1. Define ‘Entrepreneur’. What are the essential characteristics of an Entrepreneur? DEFINITIONS OF AN ENTREPRENEUR Schumpeter: According to him entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services. David McClleland: An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker. Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource. CHARACTERISTICS OF ENTREPRENEUR Responsible Hard Worker Risk Taker Creative Flexible Follows through with ideas Personable Optimistic Perceptive Self-confident Determined High degree of energy Innovative Independent Ability to anticipate needs Effective communicator Responsive to criticism Able to take the lead Learn from mistakes Self-directed2. Discuss the functions of an entrepreneur? FUNCTION OF ENTREPRENEUR An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He carries out the whole set of activities of the business for its success. He recognises the commercial potential of a product or a service, formulates operating policies for production, product design, marketing and organisational structure. He is thus a nucleus of high growth of the enterprise. According some economists, the functions of an entrepreneur is classified into five broad categories:
1. Risk-bearing function, 2. Organisational function, 3. Innovative function, 4. Managerial function, and 5. Decision making function.1. Risk-bearing function:The function of an entrepreneur as risk bearer is specific in nature. The entrepreneur assumes all possible risks ofbusiness which emerges due to the possibility of changes in the tastes of consumers, modern techniques ofproduction and new inventions. Such risks are not insurable and incalculable. In simple terms such risks areknown as uncertainty concerning a loss.2. Organizational Function:Entrepreneur as an organizer and his organizing function is described by J.B. Say as a function whereby theentrepreneur brings together various factors of production, ensures continuing management and rendersrisk-bearing functions as well. His definition associates entrepreneur with the functions of coordination,organization and supervision. According to him, an entrepreneur is one who combines the land of one, thelabor of another and the capital of yet another and thus produces a product. By selling the product in themarket, he pays interest on capital, rent on land and wages to laborers and what remains is his/her profit.In this way, he describes an entrepreneur as an organizer who alone determines the lines of business to expandand capital to employ more judiciously. He is the ultimate judge in the conduct of the business.3. Innovative Function:The basic function an entrepreneur performs is to innovate new products, services, ideas and information for theenterprise. As an innovator, the entrepreneur foresees the potentially profitable opportunity and tries to exploit it.He is always involved in the process of doing new things.J.A. Schumpeter considered economic development as a discrete dynamic change brought by entrepreneurs byinstituting new combinations of production, i.e. innovation. According to him innovation may occur in any oneof the following five forms. The introductions of a new product in the market with which the customers are not get familiar with. Introduction of a new method of production technology which is not yet tested by experience in the branch of manufacture concerned. The opening of a new market into which the specific product has not previously entered. The discovery of a new source of supply of raw material, irrespective of whether this source already exists or has first to be created. The carrying out of the new form of organization of any industry by creating of a monopoly position or the breaking up of it.4. Managerial Function:Entrepreneur also performs a variety of managerial function like determination of business objectives,formulation of production plans, product analysis and market research, organization of sales, procuringmachine and material, recruitment of men and undertaking of business operations. He also undertakes thebasic managerial functions of planning, organizing, coordinating, staffing, directing, motivating and
controlling in the enterprise. He provides a logical and scientific basis to the above functions for the smooth operation of the enterprise thereby avoids chaos in the field of production, marketing, purchasing, recruiting and selection, etc. In large establishments, these managerial functions of the entrepreneur are delegated to the paid managers for more effective and efficient execution. 5. Decision Making Function: The most vital function an entrepreneur discharges refers to decision making in various fields of the business enterprise. He is the decision maker of all activities of the enterprise. He develops an organization and creates an atmosphere for maintaining a cordial relationship with subordinates and all employees of the organization. He decides in securing adequate financial resources for the organization and maintains good relations with the existing and potential investors and financiers. He decides in introducing advanced modern technology in the enterprise to cope up with changing scenario of manufacturing process. He decides the development of a market for his product develops new product or modify the existing product in accordance with the changing consumers fashion, taste and preference. He also decides to maintain good relations with the public authorities as well as with the society at large for improving the firms’ image before others.3. Define ‘entrepreneurship’. Elaborate on its scope and vital role it plays in developing economics. Entrepreneurship is an attempt to create value through recognition of business opportunity, the management risk taking appropriate to the opportunity and through the communication and managerial skills to mobilize human ,financial & material resource necessary to bring a project alive”--Joh Kao An entrepreneur is a person who establish and manages his own enterprise or business. Process of establishment and management is called entrepreneurship Entrepreneurship= Entrepreneur + Enterprise( an economic unit of activities ) ENTREPRENEURSHIP • A theory of evolution of economic activities. • A continuous process of economic development. • An ingredient to economic development. • Essentially a creative activity or an innovative function. • A risk taking factor which is responsible for an end result. • Usually understood with reference to individual business.
• The name given to the factor of production, which performs the functions of enterprise. • Creates awareness among people about economic activity. • Generates Self-employment and additional employment. Entrepreneurship and Economic DevelopmentEntrepreneurship helps in the process of economic development in the following ways :1) Employment Generation :Growing unemployment particularly educated unemployment is the problem of the nation. The available employmentopportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly andindirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs tomillions. Thus entrepreneurship is the best way to fight the evil of unemployment.2) National Income :National Income consits of the goods and services produced in the country and imported. The goods and servicesproduced are for consumption within the country as well as to meet the demand of exports. The domestic demandincreases with increase in population and increase in standard of living. The export demand also increases to meet theneeds of growing imports due to various reasons. An increasing number of entrepreneurers are required to meet thisincreasing demand for goods and services. Thus entrepreneurship increases the national income.3) Balanced Regional Development :The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education,entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. Arapid development . When the new entrepreneurism grow at a faster rate, in view of increasing competition in andaround cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in thedevelopment of backward regions.4) Dispersal of economic power :Industrial development normally may led to concentration of economic powers in a few hands. This concentration ofpower in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneur helps indispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.5) Better standards of living :Entrepreneur play a vital role in achieving a higher rate of economic growth. Entrepreneur are able to produce goods atlower cost and supply quality goods at lower price to the community according to their requirements. When the price ofthe commodities decreases the consumers get the power to buy more goods for their satisfaction. In this way they canincrease the standard of living of the people.6) Creating innovation :An entrepreneur is a person who always look for changes. apart from combining the factors of production, he alsointroduces new ideas and new combination of factors. He always try to introduce newer and newer technique ofproduction of goods and services. An entrepreneur brings economic development through innovation.
Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words: " Economic development is the effect for which entrepreneurship is a cause”4. What do you understand by entrepreneurship? Explain its need under the present employment and economic conditions in the country. Page no 8 & 95. What are the barriers of entrepreneursip? Page no 166. What is small sacle industry? Discuss the importance of SSI in the economic development of a country like India