UNIT -1

By Prof. Vivek Shrivastava

 INTRODUCTION
Comes from the word – Entreprendre – organizer of music
or entertainment programs.
In 16th century, it also referred to those who were busy
with military expeditions.
Only in the early 18th century, the word got associated
with economic aspects.
 ENTREPRENEURSHIP
Basic Concepts:
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.

The entrepreneurial vision is defined by

discovery and risk-taking and is an
indispensable part of a nation’s capacity to
succeed in an ever-changing and more
competitive global marketplace.

The word “entrepreneur” originates from a

thirteenth-century French verb,
entreprendre, meaning “to do something”
or “to undertake.” By the sixteenth
century, the noun form, entrepreneur, was
being used to refer to someone who
 ENTREPRENEURSHIP
Definition:
According to Peter Drucker: -

“Entrepreneurship is a systematic
innovation which consists in the purposeful
and orgainised search for changes and in a
systematic analysis of the opportunities such
changes might offer for economic and social
innovation.”

“Entrepreneur – one who is involved in

gathering and using resources to
opportunities to produce result.”

In simple words, Entrepreneur is a person

who sets up an enterprise. He conceives the
idea of setting up a business. He performs
various activities to give shape to the
business and when business gets a proper
shape, it is called an enterprise.
 ENTREPRENEURSHIP
Characteristics of Entrepreneurship:

1 Systematic Activity
2 Lawful and Purposeful
Activity
3 Creative Activity
4 Organisation of
Production
5 Risk Taking
 ENTREPRENEUR AND BUSINESSMAN
BASIS FOR
ENTREPRENEUR BUSINESSMAN
COMPARISON
Meaning An entrepreneur is a A businessman is
person who starts an someone who sets up a
enterprise with a new idea business with an
or concept, undertaking existing idea offering
commercial activities. products and services to
the customers.
Market Position Market Leader Market Player
Nature Intuitive Calculative
Market Creates new market Creates place in existing
markets
Risk factor Comparatively high Less
Methods applied Unconventional Conventional
for doing things
Approach Atomistic Holistic
Orientation People Profit
Competition Low Very high
ENTREPRENEURS VERSUS
MANAGERS
 DEFINITIONS OF ENTREPRENEURSHIP
Entrepreneurship is --
• The attempt to create value through recognition of business
opportunity, the management of risk taking appropriate to the
opportunity, and through the communicative and management
skills to mobilize the human, financial and material resources
necessary to bring a project to fruition. (John Kao and Howard
Stevenson)
• The purposeful activity of an individual or group of associated
individuals, undertaken to initiate, maintain or organize a profit-
oriented business for the production or distribution of economic
goods and services. (Arthur Cole)
• Based on purposeful and systematic innovation. It includes not
only the independent businessman but also the company
directors and managers who actually carry out the innovative
functions. (Joseph Schumpeter)
 DEFINITIONS OF ENTREPRENEURSHIP
Entrepreneurship is --
• That form of social decision making which is performed by
economic innovators. (Robert Lamb)
• The investing and risking of time, money and effort to start a
business and make it successful. (Muscleman and Jackson)
• Connotes innovativeness, an urge to take risk in face of
uncertainties, and an intuition that is, a capacity of seeing things
in a way which afterwards proves to be true. (V R Gaikwad)
• Entrepreneurship is the tendency of a person to organize the
business of his own and to run it profitably using the qualities of
leadership, decision making and managerial caliber.
• Entrepreneur precedes Entrepreneurship. It relates to the
development and coordination of entrepreneurial functions.
Innovation and Risk Bearing are the two basic elements of
entrepreneurship.
 Importance of Entrepreneurship
Importance:

• Establishment of viable units

• To develop entrepreneurial tendencies
• To promote innovations
• Optimum utilization of resource
• Increasing employment opportunities
• Balanced economic development
• Rapid economic growth of the economy
• Social Satisfaction
• Promote Capital Formation
• Minimize Socio-economic problems
• Establishing self-sufficient society
 Entrepreneur
Meaning:
• Entrepreneur: The word entrepreneur
was first used in France in 16th century
for famous military expeditions. Later
the word came to be used for the
persons employed in construction
industry. But the word entrepreneur
was first used for economic activities in
18th century. The spirit of enterprise in
a person makes him an entrepreneur.
This spirit has put an individual to the
category of an industrialist.

• In simple words, Entrepreneur is a

person who sets up an enterprise. He
conceives the idea of setting up a
business. He performs various activities
to give shape to the business and when
business gets a proper shape, it is
called an enterprise.
 Characteristics of Successful Entrepreneur
Characteristics

Risk Taking Adaptable

Capacity
Persistence

Self
Creative
Motivatio
Passion
n

12
CONCEPT OF ENTREPRENEUR
 Entrepreneur
Qualities of a successful Entrepreneur
• Physical and Mental Qualities:
• Hard Worker
• Sharp Intelligence
• Imagination
• Sharp Memory
• Self Confidence
• Foresightedness
• Dynamic Ideas
• Optimism
• Ambitious
 Entrepreneur
Qualities of a successful Entrepreneur
• Social and Moral Qualities:
• Sociability
• Politeness
• Sound Character
• Honesty
• Co-operative
• Respectful
• National Outlook
 Entrepreneur
Qualities of a successful Entrepreneur
• Business and Leadership Qualities:
• Entrepreneurial Ability
• Leadership Ability
• Risk taking capacity
• Decision Making Ability
• Ability of business planning
• Organization Skills
• Ability to manage time
• Awareness towards social environment
ACTIVITY : WEDDING BELLS
Your Older Sister’s Wedding has been fixed and the
wedding is six months from today. Prepare a list of all the
activities that would need to be done to make the wedding
successful. Also indicate the sequence in which these
activities will be done.
Format
No Activity
Sequence
 Types of Entrepreneur

On the basis of On the basis of From the angle of

Innovative Quality Development Social Benefit

Minor
Imitative Exploitative
Innovator
Entrepreneurs Entrepreneur
Type

Innovating Model
Initiator Type
Entrepreneurs Entrepreneur

Drone
Satellite Type
Entrepreneurs

Fabian Local Trading

Entrepreneur Type
 Types of Entrepreneur

Based on the types Based on use of Based on

of business technology Ownership

Trading Technical Private

Entrepreneur Entrepreneur Entrepreneur

Manufacturing Non Technical State

Entrepreneur Entrepreneur Entrepreneur

Joint
Agricultural
Entrepreneur Entrepreneu
r
 Types of Entrepreneur

Based on Size of
Based on Gender
the enterprise

Men Small Scale

Entrepreneur Entrepreneur

Women Medium Scale

Entrepreneur Entrepreneur

Large Scale
Entrepreneur
 Functions of Entrepreneur

The functions of entrepreneurs can broadly be divided in

three main categories

1. Establishment related functions

2. Management and organization related functions

3. Modern functions
 Functions of Entrepreneur
The functions of entrepreneurs can broadly be divided in
three main categories

1. Establishment related functions

1. To imagine a business idea
2. Investigation of the proposition
3. Project planning
4. Preparation of the project feasibility report
5. Obtaining the approval of the projects.
6. Establishing Enterprise
 Functions of Entrepreneur
The functions of entrepreneurs can broadly be divided in
three main categories

2. Management and Operational related functions

1. Organizing and Managing the enterprise
2. Getting Finance
3. Bearing Risks
4. Distribution Remuneration
5. Formulating Efficient Marketing Strategies
 Functions of Entrepreneur
The functions of entrepreneurs can broadly be divided in
three main categories

3. Modern functions
1. Innovation and Diversification
2. To participate in Entrepreneurship Programme
3. To contribute towards National Development
4. To make business’s future safe
 Reasons for entrepreneurial shutting down
Main Reasons for
entrepreneurial shutting down

1. Lack of entrepreneurial Skills

2. Poor Planning

3. Lack of Capital

4. Unforeseen Events

5. Tough Competition

6. Extreme Time Commitments

 ENTREPRENEUR AND INTRAPRENEUR
BASIS FOR
COMPARISO ENTREPRENEUR INTRAPRENEUR
N
Intrapreneur refers to an
Entrepreneur refers to a employee of the
person who set up his own organization who is in
Meaning
business with a new idea or charge of undertaking
concept. innovations in product,
service, process etc.
Approach Intuitive Restorative
Use resources provided by
Resources Uses own resources.
the company.
Capital Raised by him. Financed by the company.
Enterprise Newly established An existing one
Dependency Independent Dependent
Borne by the entrepreneur
Risk Taken by the company.
himself.
Change and renew the
Creating a leading position in
Works for existing organizational
the market.
system and culture.
 INTRAPRENEURSHIP

Meaning of KEY TAKEAWAYS: -

Intrapreneurship: -  Intrapreneurship is a system
which allows an employee to
The term intrapreneurship
act like an entrepreneur
refers to a system that allows
within an organization.
an employee to act like an
entrepreneur within a  Intrapreneurs are self-
company or other organization.
motivated, proactive, and
action-oriented people who
Intrapreneurs are self-
have leadership skills and
motivated, proactive, and
think outside the box.
action-oriented people who
take the initiative to pursue an  Intrapreneurship is one step
innovative product or service.
toward entrepreneurship—
An intrapreneur knows failure
intrepreneurs can use what
does not have a personal cost
they've learned as part of a
as it does for an entrepreneur
team to develop their own
since the organization absorbs
businesses.
losses that arise from failure.
 INDIVIDUAL AND CORPORATE ENTREPRENEUR

Individual Entrepreneurship:
The concept of the individual entrepreneur, is a natural person who is
engaged in an economic or professional activity on his own account.

In addition, to reaffirm it, one of the characteristics of the individual

entrepreneur is that the entrepreneur is solely responsible for the
debts of the business and who will be in charge of managing the entire
company, both strictly related to economic activity and records.
accounting related to situation balance.

Corporate Entrepreneurship:
Corporate Entrepreneurship is a process used to develop new
businesses, products, services or processes inside of an existing
organization to create value and generate new revenue growth
through entrepreneurial thought and action.
 INDIVIDUAL AND CORPORATE ENTREPRENEUR
Need of Corporate Entrepreneurship:
Inadequate Growth: The current reality is that most organizations
have spent the last decade investing in existing or mature products that
are not providing adequate growth

Lack of Capabilities: A majority of CEOs do not feel like they have the
skills or capabilities inside their organization to achieve their growth
agenda, they are probably right.

Major Barriers: After a decade of cost cutting and streamlining

operations, organizations have created rigid and inflexible systems
that have created roadblocks and barriers to growth.

Inability to Change: Risk adverse cultures, resistance to change and

fear of the unknown are impeding an organizations ability to respond to
a rapidly changing world.

Poor Execution: Three out of five organizations say they are weak
when it comes to execution and they see corporate entrepreneurship as
a way to close the gap between idea generation and execution.
 Identification of Business Idea and its
Sources

• “Opportunity never knocks on the door. You have to

knock on opportunity’s door and they are all
around”.
- Thomas J. Watson
 Identification of Business Idea and its sources
Opportunity:
• Opportunity means taking advantage
of the prevailing conditions.

Business Opportunity:
• The process of deriving maximum
advantage from the prevailing
market conditions is called business
opportunities.
 Identification of Business Idea and its sources

Identification of business idea is

the primary stage of business. This
can be studied on the basis of
following points: -

Identification of Business
Opportunity:
• Alternative use of Natural Resources
• Scientific Discovery
• Idea of new designing of product
• Idea of Quality Improvement
• Idea related with discovery of
Electronic Items
 Sources of Business Idea
Followings are the important
sources of business idea:
• Knowledge of the Potential
Customers
• Watching emerging trends in
demands for certain products
• Scope for producing substitute
product
• Going through certain professional
magazines catering to specific
interests like electronics, computers
etc
• Success stories of known
entrepreneurs or friends or relatives
 Micro and Macro Units
In accordance with the provision of Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006 the
Micro, Small and Medium Enterprises (MSME) are classified
into two classes:

• Manufacturing Enterprises

• Service Enterprises
 Micro and Macro Units
The Government of India has enacted the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006 in terms of which the
definition of micro, small and medium enterprises is as under:

Manufacturing Sector
Investment in Plant and
Enterprises Machinery/Equipment
Micro
Enterprises Does not exceed Twenty Five Lakh Rupees
Small More than Twenty Five Lakh Rupees but does
Enterprises not exceed Five Crore Rupees
Medium More than Five Crore Rupees but does not
Enterprises exceed Ten Crore Rupees

Service Sector
Micro
Enterprises Does not exceed Ten Lakh Rupees
Small More than Ten Lakh Rupees but does not exceed
Enterprises Two Crore Rupees
Medium More than Two Crore Rupees but does not
Enterprises exceed Five Crore Rupees
 Micro and Macro Units
Revised Classification applicable w.e.f 1st July 2020

Composite Criteria: Investment in Plant & Machinery/equipment

and Annual Turnover
Classification Micro Small Medium

Manufacturin Investment in Investment in Investment in

g Enterprises Plant and Plant and Plant and
and Machinery or Machinery or Machinery or
Enterprises c Equipment: Equipment: Equipment:
Services Not more Not more Not more
than Rs.1 than Rs.10 than Rs.50
crore and crore and crore and
Annual Annual Annual
Turnover ; not Turnover ; not Turnover ; not
more than Rs. more than Rs. more than Rs.
5 crore 50 crore 250 crore
 Scope of Micro and Macro Units
In fact, the scope for micro and small enterprises is quite
vast covering a wide range of activities requiring less
sophisticated technology. The important activities under this
are

• Manufacturing Activities
• Servicing/Repairing Activities
• Retailing Activities
• Financial Activities
• Wholesale Activities
• Construction Activities
• Infrastructural Activities like transportation, communication.
 Scope of Micro and Macro Units
In fact, the scope for micro and small enterprises is quite
vast covering a wide range of activities requiring less
sophisticated technology. The important activities under this
are

• To generate immediate and large scale employment opportunities with

relatively low investment.

• To eradicate unemployment problem from the country

• To encourage dispersal of industries to all over country covering small

towns, villages and economically lagging region.

• To bring backward areas too in the mainstream of national development.

 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

• Economic development is a process by there is a upward

change whereby the real per capita income increases over
a long period of time.
• Adam Smith, the foremost classical economist assigned no
significance to entrepreneurial role in economic
development in his work ‘An Enquiry into the Nature and
Causes of the Wealth of Nations’ (1776). Smith
highlighted the rate of capital formation as an important
determinant of economic development. He believed that
each individual is led by an ‘invisible hand’ in pursuing
his/her interest.
 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
• David Ricardo identified only three factors of production
namely, machinery, capital and labour for which rent,
profit and wages are directed. Highlighting the role of
profit in capital accumulation, he said that profit leads to
saving of wealth which ultimately goes to capital
formation and leads to economic development. Thus, the
classical economists ignored the role of entrepreneur in
economic development.
• Richard Cantillon recognized the term entrepreneurship.
Entrepreneurship is a matter of foresight and willingness
to assume risk, not necessarily related to employment of
labour in some productive process.
• The importance of Entrepreneurship remained
unidentified. John Stuart Mill’s “Principle of Economics”
(1848) popularized the term entrepreneur but could not
overcome the concepts of classical economists.
 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
• Joseph Schumpeter (Theory of Economic Development,
1911) identified innovator with Entrepreneur. He said that
an entrepreneur is the source of dynamic change in an
economy.
• Although English classical economists failed to recognize
entrepreneurship as a moving force towards the
development of an economy but some of them such as
Israel Kirzner had strong opinions about
entrepreneurship. Kirzner said that Entrepreneurship is
alertness towards profit opportunities.
 ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
• Specifically, it was gradually understood that entrepreneurship
and economic development have a cause-effect relationship.
The major role of entrepreneur is
• Contribution to GDP
• Employment generation
• Generation of business opportunities for others
• balanced, regional development(SEZ, Smart city project, North
east region vision project, make in India, Rural electrification
program, River link project).
• Reducing unrest and social tension amongst youth
• Better standard of living
• Economic independence