ENTREPRENEURSHIP

• The word entrepreneur is derived from the French word “Entreprendre” which means to undertake, ie the person who undertakes the risk of new enterprise.

• The word was also applied to the leaders of military expedition.

• According to Cantilon “ An entrepreneur is a person who buys factor services at certain prices with a view to sell its products at uncertain prices

An entrepreneur is a bearer of risk which is non insurable.

According to 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 etc.

Max regarded entrepreneur as social parasite.

• International Labour Organization defines “entrepreneurs as those people who have the ability to see and evaluate business opportunities, together with necessary resources to take advantage of them and to initiate appropriate action to ensure success.”

ENTREPRENEURSHIP: DEFINITION AND CHARACTERISTICS

• Development of the economy in any form is the result of human activity. This activity in man envisages three important roles.

• a) Organizer

• b) Worker

• c) User of goods produced.

• Off these roles, the role of man in coordinating and organizing the means of production is considerably significant.

• Unless the skill and resources provided by the nature harnessed and transformed into viable production units, man’s labour will remain largely unproductive and keeps his level of production and consumption low.

• These considerations focus on the importance of entrepreneurship in the development of any nation.

• According to Peter Drucker “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. Indeed, what constitutes knowledge in practice is largely defined by the ends, that is by the practice. Entrepreneurship is not just making money.

• It is about imagination, flexibility, creativity, willingness to think conceptually, readiness to take risks, ability to mobilize agents of production, and the capacity to see change as an opportunity . It is also about marrying passion and process with a good dose of perseverance.

• According to Heggins “Entrepreneurship is meant the function of seeking investment and production opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labour, arranging the supply of raw materials and selecting top managers of day to day operations.”

7 Characteristics of Entrepreneurship

• A) Decision Making

• B) Accepting challenges.

• C) Risk taking

• D) Building Organization

• E) Skillful Management

• F) Innovation

• G) Mobilization of resources

Qualities of a true entrepreneur

• 1) Capacity to take risk

• 2) Capacity to work hard

• 3) Above average intelligence and wide knowledge

• 4) Self motivation

• 5) Vision and foresight

• 6) Imagination, initativeness

• 7) Flexibility and sociability

• 8) Desire to take personal responsibility

• 9) Desire to seek and use feedback

• 10) Innovativeness

• 11) Creative thinking

• 12) Strong need for achievement

• 13) Ability to mobilize resources

• 14) High degree of ambition

• 15) Will to prove superior to others

TYPES OF ENTREPRENEURS

• 1) Innovating entrepreneurs:

• 2) Adoptive or imitative entrepreneurs: This kind of entrepreneurs are ready to adopt successful innovations created by innovative entrepreneurs.

• Instead of innovating the changes themselves, they just imitate the technology and techniques innovated by others.

• 3) Fabian entrepreneurs: They are very cautious and skeptical while practicing any change. They have neither the will to introduce new changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs.

• They are very shy and lazy. Their dealings are determined by custom, religion, tradition and past practice.

• They are not much interested in taking risk and they try to follow the footsteps of their predecessors.

• 4) Drone entrepreneurs: They are characterized by a refusal to adopt and use opportunities to make changes in production.

• Such entrepreneurs may even suffer losses but they do not make changes in production methods.

• 5) Individual and institutional entrepreneurs.

• 6) Entrepreneurs by inheritance

• 7) Technological entrepreneurs

• 8) Forced entrepreneurs

13 FUNCTIONS OF AN ENTREPRENEUR

• 1) Perceiving market opportunities

• 2) Gaining command over scarce resources

3) Purchasing inputs

4) Marketing of the products and responding to competition.

5) Managing human relations within the firm.

6) Dealing with the public bureaucracy( concessions, license and taxes)

• 7) Managing customer and supplier relations

• 8) Managing Finance• 9) Managing Production (Control by written

records, supervision, coordinating input flows with orders, maintenance)

• 10) Overseeing assembly of the factory.• 11) Industrial engineering.• 12) Upgrading process and product quality.• 13) Introducing new production techniques.

• Kilby has classified the functions in to 4 groups viz.

• 1) Exchange relationship (1-4)

• 2) Political administration (5-7)

• 3) Management control (8-9)

• 4) Technology (10-13)

• He has suggested that entrepreneur will perform only first two functions. For the other 11 functions he will employ experts in the related lines.

Features of Entrepreneurship• 1) Innovation: Entrepreneurship is a

creative activity. An entrepreneur is basically an innovator who introduces something new in to the economy.

• The innovation may be a method of production with which consumers are not yet familiar or a new source of raw material or a new combination of means of production .

• Through innovation, an entrepreneur converts material into a resource or combines existing resources into new and more productive configurations.

• It is the creativity of an entrepreneur that results in invention ( creation of new knowledge ) and innovation (application of knowledge to create new products, service or processes)

• An entrepreneur is not simply an innovator.`He also assumes risk and organizes human efforts.

• Wilken has identified 5 various types of changes initiated by entrepreneurs.

• 1) Initial expansion: Original production of goods

2) Subsequent expansion: Subsequent change in the amount of goods produced

• 3) Factor innovation: Increase in supply or productivity of factors.

• A) Financial: Procurement of capital from new source or in new form.

• B) Labour:

• C) Material:

• 4) Production Innovations: Change in the production process

• A) Technological: Use of new production technique

• B) Organizational: Change of form or structure of

relationship among people.

5) Market innovations: Change in the size of the market

a) Product: New product or change in quality or cost of existing good.

b) Market:

• 2) Risk and Uncertainty: According to Hozelist an entrepreneur performs the function of risk and uncertainty .

• Every decision pertaining to development of new products, adapting new technologies, opening up of new markets involves risk.

• Decision making in an environment of uncertainty requires anticipation of risk. Profit is said to be reward for anticipating and taking such risks.

• However it is pertinent to mention that the entrepreneur is not a gambler, he only takes calculated risks.

• An entrepreneur develops the art of decision making under conditions of uncertainty as a matter of survival

• 3) Organisation Building: An entrepreneur has to organize men, material and other resources.

• He has to perform the functions of planning, co ordination and control.

• He has to use his leadership qualities to build a team, generate resources and solve problems

• CATEGORIES OF ENTREPRENEURS

• THE ENVIRONMENT FOR ENTREPRENEURS

• Globalization

• Market products abroad and hire international talent.

• Growing internationally.

• Education

• Universities are helping students launch businesses.

• Some programs teach entrepreneurship to young people.

• Students who graduate from entrepreneurship programs are three times as likely as others to be self-employed and to help start new businesses.

• Information Technology

• Helps entrepreneurs work quickly and efficiently, provide attentive customer service, increase sales, and project professional images.

• Entrepreneurs also produce and market products that apply new information technology.

• Internet also presents a challenge because customers can check prices and buy online from large or small companies anywhere in the world.

• Demographic and Economic Trends

• New opportunities:

•  Aging of population.

• Family Business

• Growth of two-income families.

• CHARACTERISTICS OF ENTREPRENEURS

• Vision

• • An overall idea for how to make their business a success.

• High Energy Level

• • Hard work of the entrepreneur compensates for small staff and limited resources available.

• Need to achieve

• • Enjoy the challenge of reaching personal goals and are dedicated to personal success.

• Self-confidence and Optimism

• Believe in their own ability to succeed and instill optimism in others.

• Tolerance for Failure

• Try and try again when others would give up and view setbacks and failures as learning experiences.

• Creativity

• Typically conceive new ideas for products and services and devise innovative ways to overcome difficult problems and situations.

• Tolerance for Ambiguity

• Take uncertainty in stride but not reckless gamblers.

• Internal Locus of Control

• Believe they control their own fates and take personal responsibility for success and failure.