Note for Entrepreneurship Development - ED by Saswat Behera

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Mgmt study material created/ compiled by - Commander RK Singh rajeshsingh_r_k@rediffmail.com Books • Robert Hisrich and Michael Peters, Entrepreneurship, Tata Mc Graw– Hill • Vasant Desai, Entrepreneurship • Marc J Dollinger, Entrepreneurship – Strategies and Resources, Pearson Education Sy l la b us • I – Entrepreneurial Perspective • II – Entrepreneurial Environment • III – Launching an Enterprise • • • Entrepreneurial Perspective • Concepts of entrepreneur, entrepreneurship and enterprise • Advantages of entrepreneurship • Nature and development of entrepreneurship • Gender issues in entrepreneurship • Dynamic role of small businesses in economic development • Personality of entrepreneurs and of intrapreneurs • Innovation and entrepreneurship Entrepreneurial Environment • Policy perspectives to promote entrepreneurship and enterprises • Analysis of business opportunities in different sectors of economy at national and global levels • Quick– start routes to enterprises (franchises, ancillaries and acquisitions) • Support organizations for entrepreneurs and their role • Legal framework for starting a business in India Launching Enterprises • Product and project identification • Developing a project report or business plan • Business financing including VC finance • Managing early growth • Business incubation • New venture expansion – strategies and issues Page 1 of 83 - Entrepreneurship Mgmt (Ver 1.1 – 06.04.2007) Jamnalal Bajaj Institute of Mgmt Studies

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Mgmt study material created/ compiled by - Commander RK Singh rajeshsingh_r_k@rediffmail.com D e f i n it i o ns Entrepreneur (Oxford Dictionary) – Person who undertakes an enterprise with chances of profit or loss. (As I have understood, Entrepreneur is a person who undertakes a business activity of which he has no background and faces considerable risks in the process. If either of the two elements, i.e., “no background” or “considerable risk” is missing in the venture, it is no entrepreneurship). Enterprise (Oxford Dictionary) – Bold Undertaking Entrepreneur – (New Encyclopaedia Britannica) – An individual who bears the risk of operating business in the face of uncertainty about the future conditions. Common Meaning – one who starts his own, new and small business Entrepreneurship – It is a philosophy or process through which an entrepreneur seeks innovation and employment. Entrepreneur Entrepreneurship Enterprise Person Process or Philosophy Object Dissecting the word we get Entre – Enter Pre – Before Neur – Nerve Centre Entrepreneurship can also be described as a creative and innovative response to the environment. E ntr e p r e ne ur s hi p The o r ie s 1600 – French verb – Entreprendre – to undertake. 1700 – Person bearing Risk or Profit in a fixed price contract (Risk) 1725 – Richard Cantillon – Person bearing risks is different from Capital Supplier (Risk) 1803 – J. B. Say – Shifts economic resources out from an area of lower to higher productivity & greater yields (Value Addition) 1934 – Joseph Schumpeter – Innovator and develops untried technology (Productivity & Innovation) 1961 – David McClelland – Highly motivated, energetic, moderate risk taker (Need for achievement) 1964 – Peter Drucker – Searches for change, responds to it & exploits as opportunity (Opportunity Focused) Page 2 of 83 - Entrepreneurship Mgmt (Ver 1.1 – 06.04.2007) Jamnalal Bajaj Institute of Mgmt Studies

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Mgmt study material created/ compiled by - Commander RK Singh rajeshsingh_r_k@rediffmail.com 1980 – Karl Vesper – Behaviour Perceptions– Economists, Psychologists, Businessmen, Politicians (Environment) 1983 – Gifford Pinchot – Intrapreneur 1985 – Robert Hisrich – Creating something different with value, devoting time & effort, assuming risks (FPS); results– rewards and satisfaction (Leadership & Vision) Please note that key word in Entrepreneurship is RISK. Any venture where risk is mitigated due to any reason does not qualify to be called entrepreneurship. Entrepreneurs are people who create new business activity in the economy and bear considerable business risk in the process. This is often done by starting new companies. But they can also create new business activity by introducing a new product or creating a new market So m e o t he r r e la t e d f a c ts a b o u t E ntr e p r e n e ur s hi p • Entrepreneurs are made; they aren’t born. (This statement is more of public posturing than fact. Essential characteristics of an entrepreneur, i.e., ambitiousness, capacity to take moderate risks, organizing ability, persistence, vision, etc, can not be taught in any school. These are inborn characteristics of a person. Know this fact but don’t write it in the answer sheet). • Incubator organization is an organization that supports entrepreneurs • Venture Capitalists – VCs are like bankers, but since they aren’t subject to strict regulations as bankers, they take greater risks in making investments – organized as formal businesses, they expect to reap 25– 30% annually and get more actively involved in the ventures than bankers do. • Angels are private individuals who invest directly in firms and receive equity stake in return – they act as advisers to founders. • Don’t confuse entrepreneurship with running a business. Every person launching a business is not an entrepreneur. A businessman’s son taking over his established family business or starting another factory in neighbouring town is no entrepreneur because he is well trained in matters of that business by virtue of constant exposure since childhood. He has support of family and friends in terms of finance and advice should going gets tough. With his training, professional and personal contacts and financial backing, risk element and uncertainty are almost missing in such business. Whereas, a farmer’s son, venturing to open a grocery or even ‘pan shop’ is an entrepreneur because he is stepping into an uncharted territory of which he has little/no training and therefore bears considerable risk. Page 3 of 83 - Entrepreneurship Mgmt (Ver 1.1 – 06.04.2007) Jamnalal Bajaj Institute of Mgmt Studies

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Mgmt study material created/ compiled by - Commander RK Singh rajeshsingh_r_k@rediffmail.com H o w d o y o u d e f i ne a n e nt r e p r e ne ur i n t he 2 1 s t Ce nt ur y ? An entrepreneur of 21 st century is a customer focused innovator. He uses e– knowledge. Advantage is speed. He is a global thinker even though he may not necessarily be a global player. St a n d a r d ( Ne w) D e f i n it i o n Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Word “Entrepreneur” stems from French Verb Entreprendre – means between; taker or go between New Definition involves four aspects – (a) The creation process (b) Devotion of time and efforts (c) Assumption of risks (d) Rewards of independence, satisfaction, money. A d v a nt a g e s o f E ntr e p r e n e ur s hi p To an Individual (a) Provides Self Employment for the entrepreneur (b) Entrepreneur can provide employment for near & dear one as well (c) Entrepreneurship often provides an employment and livelihood for next generations as well. (d) Freedom to use own ideas – Innovation and creativity (e) Unlimited income / higher retained income – Bill Gates has risen to become richest in the world in a single life time through entrepreneurship (f) Independence (g) Satisfaction To the nation (a) Provides larger employment – Entrepreneurs provide employment for self as well as other people and is source of employment creation. (b) Results in wider distribution of wealth – This is a logical sequel of above issue. Higher the employment, greater the distribution of wealth Page 4 of 83 - Entrepreneurship Mgmt (Ver 1.1 – 06.04.2007) Jamnalal Bajaj Institute of Mgmt Studies