Beruflich Dokumente
Kultur Dokumente
UNIT I
Definition
Historical Perspective
During the ancient period the word entrepreneur was used to refer to a person
managing large commercial projects through the resources provided to him.
In the 17thCentury a person who has signed a contractual agreement with the
government to provide stipulated products or to perform service was considered as
entrepreneur.
In the 18thCentury the first theory of entrepreneur has been developed by Richard
Cantillon. He said that an entrepreneur is a risk taker. If we consider the merchant,
farmers and /or the professionals they all operate at risk. For example, the merchants
buy products at a known price and sell it at unknown price and this shows that they
are operating at risk.
In the late 19thand early 20thCentury an entrepreneur was viewed from economic
perspectives. The entrepreneur organizes and operates an enterprise for personal gain.
Entrepreneurs
Invention
Innovation
Areas of Innovation
New product
New Services
New Production Techniques
New Way of Delivering the Product or Service to the Customer
New Operating Practices
New Means of Informing the Customer about the Product
New Means of Managing Relationship within the Organization
New Ways of Managing Relationships between Organizations
Small Businesses
Small business is a business which is independently owned and operated, not
dominated in its field of operation and meets certain standard of number of employee
and capital.
In general there are two approaches to define a small business; measures of the size
and economic/ control criteria
Small business failure factors
Management incompetence
Poor financial control
Lack of adequate capital
Over investment in fixed asset
Failure to plan current as well as future operation
Failure to adopt proper inventory control system
Improper Attitude (The entrepreneur may not respect time, employees and may have
lazy lifestyle and dictatorial style of work)
Inadequate marketing plan
Incorrect market identification
Poor distribution channel
Weak marketing communication or promotion
Characteristics of Entrepreneurship
Ability to take risks
Innovation
Visionary
Leadership
Open minded
Confident and well informed
Profit maker
Challenge taker
Is an Agent (Eco. And Change agent)
Qualities of Entrepreneur
Self Confidence
Tasks (or) Result oriented
Risk taker
Leadership
Future Oriented
Type of Entrepreneurship
Based on type of Business
o Trading Entrepreneur (only buying and selling)
o Manufacturing Entrepreneur
o Agricultural Entrepreneur
Based on use of Technology
o Technical Entrepreneur (science and technology venture is undertaken)
Non-Technical Entrepreneur
Based on ownership
o Private Entrepreneur (sole owner)
o State entrepreneur (trading is undertaken by the state or the government)
o Joint Entrepreneur ( Pvt. and Govt. Jointly run business)
Based on Gender
o Men entrepreneur
o Women entrepreneur
Based on Enterprise
o Small scale entrepreneur (Investment made upto 1 crore)
o Medium scale entrepreneur (1 crore to 5 crore)
o Large scale entrepreneur ( Above 5 crore)
Function of entrepreneur
Innovation
Assumption of Risk
Research
Development of Management skill
Overcome resistance to change
Catalyst of economic development
Knowledge/Expertise
Market/Demand
Total project cost
Finance / Capital
Competition
Location
Laws, rules and regulations
They remove regional disparities and bring balanced regional development. They also help to
reduce the problems of congestion, slums, sanitation and pollution in cities by providing
employment and income to people living in rural areas. They help in improving the standard
of living of the people residing in suburban and rural areas.
4. Optimization Of Capital
Entrepreneurs aim to get quick return on investment. They act as a stabilizing force by
providing high output capital ratio as well as high employment capital ratio.
5. Promotion of Exports
Entrepreneurs reduce the pressure on the country’s balance of payments by exporting their
goods they earn valuable foreign exchange through exports.
6. Consumer Demands
Entrepreneurs produce a wide range of products required by consumers. They meet the
demand of the consumers without creating a shortage for goods.
7. Social Advantage
Entrepreneurs help in the development of the society by providing employment to people and
paves for independent living They encourage democracy and self-governance. They are adept
in distributing national income in more efficient and equitable manner among the various
participants of the society.
8. Increase per capita income
Entrepreneurs help to increase the per capita income of the country in various ways and
facilitate development of backward areas and weaker sections of the society.
9. Capital formation
A country can attain economic development only when there is more amount of investment
and production. Entrepreneurs help in channelizing their savings and savings of the public to
productive resources by establishing enterprises. They promote capital formation by
channelizing the savings of public to productive resources.
UNIT II
1.ECONOMIC FACTORS
2.SOCIAL FACTORS
A society that is rational in decision making would be favorable for decisionmaking.
Education, research and training is given less importance in lessdeveloped countries therefore
there is very little vertical mobility of labor.
3. CULTURAL FACTORS
Religious, social and cultural factors also influence the individual taking up on
entrepreneurial career, in some countries there is religious and cultural b e l i e f
that high profit is unethical. This t ype of belief inhibits growth
o f entrepreneurship.
4.PERSONALITY FACTORS
5.MOTIVATION
Motivation is the act of stimulating someone or oneself to get a desiredcourse of action, to
push the right button to get the desired results.
MOTIVATING FACTORS
1. Education
2 . Occupational experience
3. Family background
4. Desire to work independently in manufacturing line
5. Assistance from financial institution
6. Availability of technology
7. Otherfactors
FAMILY TRADITION:
Individuals who for some reason, initiate, establish maintain and
expand new enterprises generate entrepreneurship in s o c i e t y .
I t i s o b s e r v e d t h a t e n t r e p r e n e u r s g r o w i n t h e t r a d i t i o n o f t h e i r families
and society and accept certain values and norms from these sources.
PSYCHOLOGICAL FACTORS:
The psychological factors like high needfor achievement, determination of unique
accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship
among individuals. On the other hand psychological factors like security, conformity and
compliance, need for affiliation etc restrict promotion of entrepreneurship.
POLITICAL FACTORS:
The political and also the political stability
of c o u n t r y i n f l u e n c e t h e g r o w t h o f e n t r e p r e n e u r s h i p . T h e p o l i t i c a l s y s
t e m , which promotes free market, individual freedom and private enterprise, will promote
entrepreneurship.
ECONOMIC POLICIES:
The economic policies of the government andother financial inst itutions and the
opportunities available in a society as a r e s u l t o f s u c h p o l i c i e s p l a y a
c r u c i a l r o l e i n e x e r t i n g d i r e c t i n f l u e n c e o n entrepreneurship.In view of
the haphazard development of economic zones, Government isencouraging the entrepreneurs
to establish their business in backward andtribal areas. This is primarily to arrest the
migration of people from thevillages to cities and to create employment opportunities
locally.Government is promoting such development by giving incentives like taxholidays
(both sales and income), subsidized power tariff, raw materials,transportation cost etc
3.Educational System:
Talented young men were prepared to take
whitec o l l a r e d j o b s o r j o i n g o v e r n m e n t o r p r o f e s s i o n a l s e r v i c e s .
M a n y w e r e attracted towards politics. The result was that very few
young men got attracted towards becoming efficient, industrialists,
technicians, managers etc.
4. Colonial Rules:
The British rulers adopted discriminatory policy Rich Indian
businessman had special connections with foreign rulers and both satisfied their
self interests. Even the few insurance and banking services catered to the needs of
some rich Indian businessman, Britishers in India did also not encourage Industrialization.
5.Managing Agents:
- T h e r e w e r e j u s t a h a n d f u l o f p e o p l e w h o w e r e known to be having
managerial skills. On common basis, these agents would lend their skills to some top
industries. Industrialists could not manage their own units. They were always at the mercy of
the managing agents who filled t h e i r pockets with big chunks of
t h e c o m p a n i e s ’ p r o f i t s a n d t o o k f u l l advantage of Indian industrialists till
the managing agency system was abolished in 1970.
6.Joint Family System:
- Younger members of the family always depended on the Head who never gave any kind of
independence or encouraged units other than family business ones. A number of young men
were discouraged f r o m d i v e r s i f y i n g from family business and
d o i n g s o m e t h i n g n e w a n d different.
7.Religious attitude:
- Indians were very religious minded. They gave more time to religion than
to earning material wealth. Religion got priority over business.
S o m e r e l i g i o n s e v e n c o n d e m n e d e x c e s s e a r n i n g s a n d indulgence I in
comforts. Industrial activity was, therefore, given secondary consideration by the religious
Indians.
8.Mindset:
The mindset of the average Indian was never entrepreneurial. Our religious
literature and epics told us to have patience and to keep on working without
expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial
activities.