Entrepreneur development

Rajendran Ananda Krishnan

https://www.facebook.com/ialwaysthinkprettythings

MEANING
1. Entrepreneur is an organizer of a business firm
central to its distributive and productive function.
2. Entrepreneur are specialized group of persons who
bear risk and deal with uncertainties
3. Entrepreneur is an economic man who tries to
maximize his profits by innovations. Innovation
involves problem solving and entrepreneur gets
satisfaction from using capabilities in attacking
problems.


EVOLUTION OF
ENTREPRENEURSHIP


Evolution of entrepreneurship
1. Earliest period : Marco polo is an early example of an
entrepreneur who attempted to establish trade route to far east.
Marco polo would sign contract with money person to sell his
goods. A common contract for taking loan stated that trader
had to pay interest of 22.5 % for the loan. Which includes
insurance. When the merchant adventurer would successfully
sell the goods and complete the trip profit were divided into
two parts of which capitalist would gain 75% of profit and
trader would end up getting 25 % of income.
2. Middle ages : in middle ages entrepreneur were more
described as actor, person, manager. His job was to manage
large production projects. He was merely managing the
business while the risk was borne by the government of the
country and not the entrepreneur. A typical entrepreneur in
middle ages were the clerk in charge of great architecture.


3. 17th century manager : emerging connection of
risk with entrepreneurship developed with 17th
century. In this stage entrepreneur entered in
contract with government were payment to be
made to capitalist was fixed and after fixed
payment, profit or loss incurred through the
business had to be borne by entrepreneur.


 E.g. Richard Cantillon a noted economist and
author in 1700 understood laws mistake. He
developed one of the early theories of the
entrepreneur and is regarded some as the founder
of the term. He viewed entrepreneur as risk taker.
He was the first person to recognize the role of
entrepreneur in economic theory. He stressed on
the entrepreneur and not his personality.


4. During this period entrepreneur were divided into
two persons
a. Person with capital
b. Person who needed capital
 Major reason for such differentiation was due to the
industrialization occurring throughout the world. Many
inventions developed during the period were reactions to
the changing world. E.g. Edison raised capital from
private sources to develop and experiment in the field of
electricity and chemistry. Similarly Whitney had to
finance his invention of cotton gin from expropriated
British crown property. Therefore both were
entrepreneur looking for venture capitalist to finance
their inventions. J B Say broadened the concept of
entrepreneur and included the concept of combining the
factors of production.

5. 19th and 20th century : during this period
entrepreneur were not distinguished from mangers
and were viewed mostly from managers and from
economic perspective in following manner :
a. He organizes and operates the enterprise for his
personal gains.
b. He pays current prices for the materials consumed in
the business.
c. He contributes his own initiative, skill, in planning,
organizing and administering things in company.
d. He assumes the chance of loss and gain consequent
to uncontrollable factors.


 During the period of 20th century entrepreneur was
seen as innovator in the economy. He was the one
who came up the unique concept in the market. He
performed following functions as entrepreneur :
a. To revolutionize the pattern of production by
exploiting inventions.
b. To perform pattern of production by exploiting
technological method of producing new commodity
or old commodity in new patter.
c. Opening new source of supply of raw materials or
new change outlet of products
d. Performing these functions by organizing new
industry. Cont....

 Concept of innovation and newness is the integral
part of entrepreneur which not only requires the
ability to create and conceptualize but ability to
understand forces at work environment. The
newness in the concept can be in the following
ways :
a. Introduction of new or quality goods
b. Introducing new method of production
c. Utilization of new source of raw material
d. Carrying out new organizational form of
industry.


6. 21st century : during the present century two
characteristics are associated with the entrepreneur
they are innovation and creativity. Creativity is the
ability to bring some thing new into existence. While
innovators are practical people and create from the
opportunities available in reality . Following
principles of innovation have emerged leading to
success of entrepreneur :
a. Action oriented and searching for new ideas
b. Making the product service simple and
understandable
c. Trying, testing and revising
d. Learning from failures
e. Hard work is the key to success


Risk
taking
Supervise Innovate
and control

Direct Analyze
activities of opportunity
firm
Functions
of
entreprene
ur
Develop Strategies to
venture start venture

Develop
Start venture business
plan
Acquire
resources


FUNCTIONS OF ENTREPRENEUR
1. Risk measurement and risk taking : risk taking and
risk measurement is the primary function of
entrepreneur. Risk are not only related to success or
failure of business but also involve personal and
professional career forgone for the sake of opportunity.
2. Innovate/ create/ discover : entrepreneurship is
innovativeness of individual and does not involve
ownership. Principal function of the entrepreneur is to
carry out new combinations of means of production.
3. Analyze opportunities : entrepreneur has to have
opportunity seeking style where he has to evaluate
credibility of various alternatives and choose suitable
alternative which will prove to be profitable in future.


4. Strategies for venture : entrepreneur has to
strategize long term plan for starting venture. He has
to analyze the market and devise effective strategies
to face present and future competition.
5. Develop business plan : business plan is written
document containing details about every aspect of
proposed business venture. It provides roadmap to
employees working in company to attain objectives
and is capable of convincing potential customers they
are share holders and investors of company.
6. Acquire resources : entrepreneur has to acquire
various types of resources such as men, money,
material, machinery to start venture. Entrepreneur
has to have suitable skills to line up required
resources for the company.


7. Organize and start venture : entrepreneur
should be a good organizer, he should deploy
suitable resources at right place in right time
required to for the company to ensure effective
working of organization.
8. Develop and grow venture : it is not only
important to start a venture but also company
should be able to respond to changes happening
in the business market which is crucial factor
deciding existence of company.


9. Delegate, direct and lead the plan : during the
growth stage of the company entrepreneur should
provide required resources for the company and
during later stage entrepreneur should come up
with effective strategies to face competition and
guide employees in company performing role of
leader.
10. Supervise and control : for success of business
it is important to have suitable mechanism in
place so that entrepreneur can track overall
success of the company.


CHARACTERISTICS OF
ENTREPRENEURS


FEATURES OF ENTREPRENEUR
 Vision entrepreneur works hard to fulfil his dream in
process to achieve his objective, he visualizes market
scenario, socio economic, and technological environment
based on these information he predicts future situation
and accordingly plans his vision and ways to achieve
desired objective.
 Knowledge as entrepreneur is soul of organization he is
required to have knowledge about all the operations
carried in organization so that he can direct and regulate
activities of his employees from time to time.
 Desire to succeed entrepreneur are recognized in society
because of their varied mindset and high dreams which
motivates them to bring in invention and innovation in
are of their business.


 Independence entrepreneur needs independence in
his work area as they are not know to follow their
rule of thumb.
 Optimistic entrepreneurs are optimistic about
achieving their objective as they intend to take risk to
any extent to accomplish desired goals.
 Value addition entrepreneurs are known for bringing
new things in market. They create, innovate, add
value to existing products in market.
 Leadership entrepreneur exhibits qualities of good
leader. They are good planners, organizers, decision
makers and are empathetic towards employees at
workplace.


 Hardworking entrepreneur are know to be
workaholic. They put in continuous efforts to
achieve success and know that their is no
substitute for hard work.
 Risk taking ability is one of the major trait of
successful entrepreneur .


TYPES OF ENTREPRENEURS
1. Based on functional characteristics :
a. Innovative entrepreneur : such entrepreneurs
introduce new goods or new methods of production
or discover new markets or new organise their
enterprise. Entrepreneurs in this groups are
characterized by aggressive assembly of
information for trying new combination of factors.
b. Imitative or adoptive entrepreneur : these people
imitate techniques and technology innovated by
others. Entrepreneurs of this trait are reactive in
nature and are ready to adopt to innovation
happening around.

c. Fabian entrepreneur : accept change only when
they feel threatened that failure to do so would
result in losses. They are imitative by nature but
not determinant and also lack in power.
d. Drone entrepreneur : these are entrepreneur who
refuse to accept to adopt to changes adopted by
the competitors. When competition increases
they are pushed out of the market as it becomes
uneconomical for them to carry their business
further due to financial crisis.


2. Based on development :
a. Prime mover : he is a person who moves in powerful
sequence of development, expansion and diversification
of business.
b. Manager : these kind of entrepreneur do not initiate
expansion or innovation but believe in utilizing available
resource in organization and performing assigned
activities to them.
c. Minor innovator : these set of entrepreneurs contribute
to economic progress by finding better use for existing
resources.
d. Satellite : these are set of suppliers who provide
business with required resources and then move towards
productive enterprise.
e. Local trading : these entrepreneur limit their products
or service to local market.


3. Based on entrepreneur business :
a. Manufacturing : these are set of entrepreneurs who
are into production of products that will be sold in
market using resources and suppliers. E.g. Apparel,
textile products.
b. Whole selling : these are set of entrepreneur who
prove to be supporting hand for producers they sell
in goods produced in production centre to
middlemen in market.
c. Retailing : he is kind of entrepreneur one who sells
goods produced by companies directly to
consumers.
d. Service : these are set of qualified entrepreneurs
who are specialized in particular field and render
service to customers


4.Based on nine personality types of entrepreneurs
a. Improver : when entrepreneur continuously focuses
on development of business then he tends to
improve overall economy through development in
business process.
b. Advisor : these are entrepreneurs who provide high
level assistance to customers in market. Main motto
of these entrepreneur is to provide vale addition
information required by customers.
c. Superstar : he is kind of person who tends to attract
attention through his charismatic features example
CEO, MD of organization.
d. Artist : these kind of entrepreneurs are reserve by
nature but are suitable for the jobs which require
creativity such as web designer.


e. Visionary : visionary entrepreneur are futuristic in nature,
they will have high degree of curiosity to understand
changes happening in world. They prefer taking initiative
and like to be in line with competitive environment.
f. Analyst : analyst entrepreneur is a person one who
believes in analyzing the existing and tries to maintain
status quo and bring improvement.
g. Fireball : entrepreneur running business which is
composed of life, energy, optimism and one who believes
in bringing change by changing mindset of customers.
E.g. Aid agency.
h. Hero : these are kind of entrepreneurs who have ability to
lead and run their business through challenges.
i. Healer : these are entrepreneur one who believe harmony
in healing and bring in harmony to business.


5. According to use of technology :
a. Technical entrepreneur : strength of technical
entrepreneur is the technical knowledge of person.
He possesses craftsmen skill in him which he
develops to apply and implements to develop
technical aspect of product.
b. Non technical entrepreneur : these entrepreneurs
believe in coming up with new strategies rather then
concentrating technical aspect of the product. His
target is not to change the technology related to the
product but rather increase demand for product with
effective strategies by attracting customers.
c. Professional entrepreneurs : are the one who are
interested in floating a business rather then
managing or operating the same.


6. According to stages of development :
a. First generation entrepreneur : are those who
do not possess any entrepreneurial background.
They start industrial unit by the means of their
own innovative skill.
b. Second generation entrepreneur : are those
entrepreneur who inherit family business firm
and pass it from one generation to other.
c. Classical entrepreneur : is a stereotype
entrepreneur who aims to maximize his
economic returns at every level consistent with
the survival of the unit but with or without
element of growth.


7. According to capital ownership :
a. Private entrepreneur : when an individual or
group of people together set up enterprise
collectively bear profit and loss of company, and
adopting latest techniques in business are known
as private entrepreneur.
b. State entrepreneur : refers to trading or
industrial venture undertaken by the state or the
government.
c. Joint entrepreneur : refers to combination of
private and state enterprise running the business
by sharing resources with each other.

INTRAPRENEUR
 Intrapreneur is the person who works within the
organization, utilizes the resources available
within the organization and tries to accomplish
present task in innovative and creative manner by
effective utilization of available resources.


CHARACTERISTICS OF INTRAPRENEUR
1. Creates new venture : giving birth to new
business within the existing organization is the
typical characteristics of intrapreneur.
2. Innovates products and services : intrapreneur
to create effectiveness at workplace has to
update organization techniques through
implementation of new technology in company.
3. Innovates process : to sustain in market
company's strategies should be effective to that
of competitors for which intrapreneur should
renew company process at regular interval of
time.


4. Proactive : intrapreneur attempt to lead rather
than follow competitors through their proclivity
in terms of advance operations in company.
5. Risk taking : intrapreneur possess risk taking
attitude with regard to investment decision and
strategic actions under uncertain situations.
6. Renews organization : intrapreneur is expected
to transform the organization through renewal of
key ideas.
7. Competitively aggressive : intrapreneur is
expected to come up with new strategies to
stabilize or develop company's brand image in
market.


DEVELOPMENT OF ENTREPRENEURSHIP
1. Government and non government support
bodies : government in country has come up with
various institution for supporting SSI they are
national institute for entrepreneurship and small
business development ( NIESBUD ) was
established in 1983 by the ministry of micro,
small and medium enterprise. Entrepreneurship
development institute in India ( EDI ) an
autonomous body and non profit institution set up
for supporting SSI in country .


2. Incubation facility : premiere business schools
and technical institution in India have
entrepreneurship centres which provide
incubation facility to start up small scale unit.
Incubator is facility designed to assist start up
companies with respect to providing knowledge
and technical assistance.
3. Educational programs : entrepreneurship is be
coming popular choice as an elective in MBA
programs at business schools in India. In addition
to educational programs their are some business
school which provide certification programs and
training to candidates intending to start up their
own business.

4. Entrepreneurship networks : refers to
association formed by successful entrepreneur
where by becoming member of such association
fresher's will get some guidance and assistance to
start up their own business. E.g. TiE : the indus
entrepreneurs was founded in silicon valley in
1992 by successful entrepreneurs and
professionals in country. National
entrepreneurship network ( NEN ) founded in
2002 is the non profit initiative working to
inspire and educate emerging entrepreneurs in
company.


STAGES IN ENTREPRENEURIAL PROCESS
Identify an opportunity

Establish vision

Persuade others

Gather resources

Create new venture, product or market

Change/ adapt with time


 Identify an opportunity : is an first step towards
setting up an enterprise. Entrepreneur before
identification of an opportunity should do proper
market analysis about market situation, economic
conditions and understand taste preference of
customers.
 Establish vision : is second step towards
establishing an enterprise. In the process
entrepreneur is required to establish long term
vision and accordingly plan in mission which will
serve as roadmap to achieve company vision.
Objectives established by entrepreneur should be
flexible in nature to adjust according to changing
situation.

 Persuade others : even though the idea of
entrepreneurship is initiated by individual person, it
requires team effort to covert an idea into reality.
Entrepreneur is required to convince skilled
employees to work on business plan, make investors
and marketers understand credibility of business to
enhance status and goodwill of company in business
market.
 Gather resources : next step towards
entrepreneurship requires gathering of required
resources to start business. Resources includes
a. Finance resources : it refers to getting required
capital through financial institutions, raising capital
through general public by issue of shares, raising
required finance though other resources such as self
investment, finance through family and friends.

b. Operating resources refers to tangible and
intangible resources which includes machinery,
raw material, company image, operating
procedure, transportation etc.
c. Human resources refers to skilled labour force
in organization and other decision in relation to
human resource such as training and
development of employees, decision to hire
permanent or temporary employees, amount of
investment to be made of human resource in
organization.


d. Information resources : it is very important on
part of organization to collect information about
competitors, customers taste and preference,
recent development in area of business company
will be operating. The company has to maintain
valid and accurate management information
system in order to suffice to the information
needs of company.


 create new venture : once the entrepreneur has
arranged in for resources mentioned above, next
step involves creation and establishment of new
venture. Which requires fulfilment of various
legal formalities.
 Change and adapt with time : initial plan
developed by entrepreneur may not be suitable
for long run. So business plan is required to be
updated on regular basis to cope up with recent
trends or updation in market.


ROLE OF ENTREPRENEURSHIP IN
ECONOMIC DEVELOPMENT
1. Create employment opportunities : unemployment
is major problem faced by developing and under
developing countries around the world. As small
scale industries are labour intensive in nature they
generate more employment opportunities rather then
large scale industries in country.
2. Inspire others towards entrepreneurship : team
created by entrepreneurship provides opportunity for
employee cum tem mates to have first hand
experience in process of setting up an venture
creating possibility for team mate to come up with
his own SSI in future.


3. Create knowledge spill over : entrepreneurship
serves as mechanism by which knowledge over to
the firm in which it is commercialized. New firm
gets the benefit by the experience and knowledge
gained by the founder in the company.
4. Augment the number of enterprise : augment
refers to making basic comparison and trying to find
out area in which competitors are ahead.
Entrepreneurship not only leads to formation of new
business but also brings into picture idea or new
concept in market exploring almost all the available
areas in market creating tuff competition in market
thus leading to supply of quality products in market.


5. Provide diversity in the firms :
entrepreneurship activity in particular region
often results into creation of variety of firms in
country. These firms operates into diverse
activities and these diversity fosters economic
development in the country.


ENTREPRENEURSHIP AND ITS BARRIERS
1. Macro economic environment : macroeconomic
environment in which SSI operates is dependent on
policies of the government in supporting private
participation in business. Macro means large and it
refers to various factors existing in the environment
which effect the working of company. E.g.
instability in government of country which leads to
change in legal legislation o continuous basis.
2. Legal and regulatory environment : for
entrepreneurship is formed by registration and
licence procedure, commercial and contractual laws,
real estate regulations and laws. If the administration
procedure and laws are unclear, time consuming and
cumbersome then it proves to be barrier in operation
of SSI.


3. Corruption and unfair competition : a corrupt can
lead to unfair competition, which in turn can become
major hurdle to entrepreneurship activity in country.
Excessive approvals and regulations and approval
from government required by entrepreneurs may
make the government officials corrupt they develop
attitude to take bribe for quicker completion of work.
4. Financial obstacles : start up ventures are usually
dependent upon capital to be sourced from financial
institution. But it is general tendency of financial
institution to be reluctant in providing finance to SSI
rather then LSI as LSI given in more amount of
interest compare to SSI.


5. Tax burden : in many regions government
charges tax to SSI at similar rate as to LSI which
SSI cannot afford to pay as the revenue generated
by SSI is comparatively less.
6. Challenges in attracting talent : to generate
improved quality of product in the company
human resource in company should be efficient
in nature. It is possible only when company is
able to attract efficient employee to join
company, but candidates these days expect in for
higher salary which SSI cannot afford to pay
because of the same SSI has to compromise with
average candidates in the company.


7. Difficulty to source raw material : for timely
production of product in the market it is
important to have proper supply of raw material,
but supplier in market give second preference to
SSI in market compare to LSI as they order in
bulk rather then SSI in market.
8. Expensive to access proprietary technology : as
investment amount of SSI is industry is less they
cannot afford to do heavy investment in
technology which again has adverse effect on
quality and quantity of product produced by the
company.


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