Unit 1 - Entrepreneurship

What is entrepreneurship
Entrepreneurship is the act of creating a business or businesses while bearing all the
risks with the hope of making a profit.
OR
The more modern entrepreneurship definition is also about transforming the world by
solving big problems like bringing about social change or creating an innovative product
that challenges the status quo of how we live our lives on a daily basis.
OR
The entrepreneur 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.

i. 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
ii. Entrepreneurship is what people do to take their career into their hands and lead it in
the direction they want.
iii. It’s about building a life on your own terms. No bosses. No restricting schedules. And
no one holding you back.
iv. Entrepreneurs are able to take the first step into making the world a better place-for
everyone in it, including themselves.
v. Mindset of entrepreneur is focused on creating a profitable business

Importance of Entrepreneurship :
1. Entrepreneurs create jobs: i. Without entrepreneurs, jobs wouldn’t exist.
ii. Entrepreneurs take on the risk of employing themselves.
iii. Their ambition to grow their business eventually leads to the creation of new jobs.
iv. As their business continues to grow, even more jobs are created.
2. Entrepreneurs innovate: i. Some of the greatest technologies in today’s society have
come from businesses.
ii. Technological advances come from a need to solve problems, create efficiencies, or
improve the world.
iii. In periods where there’s more advancement in technology, there’s usually an
entrepreneur to thank for it.
3. Entrepreneurs create change: i. Entrepreneurs dream big—many aim to make the
world better with their products, ideas, or businesses.
ii. So naturally, some of their ideas will make a worldwide change.
iii. They might create a new product that solves a burning problem or takes on the
challenge of exploring something never explored before.
4. Entrepreneurs give to society: i. While some have a notion of the rich being evil and
greedy, they often do more for the greater good than the average person.
ii. They make more money and thus pay more taxes, which helps fund social services.
iii. Entrepreneurs are some of the biggest donors to charities and nonprofits for various
causes.
iv. Some seek to invest their money in creating solutions to help poorer communities have
access to things we take for granted, like clean drinking water and good health care.
5. Entrepreneurs add to national income: i. Entrepreneurship generates new wealth in
an economy.
ii. New ideas and improved products or services from entrepreneurs allow for the growth
of new markets and new wealth.

Qualities of entrepreneur :
While everyone can become an entrepreneur -- it is not defined by race, age, gender,
financial position, experience or education -- the most prominent entrepreneurs of past
and present have had certain personal qualities.
1) Willpower – i. is key to success.
ii. it is a strong longing to achieve success.
iii. Despite many failures, the entrepreneur never loses their will to achieve.
2) Management – i. Is the ability to make plans, devise targets, and then execute.
3) Obsession – i. The entrepreneur who is obsessed with their goals and ultimate vision
will make others believe in them too.
4) Smarts – i. An entrepreneur must have old-fashioned common sense and be able to
make good decisions and deal competently with others.
5) Self-assurance – i. The entrepreneur is self-assured, confident in their abilities and
knows how to look into the future and plan well.
ii. A self-assured person instills further confidence in themselves.
6) Devotion – i. The entrepreneur is devoted to their goals, working long and hard, day
and night to achieve them.
7) Inspiration – i. Building a business requires an inspiration and the creativity which will
lead to a better product and excellent results.
ii. An entrepreneur thinks outside of the box.
8) Flexibility – i. Creating a product that meets the needs of the market requires flexibility.
ii. This quality is very important.
iii. Stubborn, unflexible people will not make good entrepreneurs.

Characteristics / Nature of Entrepreneurship:

Not all entrepreneurs are successful; there are definite Nature that make
entrepreneurship successful. A few of them are mentioned below:

1) Ability to take a risk- i. Starting any new venture involves a considerable amount of
failure risk.

ii. Therefore, an entrepreneur needs to be courageous and able to evaluate and take
risks, which is an essential part of being an entrepreneur.

2) Innovation- i. It should be highly innovative to generate new ideas, start a company

and earn profits out of it.

ii. 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.

3) Visionary and Leadership quality- i. To be successful, the entrepreneur should have

a clear vision of his new venture.
ii. However, to turn the idea into reality, a lot of resources and employees are required.

iii. Here, leadership quality is paramount because leaders impart and guide their
employees towards the right path of success.

4) Open-Minded- i. In a business, every circumstance can be an opportunity and used

for the benefit of a company.

ii. For example, Paytm recognised the gravity of demonetization and acknowledged the
need for online transactions would be more, so it utilised the situation and expanded
massively during this time.

5) Flexible- i. An entrepreneur should be flexible and open to change according to the

situation.

ii. To be on the top, a businessperson should be equipped to embrace change in a product

and service, as and when needed.

6) Know your Product- i. A company owner should know the product offerings and also
be aware of the latest trend in the market.

ii. 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.

iii. Being able to be accountable and then alter as needed is a vital part of
entrepreneurship.

Common traits for entrepreneurs :

Entrepreneurs have certain characteristics that set them apart from other individuals. The
majority of people who pursue entrepreneurship:
1 Think creatively
2 Enjoy freedom and flexibility
3 Understand basic finance principles
4 Are ambitious and goal oriented
5 Take self initiative
6 Are problem solvers
 Types of Entrepreneurship :
following are the four type of entrepreneurship

A) Small Business Entrepreneurship-

i. These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter,
plumber, electrician, etc.

ii. These people run or own their own business and hire family members or local
employee.

iii. For them, the profit would be able to feed their family and not making 100 million
business or taking over an industry.

iv. They fund their business by taking small business loans or loans from friends and
family.

B) Scalable Startup Entrepreneurship-

i. This start-up entrepreneur starts a business knowing that their vision can change the
world.

ii. They attract investors who think and encourage people who think out of the box.

iii. The research focuses on a scalable business and experimental models, so, they hire
the best and the brightest employees.

iv. They require more venture capital to fuel and back their project or business.

C) Large Company Entrepreneurship-

i. These huge companies have defined life-cycle.

ii. Most of these companies grow and sustain by offering new and innovative products
that revolve around their main products.

iii. 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.
iv. To cope with the rapid technological changes, the existing organisations either buy
innovation enterprises or attempt to construct the product internally.

D) Social Entrepreneurship-

i. This type of entrepreneurship focuses on producing product and services that resolve
social needs and problems.

ii. Their only motto and goal is to work for society and not make any profits.

Differences between Entrepreneur and Intrapreneur :

Entrepreneurship is the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit. The most prominent
example of entrepreneurship is the starting of new businesses.

Intrapreneurs are individuals who are tasked with creating new and innovative products
within an already-established business. Backed by a company's available resources,
Intrapreneur develop open-ended ideas and turn them into real-world products and
services

BASIS FOR ENTREPRENEUR INTRAPRENEUR

COMPARISON

Meaning Entrepreneur refers to a person Intrapreneur refers to an

who set up his own business with employee of the organization
a new idea or concept. who is in charge of undertaking
innovations in product, service,
process etc.

Approach Intuitive Restorative

Resources Uses own resources. Use resources provided by the

company.
 Capital Raised by him. Financed by the company.

Enterprise Newly established An existing one

Dependency Independent Dependent

Risk Borne by the entrepreneur Taken by the company.

himself.

Works for Creating a leading position in the Change and renew the existing
market. organizational system and
culture

Key Differences Between Entrepreneur and Intrapreneur

The important distinguishing points between entrepreneur and intrapreneur, are given in
the following points:

1. a) An entrepreneur is defined as a person who establishes a new business with an

innovative idea or concept.

b) An employee of the organisation who is authorised to undertake innovations in

product, service, process, system, etc. is known as Intrapreneur.

2. a) An entrepreneur is intuitive in nature.

b) whereas an intrapreneur is restorative in nature.

3. a) An entrepreneur uses his own resources, i.e. man, machine, money, etc.

b) while in the case of an intrapreneur the resources are readily available, as they
are provided to him by the company.

4. a) An entrepreneur raises capital himself.

b) An intrapreneur does not need to raise funds himself; rather it is provided by the
company.

5. a) An entrepreneur works in a newly established company.

b) On the other hand, an intrapreneur is a part of an existing organisation.

 6. a) An entrepreneur is his own boss, so he is independent to take decisions.

b) As opposed to intrapreneur, who works for the organisation, he cannot take

independent decisions.

7. a) This is one of the salient features of an entrepreneur; he is capable of bearing

risks and uncertainties of the business.

b) Unlike intrapreneur, in which the company bears all the risks.

8. a) The entrepreneur works hard to enter the market successfully and create a
place subsequently.

b) In contrast to Intrapreneur, who works for organization-wide change to bring

innovation, creativity and productivity

Similarities of entrepreneur and intrapreneur

ASPECT ENTREPRENEUR INTRAPRENEUR

Definition Individuals who create and Employees within a large

operate their own businesses or organization who act with an
startups. entrepreneurial mindset to
innovate and drive change.

Risk and Assume high personal financial Generally, their risk is lower
Reward risk in pursuit of potential high since they work within the safety
rewards. net of an established
organization.

Purpose Pursue their personal vision and Work towards the organizations
goals for their businesses. objectives and goals.

Ownership Have ownership and equity in Do not have ownership in the

businesses. organization but may receive
incentives or bonuses.
 Long-Term Often aim to build long-term, Focus on implementing
Vision sustainable businesses. innovative projects or initiatives
within the company.

Impact Can have a significant impact on Can drive change and growth
industries and economies. within their respective
organizations.

Importance of Entrepreneurship :

i. Entrepreneurship drives the growth and diversification of the economy and contributes
to the creation of wealth.

ii. Before we get into the specifics of the role of entrepreneurship in economic
development, let’s briefly encapsulate its significance.

Entrepreneurship’s importance lies in the following:

1. Drives economic growth and creates new job.

2. Encourages innovation by bringing new ideas, products, and services to the market.

3. Contributes to social change by developing products or services that reduce people’s

dependence on outdated technologies.

4. Addresses social and economic problems by creating solutions that meet the needs of
society.

5. Enables competition which improves business efficiency and lowers prices for
consumers.

* Also read above (Importance of Entrepreneurship) points

Role of Entrepreneurship in Economic Development :

The role of entrepreneurship in economic development has nine salient takeaways:

1. Raises Standard of Living

i. A significant role of entrepreneurship in economic development is that it can greatly

enhance the standard of living for individuals and communities by setting up industries
and creating wealth and new positions.

ii. Entrepreneurship not only provides large-scale employment and ways to generate
income, it also has the potential to improve the quality of individual life by developing
products and services that are affordable, safe to use, and add value to their lives.

iii. Entrepreneurship also introduces new products and services that remove the scarcity
of essential commodities.

2. Economic Independence

i. Entrepreneurship can be a path to economic independence for both the country and the
entrepreneur.

ii. It reduces the nation’s dependence on imported goods and services and promotes self-
reliance.

iii. Through their hard work and innovation, they generate income and create wealth,
allowing them to achieve economic independence and financial security.

3. Benefits of New Firms and Businesses

i. Entrepreneurs identify market needs and develop solutions through their products and
services to begin their business venture.

ii. By starting new firms and businesses, entrepreneurs play a key role in shaping the
economy and creating a more dynamic and diverse business landscape.

iii. Entrepreneurship also promotes innovation and competition, leading to new and
improved products and services that contribute to economic growth and development.

4. Creation of Jobs

i. Entrepreneurship is a pivotal driver of job creation.

ii. Running the operations of new businesses and meeting the requirements of customers
results in new work opportunities.

iii. Entrepreneurship also drives innovation and competition that encourages other
entrepreneurs and investments, creating new jobs in a wide range of industries, from
manufacturing and construction to service and technology sectors
5. Increases Gross National Product and Per Capita Income

i. Entrepreneurship can play a significant role in increasing economic growth and

prosperity by increasing Gross National Product (GNP) and Per Capita Income (PCI).

ii. GNP measures the total economic output of a country while PCI calculates the average
income per person. The increase in GNP can lead to a rise in PCI.

iii. Entrepreneurship can contribute to GNP by creating new businesses and industries,
which can lead to job creation, increased consumer spending, and higher tax revenue

Entrepreneurial environment :

i. Entrepreneurship environment refers to the various facets within which enterprises- big,
medium, small and other have to operate.

ii. The environment therefore, influences the enterprise.

iii. By and large, an environment created by political, social, economic, national, legal
forces, etc influences entrepreneurship.

iv. Entrepreneurial environment is broadly classified into six important segments, namely:

(1) Political environment (2) Economic environment, (3) Social environment,

(4) Technological environment (5) Legal environment (6) Cultural environment

1) Political environment - Political Atmosphere, Quality of Leadership.

2) Economic environment - Economic Policies, Labour, Trade, Tariffs, Incentives,

Subsidies.
3) Social environment - Consumer, Labour, Attitudes, Opinions, Motives.

4) Technological environment - Competition And Risk, Efficiency, Productivity,

Profitability.
5) Legal environment - Rules, Regulations.

6) Cultural environment - Structure, Aspirations And Values.