Transcript of Entrepreneurship material unit 1
- 1. ENTREPRENEUR 1.1 MEANING: An entrepreneur is one of the
important segments of economic growth. Basically he is a person
responsible for setting up a business or an enterprise. In fact he
is one who has the initiative, skill for innovation and who looks
for high achievements. He is a catalytic agent of change and works
for the good of people. He puts up new green field projects that
create wealth, open up many employment opportunities and leads to
the growth of other sectors. The word entrepreneur is derived from
the French verb entreprendre. It means to undertake. In the early
16th century, the Frenchmen who organized and led military
expeditions were referred to as entrepreneurs, Around 1700 A.D.,
the term was used for architects and contractors of public works.
The term entrepreneur was applied to business initially by the
French economist, Caltillon, in the 18th century, designate a
dealer who purchases the means of production for combining them
into marketable products. Another Frenchman J.B. Say, expanded
Cantillons ideas and conceptualized the entrepreneur as an
organizer of a business firm, central to its distributive and
production functions. Beyond stressing the entrepreneurs importance
to the business, Say did little with his entrepreneurial analysis.
According to J.B.Say, an entrepreneur is the economic agent who
unties all means of production, the labour force of the one and the
capital or land of the other and who finds in the value of the
products his results from their employment, the reconstitution of
the entire capital that he utilizes and the value of the wages, the
interest and the rent which he pays as well as profit belonging to
himself. He emphasized the functions of co- ordination,
organization and supervision. Further, it can be said that the
entrepreneur is an organizer and speculator of a business
enterprise. The entrepreneur lifts economic resources out of an
area of lower into an area of higher productivity and greater. The
New Encyclopaedia Britannica considers an entrepreneur as an
individual who bears the risk of operating a business in the face
of uncertainty about the future condition.
- 2. As professor Jan Tin Bergen points out The best entrepreneur
in any developing country is not necessarily the man who uses much
capital, but rather the man who knows how to organize the
employment and training of his employees. Whoever concentrates on
this is rendering a much more important service to his country than
the man who uses huge capital. Joseph A. Schumpeter thus writes The
entrepreneur in an advanced economy is an individual who introduces
something new in the economy- a method of production not yet tested
by experience in the branch of manufacture concerned, a product
with which consumers are not yet familiar, a new source of raw
material or of new markets and the like Briefly, an entrepreneur is
one who innovates, raises money, assembles inputs, chooses managers
and sets the organization going with his ability to identify them.
Innovation occurs through (1) the introduction of a new quality in
a product (2) a new product(3) a discovery of a fresh demand and a
fresh source of supply and (4) by changes in the organization and
management. New Concept of Entrepreneur The term entrepreneur has
been defined as one who detects and evaluates a new situation in
his environment and directs the making of such adjustments in the
economic system as he deems necessary. He conceives of an
industrial enterprise for the purpose, displays considerable
initiative, grit and determination in bringing his project to
fruition and in this process, performs one or more of he following.
Perceives opportunities for profitable investment Explores the
prospects of starting such a manufacturing enterprise Obtains
necessary industrial licenses Arranges initial capital Provides
personal guarantees to the financial institutions Promises to meet
the shortfalls in the capital and Supplies technical know-how. The
term entrepreneur is to be understood in its totality and not in a
fabricated manner. The term entrepreneur can only be understood
with a bearing on economic, psychological, sociological and
cultural bearings. The social responsibility is essentially a part
of entrepreneurial outlook on life.
- 3. Fig:1Fig:1 Basics of an EntrepreneurBasics of an
Entrepreneur ORGANISATION INNOVATION URGE RISK SKILL ENTERPRISE
VISION GROWTH MANAGEMENT So, Entrepreneurs are individuals
motivated by a will for power, special characteristics being an
inherent capacity to select correct answers, energy, will and mind
to overcome fixed talents of thoughts, and a capacity to withstand
social opposition. 1.2 Characteristics of an entrepreneur: A
successful entrepreneur must be a person with technical competence,
initiative, good judgment, intelligence, leadership qualities, self
confidence, energy, attitude, creativeness, fairness, honesty,
tactfulness and emotional stability. Mental ability: Mental ability
consists of intelligence and creative thinking. An entrepreneur
must be reasonably intelligent and should have creative thinking
and must be able to engage in the analysis of various problems and
situations in order to deal with them. The entrepreneur should
anticipate changes and must be able to study the various situations
under which decision have to be made.
- 4. Clear objectives: An entrepreneur should have clear
objectives as to the exact nature of the goods to be produced and
subsidiary activities to be undertaken. A successful entrepreneur
may also have the objective to establish the products, to make
profit or to render social service. Business secrecy: An
entrepreneur must be able to guard business secrets. Leakage of
business secrets to trade competitors is a serious matter which
should be carefully guarded against by an entrepreneur. An
entrepreneur should be able to make a proper selection of his
assistants. Human relations ability: The most important personality
traits contributing to the success of an entrepreneur are emotional
stability, personal relations, consideration and tactfulness. An
entrepreneur must maintain good relations with his customers if he
is to establish relations that will encourage them to continue to
patronize his business. He must also maintain good relations with
his employees if he is to motivate them to perform their jobs at a
high level of efficiency. An entrepreneur who maintains good human
relations with customers, employees, suppliers, creditors and the
community is much more likely to succeed in his business than the
individual who does not practice good human relations. Human
relations ability can also be referred to as tactfulness. Fig: 2
Characteristics of an Entrepreneur
- 5. Communication ability: Communication ability is the ability
to communicate effectively. Good communication also means that both
the sender and the receiver understand each other and are being
understood. An entrepreneur who can effectively communicate with
customers, employees, suppliers and creditors will be more likely
to succeed than the entrepreneur who does not. Technical knowledge:
An entrepreneur must have a reasonable level of technical
knowledge. Technical knowledge is the one ability that most people
are able to acquire if they try hard enough. An entrepreneur who
has a high level of administrative ability, mental ability, human
relation ability, communication ability and technical knowledge
stands a much better chance of success than his counterpart who
possesses low levels of these basic qualities. Some key
characteristics of a successful entrepreneur are:
- 6. Motivator: An entrepreneur must build a team, keep it
motivated and provide an environment for individual growth and
career development. Self confidence: Entrepreneurs must have belief
in themselves and the ability to achieve their goals. Long term
involvement: An entrepreneur must be committed to the project with
a time horizon of five to seven years. No ninety- day wonders are
allowed. High energy level: Success of an entrepreneur demands the
ability to work long hours for sustained periods of time.
Persistent problem solver: An entrepreneur must have an intense
desire to complete a task or solve a problem. Creativity is an
essential ingredient. Initiative: An entrepreneur must have
initiative accepting personal responsibility for actions and above
all make good use of resource. Goal setter: An entrepreneur must be
able to set challenging but realistic goals. Modern risk taker: An
entrepreneur must be a moderate risk taker and learn from any
failures. These personal traits go a long way in making an
entrepreneur a successful man or woman. 2.1 Concept of
Entrepreneurship Schumpter (1934) Entrepreneurship is seen as new
combinations including the doing of new things or the doing of
things that are already being done in a new way. New combinations
include 1)introduction of new good, 2)new
- 7. method of production, 3)opening of a new market, 4)new
source of supply, 5)new organizations. Entrepreneur disrupts
equilibrium. Penrose (1959) Distinguished between entrepreneurial
and managerial services. ESs refer to those contributions to the
operations of a firm which relate to the introduction and
acceptance on behalf of the firm of new ideas such as new products,
locations, significant changes in technology, acquisition of new
management personnel, fundamental changes in the administrative
organization, raising capital, making of plans for expansion.
Managerial services execute entrepreneurial services. Entrepreneurs
provides ESs. Kirzer (1973) The entrepreneur is a decision maker
whose entire role arises out of his alertness to unnoticed
opportunities; therefore, entrepreneurship is the ability to
perceive new opportunities. This recognition and seizing of the
opportunity will tend to correct the market and bring it back
toward equilibrium. Entrepreneurial Discovery Drucker (1985)
Entrepreneurship is an act of innovation that involves endowing
existing resources with new wealth producing capacity. Rumelt
(1987) Entrepreneurship is the creation of new businesses. New
business meaning that they do not exactly duplicate existing
businesses but have some element of novelty. Low & MacMillan
(1988) Entrepreneurship is the creation of new enterprise. Gartner
(1988) Entrepreneurship is the creation of organizations, the
process by which new organizations come into existence.
Entrepreneurship ends when the creation stage of the organization
ends. Stevenson et al. (1989) Entrepreneurship is the pursuit of an
opportunity w/o concern for current resources or capabilities.
- 8. Amit, Glosten & Muller (1993) Entrepreneurship is the
process of extracting profits from new, unique, and valuable
combinations of resources in an uncertain and ambiguous
environment. Timmons (1994) Entrepreneurship is creating and
building something of value from practically nothing. That is,
entrepreneurship is the process of creating or seizing an
opportunity and pursuing it regardless of the resources currently
controlled. (textbook) Venkataraman (1997) Entrepreneurship
research seeks to understand how opportunities to bring into
existence future goods and services are discovered, created, and
exploited, by whom, and with what consequences. The concept of
entrepreneurship as an organized knowledge came into being about
hundred years ago. Though the economists from Adam Smith to
Marshall were talking about it but without assigning the name of
entrepreneurship. They used the terms as employer, the master, the
merchant and the undertaker for carrying out different
entrepreneurial activities now comprising of entrepreneurship. It
was eantillon, who first brought out the term entrepreneur (Murthy
1989) and entrepreneurship was recognized in economic literature.
Considerable attention has focused on the definition of the term
entrepreneur. Schumpeter(1959) considered the entrepreneur as an
innovator. He writes that Entrepreneurship is the carrying out of
new combination we call enterprise; the individuals whose function
is to carry them out we call entrepreneurs. The new combination
focuses on five aspects (Schumpeter 1934): The introduction of new
goals, new methods of production, opening up of new markets, new
sources of supply of raw material and new industrial organizations.
Say (1964) uses the term entrepreneur to refer to someone who
creates and then, perhaps, operates a new business firm, whether or
not there is anything innovative in those acts.
- 9. Baumol (1993) sees the Schumpeter type as an innovating
entrepreneur and the Say type as the firm-organizing entrepreneur.
People who get ideas for creating a new business, bring that
business into existence and then carry on the work of the
enterprise, are entrepreneurs (Jena 1989). Pprecisely, an
entrepreneur is one who undertakes to organize, manage, and assume
the risks of a business. Even a small business unit is an
entrepreneur and his activities are the entrepreneurhip.
Entrepreneurship is a human activity which plays a major role in
economic development its history is as old as human history it
indicates to the spirit of enterprise. Such a spirit transform the
man from a nomad to a cattle rarer, to a settled agriculturist, to
a trader and an industrialist (Murthy 1989). An entrepreneur is a
person while entrepreneurship is the process of its actual working.
Entrepreneurship is also consistently equated with the
establishment and management of small business enterprises. In
United States, the entrepreneur is often defined as one who starts
his own, new and small business. (Drucker 1985). Modern literature
on economic development classifies the entrepreneurship in four
broad categories. The innovating, The imitating, The Fabian and The
drone entrepreneurship (Williamson and Bultrick 1969). Innovating
and imitating entrepreneurship is generally available in developed
countries and very rare and limited in developing countries.
Developing countries have in them the Fabian and Drone types of
entrepreneurship. In all the above definitions, entrepreneurship
refers to the functions performed by a entrepreneur is establishing
an enterprise. Just as management is regarded as what mangers do,
entrepreneurship may be regarded as what entrepreneurs do. In other
words, entrepreneurship is a process involving various actions to
be undertaken to establish an enterprise. It is, thus, process of
giving birth of a new enterprise.
- 10. Entrepreneurship = Entrepreneur + Enterprise (Process)
(Person) (Object) Theories of Entrepreneurship An entrepreneur, as
described by the Small Business Association, puts together a
business and accepts the associated risk to make a profit. While
this definition serves as a simple but accurate description of
entrepreneurs, it fails to explain the phenomena of
entrepreneurship itself. A number of theories exist, but all of
them fall into one of five main categories Economic Theories
Economic entrepreneurship theories date back to the first half of
the 1700s with the work of Richard Cantillon, who introduced the
idea of entrepreneurs as risk takers. The classic, neoclassical and
Austrian Market process schools of thought all pose explanations
for entrepreneurship that focus, for the most part, on economic
conditions and the opportunities they create. Economic theories of
entrepreneurship tend to receive significant criticism for failing
to recognize the dynamic, open nature of market systems, ignoring
the unique nature of entrepreneurial activity and downplaying the
diverse contexts in which entrepreneurship occurs. Resource-Based
Theories Resource-based theories focus on the way individuals
leverage different types of resources to get entrepreneurial
efforts off the ground. Access to capital improves the chances of
getting a new venture off the ground, but entrepreneurs often start
ventures with little ready capital. Other types of resources
entrepreneurs might leverage include social networks and the
information they provide, as well as human resources, such as
education. In some cases, the intangible elements of leadership the
entrepreneur adds to the mix operate as resource that a business
cannot replace.
- 11. Psychological Theories Psychological theories of
entrepreneurship focus on the individual and the mental or
emotional elements that drive entrepreneurial individuals. A theory
put forward by psychologist David McCLelland, a Harvard emeritus
professor, offers that entrepreneurs possess a need for achievement
that drives their activity. Julian Rotter, professor emeritus at
the University of Connecticut, put forward a locus of control
theory. Rotters theory holds that people with a strong internal
locus of control believe their actions can influence the external
world and research suggests most entrepreneurs possess trait. A
final approach, though unsupported by research, suggests
personality traits ranging from creativity and resilience to
optimism drive entrepreneurial behavior.
Sociological/Anthropological Theories The sociological theory
centers its explanation for entrepreneurship on the various social
contexts that enable the opportunities entrepreneurs leverage. Paul
D. Reynolds, a George Washington University research professor,
singles out four such contexts: social networks, a desire for a
meaningful life, ethnic identification and social-political
environment factors. The anthropological model approaches the
question of entrepreneurship by placing it within the context of
culture and examining how cultural forces, such as social
attitudes, shape both the perception of entrepreneurship and the
behaviors of entrepreneurs. Opportunity-Based Theory Prolific
business management author, professor and corporate consultant,
Peter Drucker put forward an opportunity-based theory. Ducker
contends that entrepreneurs excel at seeing and taking advantage of
possibilities created by social, technological and cultural
changes. For example, where a business that caters to senior
citizens might view a sudden influx of younger residents to a
neighborhood as a potential death stroke, an entrepreneur might see
it as a chance to open a new club. Importance of Entrepreneurship
The entrepreneur who is a business leader looks for ideas and puts
them into effect in fostering economic growth and development.
Entrepreneurship is one of the most important input in the economic
development of a country. The nature of a developing economy is
quite different from a developed economy. The developing economy
can be an agricultural country moving towards the industrialization
or it may be the one where in the industry may be in its infancy
lacking advance technology.
- 12. The modern era is an era of changes. The whole world is
becoming a village due to the industrial revolution and fast
developing communication technology. The globalization of industry
and commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful
human activity. The modern era is an era of changes. The whole
world is becoming a village due to the industrial revolution and
fast developing communication technology. The globalization of
industry and commerce is bringing a vast change in various aspects
of life. Economic development of a country is the outcome of
purposeful human activity. Economic development is a highly dynamic
process characterized by the pattern of demand shifts, new products
are needed, appear for the production of goods within a country. A
developing country needs entrepreneurs who are competent to
perceive new opportunities and are willing to incur the necessary
risk in exploiting them. A developing economy is required to be
brought out of the vicious circle of low income and poverty.
Entrepreneur can break this vicious circle. Entrepreneurs and
helping government can change a developing economy in developed
economy. Employment Generation Entrepreneurs not only give
employment to the entrepreneur but also a source of direct and
indirect employment for many people in a country. Unemployment is a
chronic problem in most of the developing and underdeveloped
countries. Entrepreneurs play an effective role in reducing the
problem of unemployment in the country which in turn clears the
path towards economic development of the nation Entrepreneurial
development is looked at as a vehicle for employment generation
through promotion of small business. India, being far more
developed and forward looking country than some of the third world
countries, can provide lead to entrepreneurial development
activities. However, India can benefit from the well- documented
success experiences of developed countries like USA, Japan and UK
in the field of employment generation and small business promotion.
Promotes Capital Formation
- 13. Entrepreneurs mobilize the idle funds which lead to capital
formation. The funds which are used by entrepreneurs is a mix of
their own and borrowed. This leads to creation of wealth which is
very essential for development of an economy. Small Business Plan
Dynamism Great dynamism is one of the qualities of the small and
medium enterprises. This quality of dynamism originates in the
inherent nature of the small business. The structure of small and
medium enterprises is less complex than that of large enterprises
and therefore facilitates quicker and smoother communication and
decision- making. This allows for the greater flexibility and
mobility of small business management. Also, small enterprises,
more often make it possible for owners, who have a stronger
entrepreneurial spirit than employed mangers, to undertake risk and
challenges. Balanced Economic Development Small business promotion
needs relatively low investment and therefore can be easily
undertaken in rural and semi-urban areas. This in turn creates
additional employment in these areas and prevents migration of
people from rural to urban areas. Since majority of the people are
living in the rural areas, therefore, more of our development
efforts should be directed towards this sector. Small enterprises
use local resources and are best suited to rural and underdeveloped
sector The growth of industries and business in these areas lead to
a large number of public benefits like road transport, health,
education, entertainment, etc Setting up of more industries leads
to more development of backward regions and thereby promotes
balanced regional development. Innovations in Enterprises Business
enterprises need to be innovative for survival and better
performance. It is believed that smaller firms have a relatively
higher necessity and capability to innovate. The smaller firms do
not face the constraints imposed by large investment in existing
technology. Thus they are both free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small
firms growth in India. An increased number of small firms are
expected to result in more innovations and make the Indian industry
compete in the international market.
- 14. Better standards of living Entrepreneurs play a vital role
in achieving a higher rate of economic growth. Entrepreneurs are
able to produce goods at lower cost and supply quality goods at
lower price to the community according to their requirements. When
the price of the commodes decreases the consumers get the power to
buy more goods for their satisfaction. In this way they can
increase the standard of living of the people. Self-Reliance
Entrepreneurs are the corner stores of national self-reliance. They
help to manufacture indigenous substitutes to imported products
which reduce the dependence on foreign countries. There is also a
possibility of exporting goods and services to earn foreign
exchange for the country. Hence, the import substitution and export
promotion ensure economic independence and the country becomes
self-reliance. Facilitates Overall Development: Entrepreneurs act
as catalytic agent for change which results in chain reaction. Once
an enterprise is established, the process of industrialization is
set in motion. This unit will generate demand for various types of
units required by it and there will be so many other units which
require the output of this unit. This leads to overall development
of an area due to increase in demand and setting up of more and
more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of
enthusiasm and conveying an impetus for overall development of the
area Entrepreneurship also facilitates the rate of development of a
country by significantly contributing to the following factors. By
increasing the rate of growth in GDP of a country Increasing
productivity. Growing employment opportunity. Increasing economic
diversification. Optimum use of local resources Continued
innovation in techno managerial practices Improving in
international competitiveness.
- 15. Entrepreneurs vs. Managers: Whats the big difference? 1.
The Job of an Entrepreneur Begins Before Even the Business is
Created An entrepreneur will perceive an opportunity, assemble a
team, locate resources for his new business idea, raise the needed
capital and start the business while the manager comes in only
after the foundation has been laid and the business established.
What this mean in essence is that the job of a manager begins only
after the entrepreneur has done the ground work. Without
entrepreneurs, the managers will have no business to manage. 2.
Entrepreneurs are more concerned with the launching and
sustainability of a business in the face of uncertainty while
managers are more concerned with the effective and efficient
operation of an on-going business. 3. Managers are specialists;
business management specialist to be precise. They are focused on
managing and growing a business. On the other hand, entrepreneurs
are generalist. They need to know a little about everything. An
entrepreneur must know a little about product development and
design, business law, accounting, communication and public
speaking, investing, leadership, business systems, finance and
insurance, marketing and sales, raising capital and so on. An
entrepreneurs cup must never be full. 4. Entrepreneurs are street
smarts; they learn by trial and error, they learn from their own
mistakes and the business mistakes of others. An entrepreneur
starts with whatever is on ground and learns the hard way. 5.
Financial freedom is the utmost priority of entrepreneurs. Freedom
to do what they want, freedom to live the kind of life they love
and freedom to make a choice. To managers, security is the utmost
priority. Security comes in the form of a steady paycheck, pension,
gratuity, pay raises, job titles, promotions, bonuses and
entitlements. 6. An entrepreneur owns the business; a manager is
simply an employee that works in the entrepreneurs business. In
essence, a manager owns a job. A manager is paid to run the
entrepreneurs business. 7. The reward of entrepreneurs come in the
form of capital gains, asset acquisition, cash flow, and dividend
while the managers reward come in form of salaries, pay offs,
promotion, job title, bonus and incentives. 8. Entrepreneurs thrive
on risk and uncertainty. To entrepreneurs, risk and uncertainty are
part of the game of entrepreneurship; risk is what makes the game
exciting. Managers on the other hand are conservative and detest
risk; they simply avoid it. 9. Entrepreneurs see mistakes as an
avenue to learn something; they learn more from their business
mistakes. Managers avoid mistakes because it will cost them their
job. Besides; that
- 16. is why they are being paid; to avoid mistakes. That is
where the word professionalism comes in. 10. When entrepreneurs
come together to pool resources or network, they form a team but
when managers who are usually employees come together to work
towards a common goal, they form a union. 11. Entrepreneurs are
primarily motivated by the need to build a business that solves a
problem or provide a need, while providing them cash flow and
freedom. Managers on the other hand are motivated by the next
paycheck, bonus, incentive, pay off, job title and promotion. 12.
Entrepreneurs are committed to the business from its inception till
they achieve their goal. Managers on the other hand are committed
till the next paycheck; delay or cut their paycheck and they are
gone Difference between an Entrepreneur and a Manager: Bases of
Difference Entrepreneur Manager 1. Motive The main motive of an
entrepre- neur is to start a venture by setting up an enterprise.
He understands the venture for his personal gratification. But, the
main motive of a manager is to render his services in an enterprise
already set up by someone else i.e., entrepreneur. 2. Status An
entrepreneur is the owner of the enterprise. A manager is the
servant in the enterprise owned by the entrepreneur. 3. Risk
Bearing An entrepreneur being the owner of the enterprise assumes
all risks and uncertainty involved in running the enterprise. A
manager as a servant does not bear any risk involved in the
enterprise. 4. Rewards The reward an entrepreneur gets for bearing
risks involved in the enterprise is profit which is highly
uncertain. A manager gets salary as reward for the services
rendered by him in the enterprise. Salary of a manager is certain
and fixed. 5. Innovation Entrepreneur himself thinks over what and
how to produce goods to meet the changing demands But, what a
manager does is simply to execute the plans prepared by the
entrepreneur.
- 17. of the customers. Hence, he acts as an innovator also
called a change agent Thus, a manager simply translates the
entrepreneurs ideas into practice. 6. Qualifications An
entrepreneur needs to possess qualities and qualifications like
high achievement motive, originality in thinking, foresight, risk
-bearing ability and so on. An manager needs to possess qualities
and qualifications like low achievement motive, origi- nality in
thinking, foresight, risk -bearing ability and so on. Role of
Entrepreneur in economic development The entrepreneur who is a
business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one
of the most important input in the economic development of a
country. The entrepreneur acts as a trigger head to give spark to
economic activities by his entrepreneurial decisions. He plays a
pivotal role not only in the development of industrial sector of a
country but also in the development of farm and service sector. The
major roles played by an entrepreneur in the economic development
of an economy is discussed in a systematic and orderly manner as
follows. (1) Promotes Capital Formation: Entrepreneurs promote
capital formation by mobilising the idle savings of public. They
employ their own as well as borrowed resources for setting up their
enterprises. Such type of entrepreneurial activities lead to value
addition and creation of wealth, which is very essential for the
industrial and economic development of the country. (2) Creates
Large-Scale Employment Opportunities: Entrepreneurs provide
immediate large-scale employment to the unemployed which is a
chronic problem of underdeveloped nations. With the setting up.of
more and more units by entrepreneurs, both on small and large-scale
numerous job opportunities are created for others. As time passes,
these enterprises grow, providing direct and indirect employment
opportunities to many more. In this way, entrepreneurs play an
effective role in reducing the problem of unemployment in the
country which in turn clears the path towards economic development
of the nation. (3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting
up of industries in less developed and backward areas. The growth
of industries and business in these areas lead to a large number of
public benefits like road transport, health, education,
entertainment, etc. Setting
- 18. up of more industries lead to more development of backward
regions and thereby promotes balanced regional development. (4)
Reduces Concentration of Economic Power: Economic power is the
natural outcome of industrial and business activity. Industrial
development normally lead to concentration of economic power in the
hands of a few individuals which results in the growth of
monopolies. In order to redress this problem a large number of
entrepreneurs need to be developed, which will help reduce the
concentration of economic power amongst the population. (5) Wealth
Creation and Distribution: It stimulates equitable redistribution
of wealth and income in the interest of the country to more people
and geographic areas, thus giving benefit to larger sections of the
society. Entrepreneurial activities also generate more activities
and give a multiplier effect in the economy. (6) Increasing Gross
National Product and Per Capita Income: Entrepreneurs are always on
the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation of
capital and skill, bring in new products and services and develops
markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of
the people in a country. Increase in gross national product and per
capita income of the people in a country, is a sign of economic
growth. (6) Improvement in the Standard of Living: Increase in the
standard of living of the people is a characteristic feature of
economic development of the country. Entrepreneurs play a key role
in increasing the standard of living of the people by adopting
latest innovations in the production of wide variety of goods and
services in large scale that too at a lower cost. This enables the
people to avail better quality goods at lower prices which results
in the improvement of their standard of living. (7) Promotes
Country's Export Trade: Entrepreneurs help in promoting a country's
export-trade, which is an important ingredient of economic
development. They produce goods and services in large scale for the
purpose earning huge amount of foreign exchange from export in
order to combat the import dues requirement. Hence import
substitution and export promotion ensure economic independence and
development. (8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to
maximize profits by innovation. When an enterprise is established
in accordance with the changing technology, it induces backward and
forward linkages which stimulate the process of economic
development in the country.
- 19. (9) Facilitates Overall Development: Entrepreneurs act as
catalytic agent for change which results in chain reaction. Once an
enterprise is established, the process of industrialization is set
in motion. This unit will generate demand for various types of
units required by it and there will be so many other units which
require the output of this unit. This leads to overall development
of an area due to increase in demand and setting up of more and
more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of
enthusiasm and conveying an impetus for overall development of the
area. Evaluation of Entrepreneurship Relationships. Having existing
relationships with necessary customers, partners, hires, investors,
etc. can be save a lot of time, reduce costs, and reduce risk.
Without existing relationships the team will have to form them,
which takes time and there is risk in being able to form them at
all. For example, if you dont know how to code, and youll need a
technical co-founder for the business, and you dont know any, thats
one more roadblock to getting your business off the ground. Which
doesnt mean you shouldnt do it, its just important to consider how
many roadblocks youre going to have before you go down the path.
Access to customers. If I cant get enough customer development
interviews within a reasonable period of time, then it will be that
much harder and take that much longer to get started. Conversely,
if I have existing relationships with, or at least easy access to,
customers I can get feedback on my product much easier. When the
time is right, sales and marketing will also be that much easier,
shorter, and cheaper with existing access to customers. For
example, if Tim Ferriss wanted to launch a productivity related
product, he would have an advantage because of all of his existing
relevant blog traffic and subscribers. Ive seen access to customers
be especially important to enterprise products. Having
relationships with decisions makers helps with customer development
and sales.
- 20. Passion. Starting a company is hard and time consuming. If
Im solving a problem Im passionate about and/or serving a customer
segment I enjoy spending time with, my overall quality of life will
be higher, and I believe I will be more successful. In starting a
company, you inevitably have to ask a lot of people for help. For
example, big things like introductions to key people, or for small
things like to share your site with their friends. I want to be in
a business that Im proud of and passionate about so Im motivated to
hustle. Many businesses require spending a lot of time with
customers, so Ill want to enjoy that time. Lifestyle is an
important factor to me. Skill set required. If the skill set
required to execute the business plays to the strength of the team,
execution risk should be less. For example, distribution: I wouldnt
want to start a business with a sales distribution strategy if I
didnt know sales. Conversely, if its a consumer app that acquires
customer through search, a team of SEO experts could be pretty
effective. If Im trying to solve a hard technical problem, I would
want to make sure I have incredible technical talent on board. I
would be more confident in an entrepreneur thats started one or
more ventures previously, or at least has experience in the skill
sets required to start and run the business. As an entrepreneur, Id
want to start a business that requires skills that I have. Of
course you can learn, but that becomes one extra cost, time
constraint, and risk. Ability to validate. How confident can I be,
or quickly get, that Im pursuing a viable business? If I cant get
10 customer development interviews within a week, and begin to
prove theres a viable business within a few months, I dont want to
do it. I know that massively limits my upside, but again, my goals
are specific. Need for financing/ability to generate cash flow. If
a lot of money is required to start testing the concept, either
because costs are high or because it will take a while to become
cash flow positive, financing will be required either from founders
or investors. If you dont have any existing relationships to
investors, or at least close connections, thats, another time
- 21. suck and risk factor. Its certainly surmountable though if
youre good. Raising money, while glorified in the media, does have
downsides. For example, you can lose some control over your
business and you have to give up equity (and therefore upside). The
more cash you need at the start, when your valuation is the lowest,
the more equity you will have to give up. Diversified. I never want
to have all my eggs in one basket. I dont want my life to be
dependent on one customer or employer. I dont want one trend,
industry, or customer group to effect everything Im doing. Its easy
for investors to diversify. For entrepreneurs its a bit harder, but
possible. I personally dont have a very wide portfolio now, but I
plan to. Size of market/opportunity. How much upside is there? If
your goal is to build a massive company, you will need to be in a
massive market. This item will largely depend on personal goals.
Quantity and quality of work. How enjoyable will the work be? How
much time will it require? Most opportunities will require
significant time investments. Overall lifestyle is an important
factor to me, so I wouldnt want to spend 100 hours a week doing
something I hate. This factor should likely be considered as a
ratio to potential upside (see above). For example, I would trade
24 hours of awfulness for $1M, but I wouldnt trade 5 years of
awfulness. Conclusion A lot of entrepreneurial content encourages
persistence, hard work etc. If you put your mind to it you can do
whatever you want. The reality is there are many challenges from
starting to growing, and different factors that can make an
opportunity more or less likely to succeed.
- 22. This is a list of notable Indian entrepreneurs. Name
Associated Company Sridhar Vembu Zoho Corporation Verghese Kurien
Amul Kunwer Sachdev Su-kam Power Systems Bhargav Sri Prakash
FriendsLearn Azim Premji Wipro Lakshmi Mittal ArcelorMittal
Dhirubhai Ambani Reliance Industries Anand Mahindra Mahindra and
Mahindra Shamit Khemka SynapseIndia Saji Chameli Orell Sachin
Bansal and Binny Bansal Flipkart Grandhi Mallikarjuna Rao GMR
Group
- 23. Name Associated Company Gunupati Venkata Krishna Reddy GVK
Group G. R. Gopinath Air Deccan N. R. Narayana Murthy Infosys Shiv
Nadar HCL Technologies V. G. Siddhartha Caf Coffee Day Krishan Dhir
DHITECH Consultancy Services Kiran Mazumdar-Shaw Biocon Achyuta
Samanta KIIT Group of Institutions Gautam Thapar Avantha Group
Sunil Mittal Bharti Enterprises Shekhar Chatterjee Host Dude
Solutions Venugopal Dhoot Videocon Karsanbhai Patel Nirma
- 24. Name Associated Company Vishal Gondal Indiagames Chirag
Kulkarni Insightfully Trishneet Arora TAC Security Solutions
Ardeshir Godrej, Pirojsha Godrej, Adi Godrej Godrej Group Kallam
Anji Reddy Dr. Reddy's Laboratories Mangal Prabhat Lodha Lodha
Group Jamnalal Bajaj, Rahul Bajaj Bajaj Group Prathap C. Reddy
Apollo Hospitals Ajay Piramal, Swati Piramal Piramal Enterprises
Ltd Kalanithi Maran Sun Group Prannoy Roy NDTV Anil Agarwal Vedanta
Resources Subrata Roy Sahara India Pariwar
- 25. Name Associated Company Shashi & Ravi Ruia Essar Group
Jagdish Chandra Mahindra Mahindra Group Naveen Jain Moon Express
Brijmohan Lall Munjal Hero Group Jamsetji Tata Tata Group Walchand
Hirachand Walchand group Khwaja Abdul Hamied Cipla Kochuousep
Chittilapilly V-Guard Industries Ltd Kishore Biyani Future Group
Naveen Tewari InMobi Laxmanrao Kirloskar Kirloskar Group Baba
Kalyani Bharat Forge Anand Deshpande Persistent Systems
- 26. Name Associated Company Byrraju Ramialinga Raju Mahindra
Satyam Dilip Sanghvi Sun Pharmaceutical Ekta Kapoor Balaji
Telefilms Dr. G. Surender Rao Yashoda Hospitals Ramoji Rao Ramoji
Group Kumar Mangalam Birla Aditya Birla Group Varun Agarwal Alma
Mater Store Ujwal Makhija Phonon Communications Ashok Soota
Happiest Minds Technologies Ritesh Agarwal OYO Rooms