Entrepreneur- Introduction

1. Chapter 1
Entrepreneur

2. Outlook
 Definition
 Characteristics
 Functions of an Entrepreneur
 Entrepreneur Vs Manager
 Types of Entrepreneurs

3. What is Entrepreneurship?
 Entrepreneurship is the process of creating something new of value by giving
the necessary time and effort.
 It is derived from the French work “Entreprendre” meaning “ to undertake”
 Definition:
 “ Process of creating something new and assuming the risks and rewards”
- Robert D Hisrich, M.P Peters & D A Shepherd
 According to Webster” Entrepreneur is one who assumes risk and
management of business”

4. Characteristics of an Entrepreneur
 There are certain characteristics which make an entrepreneur successful in his venture. They
are
1. Hard Work:
A Successful entrepreneur is one who is willing to work hard from the very beginning of his enterprise.
An entrepreneur with his hardwork can revive his business even from the verge of collapse.
2. Highly Optimistic:
Successful entrepreneur is always optimistic about future and never gets disturbed by the present
problems. He always expects a favorable situation for his business and able to run his business successfully
amidst of temporary hurdles.
3. Innovativeness: The Entrepreneur should initiate research and innovative activities to produce new
goods and services to satisfy the varying demands of customers, it is a never ending process.

5. Contn..
4. Business Acumen and Sincerity:
Business Acumen stands for shrewdness and sincerity. The success of an enterprise depends upon the sincerity
and every person in the organization should be sincere to make it success
5. Achievement Motivation:
It is the most important characteristic of an entrepreneur. Achievement motivation helps to overcome obstacles,
misfortunes and drives the entrepreneur to success.
6. Planning and Organizing Ability:
An Entrepreneur should have the ability to bring together all scattered resources required for starting a new
venture.
7. Self Reliance and Independence:
An Entrepreneur follows his own policies and he does not like to be guided by others. He is found to be
self reliant acting as his own master and responsible for his own decisions. He does not like to work for
others.

6. Contn..
8. Risk Taking:
An Entrepreneur is not a gambler and hence he should not assume high risk. However he must love a
moderate risk situation, high enough to be exciting but with a fair chance of winning.
9. Communication Skill:
Communication skill is the secret of success of most entrepreneurs. Good Communication skill enables
them to deliver their points effectively with clarity which helps to win customers.
10. Maintenance Of Public Relations:
A Successful Entrepreneur should have cordial relationship with his customer to to gain their support
and at the same time he should also maintain good relation with his employees with a view to motivate
them to generate more efficiency which in turn helps the organization to grow.

7. Functions of an Entrepreneur
An Entrepreneur is an agent who buys various factors of production with a view to
combine them into a finished product which can be sold in the market. He has to perform
the below basic functions to do it successfully.
1. Innovation:
 Innovation is an important function of an entrepreneur. The person who discovers new
methods, new materials and machines is called an inventor. But the person who utilizes
the inventions so as to make new combination of products is called an innovator.
 Innovation is a never-ending process and in fact it is ongoing function. Thus an
entrepreneur lookout to introduce a new product or a new production technology in
the market. Innovators are always successful in the market.

8. Contn…
2. Risk Assumption Function:
 An Entrepreneur has to necessarily act as a risk bearing agent of production since he
has to bear a greater amount of uncertainties in business.
 Uncertainties means risks due to the possibility of changes in taste of customers,
Change in fashion and technique of production, New inventions etc.. These cannot be
predicted, hence an entrepreneur has to be ready and skillful to face such
uncertainties.
 Entrepreneurs are required to perform both risk taking as well as risk bearing functions
as he is the owner and executer of the business enterprise.

9. Contn..
3. Decision Making Function:
 The Decision with regard to What to produce, how to produce and for whom to produce
are to be taken by the entrepreneur himself.
 A Successful Entrepreneur is one who takes sound decisions at the appropriate time so
that the business may succeed. Taking right decisions at the right time makes the
Entrepreneur Successful.
4. Managerial Function:
 In Simple words, Management is getting things done through others. The significance of
this lies with the successful entrepreneur.
 Managerial Functions include Planning, Organizing, Staffing, Directing and controlling,
An Entrepreneur has to perform these functions effectively to build a successful
enterprise.

10. Contn..
5. Division of Income:
 The next major function of the entrepreneur is to make necessary arrangement for the
division of total income among the different factors of production employed by him.
Even if there is a loss in the business, he is to pay rent, interest, wages and other
contractual incomes out of the realised sale proceeds.

11. Entrepreneur Vs Manager:
Many People are of view that the terms entrepreneur and manager means the
same. It is a wrong notion since there are many differences between the two
which is given below.
Entrepreneur Manager
1. Owner: An Entrepreneur is the owner
of the enterprise which he establishes
himself.
1. Servant: A Manager is acting in the
capacity of a servant in the enterprise.
2. Profit: The Reward for an entrepreneur
is profit which is highly uncertain.
2.Salary: The Reward for a manager is
salary and his salary is certain and fixed.
3.Full Risk Bearing: As a owner, the
entrepreneur has to bear all risks and
uncertainties involved in running the
business.
3.No Risk Bearing: As a servant, the
Manager need not bear any risk involved in
the enterprise.
4. All Functions: An Entrepreneur has to
perform many functions in order to run the
enterprise successfully.
4.Managerial Functions Alone: A
Manager renders only the managerial
services in an enterprise.
5. Innovator: An Entrepreneur mainly acts
as an innovator and prepares plans for
execution.
5. Executor: A Manager mainly acts as an
executor of plans prepared by the
entrepreneur

12. Types of Entrepreneurs
There are various ways by which entrepreneurs have been classified. According
to Clarence danhof, Entrepreneurs are classified as:
1. Innovative Entrepreneur
2. Adoptive or Imitative Entrepreneur
3. Fabian Entrepreneur
4. Drone Entrepreneur

13. Innovative Entrepreneur
 An Innovative Entrepreneur is one who always searches for change, Responds
to it and finds the opportunity in it.
 This Type of Entrepreneur is highly Motivated and talented and innovation is
the key function.
 Innovation may be in any of the following forms:
1. Innovation of a new product or introduction of a new quality of an existing
product.
2. Introduction of a new method of production
3. Opening of a new Market
Eg: Bill Gates(Microsoft Windows-OS)- Who is known for starting the starting the
technology revolution.

14. Adoptive or Imitative Entrepreneur
 Imitative Entrepreneur is one who is ready to adopt successful innovations
already introduced by Innovative entrepreneurs.
 Adoptive Entrepreneur doesn’t innovate anything by himself he imitates
technologies innovated by others. He Carefully follows the innovators by
observing to how much an innovation is successful
 Innovative Entrepreneurs are scarce in developing countries as there is
limitation in capital and skilled labours in these countries.
 This Type of Entrepreneurs play a vital role in a developing countries like
India. Such countries primarily need imitators, who are capable of
transforming the systems with limited resources.
 Eg- Kishore Biyani (Future Group) Who imitated Walmart & Co and started a
new departmental store called Big Bazaar.

15. Fabian Entrepreneur
 Fabian Entrepreneurs are the one Who are cautious and skeptical in
experimenting change in their enterprises.
 This Type of Entrepreneurs neither have the will to introduce any changes or
desire to adopt new methods.
 This Entrepreneurs brings changes once the product becomes perfect failure
and hence that would definitely result in heavy loss for him.
 These Entrepreneurs are Shy and Lazy, They are determined by custom,
religion and traditions.
 Eg- Antonio Perez- Kodak Camera, a company that happened to be the market
leaders in producing analog cameras but they did not realize the change and
the introduction of the Digicam.

16. Drone Entrepreneur
 Drone Entrepreneur is one who blindly follows the traditional means of
production even when it causes loss to him.
 They are laggards because they continue their business in the traditional way
and their products lose the marketability.
 Ultimately, there operations become uneconomical and they are pushed out
of the market
 Eg- Thakur Savadekar & Co Pvt Ltd- A bidi Manufacturer that uses employee to
make the tobacco by hand. Even though it is a dying industry but it does not
stop them.

17. Classification on the type of Business
 Trading Entrepreneur- An Entrepreneur who undertakes trading activities only is
called as trading entrepreneur.He Identifies potential markets and creates demand for
his chosen product line. Eg- Wholesalers, Retailers
 Industrial Entrepreneur- An Industrial Entrepreneur is a product oriented person
who starts his industrial unit for manufacturing some new products. Eg- Henry Ford
 Business Entrepreneur- A Business Entrepreneur conceives idea for a new product
and creates a business into reality. He Engages in both production and Marketing
activities. Eg- Mukesh Ambani
 Agricultural Entrepreneur- These Entrepreneurs undertake agricultural activities.
They raise the productivity of agriculture through modernization and application of
Modern Technology. Eg- Kaveri Seeds company

18. Basis of Use of Technology
 Technical Entrepreneur: The Person who are technically qualified or experienced
are known as technical entrepreneurs. Eg- Mark Zuckerberg
 Non Technical Entrepreneurs: These Entrepreneurs are concerned with the Non
Technical aspects of Business such as developing Marketing and Distributing Strategies
to promote sales creating demand for their goods and Services and the like.

19. Others
Social Entrepreneur:
A Social Entrepreneur uses his entrepreneurial talent to create positive social change value
for the society at large. He identifies situational multiplexity as factors that lead to
innovative ideas and make large scale benefit to the society. Eg- Muhammad
Yunus(Grameen Bank)