Unit – 1

ENTREPRENEURSHIP
DEVELOPMENT
 Entrepreneur

“Entrepreneur” is derived from the French word

“Entreprendre” which means to initiate or
undertake

F. A Walker “ Entrepreneur is one who is endowed

with more than average capacities in the task of
organizing and coordinating the factors of
production ie land, labour, capital and enterprises”

Gilbraith “ An entrepreneur must accept the

challenge and should be willing hard to achieve
something”
Who is an Entrepreneur ?
 Entrepreneur

Are individuals who recognize opportunities

where others see chaos and confusion.
Are heroes in today’s marketplace
They create jobs at a breathtaking pace.

One Anonymous Quote- “Anyone can be an

entrepreneur who wants to experience the deep,
dark canyons of uncertainty and ambiguity; and
who wants to walk the breathtaking highlands of
success. But I caution, do not plan to walk the
latter, until you have experienced the former”
 Entrepreneur

Some More Definitions :

The Entrepreneur is one who undertakes to
organize , manage and assume the risks of a
business.
Today – “ An Entrepreneur is an innovator or
developer who recognizes and seizes
opportunities; converts those opportunities into
workable/marketable ideas; adds value through
time, effort, money or skills; assumes the risk of
the competitive marketplace to implement these
ideas and realizes the rewards from these efforts”.
 Entrepreneur

According to Peter Drucker (One of the

leading management thinkers of our time)
has said – “ The Entrepreneurial mystique?
Its not magic, it’s not mysterious, and it has
nothing to do with the genes. It’s a discipline.
And ,like any discipline, it can be learned”.
 Features of Entrepreneurs

1. Disciplined
2. Self-Confidence
3. Desire to Excel
4. Hard Work
5. Initiative
6. Moderate Risk Taker
7. Innovative
8. Motivation
9. Optimistic
 Characteristics of a Successful Entrepreneur

1. Mental Ability- Intelligent , Creative Thinking, Analysing

Ability-problems and situations & anticipating change
2. Clear Objectives-Exact nature of business, nature of goods
and subsidiary activities to undertake make profit.
3. Secrecy – Guard business secrets, proper selection of
subordinates.
4. Human Relations Ability- Customers & Employees
5. Communication Ability- Customers, Employees, Suppliers
& Creditors
6. Technical Ability – Reasonable knowledge
 Importance of Entrepreneur

1. As Innovator
2. Employment Generation
3. Economic growth- Employment generation, Capital
formation, Increase in per-capita income, Physical
quality of life, Standard of living, growth in
infrastructural facilities, Regional development,
Economic Independence, Backward & Forward linkages
4. Brings Social Stability-
Absorption of workforce, Alleviation of poverty,
Glorification of self- help, Checking expansion of
monopolies, Equitable distribution of income, Creation of
Social Infrastructure, Empowerment of women through
enterprise, Supply of qualitative goods & services.
 Evolution of the concept

Entrepreneur as Risk Bearer ,

Organiser ,Innovator

Entrepreneur as Risk Bearer

1. Richard Cantillon- French
economist (Around 1730)
2. 18th century- Unique risk
bearing function in economics
3. Entrepreneur- agent, buys
factors at certain prices,
combine them and sells at
uncertain prices in the future
 Evolution of Concept

Entrepreneur as Organiser
 Jean Baptiste Say (Born 1767)
- functions of coordination ,
organisation, supervision.
 Combines – Land , labour,
capital of different individuals
and produces a product
 Then he sells the product in
the market and pays interest
on capital, rent, wages and
remaining is profit
 He differentiated between
entrepreneur who takes the
risk - to the venture capitalist
supplying the capital
 Evolution of Concept
 Entrepreneur as Innovator
Joseph A Shumpter- 1934 , Innovation- “Theory of
Economic Development”

Combinations of factors of production may occur in the

following forms:
 Introduction of new product in the market
 Instituting new production technology
 Opening a new market where specific product is not
entered
 New source of supply of raw material
 Carrying out the new form of organisation of any industry
 Evolution of concept

 1991- Six School of Thought: By Cunningham &

Lischerson
1. First School of Thought : It says Entrepreneur is born
with an intuitive ability- a sixth sense- which helps him
in the start up stage
2. Second School of Thought : Psychological
characteristics explains unique attitudes and needs
which drive them and help them especially in start-up
stage
3. Third School of Thought : Classical School of Thought -
Central characteristic of entrepreneurial behaviour is
‘Innovation’- It helps in start-up and early growth
4. Fourth School of Thought- Management School of
Thought- Entrepreneurs are Organisers of economic
venture and they organise, own, manage and assume
 Evolution of concept

1991- Six School of Thought (Contd):

5. Fifth School of Thought : Leadership School :

Entrepreneurs are leaders of people and they have the
ability to adopt their style to the needs of people. Such
personality suits -Early Growth and Maturity situations

6. Intrapreneurship School – is the sixth school of

thought. Act of developing independent units , to
create, market and expand services within the
organisation. It is required during maturity and change
 Functions of Entrepreneur/ Characteristics of
Entrepreneurship

Risk bearing Organisation Innovative

function al function function

Decision
Managerial
Making
function
function
 Types of Entrepreneur

Stages of
Type of Use of
Motivation Growth Developme Other types
business Technology
nt
• Business • Technical • Pure • Growth • First • Innovative
• Industrial • Non • Induced • Super generation • Adoptive
• Trading technical • Motivated Growth • Modern • Fabian
• Corporate • Spontaneou • Classical • Drone
• Agricultur s • Inheritanc
al e
• Individual
and
institution
al
 Intrapreneur- an emerging class

 An Intrapreneur is an inside
entrepreneur, or
an entrepreneur within a large firm,
who uses entrepreneurial skills
without incurring the risks associated
with those activities.
 Intrapreneurs are usually employees
within a company who are assigned to
work on a special idea or project, and
they are instructed to develop the
project like an entrepreneur would.
 Intrapreneurs usually have the
resources and capabilities of the firm
at their disposal.
 Intrapreneurship coined by Gifford
Pinchott in 1986
 Importance on Intrapreneurship

Motivated by recognition – corporate

bureaucracy
Corporation to diversify
To conduct market experiments
It’s a mutation of current corporate resources-
provides diversity
Training ground for new managers- future
leaders
New channels of distribution and media
communications- especially since emergence of
internet.
 Process of Intrapreneurship

1. Problem Identification

2. Coalition Building

3. Resource Mobilization

4. Project Execution

5. Venture Completion
 Entrepreneur Vs Intrapreneur

 Criteria  Entrepreneur  Intrapreneur

1. Dependency 1. Independent in his 1. Dependent on the

operations entrepreneur/owner
2. Fund Raising 2. Raises funds 2. Funds are not raised
required for the
enterprise 3. Does not fully bear
3. Risk taking
3. Fully bears the risk the risk involved in
involved in the the business
business 4. Operates within the
4. Operation organization
4. Operates from 5. Access to corprorate
5. Primary Motive outside resources and also
responds to
corporate rewards
5. Goal-oriented, self – and recognition
reliant and self-
motivated
 Entrepreneurship

It is a process involving various activities to

be undertaken to set up and run the business.
Activities-
1. Working out strategies to overcome business
problems
2. Availing business opportunities
3. Using resources effectively
4. Controlling the operations
5. Managing the business process effectively with
object of profit maximization
 Entrepreneurship

Definition :
According to AH Cole –”Entrepreneurship is the
purposeful acitivities of an individual or a group
associated individuals who undertake to initiate and
maintain or organize a profit oriented business unit for
the production or distribution of economic goods and
services. It means the function of creating something
new organizing,co-ordinating and undertaking risk and
handling economic uncertainties”.
According to Richard Cantillon –”Entrepreneurship can
be defined as self-employment of any sort.
Entrepreneurs buy at certain prices in the present and
sell at unceratin prices in the future”
 Evolution of Entrepreneurship

•Entrepreneurship in
Phase 1 Pre- British India

•Decline of entrepreneurship
Phase 2 during British Period

•Entrepreneurship development
Phase 3 in Independent India
 Development of Entrepreneurship
 EDP- Entrepreneurial Development Programme means a
programme conducted to help a person in strengthening his
entrepreneurial motive and in acquiring skill and capabilities
required for promoting and running an enterprise efficiently

 Objectives
1. To prepare entrepreneurs to accept risk and uncertainty
2. To develop broad vision of business, passion for integrity
and honesty.
3. Cope up with statutory obligations
4. Communicate clearly and effectively
5. To provide knowledge of sources of help, concession to
start small scale industry
 Need for EDP

1. In Developing Entrepreneurs
2. Helps Entrepreneurs in developing and Improving skills
3. Tool of Industrialization and path to economic growth
4. Helps in dispersal of economic activities in different
regions by providing training and other support to local
people
5. Opportunities for self-employment and entrepreneurial
careers.
6. It develops motivation, competence and skills necessary
for successful launching , management and growth of
the enterprise
7. Inculcating entrepreneurial capabilities and skill in the
trainees, create new generation entrepreneur.
 Importance of EDP

1. Economic Growth
2. Balanced Regional Development
3. Eliminates Poverty & Unemployment
4. Optimum use of Local Resources
5. Successful Launching of New Unit
6. Emp0wers New Generation Entrepreneurs
 Curriculum of EDP

1. General Introduction to Entrepreneurship

2. Achievement Motivation Training (AMT)
3. Support Systems and Procedures
4. Market Survey and Plant Visit
5. Managerial Skill
6. Project Preparation and Feasibility Study
 Role of Entrepreneurship
in Economic Development

1. Capital formation
2. Improvement in Per-Capita Income
3. Improvement in Living Standards
4. Economic Independence
5. Backward & Forward Linkages
6. Generation of Employment
7. Harnessing locally available resources
8. Balanced Regional Growth
9. Reducing Unrest and social tension among youth
10. Innovations in Enterprises
 ROLE OF ENTREPRENEURSHIP IN ECONOMIC
DEVELPOMENT

Capital Reduces
concentration of
formation economic power

Harnessing Improves
locally available standard of
resources living

Backward
Employment
and forward
opportunities
linkages

Overall Balanced
development regional
of the nation growth

Improves
 Entrepreneurial Culture
Culture of
a business

Organisati Business
on culture Ethics

Total quality
and customer
Productivi
care ty culture
 Stages in Entrepreneurial process

Stage I •Change from present lifestyle

Stage II •New venture formation

Stage III •Possibility of New venture formation

Stage IV •Coordination