Entrepreneurship Is The Ability and Readiness To Develop
Entrepreneurship Is The Ability and Readiness To Develop
(ORLU CAMPUS)
NAME:
OKAFOR AMARACHI LILIAN
REG NO
2018/ND/MAC/80226
ASSIGNMENT ON
EFFECTS OF ENTREPRENEUR AS A FACTOR OF
PRODUCTION TO THE NIGERIA ECONOMY
LECTURER NAME:
MR. LUCKY
MARCH, 2021.
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Introduction
Entrepreneurs who make a loss, however, have reduced the value created by the
resources under their control; that is, those resources could have produced more
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value elsewhere. Losses mean that an entrepreneur has essentially turned a fifty-
dollar denim backpack into a thirty-dollar pair of jeans. This error in judgment is
part of the entrepreneurial learning, or discovery, process vital to the efficient
operation of markets. The profit-and-loss system of CAPITALISM helps to quickly
sort through the many new resource combinations entrepreneurs discover. A
vibrant, growing economy depends on the EFFICIENCY of the process by which
new ideas are quickly discovered, acted on, and labeled as successes or failures.
Just as important as identifying successes is making sure that failures are quickly
extinguished, freeing poorly used resources to go elsewhere. This is the positive
side of business failure.
Successful entrepreneurs expand the size of the economic pie for everyone. Bill
Gates, who as an undergraduate at Harvard developed BASIC for the first
microcomputer, went on to help found Microsoft in 1975. During the 1980s, IBM
contracted with Gates to provide the operating system for its computers, a system
now known as MS-DOS. Gates procured the software from another firm,
essentially turning the thirty-dollar pair of jeans into a multibillion-dollar product.
Microsoft’s Office and Windows operating software now run on about 90 percent
of the world’s computers. By making software that increases
human PRODUCTIVITY, Gates expanded our ability to generate output (and
income), resulting in a higher standard of living for all.
Origin of Entrepreneurship
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It is believed that the Irish Banker operating in France, Ricardo Cantillon (Kent,
1984) was the first person who used the word ‘entreprendre’ in economics as “an
agent who assembles material/inputs for producing goods at a specific price and
through coordination of those inputs produces goods whose sales price is uncertain
in comparison with production cost”.
It is also believed that the Frenchman J.B. Say (1824) first used the term
‘entrepreneur’ as an economic agent who brought together the factors of
production in such a way that new wealth can be created.
The Oxford English dictionary has revised the meaning of entrepreneur in / 1933
and meant ‘a contractor acting as an intermediary between capital and labor”.
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Concept of Entrepreneurship
Like other economic concepts, entrepreneurship has been a subject of much debate
and discussions. It is an elusive concept.
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Entrepreneurship is a process involving various actions to be undertaken to
establish an enterprise. It is, thus, the process of giving birth to *new enterprise. ‘
Innovation and risk-bearing are regarded as the two basic elements involved in
entrepreneurship. Let us understand what these two terms mean.
Innovation
They may or may not be inventors of new products or new methods of production,
but they possess the ability to foresee the possibility of making use of the
inventions for their enterprises. Let some facts speak.
Lipton offers its tea in small packs known as ‘PUDIYAS’ to meet the requirements
of its rural customers.
You may have heard of Henry Ford, the founder of the Ford Motor Company in
the United States.
Remember, Henry Ford himself did not invent the automobile. Foreseeing the
people’s desire to have passenger cars at somewhat lower rates, he applied new
methods of mass production to offer passenger cars to the customers at an
affordable price.
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Since customers’ tastes and preferences always keep on changing, hence the
entrepreneur needs to apply invention after invention continuously to meet the
customers’ changing demands for products.
Risk-Bearing
Starting a new enterprise always involves risk and trying to do something new and
different is also risky.
The reason is not difficult to seek. The enterprise may earn profits or incur losses
because of various factors like increasing competition, changes in customer
preferences, shortage of raw material and so on.
He needs to be a risk-taker, not a risk avoider. His risk-bearing ability enables him
even if he fails in one time or one venture to persist on and on which ultimately
helps him succeed.
The Japanese proverb applies to him; “Fall seven times, stand up eight.”
Types of Entrepreneurship
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Scalable Startup Entrepreneurship-
This start-up entrepreneur starts a business knowing that their vision can change
the world. They attract investors who think and encourage people who think out of
the box. The research focuses on a scalable business and experimental models, so,
they hire the best and the brightest employees. They require more venture capital
to fuel and back their project or business.
These huge companies have defined life-cycle. Most of these companies grow and
sustain by offering new and innovative products that revolve around their main
products. The change in technology, customer preferences, new competition, etc.,
build pressure for large companies to create an innovative product and sell it to the
new set of customers in the new market. To cope with the rapid technological
changes, the existing organizations either buy innovation enterprises or attempt to
construct the product internally.
Social Entrepreneurship-
Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:
Know your Product-A 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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Profit: The activity of entrepreneurship is undertaken with the sole objective
of making the profit. It is also the reward of the efforts made and risk taken
by the entrepreneur.
Importance of Entrepreneurship
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Supports research and development- New products and services need to
be researched and tested before launching in the market. Therefore, an
entrepreneur also dispenses finance for research and development with
research institutions and universities. This promotes research, general
construction, and development in the economy.
New businesses need to hire employees. They create jobs and these economic
opportunities uplift and support communities through increasing the quality of life
and overall standard of living.
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3. Commerce and regional economic integration.
The ability to turn ideas into new products and services that people need is the
fount of prosperity for any developed country. Economic growth, generally
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speaking, is driven by new technologies and their creative applications. Periods of
rapid innovation historically have been accompanied by periods of strong
economic growth. The impetus of innovation is the greatest natural resource of all:
the human mind. Creating innovative products and solutions requires an educated
population and an environment where collaborative work can take place. In
addition to being good for business, education increases workforce creativity and
quality of life.
Functions of an Entrepreneur
This is the first function of the entrepreneur, to actually start a business. Firstly the
entrepreneur spots business opportunities in the economy he can exploit. Then he
develops the project ideas and decides on the scale of the business. Finally, he
must obtain the different factors of productions to get the ball rolling.
The entrepreneur has to build up his business dynamically. He must coordinate the
factors of production and utilize them in the right proportions. The aim is to
generate higher productivity from these factors. So the entrepreneur must get the
greatest yield for the lowest cost from these factors of production.
2] Risk Bearing
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The consumer taste may change, there can be new entrants in the market, taxes may
increase, etc. These will all affect the demand and supply of the product. And in
turn, the entrepreneur may face some financial losses. Entrepreneurs have to bear
these financial risks.
Then there are technological risks as well. These days we make technological
advancements every day. So there is a risk that the product may become obsolete.
Or more innovative means of production may be developed. There are other risks
such as theft, accidents, etc.
In exchange for all these risks, the entrepreneurs enjoy the profits earned by the
firm. Profit is their reward for bearing the risks. Unlike some of the other
management functions, risk bearing cannot be delegated to the manager. The
owner/entrepreneurs have to bear all the risk.
3] Innovation
However, any new innovation or technology comes with its own share of new risks
as well. It will be the job of the entrepreneur to manage such risks in exchange for
the scope for higher returns and higher profits. Ultimately this innovative spirit of
the entrepreneur will lead to advancements in the firm and even the economy as a
whole. The most successful entrepreneurs are all great innovators.
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Effect of Entrepreneur to Economy Development
Great entrepreneurs have the ability to change the way we live and work, on local
and national bases. If successful, their innovations may improve standards of
living, and in addition to creating wealth with entrepreneurial ventures, they also
create jobs and contribute to a growing economy. The importance of
entrepreneurship is not to be understated.
For example, the water supply in a water-scarce region will, at times, force people
to stop working to collect water. This will impact their business, productivity, and
income.
However, with a project such as the U.S. Agency for International Development's
Kenya RAPID program, an innovative and automatic pump powered by smart
sensors fills people's water containers automatically, ensuring more than 184,000
people now have improved access to clean and safe drinking water. This type of
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innovation ensures people are able to focus on their jobs without worrying about a
basic necessity like water. More time to devote to work translates to economic
growth.
For a more contemporary example, smart phones and apps have revolutionized
work and play across the globe. Smartphone are not exclusive to wealthy countries
or people, as more than 5 billion people have mobile devices around the world. As
the growth of the smartphone market continues, technological entrepreneurship can
have a profound, long-lasting impact on the world.
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REFERENCES
Acs, Z.. 2006. How Is Entrepreneurship Good for Economic Growth? Tagore LLC
Innovations: Technology, Governance. Globalization 1 (1) 97–107.
http://www.mitpressjournals.org/doi/10.1162/itgg.2006.1.1.97
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