E.d module-i

Entrepreneurship Development

GURURAJ PHATAK

Syllabus
• Module-I Introduction to Entrepreneurship
• Module-II Achievement and Motivation
• Module-III Business Plan
• Module-IV The Role of Government in Promotion to
Entrepreneurship
• Module-V Creativity and Innovation
• Module-VI Successful Indian Entrepreneurs
Question Paper Pattern
Part A- 2 Marks Questions answer any 10 20 M
Part-B- 8 Marks Questions answer any 5 40 M
Part C- Case Study and Assignment on Creativity and Innovation 15 M

Total: Theory 75+Internal Assessment 25= 100 Marks

Note: This Pattern is according to previous question papers it may
changed by the university.

Introduction to Entrepreneurship

Father of Indian Industry
And Founder of Tata Group
Jamshedhji Tata
3-3-1839-19-5-1904

ENTREPRENEURSHIP - 1
• Meaning of Entrepreneur:

• An Entrepreneur is someone who ventures out; prefers change
as a means of growth; and is prepared to take calculated risk.

• “Entrepreneur is a person who creates an enterprise. The
process of creation is Entrepreneurship.”

• Entrepreneurial Development is a key to socio-economic
transformation of the region.

• Individuals who initiate, establish, maintain and expand new
enterprises constitute the entrepreneurial class.

• “A good entrepreneur is one who is capable of inspiring
confidence in people, and has the ability to motivate them to
work with him in fulfilling the economic goals set by him.”

• Ingredients of a Successful Entrepreneur:
• Confident in facing challenges and eager to achieve.
• Identifies the product.
• Plans for a venture.
• Selects a technology commensurate with the means
available and tuned to the social and economic environment.
• Ability manage men and material.
• Finds market.
• Innovative in approach.
• Progressive mind.
• Always strive to climb up.
• Tech-savvy.
• Strives for modernization and diversification.
• Well-informed.
• Strives to meet the changing needs of the customer.


• Why you should become an Entrepreneur?
• You will be your own boss and boss to other people.
• You will have chance to put your ideas into practice.
• You will make money for yourself rather than for someone
else.
• You learn yourself and gain experience.
• You will have chance to work directly with your customers.
• You will have the personal satisfaction of creating and
running a successful business.
• You will have chance to build the retirement value.

• Evolution of the Concept of Entrepreneur:
• The concept of entrepreneur varies from country to
country as well as from period to period and the level of
economic development thoughts and perceptions.
• The word entrepreneur is derived from the French verb
entreprendre, which means ‘to undertake.’
• In the early 16th century, the Frenchmen who organized
and led military expeditions were referred to as
“entrepreneurs.”
• Around 1700 A.D., the term was used for architects and
contractors of public works.
• In many countries, the entrepreneur is often associated
with a person who starts his own new and small
business. But, not every small business is
entrepreneurial.


• Cantillon, the French economist, used the term
entrepreneur to designate a dealer who purchased the
means of production for combining them into marketable
products.
• The New Encyclopedia Britannica considers an
entrepreneur as “an individual who bears the risk of
operating a business in the face of uncertainty about the
future conditions.”
• “An entrepreneur in an advanced economy is an
individual who introduces something new in the economy
– a method of production not yet tested by experience in
the branch of manufacture concerned, a product with
which consumers are not yet familiar, a new source of raw
material or of new markets and the like.” Joseph A.
Schumpeter.

• The entrepreneur’s function is to ‘reform or revolutionize the
pattern of production by exploiting an invention or more
generally, an untried technological possibility of producing a
new commodity…….” Schumpeter.
• “Innovation is the specific tool of entrepreneurs, the means by
which they exploit changes as an opportunity for a different
business or a different service. It is capable of being presented
as a discipline, capable of being learned and practiced.
Entrepreneurs need to search purposefully for the success of
innovation, the changes and their symptoms that indicate
opportunities for successful innovation. And they need to
know and apply the principles of successful innovation.”
Peter Drucker.
• The true entrepreneur is one who is endowed with more than
average capacities in the task of organizing and coordinating
the various other factors of production. Francis A. Walker.


Entrepreneurship is the process of creating something different with
value by devoting the necessary time and effort, assuming the
accompanying financial, psychic, social risks and receiving the resulting
rewards of monetary and personal satisfaction and independence.

Word “Entrepreneur” stems from French Verb Entreprendre – means
between; taker or go between

New Definition involves four aspects –
(a) The creation process
(b) Devotion of time and efforts
(c) Assumption of risks
(d) Rewards of independence, satisfaction, money.

• Functions of an Entrepreneur:
• Entrepreneur is one who “detects and evaluates a new
situation in his environment and directs the making of such
adjustments in the economic systems as he deems
necessary.”
3. Perceives opportunities for profitable investment.
4. Explores the prospects of starting such a manufacturing
enterprise.
5. Obtains necessary industrial licenses.
6. Arranges for initial capital.
7. Provides personal guarantees to the financial institutions.
8. Promises to meet the shortfalls in the capital, and
9. Supplies technical know-how.

Entrepreneurship
• THE CONCEPT OF ENTREPRENEURSHIP:
• One of the qualities of entrepreneurship is the ability to
discover an investment opportunity and to organize an
enterprise, thereby contributing to real economic growth.
• Entrepreneurship is a composite skill, the resultant of a mix of
many qualities and traits – these include tangible factors such
as imagination, readiness to take risks, ability to bring together
and put to use other factors of production, capital, labor, land,
as also intangible factors such as the ability to mobilize
scientific and technological advances.
• Entrepreneurship lies more in the ability to minimize the use
of resources and to put them to maximum advantage.
• Entrepreneurship today is the product of team work and the
ability to create, build and work as a team.

Entrepreneurship

• What is Entrepreneurship?
• Entrepreneurship is the propensity of mind to take
calculated risks with confidence to achieve a pre-
determined business or industrial objective.
• The capacity to take risk independently and individually
with a view to making profits and seizing an opportunity
to make more earnings in the market-oriented economy
is the dominant characteristic of modern
entrepreneurship.
• The high sense of social responsibility is an essential
attribute of the emerging entrepreneurship in India.

Entrepreneurship
• Concept of Entrepreneurship:

ENTREPRENEUR ENTREPRENEURSHIP ENTREPRISE

PERSON PROCESS OF ACTION OBJECT

• Stimulation of Entrepreneurship:
• Entrepreneurship development is probably one of the most
elusive, complicated and perplexing issues in the promotion
and growth of small enterprise.
• Recently, a number of development agencies have been
involved. But the results are not all that convincing.
• The stimulation of entrepreneurship is a function of both
internal and external variables.

Entrepreneurship

• EVOLUTION OF ENTREPRENEURSHIP:
• Early Survey of Entrepreneurship:
• Contemporary economists agree that the entrepreneur is a
business leader and that his role in fostering economic growth
and development is pivotal one.
• “Entrepreneurship is the purposeful activity of an individual or
a group of associated individuals undertaken to initiate,
maintain, or organize a profit-oriented business unit for the
production or distribution of economic goods and services.” A.
H. Cole.
• McClelland describes the innovative characteristics of
entrepreneurial role. Entrepreneurial role, by definition,
involves doing things in a new and better way.

Entrepreneurship
• Characteristics of Entrepreneurship:
2. Accepting challenges.
3. Decision-making.
4. Risk-taking.
5. Innovation.
6. Accepting Challenges.
7. Organization.
8. Skillful management.
9. Making the enterprise a success.
• Entrepreneurship is an attitude of mind which calls for
calculated risks; a true entrepreneur is one who can see
possibilities in a given situation where others see none and
has the patience to work out the idea into a scheme to which
financial support can be provided.

Entrepreneurship
• In the Indian context, an entrepreneur may best be defined as a
person ( or a group of persons) responsible for existence of a
new business enterprise.
• Industrial growth in a country is achieved through a “mix” of
the large and small industry; the entrepreneurship for the
former comes through the large companies often in
collaboration with multinationals. Simultaneously, economic
growth also depends upon the level of development and use of
information system in the country.
• The entrepreneur usually lacks managerial and technical
know-how, as well as marketing, production, and personnel
management skills. These are needed so that even if the
entrepreneur can operate on only a small-scale basis, the
operation will be economically viable.

Entrepreneurship

• An Ideal Entrepreneur:
• An ideal entrepreneur is one who combines values in the
market economy; that profits do not somehow preclude ethical
behavior; that growth is possible even if political patronage is
not used to bend rules and cut corners, and quite simply that
pursuit of wealth can be a mannerly one.
• There is a need of true entrepreneurs, who do not need
incentives, infrastructure, government support; but build their
enterprises, harness the resources and develop.
• Entrepreneurship is not confined to industry and is needed in
all activities.

Entrepreneurship
• Importance of Entrepreneurship:
• Entrepreneurship Development today has assumed special
significance, since it is a key to economic development.
• The objectives of industrial development, regional growth,
and employment generation depend upon entrepreneurial
development.
• Many innovations have transformed the society and altered
our pattern of living, and many services have been introduced
to alter or create new service industries.
• India needs entrepreneurs. It needs them for two reasons: to
capitalize on new opportunities and to create wealth and new
jobs.
• The most exciting part of entrepreneurship is that you are
your own master. In the entrepreneurship, it is you who set
the goal, plan the action, and reap the satisfaction and
rewards of achieving the goal.

Entrepreneurship

• Entrepreneurial Development Process:
Stages.
2. Perceiving, identifying, and evaluating an
opportunity.
3. Drawing up a business plan.
4. Marshalling resources.
5. Creating the enterprise.
6. Consolidation and Management.

Entrepreneurship
• Entrepreneurial Process:
• Entrepreneurial Process is a leadership function which centers
around the dynamics of entrepreneurial growth and change. It
is a process comprising several distinct changes.
• Stage 1: Some changes in socio-economic environment
leading to changes in the every aspect of life in the country
e.g. the change creates needs for new products and services.
• Stage 2: Starting a new venture.
• Stage 3: Intrapreneurship – the process of extending the
enterprises domain of competence by exploiting new
opportunities through new combinations of its available
resources.
• Stage 4: Coordinating the varied activities to achieve the
entrepreneurial goal.

Entrepreneurship

• Role of Entrepreneurs in Economic Development:
• The success of India’s economic progress is closely linked to
its capabilities to manufacture and export quality products in a
highly competitive global market.
• The objective of economic reforms that were initiated in India
was to move the economy into a higher growth plane by
relying more on market-oriented process.
• There are 3 types of economic development – symbolic
modernization, maximized economic growth and selective
growth.
• The economic reforms of 1991 and its impact on economic
growth of India – a leap jump from around 5% to 8%.

Entrepreneurship

• The primary objective of developing countries like India
is to achieve rapid, balanced, and sustained rate of
economic growth (keeping in mind social, cultural,
political and economic changes).
• Comprehensive national planning is increasingly
becoming an instrument of socio-economic
transformation in developing countries.
• Planning must impart dynamism to the process of
development – balanced regionally and sectorally.
• The success of planning is closely linked with the
readiness with which the people respond to the demand
of economic progress.

Entrepreneurship
• Trends in Economic Development:
2. Technology as a resource.
3. Competition in domestic and international markets.
4. The role of invention.
5. Government as stimulator.
6. Entrepreneurial and Intrapreneurial development.
7. Innovative capital formation.
8. Active financial sector.
9. Innovative entrepreneurship.
10. Progressive management.
11. Quality as a goal.
12. Supremacy of the customer.
13. Collaborative relationships.

Entrepreneurship

• Man is much more crucial to development than other
economic factors. As such, when man plans to initiate
change, economic development rolls on.
• While the availability of industrial resources is an
important advantage for development through
industrialization, responsive human resources are the
major conduit for the development and upgrading of
technology.
• Lack of entrepreneurship inhibits the process of
industrialization in the newly-developed countries.
Hence, the need for Entrepreneurship Development
Programmes.

Entrepreneurship
• Myths of Entrepreneurship:
2. Entrepreneurs are born not made.
3. Entrepreneurs are academic and social misfits.
4. Entrepreneurs fit an ideal profile.
5. All you need is money to be an entrepreneur.
6. All you need is luck to be an entrepreneur.
7. A great idea is the only ingredient in a recipe for success.
8. My best friend will be a great business partner.
9. Having no boss is a great fun.
10. I can make lots of money.
11. I’ll definitely become successful.
12. Life will be much simpler if I work for myself.

Entrepreneurship

• Problems faced by entrepreneurs: Barriers to
Entrepreneurship.
• They can be broadly classified as internal problems and
external problems.
• Internal Problems of Entrepreneurs:
4. Planning – technical feasibility and economic viability.
5. Implementation – cost over-runs resulting from delays in
getting licenses, sanctions, and inadequate mobilization of
finance.
6. Production – production management, labor management,
marketing management, financial management, and
administrative management.

Entrepreneurship

• External Problems of 7. Inspections.
Entrepreneurs: 8. Technology.
2. Infrastructural – location, 9. Government policy.
power, water, 10. Administrative hurdles.
communication,
transportation, supply of 11. Rampant Corruption.
raw material etc. 12. Lack of direction.
3. Finance. 13. Competitive and violent
4. Marketing. environment.
5. Taxation.
6. Raw material.
7. Industrial and financial
regulations.

Entrepreneurship

• Specific Management Problems:
2. Management deficiency.
3. Financial inadequacy.
4. Manufacturing and technical problems.
5. Product planning.
6. Selection of equipment, plant and machinery.
7. Human resource development.
8. Technical know-how.
9. Preparation of project report.

Entrepreneurship

• Capacity Building for Entrepreneurship:
India’s Case.
2. Create the right environment for success.
3. Ensure that entrepreneurs have access to the
right skills.
4. Ensure that entrepreneurs have access to
“smart” capital.
5. Enable networking and exchange.

ENTREPRENEURSHIP
• The term ‘entrepreneur’ is to be understood with a bearing on
economic, psychological, sociological, and cultural bearings.
The social responsibility is essentially a part of
entrepreneurial outlook of life.
• Many successful people have been good at copying and / or
imitating others. They cannot be termed as entrepreneurs in
a strict sense.
• Similarly, a brothel-keeper, bootlegger, drug peddler, black
marketer, etc., cannot be considered as entrepreneurs.
• Innovation, risk-taking, vision, and organizing skills are the
four key elements of entrepreneurship. The efforts of
entrepreneur are guided by his values, ethics, character and
operational excellence.

ENTREPRENEURSHIP

• Jamsetji Tata, Jamnalal Bajaj, Laxmanrao Kirloskar,
Ghanashyamdas Birla are some of the entrepreneurs in their
truest sense.
• Entrepreneurship is not just a way to increase the level of
innovation and productivity of organization, although it will
do that. More importantly, it is a way of initiating vast
business so that work becomes a joyful experience of one’s
contribution to society.
• Entrepreneurship is neither a science nor an art. It is a practice.
It has a knowledge base. Knowledge in entrepreneurship is a
means to an end.


• Types of Entrepreneurs:
• Entrepreneurs can be classified based on
different factors as under:
3. Based on functional characteristics.
4. Based on the developmental angle.
5. Based on types of entrepreneurial business.
6. Based on Personality Types.
7. Based on Schools of Thoughts.

Types of Entrepreneurs

Based on Based on Based on type of Based on Based on
Functional Developmental Entrepreneurial Personality School of
Characteristics Angle Business Types Thoughts

1.Innovative 1.Improver 1.Great Pearson
1.Prime mover. 1.Manufacturing.
2.Advertiser 2.Psychological
2. Imitative 2.Manager. 2.Wholesaling. 3.Superstar Characteristics
4.Artist 3.Claasical
3.Minor innovator. 3.Retailing.
3. Fabian 5.Visionary 4. Management
4.Satellite. 4.Service. 6.Analyst 5.Leadership
4. Drone 7.Fireball 6.Intraprenuership
5.Local trading
8.Hero
9.Healer

• Based on Functional Characteristics:
• Innovative Entrepreneur. Entrepreneurs in this group are
characterized by an aggressive assemblage of information
for trying out a novel combination of factors.
• Imitative or adoptive entrepreneur. He imitates
techniques and technology innovated by others.
• Fabian Entrepreneur. He displays great caution and
skepticism in experimenting with any change in their
enterprise.
• Drone Entrepreneur. He is characterized by a die-hard
conservatism and may even be prepared to suffer the loss
of business.

• Based on the Developmental Angle:
• Prime mover. He sets in motion a powerful sequence of
development, expansion, and diversification of business.
• Manager. He does not initiate expansion and is content just
staying in business.
• Minor innovator. He contributes to economic progress by
finding better use for existing resources.
• Satellite. He assumes a supplier’s role and slowly moves
towards a productive enterprise.
• Local trading. He limits his enterprise to the local market.
• Based on types of Entrepreneurial Business:
h. Manufacturing.
i. Wholesaling.
j. Retailing, and
k. Service.

• Based on the Personality Types:
• The Improver. He focuses on using his company as a means
to improve the world. For ex. Anita Roddick, Founder of The
Body Shop.
• The Advisor. He will provide an extremely high level of
assistance and advice to customer. For ex. John W.
Nordstrom, Founder Nordstrom.
• The Superstar. The business is centered on the charisma
and high energy of the Superstar CEO. For Ex. Donald
Trump, CEO Trump Hotels and Casino Resorts.
• The Artist. He is reserved but highly creative. For Ex. Scott
Adams, Creator of Dilbert.
• The visionary. He sets future vision and becomes a founder.
For Ex. Bill Gates, Founder of Microsoft Inc.


• Based on the Personality Types: contd……
f. The Analyst. The focus is on fixing problems in a systematic
way. For Ex. Gordon Moore, Intel Founder.
g. The Fireball. He is full of life, energy, and optimism. For Ex.
Malcolm Forbes, Publisher of Forbes Magazine.
h. The Hero. He has an incredible will and ability to lead the
world and his business through any challenge. For Ex. Jack
Welch, CEO of GE.
i. The Healer. He has an uncanny ability to survive and persist
with an inner calm. For Ex. Ben Cohen, Co-founder of Ben and
Jerry’s Ice Cream.

• Based on Schools of Thought:
• The Great Person School of Entrepreneurship. This
school believes that an entrepreneur is born with an intuitive
ability, sixth sense, traits, and instincts.
• The Psychological Characteristics School of
Entrepreneurship. This school of thought focuses on
personality factors and believes that entrepreneurs have
unique values and attitudes towards work and life.
• The Classical School of Entrepreneurship. Innovation,
creativity, or discovery are key factors underlying the
classical body of thought and research on entrepreneurship.
• The Management School of Entrepreneurship. An
entrepreneur is “ a person who organizes or manages a
business undertaking, assuming the risk for the sake of
profits.”


• Based on Schools of Thoughts: contd……
e. The Leadership School of Entrepreneurship. An
entrepreneur is often a leader who relies on people to
accomplish his purposes and objectives. Entrepreneurs
need to be skilled in appealing to others to join the cause.
f. The Intrapreneurship School of Thought. It assumes
that encouraging people to work as entrepreneurs in semi-
autonomous units can achieve innovation is existing
organization.

E.d module-i

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