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SYBBA 2020-21 TERM-II
Course- 401- Entrepreneurship and Small
Business Management
NBN College of Commerce & Science, Lonavala
UNIT I
ENTREPRENEURIAL PERSPECTIVE
• Concept of Entrepreneur, Manager, Intrapreneur
• Entrepreneur and Entrepreneurship
• Meaning, Definition, Evolution.
• Types of Entrepreneurs, Qualities and Functions of
Entrepreneur.
• Factors influencing Entrepreneurship: Psychological, Social,
Economical and Environmental factors.
• Role of Entrepreneur in growth and development of the small
business.
• Problem of Unemployment and Importance of wealth
creation.
from French word “entreprendre”
meaning to undertake
“ A person who organizes and manages any
enterprise, especially a business, usually
with considerable initiative and risk. ”
Entrepreneur
A) Concept:
The concept of entrepreneur has a wide range of meanings. On the one
extreme an entrepreneur is a person of very high aptitude who pioneers
change, possessing characteristics found in only a very small fraction of the
population.
B) Definitions:
1) 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.”
2) Albert Shapero: “Entrepreneurs take initiative, accept risk of failure and
have an internal locus of control.”
3) Gilbraith: “An entrepreneur must accept the challenge and should be
willing hard to achieve something”.
Concept of Entrepreneur
Meaning: Entrepreneur is one who organizes and manages a
business assuming the risk for the sake of profit. An
entrepreneur is the person who starts an enterprise.
According to David McClelland an entrepreneur has the
following characteristics:
Innovative
Extremely Energetic
Strong desire for accomplishments
Self confidence
Risk Taker
Collection and Analysis of Facts
Orientation towards Future
Flexibility
Decision making ability
Responsibility
An entrepreneur assumes following functions:
Risk bearing Functions
Organisational Functions
Innovative Functions
Managerial Functions
Decision Making Functions
Functions of Entrepreneur
An entrepreneur assumes following functions:
Risk bearing Functions
Organisational Functions
Innovative Functions
Managerial Functions
Decision Making Functions
Functions of Entrepreneur
1)ACCORDING TO THE TYPE OF BUSINESS
i)Business entrepreneurs:-who start business units after
developing ideas for new products/services.
ii)Trading entrepreneurs :-who undertake buying & selling of
goods, but not engage in manufacturing.
iii)Corporate entrepreneurs:-who establish and manage
corporate form of organization which have separate legal
existence.
iv)Agricultural entrepreneurs:- who undertake activities like
raising and marketing of crops, fertilizers and other allied
activities.
Types of Entrepreneurs
2)ON THE BASIS OF STAGES OF DEVELOPMENT
i)First generation entrepreneurs:-who do not possess any
entrepreneurial background. They start industry by their own
innovative skills.
ii)Second generation entrepreneurs:-who inherit the family
business and pass to next generation.
iii)Classical entrepreneurs:-who aims to maximize his economic
returns at a level consistent with the survival of the unit with
or without an element of growth.
Types of Entrepreneurs
3)ON THE BASIS OF MOTIVATION
i)Pure entrepreneurs:-who are basically motivated to become
entrepreneurs for their personal satisfaction, ego etc..
ii)Induced entrepreneurs:- who are induced to take up
entrepreneurial role by the assistance and policy of
government including incentives, subsidies etc.
Types of Entrepreneurs
4) ON THE BASIS OF TECHNOLOGY
i)Technical entrepreneurs:- who are task oriented and
‘craftsman type’. They prefer doing to thinking.
ii)Non-technical entrepreneurs:- who are not concerned with
technical side, but rather with marketing and promotion.
iii)Professional entrepreneurs:- who start a business unit, but
later sell the running business and start a new unit later.
Types of Entrepreneurs
5)ON THE BASIS OF CAPITAL OWNERSHIP
i)Private entrepreneurs:- individual or group set up enterprise,
arrange finance, share risk etc..
ii)State entrepreneurs:- means the trading or industrial venture
undertaken by the state or the government itself.
iii)Joint entrepreneurs:- the combination of private and
government entrepreneurs.
Types of Entrepreneurs
OTHER CLASSIFICATIONS
6)ACCORDING TO GENDER AND AGE
i)Man entrepreneurs
ii)Women entrepreneurs
iii)Young entrepreneurs
iv)Old entrepreneurs
v)Middle-aged entrepreneurs
7)ACCORDING TO AREA
i)Urban entrepreneurs
ii)Rural entrepreneurs
Types of Entrepreneurs
8)ACCORDING TO SCALE
i)Large scale entrepreneurs
ii)Medium scale entrepreneurs
iii)Small scale entrepreneurs
iv)Tiny scale entrepreneurs
Types of Entrepreneurs
The entrepreneur invents while the manager
administers. Manager is the person responsible for planning
and directing the work of a group of individuals, monitoring
their work, and taking corrective action when necessary.
A manager is a person responsible for supervising and
motivating employees and for directing the progress of an
organization.
Concept of Manager
Roles and Responsibilities of Manager
An entrepreneur assumes following functions:
Information Processing
 Managers role as Monitor
 Managers role as a disseminator of Information
 Managers role as a spokesman
Decision Making
 Managers role as an Entrepreneur
 Managers role as a conflict handler
 Managers role as Resource Allocator
 Managers role as a Negotiator
Interpersonal Relationships
 Managers role as a Figurehead
 Managers Leadership role
 Managers role as a Liaison Officer
Differences between an Entrepreneur and a Manager
Often the two terms namely entrepreneur and manager are considered as synonym. However
the two give different meaning. The major points of distinction between the two are
presented in table.
Points of
Difference
Entrepreneur Manager
Motive The main motive of an
entrepreneur is to start a
venture for his personal
gratification
The main motive of a manager
is to render services in an
enterprise already sent by
someone else.
Status The Entrepreneur is the
owner of the business and
serves only his customers.
The manager is the middle
executive of the company and
has to serve both; management
and customers.
Risk Entrepreneur assumes risk A manager does not bear any
Points of
Difference
Entrepreneur Manager
Rewards An entrepreneur may always look for
a reward, it may be highly uncertain.
A monthly income that is
fixed and certain.
Innovation Entrepreneur himself thinks over
what and how to produce goods to
needs of the customers. Hence, he
acts as innovator/ change agent.
A manager simply executes
plans prepared by the
management.
Qualification An entrepreneur needs to posses
qualities and qualifications like high
achievement motive, originality in
thinking, foresight, risk bearing
ability etc.
A manager needs to
possess distinct
qualifications in terms of
sound knowledge in
management theory and
practice.
Concept of Intrapreneur
Intrapreneurs are employees of a company who are
assigned to work on a special idea or project. They are
given the time and freedom to develop the project as
an entrepreneur would. However, they are not
working solo. Intrapreneurs have the resources and
capabilities of the firm at their disposal.
“…a person within a large corporation who takes
direct responsibility for turning an idea into a
profitable finished product through assertive risk-
taking and innovation.”
Characteristics of an
Intrapreneur
 Adaptive
Intrapreneurs recognize and learn from mistakes, then adapt to
find new solutions
 Creative
They posses ingenuity, bringing creativity to the workplace and
applying it to everyday situations
 Goes Against the Grain
Innovation is the name of the game, intrapreneurs often have a
rebellious spirit.
Characteristics of an Intrapreneur(Contd.)
 Internally & Externally Focused
They understand the needs of company and customers.
Perspective is essential and they see the world through many
different lenses
 Self-Reliant
Like any leader, they must trust their judgment and ability.
Confidence and independence enables them to convey ideas,
even controversial ones
 Visionary
A good idea is one thing, but quantifying costs and benefits,
understanding short vs. long-term implications, and
successfully pitching the idea spells success for an intrapreneur.
Differences between an Entrepreneur and an
Intrapreneur
Entrepreneurship
Entrepreneurship can be described as a process of action an entrepreneur undertakes
to establish his enterprise. Entrepreneurship is a creative activity. It is the ability to
create and build something from practically nothing.
A) Concept:
Entrepreneurship is a process. It is the purposeful and organized search for change,
conducted after systematic analysis of opportunities in the environment.
B) Definition:
1) Peter Drucker:
“Entrepreneurship is defined as ‘a systematic innovation, which consists in the
purposeful and organized search for changes, and it is the systematic analysis of
the opportunities such changes might offer for economic and social innovation.”
2) 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 manager’s of day-to-day operations.”
Characteristics of Entrepreneurship:
Characteristics of
Entrepreneurship
Economic
Activity
Entrepreneurship
Involves
Innovation
Goal-oriented
Activity
Value
Creation
Enterprise
Creation
A Function of
Risk Bearing
Entrepreneurshi
p Implies
Growth:
Managerial Skill
and Leadership
Function
Uniqueness
Organizing
Function
Characteristics of Entrepreneurship
1) Economic Activity:
Entrepreneurship is primarily an economic activity because it involves the creation
and operation of an enterprise. It is basically concerned with the production and
distribution of goods and services and optimally utilizes the resource towards
productive use.
2) Entrepreneurship Involves Innovation:
Entrepreneurship involves changing, revolutionizing, transforming, and introducing
new approaches.
3) Goal-oriented Activity:
The entrepreneur who creates and operates enterprises seeks to earn profits
through satisfaction of needs of consumers; hence, entrepreneurship is a goal-
oriented activity.
4) Value Creation:
Next, it is found that the process of creating value is a characteristic in describing
entrepreneurship. Through entrepreneurship, new products, services, transactions,
approaches, resources, technologies, and markets are created that contribute some
value to a community or marketplace.
Characteristics of Entrepreneurship
5) Enterprise Creation:
The next characteristic of entrepreneurship is enterprise creation. In order to
pursue the perceived opportunities for innovation and to create value, there must
be organized efforts and actions.
6) A Function of Risk Bearing:
Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur
works under uncertainties and he assumes the uncertainty of future. In the pursuit
of profit, there is possibility of loss also.
7) Entrepreneurship Implies Growth:
The next characteristic in entrepreneurship is growth. One major difference
between entrepreneurial ventures and other small businesses is the emphasis on
growth.
8) Managerial Skill and Leadership Function:
Managerial skill and leadership are the most important facets of entrepreneurship.
An entrepreneur must have the ability to lead and manage.
Characteristics of Entrepreneurship
9) Uniqueness:
Other characteristic found in entrepreneurship is that of uniqueness.
Entrepreneurship involves new combinations and new approaches with which
entrepreneurs are willing to experiment.
10) Organizing Function:
It is the ability to bring together productive resources of society. Entrepreneur
coordinates and control the efforts of all the persons engaged in his enterprises.
He harnesses land, labour, capital and other resources of for the benefits of
mankind. Therefore, an entrepreneur is called as an organization builder.
Need and Importance of Entrepreneurship
An entrepreneur assumes following functions:
Development of Managerial Capabilities
Creation of Organisations
Improving standards of Living
Means of Economical Development
Role of Entrepreneurship in Economic
Development
An entrepreneur assumes following functions:
Employment Generation
National Income
Balanced Regional Development
Better Standards of Living
Creating Innovation
Enterprise v/s Entrepreneurship
Benefits of Self Employment
• Freedom
• Being your own boss
• Earning more money (possibly becoming rich)
• Working fewer hours
• Independence
• Variety and choosing work you enjoy
Self Employment Vs. Entrepreneurship
Unemployment in India
India as a nation is faced with massive problem
of unemployment. Unemployment can be
defined as a state of worklessness for a man
who is fit and willing to work. It is a condition
of involuntary and non voluntary idleness.
Types of Unemployment in India
• Seasonal Unemployment
• Voluntary Unemployment
• Frictional Unemployment
• Causal Unemployment
• Disguised Unemployment
Problem of Unemployment in India
• Rapid Population Growth
• Limited Land
• Seasonal Agriculture
• Fragmentation of Land
• Backward method of Agriculture
• Decline of Cottage Industries
• Lack of Transport and Communication
• Inadequate Employment Planning
Importance of wealth creation
• Economic development
• Development of backward regions.
• Helps in chain reaction
Entrepreneurial career as an option

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UNIT-I-Entrepreneurship Development BBA Sem IV.ppt

  • 1. SYBBA 2020-21 TERM-II Course- 401- Entrepreneurship and Small Business Management NBN College of Commerce & Science, Lonavala
  • 2. UNIT I ENTREPRENEURIAL PERSPECTIVE • Concept of Entrepreneur, Manager, Intrapreneur • Entrepreneur and Entrepreneurship • Meaning, Definition, Evolution. • Types of Entrepreneurs, Qualities and Functions of Entrepreneur. • Factors influencing Entrepreneurship: Psychological, Social, Economical and Environmental factors. • Role of Entrepreneur in growth and development of the small business. • Problem of Unemployment and Importance of wealth creation.
  • 3. from French word “entreprendre” meaning to undertake “ A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk. ” Entrepreneur
  • 4. A) Concept: The concept of entrepreneur has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population. B) Definitions: 1) 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.” 2) Albert Shapero: “Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.” 3) Gilbraith: “An entrepreneur must accept the challenge and should be willing hard to achieve something”. Concept of Entrepreneur
  • 5. Meaning: Entrepreneur is one who organizes and manages a business assuming the risk for the sake of profit. An entrepreneur is the person who starts an enterprise. According to David McClelland an entrepreneur has the following characteristics: Innovative Extremely Energetic Strong desire for accomplishments Self confidence Risk Taker Collection and Analysis of Facts Orientation towards Future Flexibility Decision making ability Responsibility
  • 6. An entrepreneur assumes following functions: Risk bearing Functions Organisational Functions Innovative Functions Managerial Functions Decision Making Functions Functions of Entrepreneur
  • 7. An entrepreneur assumes following functions: Risk bearing Functions Organisational Functions Innovative Functions Managerial Functions Decision Making Functions Functions of Entrepreneur
  • 8. 1)ACCORDING TO THE TYPE OF BUSINESS i)Business entrepreneurs:-who start business units after developing ideas for new products/services. ii)Trading entrepreneurs :-who undertake buying & selling of goods, but not engage in manufacturing. iii)Corporate entrepreneurs:-who establish and manage corporate form of organization which have separate legal existence. iv)Agricultural entrepreneurs:- who undertake activities like raising and marketing of crops, fertilizers and other allied activities. Types of Entrepreneurs
  • 9. 2)ON THE BASIS OF STAGES OF DEVELOPMENT i)First generation entrepreneurs:-who do not possess any entrepreneurial background. They start industry by their own innovative skills. ii)Second generation entrepreneurs:-who inherit the family business and pass to next generation. iii)Classical entrepreneurs:-who aims to maximize his economic returns at a level consistent with the survival of the unit with or without an element of growth. Types of Entrepreneurs
  • 10. 3)ON THE BASIS OF MOTIVATION i)Pure entrepreneurs:-who are basically motivated to become entrepreneurs for their personal satisfaction, ego etc.. ii)Induced entrepreneurs:- who are induced to take up entrepreneurial role by the assistance and policy of government including incentives, subsidies etc. Types of Entrepreneurs
  • 11. 4) ON THE BASIS OF TECHNOLOGY i)Technical entrepreneurs:- who are task oriented and ‘craftsman type’. They prefer doing to thinking. ii)Non-technical entrepreneurs:- who are not concerned with technical side, but rather with marketing and promotion. iii)Professional entrepreneurs:- who start a business unit, but later sell the running business and start a new unit later. Types of Entrepreneurs
  • 12. 5)ON THE BASIS OF CAPITAL OWNERSHIP i)Private entrepreneurs:- individual or group set up enterprise, arrange finance, share risk etc.. ii)State entrepreneurs:- means the trading or industrial venture undertaken by the state or the government itself. iii)Joint entrepreneurs:- the combination of private and government entrepreneurs. Types of Entrepreneurs
  • 13. OTHER CLASSIFICATIONS 6)ACCORDING TO GENDER AND AGE i)Man entrepreneurs ii)Women entrepreneurs iii)Young entrepreneurs iv)Old entrepreneurs v)Middle-aged entrepreneurs 7)ACCORDING TO AREA i)Urban entrepreneurs ii)Rural entrepreneurs Types of Entrepreneurs
  • 14. 8)ACCORDING TO SCALE i)Large scale entrepreneurs ii)Medium scale entrepreneurs iii)Small scale entrepreneurs iv)Tiny scale entrepreneurs Types of Entrepreneurs
  • 15. The entrepreneur invents while the manager administers. Manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary. A manager is a person responsible for supervising and motivating employees and for directing the progress of an organization. Concept of Manager
  • 16. Roles and Responsibilities of Manager An entrepreneur assumes following functions: Information Processing  Managers role as Monitor  Managers role as a disseminator of Information  Managers role as a spokesman Decision Making  Managers role as an Entrepreneur  Managers role as a conflict handler  Managers role as Resource Allocator  Managers role as a Negotiator Interpersonal Relationships  Managers role as a Figurehead  Managers Leadership role  Managers role as a Liaison Officer
  • 17. Differences between an Entrepreneur and a Manager Often the two terms namely entrepreneur and manager are considered as synonym. However the two give different meaning. The major points of distinction between the two are presented in table. Points of Difference Entrepreneur Manager Motive The main motive of an entrepreneur is to start a venture for his personal gratification The main motive of a manager is to render services in an enterprise already sent by someone else. Status The Entrepreneur is the owner of the business and serves only his customers. The manager is the middle executive of the company and has to serve both; management and customers. Risk Entrepreneur assumes risk A manager does not bear any
  • 18. Points of Difference Entrepreneur Manager Rewards An entrepreneur may always look for a reward, it may be highly uncertain. A monthly income that is fixed and certain. Innovation Entrepreneur himself thinks over what and how to produce goods to needs of the customers. Hence, he acts as innovator/ change agent. A manager simply executes plans prepared by the management. Qualification An entrepreneur needs to posses qualities and qualifications like high achievement motive, originality in thinking, foresight, risk bearing ability etc. A manager needs to possess distinct qualifications in terms of sound knowledge in management theory and practice.
  • 19. Concept of Intrapreneur Intrapreneurs are employees of a company who are assigned to work on a special idea or project. They are given the time and freedom to develop the project as an entrepreneur would. However, they are not working solo. Intrapreneurs have the resources and capabilities of the firm at their disposal. “…a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk- taking and innovation.”
  • 20. Characteristics of an Intrapreneur  Adaptive Intrapreneurs recognize and learn from mistakes, then adapt to find new solutions  Creative They posses ingenuity, bringing creativity to the workplace and applying it to everyday situations  Goes Against the Grain Innovation is the name of the game, intrapreneurs often have a rebellious spirit.
  • 21. Characteristics of an Intrapreneur(Contd.)  Internally & Externally Focused They understand the needs of company and customers. Perspective is essential and they see the world through many different lenses  Self-Reliant Like any leader, they must trust their judgment and ability. Confidence and independence enables them to convey ideas, even controversial ones  Visionary A good idea is one thing, but quantifying costs and benefits, understanding short vs. long-term implications, and successfully pitching the idea spells success for an intrapreneur.
  • 22. Differences between an Entrepreneur and an Intrapreneur
  • 23. Entrepreneurship Entrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. A) Concept: Entrepreneurship is a process. It is the purposeful and organized search for change, conducted after systematic analysis of opportunities in the environment. B) Definition: 1) Peter Drucker: “Entrepreneurship is defined as ‘a systematic innovation, which consists in the purposeful and organized search for changes, and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation.” 2) 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 manager’s of day-to-day operations.”
  • 24. Characteristics of Entrepreneurship: Characteristics of Entrepreneurship Economic Activity Entrepreneurship Involves Innovation Goal-oriented Activity Value Creation Enterprise Creation A Function of Risk Bearing Entrepreneurshi p Implies Growth: Managerial Skill and Leadership Function Uniqueness Organizing Function
  • 25. Characteristics of Entrepreneurship 1) Economic Activity: Entrepreneurship is primarily an economic activity because it involves the creation and operation of an enterprise. It is basically concerned with the production and distribution of goods and services and optimally utilizes the resource towards productive use. 2) Entrepreneurship Involves Innovation: Entrepreneurship involves changing, revolutionizing, transforming, and introducing new approaches. 3) Goal-oriented Activity: The entrepreneur who creates and operates enterprises seeks to earn profits through satisfaction of needs of consumers; hence, entrepreneurship is a goal- oriented activity. 4) Value Creation: Next, it is found that the process of creating value is a characteristic in describing entrepreneurship. Through entrepreneurship, new products, services, transactions, approaches, resources, technologies, and markets are created that contribute some value to a community or marketplace.
  • 26. Characteristics of Entrepreneurship 5) Enterprise Creation: The next characteristic of entrepreneurship is enterprise creation. In order to pursue the perceived opportunities for innovation and to create value, there must be organized efforts and actions. 6) A Function of Risk Bearing: Risk is an inherent and inseparable element of entrepreneurship. An entrepreneur works under uncertainties and he assumes the uncertainty of future. In the pursuit of profit, there is possibility of loss also. 7) Entrepreneurship Implies Growth: The next characteristic in entrepreneurship is growth. One major difference between entrepreneurial ventures and other small businesses is the emphasis on growth. 8) Managerial Skill and Leadership Function: Managerial skill and leadership are the most important facets of entrepreneurship. An entrepreneur must have the ability to lead and manage.
  • 27. Characteristics of Entrepreneurship 9) Uniqueness: Other characteristic found in entrepreneurship is that of uniqueness. Entrepreneurship involves new combinations and new approaches with which entrepreneurs are willing to experiment. 10) Organizing Function: It is the ability to bring together productive resources of society. Entrepreneur coordinates and control the efforts of all the persons engaged in his enterprises. He harnesses land, labour, capital and other resources of for the benefits of mankind. Therefore, an entrepreneur is called as an organization builder.
  • 28. Need and Importance of Entrepreneurship An entrepreneur assumes following functions: Development of Managerial Capabilities Creation of Organisations Improving standards of Living Means of Economical Development
  • 29. Role of Entrepreneurship in Economic Development An entrepreneur assumes following functions: Employment Generation National Income Balanced Regional Development Better Standards of Living Creating Innovation
  • 31. Benefits of Self Employment • Freedom • Being your own boss • Earning more money (possibly becoming rich) • Working fewer hours • Independence • Variety and choosing work you enjoy
  • 32. Self Employment Vs. Entrepreneurship
  • 33. Unemployment in India India as a nation is faced with massive problem of unemployment. Unemployment can be defined as a state of worklessness for a man who is fit and willing to work. It is a condition of involuntary and non voluntary idleness.
  • 34. Types of Unemployment in India • Seasonal Unemployment • Voluntary Unemployment • Frictional Unemployment • Causal Unemployment • Disguised Unemployment
  • 35. Problem of Unemployment in India • Rapid Population Growth • Limited Land • Seasonal Agriculture • Fragmentation of Land • Backward method of Agriculture • Decline of Cottage Industries • Lack of Transport and Communication • Inadequate Employment Planning
  • 36. Importance of wealth creation • Economic development • Development of backward regions. • Helps in chain reaction