Concep tof entrepreneurship


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Concep tof entrepreneurship

  2. 2. Entrepreneurs: DefinitionsEntrepreneur is a ‘proprietary capitalist’ that is asupplier of capital and at the same time workingas a manager intervening between the labour andconsumer. He effectively coordinates productiveresources to attain profit and growth.He possesses the vision and foresight ofidentifying opportunities in a changingenvironment and becomes an economic agentwho transforms demand in to supply for profits.4/19/2013 6:34 AM2 Concept of Entrepreneurship
  3. 3. UNDERSTANDING OF THE TERM The word is derived from the French word‘entreprendre’ which means ‘undertakers’. The word referred to those who undertook therisk of starting a new enterprise. The word entrepreneurship has a very wide rangeof meaning. In one extreme, an entrepreneur isone who pioneers a change and in the otherextreme he is one who works for himself. Entrepreneurship is among the four mainstreameconomic factors – land, labour, capital andentrepreneurship.4/19/2013 6:34 AM3 Concept of Entrepreneurship
  4. 4.  According to Richard Cantillon (1755) a Frencheconomist introduced the concept ofentrepreneurship in economics. As per him an entrepreneur is one who buys aproduct, repacks and transforms the farm’sproduce to market and then sells it at uncertainprice. Thus he takes decisions regarding resourceallocation and bears the consequential risks. He evidently seeks best opportunities for highestyields/profit.4/19/2013 6:34 AM4 Concept of Entrepreneurship
  5. 5. According to Adam Smith (1776) entrepreneurswere ‘economic change agents’ who reacted toenvironmental changes. They were agents who converted new demand into supply. Entrepreneur was a ‘proprietary capitalist’ thatis a supplier of capital and at the same timeworking as a manager intervening between thelabour and consumer.4/19/2013 6:34 AM5 Concept of Entrepreneurship
  6. 6. Definition-Entrepreneurship is a multi-dimensional taskdefined differently by different authorities.There is no indisputable definition ofentrepreneurship. Some are discussed below: The American Heritage Dictionary defines anentrepreneur to be "a person whoorganizes, operates, and assumes the risk forbusiness ventures." Sociologists assert that entrepreneur brings inoverall change through innovation for the good ofthe society. He contributes in modernizing society.4/19/2013 6:34 AM6 Concept of Entrepreneurship
  7. 7. According to Joseph Schumpeter (1950)entrepreneur is one who coverts a new invention oridea in to successful innovation.He said that entrepreneurs are the business leadersnot simple owners of capital. Schumpeter in his definition made the distinctionbetween entrepreneurs and inventors clear.The inventor might create a new product but theentrepreneur gathers resources, organizes talent andprovides leadership to make the venture acommercial success.4/19/2013 6:34 AM7 Concept of Entrepreneurship
  8. 8.  In Peter Drucker’s view (1985) – Entrepreneurship isneither a science nor a art. It is a practice. It is not justabout making money. It is all about imagination,flexibility, creativity, willingness to think conceptually,readiness to take risk. Acc to H.N.Pathak- Entrepreneurship involves1.Perceptoin of an opportunities.2.organizing an industrial unit.3.Running the industrial unit as profitable, going &growing concern.4/19/2013 6:34 AM8 Concept of Entrepreneurship
  9. 9. WHO CAN BE CALLED AN ENTREPRENEUR?Let us first start with some questions: Is a fruit vendor an entrepreneur? Were G.D. Birla, Jamnalal Bajaj, LaxmanraoKirloskar entrepreuners? Was Ohno the GM of Toyota Motors whointroduced many innovative measures thatrevolutionized automobile industry anentrepreneur?4/19/2013 6:34 AM9 Concept of Entrepreneurship
  10. 10.  Now founders of small industries/ small business,trading establishments etc are loosely termed asentrepreneurs. They might have the attributes of an entrepreneurbut they are not entrepreneurs in the purestsense of the term, if they have not innovated. They can just be called businessmen withentrepreneurial attributes of risk taking andorganizing.4/19/2013 6:34 AM10 Concept of Entrepreneurship
  11. 11.  Professionals in corporate organizations oftenexhibit high degree of innovativeness. But theycannot be called entrepreneurs because they areessentially salaried employees. This form of corporate entrepreneurship alsocalled ‘Intrapreneurship’ emerges within existingenterprise. Intraprenurs introduce innovative ideas in theorganizations they work for and thus add greatvalue.4/19/2013 6:34 AM11 Concept of Entrepreneurship
  12. 12. Few examples-(for a better understanding of the terms entrepreneurshipand innovation)1. Mary Quant, the English fashiondesigner, arguably invented the miniskirt in thesixties. But she definitely was the first toname, market and popularize the product. Skirtswere not a new outfit but her redefining thehemline and popularizing it was innovativeenough to call her an entrepreneur.4/19/2013 6:34 AM12 Concept of Entrepreneurship
  13. 13. 2. Jeff Bezos, the founder of Amazon (a Web-basedbookstore) was the fist to sell books online on a largescale and patented the one-click system for onlinebuying. Though selling books is not an innovation in itself,Jeff Bezos was innovative in the use of the Internet as aviable marketing and sales channel for selling books.So an individual could be termed as an entrepreneur if heor she sells a product or service using new systems and/or mediums of marketing, distribution or productionmethods as a basis for a new business venture.4/19/2013 6:34 AM13 Concept of Entrepreneurship
  14. 14. 3. Stuart Skorman was the founder of, whichis essentially one of the first cyber movie stores. It hasa very large inventory of over a 100 000 videos.Though setting a movie store was revolutionary then, main distinction was being known as thefirst online store to expand by opening an offlinestore. Stuart Skorman felt that by doing so, the onlinestore could be an advertisement for the offline storeand vice versa, thus strengthening this click andmortar business venture.It was an example of creativity and innovation in thefield of e-commerce.4/19/2013 6:34 AM14 Concept of Entrepreneurship
  15. 15. STAGES OF ENTREPRENEURSHIPFundamentally there are five (often overlapping) stages:1. Discovery: In which the entrepreneur generates ideas,recognizes opportunities, and determines the feasibility of ideas,markets, and ventures;2. Concept development: In which the entrepreneur plans theventure, identifies needed resources using a business plan, andidentifies strategies for penetrating markets or protectingintellectual property;3. Resourcing: In which the entrepreneur identifies and acquiresthe financial, human, and capital resources needed for theventure start-up,4. Actualization: In which the entrepreneur operates the ventureand utilizes resources to achieve its goals and objectives5. Harvesting: In which the entrepreneur decides on the venture’sgrowth, development, or even demise.4/19/2013 6:34 AM15 Concept of Entrepreneurship
  16. 16. BENEFITS OF ENTREPRENEURSHIPBenefits of entrepreneurial activities are immense both in termsof personal growth and contribution to the society. Only a fewhave been listed below: Opportunity of huge personal financial gain. Scope of high order of Job satisfaction, sense ofachievement, self employment. Generation of employment / income for others. Contribution to overall growth in the region/ nation /world Encourages higher quality products. Development of new products and markets. Contribution towards growth and promotion of the use ofmodern technology.4/19/2013 6:34 AM16 Concept of Entrepreneurship
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