ENTREPRENEURSHIP MANAGEMENT

INDEX

1. INTRODUCTION
2. MODERN CONCEPT OF ENTREPRENEUR
3. DEFINITIONS OF ENTREPRENEUR
4. CHARACTERISTICS OF AN ENTREPRENEUR
5. DEFINITIONS OF ENTREPRENEURSHIP
6. NATURE OR CHARACTERISTICS OF ENTREPRENEURSHIP
7. TYPES OF ENTREPRENEURSHIP
8. ESSENTIALS OF A SUCCESSFUL ENTREPRENEUR
9. IMPORTANCE AND SIGNIFICANCE OF ENTREPRENEURSHIP
10. SOCIAL ENVIRONMENT IN ENTREPRENEURIAL
DEVELOPMENT
11. ECONOMIC ENVIRONMENT IN ENTREPRENEURIAL
DEVELOPMENT
12. ECONOMIC SYSTEM AND ITS IMPACT ON
ENTREPRENEURSHIP
13. SUMMARY
 01- INTRODUCTION

$ The word entrepreneur has an interesting definitional history and it

stems from the French word entreprendre which refers to
‘undertake’ i.e., individual who undertake the risk of new enterprise.
Richard Cantillon of France used the word entrepreneur, in 1725
A.D. as the person who bears the risk and faces the uncertainty of an
activity. He expressed that an entrepreneur is different from a person
who supplies capital.
$ Adam Smith (1776) described the entrepreneur as an individual who
forms an organization for commercial purpose—who is a capitalist.
 02- MODERN CONCEPT OF ENTREPRENEUR

 An entrepreneur may be defined as an individual who intends to add

value to the economy by creating a new business venture through
effective use of his knowledge, passion, dreams and desires.
 An entrepreneur is a person who evaluates the new situation in the
environment and directs the making of such adjustments or alternations
in the economic or manufacturing systems as he thinks necessary for
achieving desired results.
 03- DEFINITIONS OF ENTREPRENEUR

Different authors have given different definitions of entrepreneur. Some of the main definitions
are given below :

(1)American Heritage Dictionary, defines entrepreneur as a person who organises, operates and
assumes the risk for a business venture.”
(2)Richard Cantillon, described the entrepreneur an agent buying and selling goods at uncertain
prices.”

(3)J.B. Say, defined an entrepreneur as the economic agent who unites all means of production, the
labour, the capital or land and earns profit. He has compared entrepreneur with a farmer.
 04- CHARACTERISTICS OF AN ENTREPRENEUR
(1) An Individual or Group Individuals :
Entrepreneur may be an individual or a group of many individuals. Present age belongs to large business houses and
mass level of production. To commerce an enterprise on a very large basic, the capital or skills of a single individual
is not sufficient. A group of individuals gathers, 4 contributes their share of capital and resources and starts a
business enterprise.

(2) Need for achievement:

It is the prime psychological drive that motivates the entrepreneur. His desire to excel in his venture and to achieve
desired goal. As a high achiever, he competes with his rivals in the venture field as well as with his own previous
performance.

(3) Independence or autonomy:

Although there are various motivations for venturing out alone, the most frequent reason for becoming an
entrepreneur is the desire for independence or autonomy—not wanting to work for anyone else. This desire to be
one’s own loss ignites a fire in the heart of an entrepreneur to accept all social, psychological, financial, and
technological risks and to work hard.

(4) Risk Bearer :

Entrepreneur has the risk bearing capacity. In fact it is the characteristics of risk bearing that distinguishes an
entrepreneur from a manager. An entrepreneur is a manager but he has the distinction of performing risk bearing
function. A manager also does more or less the same thing but he does not take risks.
 CHARACTERISTICS OF AN ENTREPRENEUR

(5) Innovation :
An entrepreneur is basically an innovator by nature. He is always in search of new ideas and new
opportunities. He tries to outshine others by taking initiative in doing new things i.e., exploring new
products, new markets, new raw materials, new methods of production, etc.

(6) Goal Oriented :

Entrepreneur is goal oriented. He gets happiness by setting and striving for goals one by one. Reaching one
goal set by entrepreneur will lead to setting up of another goal.

(7) Decision-making :
An entrepreneur is a rational decisionmaker. He has to take several decisions to put his business idea into a
reality. He recognises an idea i.e., a product, service or market. He has several alternatives before him. He
has to make a choice between them. This involves decision-making as to choose the best alternative which
may suit him and give maximum profit. For example, he has to decide what is to be produced, how is to be
produced, where to be produced and when to be produced etc.

(8) Self-confidence :
An entrepreneur has high degree of selfconfidence in achieving his goals. He has the capacity to face
extraordinary and unforeseen circumstances as and when they arise.
 CHARACTERISTICS OF AN ENTREPRENEUR
(9) Initiative :
An entrepreneur always takes initiative. He spend a large portion of their time in thinking over finding out
new or novel 5 ways of doing things differently—finding out a new raw material, a new product, a new
method of production, a new style of advertisement, a new style of packaging, and so forth. While taking
such initiative, entrepreneurs duly keep in mind the needs and requirements of the customers, changing
tastes and fashions, changing life-styles and attitudes, etc.

(10) Motivator :
An entrepreneur is a motivator. He motivates his workers by giving them incentives, and creation of team
work in order to get their whole-hearted cooperation. He is able to influence people in the new business unit
in the way that they will strive willingly and enthusiastically toward the achievement of unit’s goals.

(11) Human Relations Ability :

An entrepreneur possess sound human relations ability to deal with his employees, customers, suppliers,
creditors etc.
(12) Economic Planning :
Planning is an activity of a highly ubiquitous character. Every action of an entrepreneur is well planned as it
evident from the fact where there are production plans, sales plans, financial plans, purchase plans, research
and development plans and so on. Without proper business planning the affairs of any business enterprise
are likely to be haphazard.
TYPOLOGY OF AN ENTREPRENEUR
 05- DEFINITIONS OF ENTREPRENEURSHIP

1. According to Prof. Mussel man and Jackson : “Entrepreneurship is to start a

business and put money, times and efforts into it to make it a success, by bearing
risks.” The above definition has not included innovation in the sphere of
entrepreneurship, so, the definition is incomplete in the context of an
underdeveloped economy.
2. According to prof. Rio and Math : “Entrepreneurship can be described as
creative and innovative response to the environment.” This definition can be said
modern and dynamic. It stresses on innovation and dynamic. It stresses on
innovation and creativity. It says that entrepreneurship is the competence to adopt
changes, and creative ideas according to the changing environment.
 06- NATURE OR CHARACTERISTICS OF ENTREPRENEURSHIP

1. Risk-bearing capacity : The entrepreneur starts facing uncertainties and several types of risk right from inception of
business. The business environment is dynamic and ever changing. The entrepreneur risks his capital when he invests
in the business. So, the entrepreneur have the capacity to bear risks and face uncertainties as it is unknown what is
hidden in the pistil of the future.

2. “Entrepreneurship Trait : Entrepreneurship is not a trait. The success of the enterprise depends on the decision-
making and other capabilities of the entrepreneur. so, a person develop these capability in himself. It is often said that
entrepreneurs are not born. They can be made by training and development.

3. Creative Activity : Entrepreneurship is basically a creative activity. Entrepreneur searches for new opportunities,
new ideas, new techniques etc., think creatively and execute new ideas in his enterprise. It is entrepreneurship which
encourages creativity and changes in the society.

4. Result of Changes : Entrepreneurship is the result of social, political, scientific and technical changes occurring in
the environment. It is not merely an economic event or activity. The changes in social values, traditions, education,
science, techniques, population and government policies are forcing people in the society to change their approaches,
thinking and opinion, which is again inspiring people to adopt entrepreneurship.

5. Creation of a Resource : Entrepreneurship transforms materials into ‘resource’. Therefore, the entrepreneurship is
the process of developing ‘utility’, ‘economic value’ and ‘capacity of wealth creation’.

6. Essential in all Businesses and Economies : Entrepreneurship is essential in all businesses and all economies,
whether big or small, developed or developing, since, the basic functions of the entrepreneurship, innovation risk
bearing, adaptation to changes etc are there. It should be borne in mind that entrepreneurship exists in every society
and economy. Without entrepreneurship there will be no growth of the economy.
 NATURE OR CHARACTERISTICS OF ENTREPRENEURSHIP

7. Essential in Every Activity : Entrepreneur is needed in every area of life. A person can succeed in every field by
adventurous nature and entrepreneurial behavior. Education, research, 8 medical, politics, military or games, all needs bearing
risks, innovation or leadership to succeed in Drucker has said, “Entrepreneurship is by no means confined solely to economic
institutions.”

8. Low Risk : Entrepreneurship carries a greater level of risk. But technical and socio economic environment have made
entrepreneurship less risky than ever. Entrepreneurship does not carry a very high level of risk. Infect, if the enterprise is well
managed and well planned, then the entrepreneurship becomes a low risk game.

9. Ability to Innovate : Entrepreneurship is an innovative activity. It enables application of creative ideas. The entrepreneur
adopts new ideas, new techniques, new production system, new management concepts, new markets, new products and new
procedures for more satisfaction and better services to the customers and more profits to the enterprise.

10. Knowledge-based : Peter F. Drucker says, “Entrepreneurship is neither a service nor an art. it is a practice based on
knowledge.” The entrepreneur achieves a high place by his knowledge and understanding of thing. The quality of enterprise
comes in a person after long experience and practice.

11. Result-Oriented Behavior : Enterprise can’t get success unless the results are favorable. The entrepreneurship stresses on
results an not the fate. Entrepreneurs believes in getting good results through their efforts and hard work They achieve their
goals by their ability of making sound decisions, solid planning and goals oriented behavior.

12. Environment-Oriented Activity : Entrepreneurship is an external and open environment-linked system. Entrepreneurs
produces and take risks keeping social, economic, political and material factors of environment in view. Joseph Schumpeter
said in this context, “It is a creative response to every external situation.”
 07- TYPES OF ENTREPRENEURSHIP

1. Imitative Entrepreneurship :
This type of entrepreneurship is imitative in nature. It presents the existing product in an innovative 10 manner. takes
advantage ideas of other firms’ and simply brings to bear the weight of corporate muscle to control markets. For
instance the Japanese have studied American products, found ways to improve on those products and produced them
at lower costs and exported them to American markets. This type is very often called espionage. Consumers are very
much benefited, due to the cheap availability of existing costly products or services. Thus, products become
commercially viable because of improvement in quality at lower price.

2. Incubate Entrepreneurship :
In this type, new ideas materialize. For instance new venture development unit that is often provided seed capital and
corporate resources and functions almost independently and is semi-autonomous in implementation of responsibility
from inception to commercialization.

3. Opportunistic Entrepreneurship :
In this type the managers are given the responsibilities and they do not report through existing management
hierarchies but enjoy a semi-autonomous work environment. This gives scope for innovation.

4. Administrative Entrepreneurship :
Researchers are supported while providing them with corporate resources for making their ideas commercial
realities. Thus, inventions are enthusiastically led by a champion and the organization encourages the development of
the new product.

5. Acquisitive Entrepreneurship :
This type is a step further from traditional method of growth and development. Here, we find alternative growth
strategies through mergers, acquisitions, joint ventures, etc.
 08- ESSENTIALS OF A SUCCESSFUL ENTREPRENEUR

1. Imaginative : Creative thinking and imagination are important entrepreneurial qualities since innovation
comes with these qualities. An imaginative entrepreneur is always in search for new ideas and is a competent
reader of the future events which are uncertain and poses the maximum risk before the enterprise.
Entrepreneur plans to profit and to avoid or mitigate risks using his imaginative capabilities and execute
these plans for realization of the profit, sales budget etc. Imaginative entrepreneur can smell the future
problems and make plans in advance to tackle those problems.

2. Sharp Memory : Successful entrepreneurs always have a memory sharper than people in general. Every
event of the recent past should be in his mind when he is making any important decision as regards the
organization. He has to meet several people, take numerous decisions and keep a score of plans, reference
etc. in his mind, which are necessary for accurate decision-making and success of the organization.

3. Self confident : Entrepreneur should be confident that what he is doing or whatever he is going to do in
future is right, but he should keep a place reserved too, i.e., he should be very confident but his actions
should not fall prey to over confidence. Emerson has said, “Self confidence is the secret of success.”

4. Maturity : A matured entrepreneur performs his duties well and remains honest towards his
responsibilities. He is not irritated upon his criticism and maintains his cool while communicating or during
conversation with anyone. His thoughts and feelings are filled with maturity.
 ESSENTIALS OF A SUCCESSFUL ENTREPRENEUR

5. Foresighted : The entrepreneur can evaluate the events even before they are occurred with the
help of his foresight. He can analyze the results of the present action and plans. Foresighted
entrepreneur is future—oriented, which enables the enterprise to avoid problems which it may face
in near future.

6. Dynamic Ideas : The success of the entrepreneur and the enterprise depends on the ideas or
thinking of the entrepreneur also. Conservative approach or traditional ideology proves to be
hurdle in the success of the enterprise. Entrepreneur should be a man of dynamic ideas and only
then he would be interested in using modern management techniques, latest machineries, plans,
and process etc. for his enterprise’s success. Dynamic thinking paves the way for innovation and
modernization in the organization.

7. Willingness of challenges : An entrepreneur should have the tendency of accepting new

challenges. He should prefer challenging jobs. “Entrepreneur should have the spirit of enterprise
(venture).” “One who chooses challenges between security and challenge is the true entrepreneur.”
 ESSENTIALS OF A SUCCESSFUL ENTREPRENEUR

8. Optimism : The entrepreneur should be an optimistic one. He should see failure as a steps towers success. If he does not have this
quality than he can’t drive his enterprise towards the road of success. A shock of despair creates vacuum in the mind such as paralysis
creates in the human body. “So an entrepreneur should always avoid trustration and be optimistic about the future of the enterprise. Only an
optimistic entrepreneur can face the risks and 12 uncertainties of a business enterprise. So, pessimism should be a retired word from his
dictionary of words.

9. Ambition : The ambition to do something and get ahead of others must be there. If it’s not there in entrepreneur, he can’t succeed.
David McClleland has called it an ‘urge to Achieve’. Andrew carnegi says “A person who does not hold desire for success and
achievement, can’t get to the higher goals in his life.” Whether a sportsperson, an artist, a politician or a scientist, all have an urge or desire
to achieve, and so they become popular for the field or working area they are in. They can not get ahead of their competitors, if they does
not possess desire to do so. It is the same for entrepreneur also. First he should have the desire and then he should work to march past
others.

10. Foresightedness : A successful entrepreneur must have foresightedness. If the entrepreneur is unable to foresee, he will not be alert
about the possible uncontrollable factors. An entrepreneur should have the most forward looking strategy and vision. Today we face some
key challenges due to globalization, liberalization and privatization. Hence, the need of the day is constant competition and change. Small
changes will not be enough; entrepreneurs will have to transform themselves not once or twice but continuously and many times over.

11. Time Management : A successful entrepreneur must value time. If the entrepreneur is not able to manage time, he will also not be able
to complete the project before the deadline. While an entrepreneur seeks to minimize risk to the enterprise, encourages work-life balance,
monitors quarter-on-quarter results, engages in long-range planning, cost optimisation, he happens to neglect adherence to strict timeliness
for delivering results which. This puts enormous pressure and is not surprising if it creates a crisis of identity and confidence. Entrepreneur
should be able to manage his time to address all the issues and will not succeed if he addresses issues solely from any one perspective.
 ESSENTIALS OF A SUCCESSFUL ENTREPRENEUR

12. . Technical Management Skill : A successful entrepreneur must have managerial skill and
technical knowledge. If he is not able to manage the resources (human, material, capital, equipment)
he will risk losing business. Hence young and emerging entrepreneurs 13 must be able to perform
multiple roles and be able to create his own distinctive form of entrepreneurship.

13. Risk-bearing Capacity : In any venture there is some amount of risk. However you may try to
take the necessary precautions and measures and only take calculated risks; yet there exists some
degree of risk due to uncertain nature of environment. Anything untoward may happen and if you are
not able to cope with the ups and downs and not able to do crisis management you will fail. To meet
the industry’s requirement and create the world-beating requirement the entrepreneur must aim for
making the big leap. But this will not happen by itself; at critical times there should be radical leaps.

14. Decision-making : If the entrepreneur is not able to make quick or spontaneous decisions he will
also not be able to work with confidence. Infect due to the competitive nature of small business one
delayed decision made by the entrepreneur may lead to years of rectification.
09- IMPORTANCE AND SIGNIFICANCE OF ENTREPRENEURSHIP

Importance and Significance of Entrepreneurship : Entrepreneur has to play an important role in the economic
growth of a country. The mobilization of human and physical resources of a country is a major function of an
entrepreneur. He utilizes these resources using innovation as an important tool. He engages in some activities which
helps in the generation of employment and the opportunities. he is responsible in providing employment to thousand
of persons.

One of the important inputs in any economic development of a country is entrepreneurship. More the
entrepreneurship activity better the development. Entrepreneurship is the life blood of any economy and it applies
more to a developing economy like India. The areas of development are :
•Taking to higher rate of economic growth by creation of value.
•Speed up the process of industrial use of the factors of production.
•Creation of employment opportunities.
•Dispersal of economic activities to different sectors of economy and identifying new avenues of growth.
•Development of backward and tribal areas. (
•Better social changes.
•Improvement of the standard of living of different weaker sections in the society.
•Bring socio political change in the society.
•Develop technological know-how.
•Improve culture of business and expand commercial activities.
•Entrepreneurship act as a change agent to meet the requirements of the changing market and customer preferences.
•Develop a culture of achievement orientation.
 10- SOCIAL ENVIRONMENT IN ENTREPRENEURIAL DEVELOPMENT

 An entrepreneur is born in society. He performs different types of activities as a member of the

society. Without entrepreneur, the existence of the society is nil. Different social factors, such as,
caste, creed, community, religion, family background, social values, ideals, educational,
background, occupational back group, customs, traditions, technical development and innovations,
motivation, managerial ability, initiative, professional background, training facilities, migration
thinking pattern, ‘self-confidence etc. play vital role in the development of entrepreneurship.

 Social process effects the habits, outlook, thinking, method of living, ambitions of a man
considerably: The entire development and total personality of an entrepreneur takes place in the
society. Society provides necessary field to the entrepreneur for the development of entrepreneurial
qualities, such as, self-confidence, initiative, freedom, desire to earn prestige, use of opportunities,
desire for achievements and capacity to face challenges and risks etc. History also supports this
view.

For example, Marwaries, Gujaratis, Banias, Mahajan etc. are found in trade, business and business in
every concern of the world.
Entrepreneurial talent is found in the blood of certain castes, families and communities. For example,
Birla, Tata, Dalmia, Modi, Kirloskar, J.K. etc. all have family traditions of being engaged in trade,
commerce and industry. Further, Gujaratis, Marwaris, Sikhs etc. have high migratory character as
they can be seen almost in every corner of the world in search of economic activities and have
become most successful entrepreneurs.
 11- ECONOMIC ENVIRONMENT IN ENTREPRENEURIAL DEVELOPMENT

 Economic environment occupy an important place in the entrepreneurial development.

Economic environment refers to all those factors which provide necessary resources to
the entrepreneur, such as, capital, land, equipment, material, manpower, machinery,
building, technical-know-how, market, investment opportunities and other needed
inputs. The dependence of trade, business and industry on the economic environment
is total. For example, the more is the technical know-how of the entrepreneur, the more
and better shall be production as to quantity, quality and economical. Reduction in the
cost of production will lead to wide market and increase in profits.

 Moreover, economic stability, healthy, competition, sound working conditions,

availability of trained labour force, healthy investment and saving environment,
stability of prices, availability of cheap finance, high level of income etc. also affects
the entrepreneurial development.
 12- ECONOMIC SYSTEM AND ITS IMPACT ON ENTREPRENEURSHIP

We can broadly classify the economic systems into : (a) Capitalist, (b) Socialist and (c)Mixed economy.

Capitalistic Economy : In a capitalistic economy the means of production are privately owned; there is free
competition, free access to any industry. Any individual can enter into any field where he perceives a business
opportunity. Competition and survival of the fittest is the rule. There is very little intervention by the State. In such
an environment, a manufacturer who produces what the society wants at prices which the members of the society are
willing to pay, will be able to gain a foothold, and survive. An entrepreneur who is not able to pass this crucial test
will be left behind. However, under this kind of system, it is not normal for the bigger units in an industry to
dominate over the smaller ones. In the process, the smaller units often get crushed and go out of business. Failure of
small business units is a real problem in the U.S.A. Therefore, a number of specialized agencies have been set up in
the U.S.A. to help the small units to stand the competition from the larger ones in the market place. Of course, there
is no direct state intervention in the matter of regulating the formation and running of these businesses.

Socialist Economy : In a Socialist economy, the means of production are owned and controlled by the State. The
allocation of the means of production is done by the State by some centrally administered machinery which
monitors the social needs and ensures that resources flow where the needs be properly met. Very little of private
enterprise or entrepreneurship is seen in such economies.
 ECONOMIC SYSTEM AND ITS IMPACT ON ENTREPRENEURSHIP

Mixed Economy : In a mixed economy we have a dominant public sector through which
the State controls the economic 17 activity,
e.g., steel, heavy industry, aviation, banking, insurance etc. There is also a large private
sector as in agriculture, services, industries etc. Even in the private sector, the state could
play a positive role by :
(a)Reserving certain areas for the small scale units
(b)Providing incentives and concessions so essential, particularly in the initial stages of a
business venture
(c)Providing markets for their finished products and assisting these units in obtaining
scarce raw materials
(d)Ensuring that the larger units do not dominate over the smaller ones. The mixed
economy, such as we have in India, provides a very favorable climate where
entrepreneurship can be nourished very well. There is an umbrella of protection available
until the small scale unit that is launched is able to take off and stand on its own.
 13- SUMMARY

Entrepreneur is a person who perceives an idea of establishing a ‘ new business enterprise and then bring
together manpower, land, equipment, material and arranges necessary capital needed for business. He is a
person with vision, original idea, decision making ability and courage to undertake risky projects. The
entrepreneur is an innovator who brings in new ideas, new processes and encourages his team in new activities.

Entrepreneurship development passes through the following stages in the process of growth and
development :
(i)The entrepreneur perceives an opportunity and wishes to strive to make the most of it : in the process he
desires to meet his personal goals.
(ii)He translates the opportunity into a product idea or a service idea, which he could offer to the society.
(iii)He analyses the various things required to be done to concretise the concept or idea, outlines the steps
required and makes a tentative plan of action.
(iv)He collects a team and along with his teammates, he puts up a project or venture.
(v)He markets the project to the government agencies, financial institutions and others to get their response
and also support and assistance.
(vi)He goes about collecting the resources men, money, machine and materials necessary to commence the
venture.
 SUMMARY

vii. He designs and creates the organization structure that will implement his idea.
He has to sell this structure to the first set of key personnel that will assist him in
running the venture.
viii. He will make “trial runs” and “experiments” till he feels confident that the
enterprise has been successfully launched and will take off. All the above stages
have to be gone through within the entrepreneurial environment that we have just
discussed. And remember also that the environment is not static; the entrepreneur
has to grapple with an extremely dynamic environment. The environmental
factors that are favorable at one stage of the development might suddenly
become hostile, causing tension and even frustration in the mind of the
entrepreneur. Reacting quickly to environmental changes is one of the attributes
of a successful entrepreneur.
BIBLIOGRAPHY

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