eNTREPRENEURSHIP

1. ENTREPRENEURSHIP

2. Entrepreneur?
Derived from French word
Entreprendre means “to undertake”.
An Entrepreneur is the one Who
organizes and manages a business
undertaking, assuming the risk for
the sake of profit.
Any person (any age) who starts and
operates a business is an
Entrepreneur.

3. Entrepreneur Definitions
 Richard Carleton:
 a person who buys factors of production
at certain prices in order to combine
them into a product with a view to sell
them at uncertain prices.
 Considered as a risk bearer.
◦ Eg: Farmer pays definite price for seeds,
fertilizers, pesticides, labours,.. etc but he is
not certain at which price he could sell his
produce.

4. Entrepreneur Definitions
 F.H. Knight:
 a person who bears uncertainty (risk which
cannot be insured & is incalculable) can
reduce uncertainty by taking insurance.
 one who combines the land of one, labour of
another & capital of yet another & thus
produces a product and sells the product to
pay rent, wages and interest.

5. Need of Entrepreneurs
 By 2017, 110-130 million Indians will be
searching for jobs, of which 80-100 million
will be searching for their FIRST jobs.

6. Importance of Entrepreneurs
 To capitalise on new opportunities so as to
create wealth and new jobs.
 helps the formation of capital by bringing
together the savings and investments of people;
 provides large-scale employment opportunities
and increases the purchasing power of the
people;
 promotes balanced regional development in the
country;
 helps in reducing concentration of economic
power (power to own the factor of production
in a few hands).

7. Why should you become an
Entrepreneur?
 You are your own boss & boss to other people
and make decisions that are crucial to the
success or failure of your business.
 You will have the chance to put forward your
ideas into practice.
 You will have personal satisfaction of creating
and running a successful business
 Enjoy the profits from you efforts
 Sense of pride in your business
 Flexibility in your work schedule
 You will be able to work in a field / area that you
really enjoy.

8. QUALITIES OF ENTREPRENUERS
 Mental ability: intelligent person
 Organising ability: good organisation.
 Hard work: ready to work for long hours.
 Discipline: highly disciplined-everything to be
in order for them.
 Clear objectives: regarding nature of
business & products to be produced.

9. QUALITIES OF ENTREPRENUERS
 Need for high achievement:
◦ they have a strong desire for achieving something
great.
 Optimistic:
◦ highly optimistic-not disturbed by present problems-
and hope for favourable future.
 Risk taking: they like challenges.
 HR ability:
◦ maintain good relations with other people (employee,
vendors, customers, bankers).
 Emotional stability:
◦ have consider ableamount of self-control-business
pressure can be handled.

10. QUALITIES OF ENTREPRENUERS
 Organisation of the Resources:
combining various factors of production.
 Innovation
 Exploration of new opportunities
 Providing Leadership & Motivating the
people
 Communication ability:
 Self-confidence:
◦ tackle problems immediately with self-confidence.
 Adaptability:
◦ highly flexible-adapt themselves for any conditions.

11. QUALITIES OF ENTREPRENUERS
 Positive attitude:
◦ always think positively, they do not leave hopes
even under difficult conditions.
 They are also good managers, pro-active,
realistic, have comprehensive awareness &
conceptual ability.

12. FUNCTIONS OF ENTREPRENUERS:
 Market research
 Idea generation
 Product/service analysis
 Form of business: individual, partnership.
 Determination of business objectives:
main objectives, subsidiaries objectives, short
term, long term.

13. FUNCTIONS OF ENTREPRENUERS
 Promotional formality:
◦ getting license, clearance of govt. Formalities.
 Raising Capital:
◦ Own capital/Issue of share/Borrowing loan.
 Providing Infrastructure:
◦ Buying plant, Machinery, Land.
 Selection of human resources :
◦ right people at right place.
 Carrying out the Operations:
◦ where to purchase, scale of production, fixing price, and
advertisement mean etc.

14. Stages in the development of
Entrepreneural process
 1.The Identification/Recognition of market
opportunity and the generation of a business
idea (product or service) to address the
opportunity.
 2.The marshalling and commitment of
resources in the face of risk to pursue the
opportunity.
 3.The creation of an operating business
organization to implement the opportunity-
motivated business idea

15. 5 Characteristics of successful
entrepreneurs
 – Drive,
◦ which is defined as the most important attribute.
◦ Entrepreneurs can expect long hours, high stress
and endless problems, as they launch a new
business.
 – Creativity/Thinking Ability
◦ or the characteristic that encompasses critical
thinking, analytical abilities and originality.
 – Communication Skills,
◦ or the ability to make yourself understood and
also make others understand in the best possible
way.

16. Characteristics
 – Aptitude for Human Relations.
◦ This characteristic recognizes the importance of
the ability to motivate employees, sell customers,
negotiate with suppliers and convince lenders.
◦ Personality plays a big part in success in this area..
 – Technical Ability
◦ speaks to the need of the entrepreneur to know
their product and their market.
◦ They must consider the long- and short-term
implications of their decisions, their strengths and
weaknesses, and their competition.
◦ In short, they need strategic management skills.

17. Entrepreneurship
 The process of
starting and
running one’s
own business

18. ENTREPRENEURSHIP?
 The function or process of
◦ seeing investment & production opportunities;
◦ organising an enterprise to undertake a new
production process;
◦ raising capital;
◦ hiring labour,
◦ arranging for raw material,
◦ finding a site & combining these factors of
production into a going concern;
◦ introducing new techniques, new commodities,
◦ discovering new sources of natural resources &
◦ selecting top-managers for day-to-day operations

19. INTRAPRENEURSHIP
 There are people working in big organisation,
holding key positions.
 They are quite innovative & bring many changes
in products & methods of production.
 They possess all qualities of an Entrepreneur.
 Top managements in big organisations encourage
people holding key positions to come out with
new ideas so that they can bring some changes in
products &services.
 They are also known as INTRAPRENUERS.
 They serve as champions to others in the
organisation (king Makers)

20. Entrepreneur Intraprenuer
 Entrepreneur is Employer
 Independent in operation.
 Bears all the risk involved in
enterprise.
 Exhibits higher need for
achievement.
 Profit is the reward.
 May not have formal
qualification.
 Do not have any boundary for
operations.
 Administrator
 Intraprener is Employee
 Depends on the organization
to implement his ideas.
 Does not bear all the risk.
 May not have high need
achievement
 Attractive salary, promotion
&incentives are the reward.
 Should have some professional
or technical qualification.
 He has to operate within the
organisational policies.
 Manager

21. Evolution of the concept
Earliest Period: Entrepreneur played a active role in Trading
Middle Ages: Entrepreneur's job is to manage large production
projects

22. 17th Century: Contractors who bear the risk of profit or loss
18th Century: Differentiation between the person with capital & Person who
needed capital

23. 19th & 20th Century: Started adopting Innovation & Invention
21st Century: Entrepreneur is associated with creativity

24. CREATIVITY PROCESS

25. Creativity v/s Innovation
 Creativity: is the
◦ “ability” to bring some thing new into existence.
◦ The definition emphasises on “ability”, not on
Activity of bringing something new into existence
 Creativity refers to the phenomenon
whereby a person creates something new (a
product, solution, artwork, literary work, joke,
etc.) that has some kind of value.
 Innovation:
◦ The “Process/Activity” of doing new things.
◦ Creativity is pre-requisite for Innovation.

26. Creative process for an idea
 Creative process for an idea involves 5 stages.
Germination
Preparation
Incubation
Illumination
Verification

27. Creative process for an idea
Germination
SEEDING process
Preparation
Conscious search
verification Illumination
realistic creation.
Incubation
sub-conscious

28. Germination stage
 It is the SEEDING process.
 It is unlike sowing seeds by farmers, but
like the congress plant, where the
pollinated flower seeds, scattered by the
wind, find fertile land to take root.
 Similarly, the exact manner in which an idea
is germinated is a mystery.
 But, most creative ideas can be traced to
an individual’s interest and curiosity about
a specific problem or area of study.

29.  The first great invention developed by Edison in Menlo
Park was the tin foil Phonograph/ Gramophone.
 While working to improve the efficiency of
a Telegraph transmitter, he noted that the tape of the
machine gave off a noise resembling spoken words
when played at a high speed.
 This caused him to wonder if he could record a
telephone message.
 He began experimenting with the diaphragm of a
telephone receiver by attaching a needle to it.
 He reasoned that the needle could prick paper tape to
record a message. His experiments led him to try a
stylus on a tinfoil cylinder, which, to his great surprise,
played back the short message he recorded,
"Mary had a little lamb."
Gramophone - History

30. Preparation stage
 Once the creative idea has cropped up, the
creative people embark on a conscious search
for answers through market research.
 Set up lab. Experiments, designers will begin
engineering new product ideas, marketers will
study consumers-buying behavior.
 In rare instances, Preparation stage will yield
any results. Rather, the effort is important to
gather information and knowledge vital to an
eventful solution.

31. Incubation stage
 Only a few ideas or the solutions normally
evolve from conscious effort or from the
thunderbolts of insight or understanding.
 Most evolve in the minds of creative people in
sub-conscious state of mind, while they go
about performing other activities.
 The sub-conscious mind is allowed to
assimilate information in the background.
 During this stage, the sub-conscious mind
assumes control of the creative process.

32. Incubation stage
 Incubation stage is crucial aspect of creativity
process, because “ when we consciously focus
on a problem, we behave rationally to attempt
to find systematic resolutions”.
 When we rely on sub-conscious processes,
our minds are un-restricted by the limitation
of human logic.
 The sub-conscious mind is allowed to wander
and to pursue fantasies. Hence, it is open to
unusual information and knowledge that we
cannot assimilate in the conscious state.

33. Illumination stage
 Occurs when an idea resurfaces as a realistic
creation.
 It is about the tale of thunderbolt being captured
in this moment of illumination.
 Eg: Fleming watched his penicillin attack
infectious bacteria under a microscope.
 Illumination may be triggered by an opportune
incident.
 This stage is critical for entrepreneurs because
ideas, by themselves, have little meaning, unless
they are realized.
 Reaching illumination stage separates
daydreamers and thinkers from creative people.

34. Verification stage
 The idea once illuminated in the mind of an
individual continues to have little meaning
until verified as realistic and useful.
 Verification is the stage of development that
refines knowledge into application.

35. Advantages of being an Entrepreneur
 –You are your own boss
 – Enjoy the profits from you efforts
 – Sense of pride in your business
 – Flexibility in your work schedule

36. Disadvantages
 – Will need to put in long hours
 – Need money to start
 – Have to keep up with government rules and
 regulations
 – May have to mark hard decisions (hiring,
firing, etc.)
 – May lose money

37. CLASSIFICATION OF ENTREPRENUERS
 Based on Functional characteristics
 Based on Development angle
 Based on types of entrepreneurial business
 Based on nine personality types of
entrepreneurs
 Based on several others!!!!!!

38. CLASSIFICATION OF ENTREPRENUERS
Based on Functional characteristics
 INNOVATIVE Entrepreneur:
 IMITATIVE / ADOPTIVE Entrepreneur
 DRONE Entrepreneur
 FABIAN Entrepreneur

39. Based on Functional characteristics
 INNOVATIVE Entrepreneur:
◦ They introduce new ideas/goods or discover new
markets or reorganise their enterprise
◦ They are characterized by aggressive assemblage
of info. for trying out novel combination of factors.
 IMITATIVE / ADOPTIVE Entrepreneur
◦ They do not innovate, but imitate techniques &
technology innovated by others
◦ They are suitable for under developed economies
as adoption saves costs of trial and error.

40. Based on Functional characteristics
 DRONE Entrepreneur
◦ Drone entrepreneurs are characterized by a die-
hard conservatism/traditional and may even be
prepared to suffer the loss of business.
 FABIAN Entrepreneur
◦ Such entrepreneurs display great caution and
skepticism/ uncertainty in experimenting with any
change in their enterprise.
◦ They change only when there is an imminent
threat to the very existence of their business.

41. Classification of Entreprenuers
 Based on Development angle
 Prime mover
 Manager
 Minor Innovator
 Satellite
 Local trading

42. Based on Development angle
 Prime mover
◦ This entrepreneur sets in motion a powerful sequence
of development, expansion, and diversification of
business.
 Manager
◦ This entrepreneur is just content with staying in
business and does not go for expansion, diversification
 Minor Innovator
◦ This entrepreneur contributes to economic progress
by finding better use of existing resources.
 Satellite
◦ This entrepreneur assumes the roll of supplier and
slowly moves towards a productive enterprise.
 Local trading
◦ This entrepreneur limits his enterprise to local market

43. Classification of Entreprenuers
 Based on types of Entrepreneurial
business
 Business Entrepreneur
 Trading Entrepreneur
◦ Wholesaling Entrepreneur
◦ Retailing Entrepreneur
 Corporate Entrepreneur
 Industrial Entrepreneur
 Agricultural Entrepreneur

44. Types of Entrepreneurs:
1.According to type of business
Business Entrepreneur Trading Entrepreneur
Industrial Entrepreneur Corporate Entrepreneur
Alexander Graham Bell Dhirubhai Ambani
Jamshetji Tata
Bill Gates
Agricultural
Entrepreneur
Farmers of e-choupal

45. Classification of Entreprenuers
 Based on 9 personality types of
entrepreneurs
 The Improver
 The Advisor
 The Superstar
 The Artist
 TheVisionary
 The Analyst
 The Fireball
 The Hero
 The Healer

46. 9 personality types of entrepreneurs
 The Improver
◦ They are focused on using their company as a
means to improve the world.
◦ Their Motto:“ Morally correct companies will be
rewarded working on a noble cause”.
◦ Improvers have an unwavering ability to run their
business with high integrity and ethics.
 The Advisor
◦ They provide an extremely high level of assistance
& advice to their customers.
◦ Their Motto:“The customer is right and we must do
everything to please them”.

47. 9 personality types of entrepreneurs
 The Superstar
◦ The business is centered on charisma and high
energy of the superstar CEO.
◦ This personality will often cause to build business
around their own personal brand.
 The Artist
◦ The business personality is reserved, but a highly
creative type. Often found in businesses
demanding creativity such as web designing, ad
agencies, event management.

48. 9 personality types of entrepreneurs
 TheVisionary
◦ Builds the business based on future vision and
thoughts.They have high degree of curiosity to
understand the world around and will set-up plans
to avoid landmines. Eg: Narayanmurthy, Bill gates
 The Analyst
◦ The business focus on fixing problems in a
systematic way. It is often the basis for Science,
Engg., or computer firms.
 The Fireball
◦ A business owned & operated by a fireball is full of
life, energy, and optimism.

49.  The Hero
◦ The Entrepreneur has the incredible will and
ability to lead the world and their business
through any challenge.
 The Healer
◦ The Entrepreneur has an uncanny ability to survive
and persist with an inner calm.
◦ They provide more nurturing and harmony to
business.
9 personality types of entrepreneurs

50. According to use of technology
Technical Entrepreneur Non-Technical Entrepreneur
Professional Entrepreneur
Atul Jalan
Ramoji Rao
Narayana Murthy

51. According to Stages of Development
First generation Entrepreneur Second Generation
Classical Entrepreneur
Ambani Brothers
Captain
Gopinath
Mark Zukerberg

52. According to Capital Ownership
Private entrepreneur
State entrepreneur
Joint Entrepreneur

53. According to Gender & Age
Man entrepreneur
Mark Zukerberg
K C Mahindra
Woman entrepreneur
Kiran Mazumdar Shaw
Young entrepreneur
Old entrepreneur
Middle aged
entrepreneur

54. According to area
Urban entrepreneur
Rural entrepreneur
According to scale
Large scale industry entrepreneur
Medium scale industry entrepreneur
Small scale industry entrepreneur
Tiny industry entrepreneur

55. Steps/Stages in the Entrepreneurial
Process
1. Discovery/Identify and Evaluate: The
stage in which the entrepreneur
generates ideas, recognizes
opportunities, and studies the market
Innovation
Opportunity

56. Discovery
Consider your
hobbies or skills
Consider consumer
needs and wants
Conduct Surveys and
questionnaires – test the
market
Study demographics

57. Steps in the Entrepreneurial Process
2. Concept Development:
◦ Develop a business plan: a
detailed proposal describing
the business idea
Executive summary
Code of ethics

58. Concept Development
◦ Choose business location
◦ Will a patent or trademark be required?

59. Steps in the Entrepreneurial
Process
3. Resourcing: The stage in which
the entrepreneur identifies and
acquires the financial, human, and
capital resources needed for the
venture startup, etc
Start-up resources

60. Resourcing
Identify potential
investors
Hire
employees
Apply for loans,
grants and
assistance

61. Steps in the Entrepreneurial
Process
4. Actualization: The stage in
which the entrepreneur operates
the business and utilizes
resources to achieve its
goals/objectives.
$$ Grand Opening $$
Day-to-Day Operations

62. Steps in the Entrepreneurial
Process
5. Harvesting: The stage in which
the entrepreneur decides on
venture’s future growth,
development, or demise
What is your 5-year or 10-year plan?
Consider adding locations or providing different
products/services
Will you go public?

63. Role of Entrepreneurs in Economic
Development:
 Capital formation
 Generation of employment
 Reduces concentration of wealth
 Balanced regional development
 Improvement in standard of living
 National self-reliance

64. Barriers to Entrepreneurs:
Internal Barriers:
◦ Planning
Technical Feasibility
Economic viability
◦ Implementation
◦ Production
Production management
Labour management
Marketing management
Financial management
Administrative management
External Barriers
◦ Infrastructural
◦ Financial
◦ others

65. Barriers to Entrepreneurs:
Internal Barriers
1. Planning
(a)Technical Feasibility
- Inadequate technical know-how
- Location disadvantage
- Outdated production process
(b) Economic viability
- High costs of inputs
- Uneconomic size of project
- Choice of idea
- Feeble structure
- Poor project implementation
- Lack of strategies
- Lack ofVision

66. - Underestimation of financial requirements
- Unduly large investments in fixed assets
- Overestimation of demand
2.Implementation
Cost over runs resulting from delays in getting licenses, sanctions
and so on and inadequate mobilization of finance
3. Production
a. Production Management
- Inappropriate product mix
- Poor quality control
- Poor capacity utilization
- High cost of production
- Poor inventory management and replacement
- Lack of timely and adequate modernization
- High wastage
- Poor production

67. b. Labour Management
- Exercising high wage structure
- Inefficient handling of labour problems
- Excessive manpower
- Poor labour productivity
- Lack of trained skilled labour
- Poor labour relations
c. Marketing Management
- Poor sales realization
- Defective pricing policy
- Market competition
- Weak market organisation
- Lack of market feedback and market research
- Unscrupulous sale-purchase practices

68. d. Financial Management
- Poor resources management and financial planning
- Faculty costing
- Deficiency of funds
- Over funding
- Inadequate working capital
- Delayed payments
e.Administrative Management
- Over centralization of authority
- Lack of professionalism
- Lack of timely diversification
- Poor project report
- Excessive expenditure on R & D
- Administrative hurdles

69. External Barriers
a.Infrastructural
- Unsuitable and insufficient location
- Lack of power and water
- Insufficient banking facilities and post-office and so on
- Lack of communication facilities
-Transport bottlenecks
b. Financial
- Lack of capital
- Lack of long term funds
- Delayed payments
- High marketing cost
- Defective tax structure
- High material cost
- High cost of technology
- High administrative cost

70. c. Other problems
- Lack of marketing facilities
- Non-availability or irregular supply of critical raw
materials or other inputs
- Unfavorable industrial and financial regulations
- Excessive inspections
- Non-availability of technology
- Unfavorable government policies

71. EDP(entrepreneurship development
programme) organisations in INDIA
 MDI: Management Development Institute
 NIESBUD: The National Institute for
Entrepreneurship and Small Business Development.
 EDII: Entrepreneurship Development Institute of
India.
 STEP: Science and Technology Entrepreneurship
Parks
 IED: Institutes for Entrepreneurship Development
49

73. IDENTIFICATION OF BUSINESS OPPORTUNITIES
• Business opportunities can be obtained from
various magazines, trade journals,
financial institutions, government, commercial
organizations, friends, relatives, competitors
etc.
• An entrepreneur has to identify and select
the most rewarding opportunity from the
available ones

74. One has to evaluate the following areas and understand
the gap between demand and supply
• Study of government rules and regulations regarding
the different business opportunities.
• Extensive and in depth study of promising investment
opportunity.
• SWOT analysis of the business opportunities.
• Market feasibility study.
• Technical feasibility study.
• Financial feasibility study and
• Social feasibility study.

75. Sources of business ideas
1.Unfulfilled demand:
An Unfulfilled demand will open doors to
new products
2.Own idea:
One own creative idea can result in a
business opportunity.
3.Social and economic trends:
Social and economic trends necessitate
demand for new products.

76. 4.Magazines/Journals/Research publications:
Magazines/ Journals/ Research publications form
a major role of ideas.
5.Government:
Government also identifies and proposes ideas
and give support for business opportunities.
6.Emerging new technology and scientific know
how: commercial exploitation of indigenous and
imported technologies and know-how is another
source of opportunities.

77. 7.Charges in consumer needs:
the needs of consumers charge giving rise to
requirement of new business opportunities.
8.Trade fairs/Exhibitions:
Trade fairs and technical exhibitions also offer
wide scope for business opportunities.
9.Banks and government agencies:
Commercial banks and government agencies
encourage entrepreneurs by providing business
opportunities, ideas subsidies, loan etc.

79. MARKET FEASIBILITY STUDY
• Feasibility study is a detailed work of collection of data
analysis and concludes the feasibility of that operation.
• Market feasibility study involves the study and analysis
of the following aspects.
• Market feasibility study will assess whether the
product has good market.

80. Market feasibility study needs the following
Nature of market:
The nature of market in terms of monopolistic or
perfect competition is to be studied.
Cost of production: It is essential to study and control
cost of production. Cost of production decides the
selling price.
Selling price and profit: Selling price plays a vital role
in profit. In price sensitive goods like cosmetics, one
should be careful in fixing the price.

81. Demand: Present demand and demand forecast are
prepared and studied. This will decide the facility
planning.
Market share: Estimated market share is to be
made. Comparison is made with share of similar
products.
Target market: Study is made with regard to the
target market and market segmentation

82. TECHNICAL FEASIBILITY STUDY
Location of the project: The data regarding the location of
project is very important. It may be located in rural, urban or
semi- urban areas.
Construction of factory, building and its size: The construction
details, the nature/type of building and its size for the project
are to be analysed.
Availability of raw materials: The study of availability of raw
materials, sources of supply, alternate sources, its quality and
specifications cost etc., are to be studied.
Selection of machinery: The selection of machinery required
to produced the intended product is to be carried out. The
specifications are capacity, cost sources of supply, technology
evaluation of various makes of the machine. Their good and
bad etc., are studied.

83. Utilities:
The details about availability of utilities like water, gas
electricity, petrol, diesel etc. are to be studied.
Production capacity:
Establishment of production capacity and utilization of
production capacity are analysed.
Staff requirement:
Study and analysis of requirement of workers, technical staff
and officers etc. is to be made. Technical viability: The
technical viability of the opportunity is to be studied.

84. FINANCIAL FEASIBILITY STUDY
Total capital cost of project: It is very essential to
study the total cost of project. This includes fixed
capital, working capital and interest factor.
Sources of capital: The study of main sources of
capital is to be made. If capital is borrowed,
interest burden is to be studied in detail.
Subsidiary sources for additional finance: After
study of main sources of capital, subsidiary
sources of capital are to be identified and studied.

85. Financial for future development of business: Financial
requirement for future development of business are to
be studied. Working capital requirement for at least
three months running of enterprise are to be estimated.
Break Even Analysis(BEA): BEA is to be carried out
to see at what level of production/sales will make the
organization no loss/no profit situation. BEA is very
useful to identify the level of production that makes
profit.
Estimation of cash and fund flow: It is very essential to
make a study of estimation of cash and fund flow in
the business.

86. Return on investment(ROI): ROI is to be calculated
to see the amount of return on investment for the
investors/share holders and how much they get.
Proposed balance sheet: Proposed balance sheet is
made showing liabilities and assets, depreciation,
interest burden, profits expected etc.
Cost of labour and technology: The cost of
employees is to be estimated and studied. If
technology is not available then it has to be
purchased from any R & D institution or by way of
foreign collaboration.

87. SOCIAL FEASIBILITY STUDY
Location: The location is in such a place that it should not
have objection from the neighbours.
Social problem: The enterprise should not create any nuisance
to the public.
Pollution: There should not have any sort of noise or other
pollution objectionable society. Suitable measures are to be
taken for controlling pollution.
Other problem: Any other problems related to the society and
people are to be studied.