ENTREPRENEURSHIP DEVELOPMENT MODULE-I Concept of Entrepreneurship The term ‘Entrepreneurship’ has been defined in many ways and various senses. It also defined differently by different authors. While some call entrepreneurship as ‘risk-bearing’, others view it ‘innovating’ and yet others consider it ‘thrill-seeking’. These views are now for the convenience of understanding broadly classified into three groups, namely, risk-bearer, organizer, and innovator. In a Conference on Entrepreneurship held in United States, the term ‘entrepreneurship’ was defined as follows: “Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition” According to Joseph A. Schumpeter (1939), “Entrepreneurship is based on purposeful and systematic innovation. It includes not only the independent businessman but also company directors and managers who actually carry out innovative functions”. 1. Risk-Bearing: He defined entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. A farmer who pays out contractual incomes which are ‘certain’ to the landlords and labourers and sells at prices that are ‘uncertain’. Here, uncertainty is defined as a risk which cannot be insured and is incalculable. The entrepreneurship is for earning profits or incurring losses because of various factors like increasing competition, changes in customer preferences, and shortage of raw materials and so on. Japanese proverb applies to him: “Fall seven times, stand up eight.” 2. Innovation: Innovation that is doing something new The ‘innovation’, i.e. introduction of new combination of factors of production, according to Schumpeter, may occur in any one of the following five norms: a. Introduction of a new product; b. Introduction of a new method of production; c. Opening of a new market; d. Discovery of a new source of supply of raw materials; and e. Carrying out of the new form of organization of any industry.
Something differently is a necessary condition to be called a person as an entrepreneur. The entrepreneur needs to apply invention after invention on a continuous basis to meet the customers’ changing demands for products. 3. Thrill-Seeking(risk-taking): He always takes the challenges for producing something new for the society. He facing challenges due to uncertainty of future and selling price. Other Important points: Besides these above, the entrepreneur is always helps economic development of any society, community, region and nation. Entrepreneurship is for: o Provide opportunity to unemployed, o Help to generate wealth for nation, o Help generate revenue for governance, and welfare and developmental work in the nation, and o Help improve quality of living. Motivation for Economics development and Entrepreneurial Achievement: Motivation for Entrepreneurs 1. 2. 3. 4. 5. Economic gain Independence Wealth creation Self employment Social status Motivation for Government 1. 2. 3. 4. 5. Best use of resources Fill up the demand-supply gap Supplement regional improvement Freedom from imports Employment generation Motivation for Corporate Houses 1. 2. 3. 4. 5. 6. Achieve monopoly Increase earning Building goodwill Proper use of surplus fund Explore new opportunities Diversification to various fields Enterprise & Society:
Enterprises are important ingredient of the modern society Enterprises are symbol of civilization and development in the society Enterprises cater to the need of goods and services of the society Enterprises bring social, educational and cultural development in the society Benefits 1. 2. 3. 4. 5. Enterprises are providing goods and services Enterprises are providing both direct and indirect employment. Enterprises brings up economic development Enterprises are responsible for the distribution of national wealth Enterprises create entrepreneurs. Hazards 1. 2. 3. 4. Enterprises causes environmental pollution Concentration of population in small areas It causes/reason of economic imbalance It disturb traditional professions Why to start business? 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Self-employment Desire to be successful Envious (jealous) at others’ success To meet challenges To earn money To earn name and fame To utilize talent To utilize idle time and resources Pain of unemployment or underemployment To take advantage of business situations To utilize local available resources How to start business? 1. 2. 3. 4. 5. 6. 7. 8. 9. Decide what business to do Decide where to do business When to start business? How much to produce? How to market? Where to market? How much fund to invest? Locating sources of capital Sourcing manpower
Entrepreneurial Traits and Skills Traits (Personality/behavior) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. They are self confidence They risk taker. They take their own decision They are highly motivated They are good managers They are leaders They are innovative They are quality conscious They are achievement oriented They are goal oriented They resolve conflict Skills (Talent/ability) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. They are good managers They are good planners They are capable of controlling the activities They can self execute They confidently delegate the work They can forecast They are good motivators They are innovators They can visualize the future prospect of their venture They are risk-takers They are result oriented Mind Vs Money in commencing New Venture Starting an enterprise is always a big challenge for any entrepreneur whether new or already existing. But the difference lies in the fact that an entrepreneur, who is already experienced in ways of business, takes decisions based on such experiences. In case of new entrepreneur, there is no such help. 1. Not an easy task for a first-timer 2. First-timer uses money more than mind 3. Existing entrepreneur uses mind more than money Entrepreneurial Success and Failures Success: Internal Reasons