UNIT 1

TOPIC:

CLASSIFICATION AND TYPES OF ENTREPRENEURS

INTRODUCTION
The entrepreneurs have been broadly classified according to the type
of business, use of professional skill, motivation, growth and stages of
development. The various type of entrepreneur is as follows

The term ‘entrepreneur’ is a French origin which means ‘go between’

or ‘between-takers’. An entrepreneur is a person who creates a new
enterprise by assembling inputs (i.e. land, labour and capital) for
production purposes. He assumes all risk and uncertainty, in order to
achieve profit and growth of the business venture by identifying new
opportunities and combining resources for the purpose of capitalising
them. He innovates new ideas and business processes.

They are classified as an innovative entrepreneur, imitating

entrepreneur, fabian entrepreneur, drone entrepreneur. Further,
they can be classified on the basis of business, technology, motivation,
area, stages of development, etc. The characteristics of a successful
entrepreneur are given below:
Risk taker

 Commitment and Conviction

 Capacity to analyse
 Initiative and Independence
 High personal efficiency
 High need for achievement

1. Entrepreneurs according to the type of business.

Entrepreneurs are found in various types of business occupations of
varying size, we may broadly classify them as follows:
 a. BUSINESS ENTREPRENEUR: Business entrepreneurs are individuals
who conceive an idea for a new product or service and then
create a business to materialize / convert their idea into reality.
They may set up a big establishment or a small business unit.
They are called small business entrepreneurs when found in
small business units such as printing press, textile processing
house, advertising agency, readymade garments or
confectionery.
b. TRADING ENTREPRENEUR: The trading entrepreneur is one who
undertakes trading activities and is not concerned with the
manufacturing work. He identifies potential markets, creates
demand for his product line and also creates a desire and
interest among buyers to buy his product. Eg BIG BAZAAR CHAIN,
EAZY DAY etc, (ONLINE- AMAZON, SNAP DEAL etc)
c. INDUSTRIAL ENTREPRENEURS: Industrial entrepreneur is
essentially a manufacturer who identifies the potential needs of
customers and tailors a product or service to meet the marketing
needs. He is product- oriented man who starts in an industrial
unit because of the possibility of some new product. Eg:
PANASONIC ACs, HITACHI Refrigerators etc.
d. CORPORATE ENTREPRENEUR: Corporate entrepreneur is a person
who demonstrates his innovative skill in organizing and managing
corporate undertaking. A corporate undertaking is a form of
business organization which is registered under some act which
gives it a separate legal entity. A trust registered under Trust act
or company registered under the companies act 1956. Eg.
INFOSYS Ltd, TCS Ltd, Xerox Ltd. Glaxo Smithklin Ltd
e. AGRICULTURAL ENTREPRENEUR: Agricultural entrepreneur are
those entrepreneurs who undertake agricultural activities as
raising and marketing of crops, fertilizers and other inputs of
agriculture. They are motivated to raise agricultural through
mechanization, irrigation and application of technologies for dry
land agriculture products.

2. ENTREPRENEURS IN TECHNOLOGY
We may broadly classify these entrepreneurs on the basis of use of
technology as follows:
a. TECHNICAL ENTREPRENEUR: A technical entrepreneur is
essentially compared to a crafts man. He develops improved
quality of goods because of the craftsmanship. He concentrates
more on production than marketing.
b. NON TECHNICAL ENTREPRENEUR: These are people who are not
concerned with the technical aspects of the product in which
they deal. They are concerned only with developing alternative
marketing and distribution strategies to promote their business.
c. PROFESSIONAL ENTREPRENEURS: Professional entrepreneurs are
a person who is interested in establishing a business but does not
have interest in managing or operating it once it is established. A
professional entrepreneur is a person who is interested in
establishing a business but does not have interest in managing or
operating it once it is established. A professional entrepreneur
sells out the running business and starts another venture with
the sales proceeds.

3. ENTREPRENEURS ACCORDING TO MOTIVATION

a. PURE ENTREPRENEUR: A pure entrepreneur is an individual who

is motivated by psychological and economic rewards. He
undertakes an entrepreneurial activity for his personal
satisfaction in work, ego, and status.
b. INDUCED ENTREPRENEUR: He is the person who is induced to
take up an entrepreneurial task due to the policy measures of
the government that provides assistance, incentives,
concessions, and necessary overhead facilities to start the
venture. Most of the induced entrepreneurs enter
entrepreneurship due to financial, technical and several other
facilities provided to them by the state agencies to promote
entrepreneurship.
c. MOTIVATED ENTREPRENEUR: New entrepreneurs are motivated
by the desire for fulfillment. They come into being because of
the possibility of making and marketing some new product for
the use of customers. If the product is developed to saleable
stage, the entrepreneur is further motivated by reward in terms
of profit.
d. SPONTANEOUS ENTREPRENEUR: These entrepreneurs start their
business because of their natural talents. They are persons with
 initiative, boldness and confidence in their ability which
motivate them to undertake entrepreneurial activity. Such
entrepreneurs have a strong conviction and confidence in their
inborn ability.
.

4. ENTREPRENEURS AND STAGES OF DEVELOPMENT:

Entrepreneurs may also be classified as the first generation

entrepreneur, modern entrepreneur and classical entrepreneur
depending upon the stage of development. They are explained below:
a. FIRST-GENERATION ENTREPRENEUR: A first generation
entrepreneur is one who starts an industrial unit by innovative
skills. He is essentially an innovator, combining different
technologies to produce a marketable product or service.
b. MODERN ENTREPRENEUR: A modern entrepreneur is one who
undertakes those ventures which go well along with the changing
demand in the market. They undertake those ventures which
suit the current marketing needs.
c. CLASSICAL ENTREPRENEUR: A classical entrepreneur is one who
is concerned with the customers and marketing needs through
the development of the self supporting venture. He is a
stereotype entrepreneur whose aim is to maximize his profits
only.

5. INNOVATING ENTREPRENEURS: Men and women in this group are

generally aggressive in experimentation who exhibit cleverness
in putting attractive possibilities into practice. One need not
invent but convert even old established products or services by
changing their utility, their value, and their economic
characteristics into something new, attractive and utilitarian.
This is the secret of these people.
6. IMITATIVE ENTREPRENEURS: These people are characterized by
readiness to adopt successful innovations by entrepreneurs. They
imitate techniques and technology innovated by others. They are
adoptive and more flexible.
ENTREPRENEURIAL COMPETENCIES

Entrepreneurial behavior requires certain knowledge, skill or

personality profile. Generally, it is called entrepreneurial competence
or traits.

A competence may be defined as an underlying characteristics of a

person which results in effective and/or superior performance in a
job. A job competence is an underlying characteristics of a person in
that it may be motive, traits, skills, aspect of one’s self-image or a
body of knowledge which one uses.

Thus, success of an entrepreneur is governed by entrepreneurial

competencies. If he has all these competencies, he can be expected to
achieve his entrepreneurial goals. Elements of entrepreneurial
competencies as follows:

(i) Body of Knowledge

(ii) Set of Skills
(iii) Cluster of Appropriate Motives/Traits.

(i) Body of Knowledge: Innovation is possible only through

knowledge. The inventor or originator of the idea that led to the
knowledge or vision, of something new. Inventors include those
who identify new technological processes, new forms of plant life
and new designs. Thus, inventions deal with new processes, or
new technical knowledge. In a simple way, knowledge means
collections of information and retention of facts that an
individual stores in some parts of his brain.

(ii) Set of Skills: Skill means potential and it also means the ability
to perform any task to achieve the goal. An entrepreneur is
required to have certain skills and these skills also constitute his
leadership qualities. These skills are as follows.

(a) Anticipatory Skills––foresight into a constantly changing

environment;
(b) Visioning Skills––the use of opinion and example to induce a
group to act in accordance with the leader’s purposes or
the shared purposes of a larger group. Eg APPLE LTD.
(d) Empowerment Skills––the willingness to share power and to
do so effectively; and
(e) Self understanding Skills––introspective or self underskills as
well as framework within which leaders understand both
their own needs and goals and those of their employees.

In practice, an entrepreneur who pursues the idea, planning its

application, acquiring resources and establishing its market
through persistence, planning, organizing and leadership needs
above skills. With the help of these skills, entrepreneur is
expected to perform well in his entrepreneurial behavior.

(iii) According to Paul Wilken “entrepreneurship becomes the

link between need achievement and economic growth.
Thus, need for achievement is guiding force behind
entrepreneurial activities. It is the desire to do well and it
motivates the people to undertake innovative activities.

The trait may be defined as a characteristic way in which

the person responds to an equivalent set of stimuli.
These responses represent intelligence, charisma
decisiveness, enthusiasm, strength, bravery, integrity and
self-confidence.
Thus, traits are an individual’s personal characteristics.
Traits are contents of leadership qualities. So an effective
leader is one who possesses intelligence, alertness to the
needs of others, understanding of the task, good
communication skills, initiative and persistence in dealing
with the problems.

In this way, entrepreneur is required to have certain traits.

These traits are necessary for leadership qualities expected
from an entrepreneur.
An entrepreneur should be
(i) Adaptable to situations,
(ii) Alert to social environment,
 (iii) Ambitious and achievement oriented
(iv) Assertive
(v) Cooperative
(vi) Decisive
(vii) Dependable
(viii) Dominant (desire to influence others)
(ix) Energetic (high activity level); persistent,
(x) Self-confident
(xi) Tolerant of stress and
(xii) Willing to assume responsibility.

Thus, for achieving success in his entrepreneurial behavior,

entrepreneur is required to have entrepreneurial
competencies and these are consist of a set of knowledge,
skills, motives and traits.

TOPIC

Q. ENTREPRENEURIAL COMPETENCIES IDENTIFIED BY THE EDI

Entrepreneurship Development Institute of India (EDI) conducted a

study under the guidance of David C. McClelland, a reputed
behavioural scientist, in three countries, namely, India Malawi and
Equador. It was found out that possession of certain competencies or
abilities results in superior performance. An entrepreneur may possess
certain competencies and at the same time it is possible to develop
these through training, experience and guidance. Various
competencies required for superior performance by the entrepreneurs
(identified during the study) are:
(a) INITIATIVE: It is an inner urge in an individual to do or initiate
something. These is a popular saying, ‘Well begun is half done’. It is
the entrepreneur who takes the first move towards setting up of an
enterprise. Most of the innovators have got this urge to do something
different. Entrepreneur basically is an innovator who carries out new
combinations to initiate and accelerate the process of economic
development.

(b) LOOKING FOR OPPORTUNITY: An entrepreneur is always on the look

out or searching for opportunity and is ready to exploit it in the best
interests of his enterprise.

(c) PERSISTENCE: An entrepreneur is never disheartened by failures. He

follows Try-Try Again for overcoming the obstacles that come in the
way of achieving goals.

(d) INFORMATION SEEKER: A successful entrepreneur always keeps his

eyes and ears open and is receptive to new ideas which can help in
realizing his goals. He is ready to consult expert for getting their
expert advice.

(e) CONCERN FOR HIGH QUALITY: Successful entrepreneurs do not believe

in moderate or average performance. They set high quality standards
for themselves and then put in their best for achieving these
standards. They believe in excellence, which is reflected in everything
they do.

(f) COMMITMENT: Top performers are prepared to make all sacrifices for
honouring the commitments they have made. Whatever they commit,
they take it as a moral binding for honouring their commitments,
irrespective of the costs involved.

(g) CONCERN FOR EFFICIENCY: Top performers are always keen to devise
new methods aimed at promoting efficiency. They are keen to evolve
and try new methods aimed at making working easier, simpler, better,
and economical.

(h) SYSTEMATIC PLANNING: Successful entrepreneurs evolve future course

of action keeping in mind the goals to be realized. They believe in
 developing relevant and realistic plans and ensure proper execution of
the same in their pursuit of attaining their goals.

(i) PROBLEM SOLVING: A successful entrepreneur takes each problem as a

challenge and put in best for finding out the most appropriate solution
for the same. He will first of all understand the problem and then
evolve appropriate strategy dealing with the same.

(j) SELF-CONFIDENCE: Entrepreneurs are not cowed down by difficulties

as they believe in their own abilities and strengths. They have full
faith on their knowledge, skill and competence and are not worried
about future uncertainties.

(k) ASSERTIVENESS: An assertive person knows what to say, when to say,

how to say and whom to say. He believe in his abilities and ensures
that others fall in line with his thinking, aimed at promoting the
interests of the organisation.

(l) PERSUATIVENESS: A successful entrepreneur through his sound

arguments and logical reasoning is in position to convince others to do
the work the way he wants them to do. It is not the physical, but
intellectual force he will use for convincing others.

(m) EFFECTIVE STRATEGIST: A successful entrepreneur possesses the

ability to evolve relevant strategy, aimed at safeguarding or promoting
organisation’s interests. Strategy may be with respect to facing future
uncertainities or challenges posed by competitors.

(n) EFFECTIVE MONITORING: Entrepreneurs ensure that every thing is

carried out in their organizations as per their wishes. They ensure
regular monitoring of the working so that the goals of the oganisation
are achieved in best possible manner.

(o) CONCERN FOR EMPLOYEES WELFARE: Future of the organisation

depends on its employees. If the employees are dedicated, committed
and loyal, the organisation is bound to perform well. A successful
entrepreneur tries to promote organisation’s interest through
promotion of interests of the workers. He takes personal interest in
solving problems confronting works and generates the feeling that
 there is interpendence of the interest of workers and the
management.

TOPIC: DEVELOPING ENTREPRENEURIAL COMPETENCIES

Following steps are involved in developing entrepreneurial

competencies:

(a) Recognising Process: Entrepreneurial behaviour starts with

understanding and recognition of the fact that in which area potential
behavior is going to be noteworthy. Specific competencies are meant
for innovative behavior and that is why recognition process should
give specific competencies.

(b) Process of Self-Assessment: It deals with identifying the specific

competencies among the potential candidates for entrepreneurship. It
is just like identifying a fact––does one possess a given competence
and if so how frequently one exhibit the same in one’s day-to-day
operational behaviour.

(c) Process of Practice: It covers the desired framework to what extent a

potential candidate for entrepreneurship lacks certain competencies.
But being interested to undertake entrepreneurial beahviour he would
like to acquire these competencies and strengthen others.
Entrepreneurial development programmes provide help in
strengthening this process.

(d) Feed Back Process: It relates with appraisal or seeking information

about the newly acquired behaviour. It also deals with introspection
process to what extent new behaviour or act of exhibiting a
competence has been beneficial.

Thus, there are different types of competencies required for

developing entrepreneurship. To become a successful entrepreneur, it
is must for his to have that competencies or leadership qualities like
innovative, initiative, risk assuming personality, sensitivity to
environment, sense of work, commitment and decisiveness.
TOPIC:

What are the economic and non economic factors influencing

Entrepreneurial development in India?

NOTE:(Follow a format: Introduction, Meaning,Definition and make a

flow chart too)

Economic Factors:

(a) Capital:
Capital is one of the most important prerequisites to establish an
enterprise. Availability of capital helps an entrepreneur to bring
together the land of one, machine of another and raw material of yet
another to combine them to produce goods. Therefore, capital is
regarded as lubricant to the production process. Basically, capital is
the life blood of any activity. If capital is available, people who have
innovative ideas would like to put them into reality. Without having
any obstacles, if capital is available, it will act as a lifeline to
entrepreneurs. So, if capital is available, entrepreneurial activities
will increase.

(b) Labour:
The quality and quantity of labour is another factor which influences
the emergence of entrepreneurship. Availability of labour makes
entrepreneurship attractive. More than abundantly available labour,
the presence of skilled labour force is very important because such a
workforce is generally less mobile than other resources. If
entrepreneurial activities are initiated near areas where labour is
available, then it is easy to carry out the business more comfortably
and profitably at low cost. This is why one finds textile units and
machine tools manufacturing industries concentrated in certain cities
like Coimbatore, Tiruppur, Ludhiana, Rajkot, Baroda, etc. just
because of availability of skilled labour force required for such units.
(c) Raw Materials:
Raw materials are required for establishing any industrial activity and
therefore has an influence in the emergence of entrepreneurship. In
the absence of raw materials, neither any enterprise can be
established nor an entrepreneur can emerge. In some cases
technological innovations can compensate for raw material
inadequacies. The supply of raw materials is not influenced by
themselves but becomes influential depending upon other opportunity
conditions. The more favourable these conditions are, the more likely
is the raw material to have its influence on entrepreneurial
emergence.
(d) Market :
It is not only the availability of capital, labour and raw materials but a
readily available market that attracts entrepreneurial activities.
Ultimately, it is the market that fetches revenue for any business. If
sufficient market is not there, people will naturally hesitate to do
business in a sector where there is no market. In addition to market
opportunities, it is equally important to ensure future market
opportunities for the emergence of entrepreneurial activities.
Non Economic Factors:

Social Factors :
Development of entrepreneurship in a society may take place not just
because of better economic factors but because of the presence of
positive social factors. The following social factors influence the
development of entrepreneurship in a society.
(a) Social norms and values:
A society sets certain norms and values for the behavior of people who
are part of that society. If people violate or overstep these norms and
values, certain restrictions are likely to be imposed on them. As a
result, many people are forced to accept certain types of jobs and
tasks that reflect the social environment. If the society has an open
and flexible approach towards various types of jobs and works, then
people will feel free to do whatever they like and even go in for
innovation and creativity. When there is more openness and
flexibility, entrepreneurship will not only emerge but also thrive.
(b) Role models:
Societies that celebrate entrepreneurship and felicitate successful
entrepreneurs in a way encourage many future generations to take up
entrepreneurial activities. This is because successful businessmen
prove to be role models for the society at large. For instance, states
like Gujarat, Maharashtra and to some extent Tamil Nadu and Haryana
have experienced better industrial development as a result of higher
concentration of entrepreneurs compared to lesser industrialised
states such as Orissa, Chattisgarh, Madhya Pradesh and other
Northeastern states.
(c) Social pressure:
At times, entrepreneurship can emerge in a society due to social
restriction too. If a society is orthodox, close and imposes a lot of
restrictions, then it is likely to backfire. People who are at the
receiving end are likely to react strongly and go in for change. In other
words, because of negative pressure, more number of people would
like to become entrepreneurs as a means of improving their status. It
has been noticed that where people were marginalized, they became
entrepreneurs just to prove their abilities and establish an identity in
the society.
(d) Respect and Status:
If societies accord recognition and respect to people who dare to do
something different and creative, it proves to be an encouragement
for others to do something enterprising. Therein lies the emergence of
entrepreneurship. In the traditional societies, people were looked
down upon rather than encouraged for deviating from the set norms or
regular occupation. This means there was no respect for change. Thus,
societies where there is respect and recognition for people to do
something different are more likely to see the development of
entrepreneurial activities.
(e) Security:
The view regarding role of social security in encouraging
entrepreneurship development is rather divided. One school of
thought is of the view that people are more prone to take
entrepreneurial risks in secure social environments. On the other
hand, there are others who argue that entrepreneurship will more
likely emerge if there are turbulent conditions. In both cases, there is
scope for entrepreneurship development.
3. Psychological Factors

According to David McClelland’s theory of need achievement, a

constellation of personality characteristics which are indicative of high
need achievement is the major determinant of entrepreneurship
development. Therefore, if the average level of need achievement in
a society is relatively high, one would expect a relatively high amount
of entrepreneurship development in that society. McClelland gives the
psychological concept of achievement motivation to account for the
differences in response to similar conditions. Referring to the
encouraging impact of achievement motivation training programmes
organised by the Small Industries Extension Training Institute (SIET),
Hyderabad McClelland argues that the need achievement can be
developed through the intensive training programmes.
4. Government Actions
The government by its actions or failure to act also does influence
both the economic and non-economic factors for entrepreneurship.
Any interested Government in economic development can help,
through its clearly expressed industrial policy, promote
entrepreneurship in one way or other. By creating basic facilities,
services and utilities and by providing incentives and concessions, the
Government can provide the prospective entrepreneurs a facilitative
socio-economic setting. Such compensations/benefits minimize the
risks which the entrepreneurs generally face. Thus, the supportive
actions of the Government appear as the most conducive to the
entrepreneurial growth. This is true of the Indian entrepreneurs also.
Note: make a flow chart for aforementioned headings and then at last
conclude.
TOPIC
EDP: ENTREPRENEURSHIP DEVELOPMENT PROGRAMME
It is said that an economy is an effect for which entrepreneurship is
the cause. Entrepreneurship development has therefore become a
matter of great concern in all countries. But the real problem is how
to develop entrepreneurship. Entrepreneurship development
programmes, or EDPs in short, are deemed to offer the solution to this
problem.
Entrepreneurs possess certain traits or competencies, which result in
superior performance. The question that arises is whether these
characteristics are inborn in the entrepreneurs or whether they can
be induced and developed. A well-known behavioural scientist David
McClelland at Harvard University made an interesting investigation
into why certain societies displayed great creative powers at
particular periods of their history. He found that ‘the need for
achievement’ was the answer. It was the ‘need to achieve’ that
motivated people to work hard and moneymaking was incidental.
Money was only a measure of achievement, not its core motivation.
In order to answer the next question, whether this need for
achievement could be induced, McClelland conducted a five-year
experimental study in one of the prosperous districts of Andhra
Pradesh in India in collaboration with the Small Industries Extension
and Training Institute (SIET) at Hyderabad.
This experiment is popularly known as the ‘Kakinada Experiment’.
Under this experiment, young persons were selected and put through
a 03 month training programme and motivated to see fresh goals. One
of the significant conclusions of the experiment was that suitable
training can provide the necessary motivation to entrepreneurs.
It was the Kakinada Experiment that made people appreciate the need
for entrepreneurial training (now popularly known as EDPs) to induce
motivation and competence among young prospective entrepreneurs.
Based on this realisation, India embarked in 1971 on a massive
programme of entrepreneurship development.
At present, some 700 all India and state level institutions conduct
EDPs. This model is followed in other countries too, such as the
‘Junior Achievement’ programme in USA and ‘Young Enterprises’
in UK.
The objectives of EDPs are
a. To develop and strengthen the entrepreneurial quality
b. To motivate them for achievement
c. To enable participants to be independent, capable, promising
entrepreneurs.
d. To make the trainees prepared to start their own enterprise
after the completion of the training programme.
The course contents of an EDP are selected in line with its objectives.
The training duration is about six weeks. The inputs are normally:
a. Introduction to entrepreneurship – Factors affecting small-scale
industry, role of entrepreneurs in economic development,
entrepreneurial behaviour and the facilities available for
establishing small-scale enterprise.
b. Motivation training – Participants are induced and their need for
achievement is increased which in turn helps in building
confidence and positive attitude. Successful entrepreneurs share
their experiences.
c. Management skills – Small entrepreneurs cannot afford expert
managers, therefore knowledge of finance, production, marketing
and human resource is imparted to them.
d. Support system and procedure – Support available from different
institutions is informed and the procedure for approaching them,
applying and obtaining support is explained.
e. Fundamentals of project feasibility study – Participants are
taught how to carry out the analysis and the feasibility of
marketing, organisation, technical, financial, and social aspects.
 f. Plant visits – Visits to various industrial plants are arranged which
help participants know more about an entrepreneur’s behaviour,
personality, thoughts and aspirations.

TOPIC:

Role of Entrepreneurship in economic development.

INTRODUCTION

There is a very important role for entrepreneurs to spark economic

development by starting new businesses, creating jobs, and
contributing to improvement in various key goals such as GDP,
exports, standard of living, skillsdevelopment and
community development. Entrepreneurship plays an influential role in
the economic growth and standard of living of the country. As a
startup founder or small business owner, you may think that you are
simply working hard to build your own business and provide for
yourself and your family. But you are actually doing a whole lot more
for your local community, state, region, and the country as a whole.
Here are the top 7 important roles an entrepreneur plays in the
economic development of a country.

MEANING

The capacity and willingness to develop, organize and manage a

business venture along with any of its risks in order to make a profit.
The most obvious example of entrepreneurship is the starting of new
businesses. The term entrepreneur is derived from French word ie
‘Entrependre’ which means to undertake. The one who undertakes
risk is known as an entrepreneurship.
DEFINITION

A person who organizes and manages any enterprise, especially a

business, usually with considerable initiative and risk. 2. an employer
of productive labor; contractor. 3. to deal with or initiate as
an entrepreneur.

1. Wealth Creation and Sharing: By establishing the business entity,

entrepreneurs invest their own resources and attract capital (in the
form of debt, equity, etc.) from investors, lenders and the public. This
mobilizes public wealth and allows people to benefit from the success
of entrepreneurs and growing businesses. This kind of pooled capital
that results in wealth creation and distribution is one of the basic
imperatives and goals of economic development.
2. Create Jobs: Entrepreneurs are by nature and definition job
creators, as opposed to job seekers. The simple translation is that
when you become an entrepreneur, there is one less job seeker in the
economy, and then you provide employment for multiple other job
seekers. This kind of job creation by new and existing businesses is
again is one of the basic goals of economic development. This is why
the Govt. of India has launched initiatives such as Start -up -India to
promote and support new startups, and also others like the Make in
India initiative to attract foreign companies and their FDI into the
Indian economy. All this in turn creates a lot of job opportunities, and
is helping in augmenting our standards to a global level.
3. Balanced Regional Development: Entrepreneurs setting up new
businesses and industrial units help with regional development by
locating in less developed and backward areas. The growth of
industries and business in these areas leads to infrastructure
improvements like better roads and rail links, airports, stable
electricity and water supply, schools, hospitals, shopping malls and
other public and private services that would not otherwise be
available.
Every new business that locates in a less developed area will create
both direct and indirect jobs, helping lift regional economies in many
different ways. The combined spending by all the new employees of
the new businesses and the supporting jobs in other businesses adds to
the local and regional economic output. Both central and state
governments promote this kind of regional development by providing
registered MSME businesses various benefits and concessions.
4. GDP and Per Capita Income: India’s MSME sector, comprised of 36
million units that provide employment for more than 80 million
people, now accounts for over 37% of the country’s GDP. Each new
addition to these 36 million units makes use of even more resources
like land, labor and capital to develop products and services that add
to the national income, national product and per capita income of the
country. This growth in GDP and per capita income is again one of the
essential goals of economic development.
5. Standard of Living: Increase in the standard of living of people in a
community is yet another key goal of economic development.
Entrepreneurs again play a key role in increasing the standard of living
in a community. They do this not just by creating jobs, but also by
developing and adopting innovations that lead to improvements in the
quality of life of their employees, customers, and other stakeholders
in the community. For example, automation that reduces production
costs and enables faster production will make a business unit more
productive, while also providing its customers with the same goods at
lower prices.
6. Exports: Any growing business will eventually want to get started
with exports to expand their business to foreign markets. This is an
important ingredient of economic development since it provides
access to bigger markets, and leads to currency inflows and access to
the latest cutting-edge technologies and processes being used in more
developed foreign markets. Another key benefit is that this expansion
that leads to more stable business revenue during economic
downturns in the local economy.
7. Community Development: Economic development doesn’t always
translate into community development. Community development
requires infrastructure for education and training, healthcare, and
other public services. For example, you need highly educated and
skilled workers in a community to attract new businesses. If there are
educational institutions, technical training schools and internship
opportunities, that will help build the pool of educated and skilled
workers.
A good example of how this kind of community development can be
promoted is Azim Hashim Premji, Chairman of Wipro Limited, who
donated Rs. 27,514 crores for promoting education through the Azim
Premji Foundation. This foundation works with more than 350,000
schools in eight states across India.
Creating innovation :-An entrepreneur is a person who always look for
changes. apart from combining the factors of production, he also
introduces new ideas and new combination of factors. He always try to
introduce newer and newer technique of production of goods and
services. An entrepreneur brings economic development through
innovation.
So, there is a very important role for entrepreneurs to spark economic
development by starting new businesses, creating jobs, and
contributing to improvement in various key goals such as GDP,
exports, standard of living, skills development and community
development.
TOPIC
MANAGERS vs Entrepreneurs

Definition of Entrepreneur

The term ‘entrepreneur’ is a French origin which means ‘go between’

or ‘between-takers’. An entrepreneur is a person who creates a new
enterprise by assembling inputs (i.e. land, labour and capital) for
production purposes. He assumes all risk and uncertainty, in order to
achieve profit and growth of the business venture by identifying new
opportunities and combining resources for the purpose of capitalising
them. He innovates new ideas and business processes.

They are classified as an innovative entrepreneur, imitating

entrepreneur, fabian entrepreneur, drone entrepreneur. Further,
they can be classified on the basis of business, technology, motivation,
area, stages of development, etc. The characteristics of a successful
entrepreneur are given below:
Risk taker

 Commitment and Conviction

 Capacity to analyse
 Initiative and Independence
 High personal efficiency
 High need for achievement

Definition of Manager

By the term ‘manager’ we mean a person who gets the things done
through his subordinates, with the aim of accomplishing business
objectives efficiently and effectively. The five primary functions of a
manager are planning, organising, directing and motivating,
coordination and control.

The manager is in charge of the particular division, unit or department

of the company. He may directly command to workers, or he may
direct the supervisors, who will command workers. Therefore, he is
the one under whose supervision, his subordinates work and report to
him. Managers can be top level managers, middle-level managers, low-
level managers.

Comparison Chart

BASIS FOR
ENTREPRENEUR MANAGER
COMPARISON

Meaning Entrepreneur refers Manager is an

to a person who individual who
creates an takes the
enterprise, by taking responsibility of
financial risk in controlling and
order to get profit. administering the
organization.

Focus Business startup Ongoing operations

Primary Achievement Power

motivation

Approach to Informal Formal

task

Status Owner Employee

Reward Profit Salary

Decision Intuitive Calculative

making

Driving force Creativity and Preserving status

Innovation quo

Risk Risk taker Risk averse

Conclusion

After reviewing the above points, it is quite clear that entrepreneur

and manager are two different persons in an organization. While
managers concerned with managing available resources, entrepreneur
focuses on spotting and capitalizing opportunities.

SHORT ANSWER QUESTIONS.

Q1. What steps should the entrepreneur take before launching a

venture?
The entrepreneur should take the following steps before launching a
venture.

a. Acquire indepth economic insight.

b. Build the capacity to scan the environment.
c. Clearly sense the opportunity.
d. Decide to select a venture suitable to the individual entrepreneur.
e. Establishing a plan to execute the project.
f. Facilitate the assessement and mobilization of the resources.
g. Go for the final launch of the entrepreneur

Q2.How can an entrepreneur raise the expectancy of his success?

Entrepreneurs can raise the expectancy of their success by acquiring
the following abilities.

Irrespective of the size of the venture, big or small, they should

acquire efficient management of

 Men
  Money
 Material
 Market
Efficiency of these resources is a key factor for the success. However,
the required level of expertize in managerial ability in production,
marketing, finance and personnel vary as per the size and nature of
the enterprise. It also calls for managerial growth and sustenance.

By acquiring these abilities, prospective entrepreneurs can raise the

expectancy of their success.

Q3.How does entrepreneurship development contribute to wealth

generation?
 Entrepreneurship involves innovating a better product or a better
service or a better process or a better programme.
 This involves efficient mobilization of Men, Material, Money and
Market.
 Thus the resources which were lying unutilized will be brought into
efficient usage there by contributing to the flow of cash, by
opening new markets or increasing the demand in the existing
markets.
 This drive to be innovative contributes to the wealth generation
process.
Q4. Explain the process of entrepreneurship development.
The process of entrepreneurial development consists of creating an
entrepreneurial person by

i. Imbibing entrepreneurial quality and motivation.

ii. Developing capacity of sensing, selecting, planning and establishing
an enterprise.
iii. Acquiring ability to successfully manage the set enterprise.
The main methodology can be best classified into simulatory, support
services and sustaining. This is best explained through the following
diagram.

Q5. What is the difference between creativity and innovation?

Creativity Innovation
1. Creativity is the ability to 1. Innovation is the process of doing
bring something new into new things or bring new new ideas
existence. or new process or new products or
new services into reality.
2. Innovation is a process that
2. Creativity is pre-requisite for
transforms creative ideass into
innovation.
useful realities.
3. A creative individual may just 3. An innovator may have the right
have a vision but may not have ability to transform the ideas into
the necessary resources or the products and services, but may
drive to convert the idea into suffer from shortage of creative
action. thoughts and ideas.

Q6. What are the areas involving risk in creating and managing an
enterprise?
The following are the areas involving risk in creating and managing an
enterprise.
 The design of the product or service and its acceptability.
 The resources availability.
 The availability of market.
 The variance in consumer expectations.
 The speed of change in the types and patterns of the products and
services.
 The demand-supply situation.
 The finance flow in the market.
 The performance of tools and equipment.
 The social and political climate for sustainability of the products.

Q7.In taking and managing a risk, the entrepreneur does not behave
like a gambler – Do you agree?
 While venturing into new ideas and services, the entrepreneur
treads into areas of uncertainty. Thus the entrepreneur is
exposed to risk. Hence risk taking and risk management are
important aspects of entrepreneurial competencies. There are
several areas and elements which throw potential challenge to
the entrepreneur. Therefore, he has to take crucial risk-prone
decisions in the process of discharging his responsibilities.

 However, unlike gamblers, an entrepreneur takes a calculated

and perceived decision in the light of the facts and
circumstances available at his disposal. So, we can say that, in
taking and managing a risk, the entrepreneur does not behave
like a gambler.

Q8. What are the general practices an entrepreneur should adopt to

acquire the skills of risk management?
The following are the general practices an entrepreneur should adopt
to acquire the skills of risk management.

1. Analysis of various policies, programs and situations

2. Identification of roadblocks in the road map of the enterprise
3. Consideration of alternatives
4. Plan of action for alternatives
5. Crisis management
6. Possibility of the new ideas or services being hijacked by other
powerful individuals or systems.
Q9.What are the standard problem solving competencies required for
an enterprise?
The following are the standard problem solving competencies required
for an enterprise.

a. Acquiring the necessary mindset which will help to understand that

the problems are part of the process and start working on the
problems in the context of the process to which the problems
belong to.
b. Basic understanding of the phenomenon that normally problems are
always caused.
c. Clear understanding of the fact that every problem has a solution
and one must seek for the solution.
d. Decision making capability to choose the relevant, contextual and
pragmatic solution, among the available multiple solutions for a
problem.
e. Explore the alternate strategies till the solutions for the imminent
problems are found.
f. Find or look for resources that would help to solve the problems in
an amiable way.
g. Generating new ideas, products, services, visions so that the
problems of the similar type donot occur in future.
EXAMPLES OF INDIAN ENTREPRENEURS
Dhiru Bhai Ambani
India’s largest private sector company. Created an equity cult in the
Indian capital market.

Reliance is the first Indian company to feature in Forbes 500

list. Dhirubhai Ambani was the most enterprising Indian entrepreneur.

Vijay Shekhar Sharma ( Paytm )

Vijay Shekhar Sharma is an Indian entrepreneur and founder of Paytm.

Sachin Bansal & Binny Bansal ( Flipkart )

Sachin Bansal and Binny Bansal launch an e-commerce website
retailing books in October 2007. Today, the near-20% stake they hold,
along with the top management and company is valued at around
US$16Bn. ( source: CB insights )
Initially, they had spent ₹ 400,000 only for making website to set up
the business.
ENTREPRENEURS WHO FAILED FIRST AND THEN STARTED AGAIN

Mr. N R Narayana Murthy:

First worked in IIMA and then started a company called Softronics in
1976! When it failed after a year and a half he joined Patni Computer
Systems.

Later he started Infosys Technologies along with 6 other professionals

as partners in 1981 and the rest, as they say, is history!!!

Ratan Tata while building Tata Motors.

In 1998, Ratan Tata brought a hatchback car Indica but it failed badly.
People didn’t like it. Nobody wanted to buy that car. Some people
suggested him to sell his car division and he agreed.

In 1999, He contacted many companies and Ford Motor

Company showed some interest. Ratan Tata along with Praveen Kadle
went to Ford’s headquarter to discuss terms of the deal but Ford’s
attitude was insulting. Ford’s chairman Bill Ford said to Ratan Tata-
“When you don’t know anything about passenger cars, why did you
start the business. We are doing a favour by buying your business.”

But what goes around comes around. In 2008, Ford’s Jaguar-

LandRover was a terrible loss. Guess, who came to save them from
going bankrupt. Yes, it was none other than Mr. Ratan Tata. He bought
JLR division of Ford. JLR made a loss of 1800 crore that year and
because of that Tata had to bear a loss of 2500 crore. This time,
Ford’s words were-

“You are doing us a favour by buying our company.”

In 2014, Tata Motors made a profit of 2.33 Lakh Crore and JLR’s share
in it was off 1.90 Lakh Crore, around 82%. Need I say more.

This story has been shared by Praveen Kadle, CEO of Tata Capital. (
Source: Quora )