWLEDGE OF THE PRODUCT AND MARKET
DEPENDABILITY
MONEY MANAGEMENT SKILLS
EFFECTIVE PALNNNG SKILLS
EXCELLENT COMMUNICATION SKILLS
TECHNICAL KNOWLEDGE AND SKILLS
PROS OF ENTREPRENEURSHIP
pros of EntrEprEnEurship
THE FREEDOM TO PURSUE YOUR OWN VISION
• You can have your own view of the world and entrepreneurship is the
only avenue where you pursue that view and see the fruition of your
vision.
POTENTAIL EARNINGS OF AN ENTREPRENEUR EXCEED A
SALARIED EMPLOYEE
• As an employee, no matter how hard you work, the financial
remuneration you receive is limited to your salary and an occasional
bonus. As a self-employed person, you can earn so much more if you hit
the right business idea and execute the business well.
pros of EntrEprEnEurship
THE CONTROL AND FLEXIBILITY OF YOUR OWN TIME.
As your own boss, you work when you want to work; and stop if
you want to stop. You can tailor your work according to your
lifestyle and accommodate various tasks.
THE OPPORTUNITY TO LEARN AND GAIN KNOWLEDGE
The entrepreneur often wears many hats – the strategic planner,
the marketer, the customer service rep, and the sales rep, even
the book keeper.
pros o f EntrEprEnEurship
• THE SENSE OF PRIDE AND FULFILLMENT IN ACCOMPLASHING
THINGS
Doing all these things can give an incredible feeling of pride and joy – seeing
your website used by people, finding your products in stores and getting
compliments from customers on how your business as helped them
THE CHANCE TO SHARE YOUR LEARNING
At the end of the day, you can have the chance to teach and share with others
the things you’ve learned as an entrepreneur. Sharing what you learned can
be a way of giving back to the community.
Con s of EntrEprEnEurship
WORK SCHEDULE
A major disadvantage of being an entrepreneur is that it requires more work
and longer hours than being an employee.
NO REGULAR SALARY
Being an entrepreneur often means giving up the security of a regular
paycheck.
ADMINISTARTIVE TASKS
When you run a business, especially at the initial stages, you need to check on
finances and other administrative tasks; Salaried employees mostly handle
specific tasks. This isn’t the most fun aspect of being your own boss, but it is
crucial to the success of your venture.
Con s of EntrEprEnEurship
COMPETEITION
As a small business owner, staying competitive is critical.You will need to
differentiate your business from others like yours in order to build a solid
customer base and be profitable.
DISRUPTION OF ONES PERSONAL LIFE
Most of your time will be spent trying to keep your business afloat and this could
have adverse effects on your personal life.
iMportanCE of EntrEprEnEurship:
• Creation of Employment
• Innovation
• Impact on Society and Community
Development
• Increase Standard of Living
• Supports research and development
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EntrEprEnEurship
barriErs
Financial barriers: This is one of the most prominent barriers in the
life of an entrepreneur. Such barriers are quite common. Availability of
funds is of great significance. If a delay happens in gathering enough
funds, then it may further delay the commencement of an enterprise.
Also, various business operations need a persistent flow of funds.
Personal barriers: Personal barriers are caused because of the
emotional and psychological blocks of an entrepreneur. Let us have a
look at the various types of personal barriers:
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Lack of practical knowledge
Many youngsters believe that an
entrepreneur must have an adequate
educational background to make the
business successful, but the reality is
completely different. Every entrepreneur
may have the same bookish knowledge but
it is their practical knowledge that makes
them unique in this highly competitive
market. Lack of this practical knowledge
can also become a barrier in the path to the
success of a business.
34
Lack of motivation and encouragement: When an idea does not turn
out to be fruitful, these entrepreneurs give up quite easily.
Inability to depend on and trust others: These
entrepreneurs often find it difficult to trust others while
hiring their expert services. They waste much of their time
deciding upon the best service provider and then, too,
cannot put their trust completely.
Lack of patience: If an entrepreneur loses interest because
of any hurdle or obstacle, then he does not have enough
patience and perseverance to carry on with the
entrepreneurship. Even the initial losses are enough to
discourage them and shut their enterprises 35
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Lack of confidence: These entrepreneurs never have
enough confidence. They never trust in themselves. They
are somehow convinced that they will never be able to
come up with a successful business idea. They are always
bothered about their inability to attract enough funding.
Hence, they almost give up on their dream of being self-
employed and thus do not carry on with entrepreneurship.
Lack of vision: There should never be any limitation to
what you can achieve. Some entrepreneurs, after making
short progress, lose their vision and show no more interest
in expanding the business.
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Sense of embarrassment/pride: Such entrepreneurs are
way too proud or embarrassed to ask for help from
someone.
Machinery: Machines are extremely significant to carry
out multiple operations. However, machinery does come
costly. Also, technology keeps changing quite rapidly, and
hence, machines tend to get obsolete quite often. Thus an
entrepreneur needs to replace them. This process is quite
difficult for the entire organization.
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Raw material: The situation can get quite distressful if
there is no raw material available during the peak season
of the work. This further increases the price of limited raw
materials available because of an increased level of
competition.
Land and building: For an enterprise, it is necessary that
proper acquisition of land is made. Then, the construction
of buildings will also have to be done. However, all these
can be quite expensive. When the land is rented, the fixed
cost becomes a cause of worry for the entrepreneur. He
needs to keep paying the rents whether he is making any
profit out of business or not.
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Infrastructure support: There have to be proper roads,
adequacy of power, drainage facilities, water, and other such
infrastructural supports. But because of red-tapism and
increased corruption, things tend to be quite complicated.
Labour: For successful entrepreneurship, there has to be the
availability of skilled labor, quality and quantity labor, and
committed and loyal employees. Lack of any of these can lead
to severe disruptions in the working procedure of the
enterprise
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Societal barriers:
Caste and religious affiliations often act as hurdles in the
way of a business.
Financial stability and family backgrounds also have to be
kept in mind. These, too, can impact the operations and
development of an enterprise.
Socio-cultural norms and values often act as barriers for
modern-day budding entrepreneurs. These age-old norms
hamper the smooth development and progress of business
enterprises.
Degree of disapproval and approval of entrepreneurial
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behavior.
Political barriers:
• When there are not enough government
concessions, and incentives offered, things start
getting difficult for the entrepreneurs. Also, there
has to be a proper socio-economic setting to make
things happen the way they need to. A politician
should also focus on making a society
economically developed. Only then will things
smoothen up for the entrepreneurs.
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• Promotes Capital Formation: Entrepreneurs
promote capital formation by mobilizing the idle
savings of public. They employ their own as well as
borrowed resources for setting up their enterprises.
Such type of entrepreneurial activities leads to value
addition and creation of wealth, which is very
essential for the industrial and economic development
of the country.
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rolE of EntrEprEnEurs in
EConoMiC DEVElopMEnt
Creates Large-Scale Employment
Opportunities: Entrepreneurs provide immediate large-scale
employment to the unemployed which is a chronic problem of
underdeveloped nations. With the setting up.of more and
more units by entrepreneurs, both on small and large-scale
numerous job opportunities are created for others. As time
passes, these enterprises grow, providing direct and indirect
employment opportunities to many more. In this way,
entrepreneurs play an effective role in reducing the problem
of unemployment in the country which in turn clears the path 45
towards economic development of the nation.
• Promotes Balanced Regional Development: Entrepreneurs
help to remove regional disparities through setting up of
industries in less developed and backward areas. The growth
of industries and business in these areas lead to a large number
of public benefits like road transport, health, education,
entertainment, etc. Setting up of more industries leads to more
development of backward regions and thereby promotes
balanced regional development.
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• Reduces Concentration of Economic Power: Economic
power is the natural outcome of industrial and business
activity. Industrial development normally leads to
concentration of economic power in the hands of a few
individuals which results in the growth of monopolies. In
order to redress this problem a large number of
entrepreneurs need to be developed, which will help reduce
the concentration of economic power amongst the
population
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.
Wealth Creation and Distribution: It stimulates
equitable redistribution of wealth and income in
the interest of the country to more people and
geographic areas, thus giving benefit to larger
sections of the society. Entrepreneurial activities
also generate more activities and give a multiplier
effect in the economy.
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• Increasing Gross National Product and Per Capita
Income: Entrepreneurs are always on the look out for
opportunities. They explore and exploit opportunities,,
encourage effective resource mobilization of capital and skill,
bring in new products and services and develops markets for
growth of the economy. In this way, they help increasing gross
national product as well as per capita income of the people in a
country. Increase in gross national product and per capita
income of the people in a country, is a sign of economic growth.
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• Induces Backward and Forward
Linkages: Entrepreneurs like to work in an
environment of change and try to maximize
profits by innovation. When an enterprise is
established in accordance with the changing
technology, it induces backward and forward
linkages which stimulate the process of
economic development in the country.
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Improvement in the Standard of Living: Increase in the standard of living
of the people is a characteristic feature of economic development of the
country. Entrepreneurs play a key role in increasing the standard of living
of the people by adopting latest innovations in the production of wide
variety of goods and services in large scale that too at a lower cost. This
enables the people to avail better quality goods at lower prices which
results in the improvement of their standard of living.
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• Facilitates Overall Development: Entrepreneurs act as catalytic agent
for change which results in chain reaction. Once an enterprise is
established, the process of industrialization is set in motion. This unit
will generate demand for various types of units required by it and
there will be so many other units which require the output of this unit.
This leads to overall development of an area due to increase in demand
and setting up of more and more units. In this way, the entrepreneurs
multiply their entrepreneurial activities, thus creating an environment
of enthusiasm and conveying an impetus for overall development of the
area.
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Promotes Country’s Export Trade: Entrepreneurs
help in promoting a country’s export-trade, which is
an important ingredient of economic development.
They produce goods and services in large scale for
the purpose earning huge amount of foreign
exchange from export in order to combat the import
dues requirement. Hence import substitution and
export promotion ensure economic independence
and development. 53
EntrEprEnEurship sCopEs in inDia
India is right now witnessing multiple entrepreneurship projects for the last two decades.
Entrepreneurship is getting all the more popular because of the following reasons:
The higher level of profits
Control over one’s future
Proper government measures which support entrepreneurship
Reduction in employment opportunity
Entrepreneurship is a great source of earning as well as employment for various people.
It actively reduces the monopoly of bureaucrats. Thus it helps in successfully creating a
balanced regional growth and development in the Indian economy. Indian government
successfully conducts development programs so that proper entrepreneurial potential is
identified. Also, they offer effective assistance – both financial and non-financial, to the
entrepreneurs. Multiple entrepreneurship training academies have also been established
to provide apt training to young entrepreneurs.
•
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