The act of working under a firm and being paid a salary. The act of creating something new, of...

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ECONOMIC APPLICATIONSNOTES

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Entrepreneur



Introduction

Meaning and Definition

Functions of an Entrepreneur

Role of an Entrepreneurin Economic Development

Difference between an Entrepreneur and an Organizer

Conclusion

Difference between an Entrepreneur and a Laborer

Quiz



Meaning

& D

efinition

What/who is an entrepreneur?

Entrepreneurship is the process of creating something new of value by devoting (giving) the necessary time and effort. By accepting and acknowledging the necessary financial, psychological, and social risks, and finally receiving the resulting rewards, be it monetary and personal satisfaction and freedom to do what you want. ~ Robert D. Hisrich, M. Peters & D.A. Shepherd

What is an entrepreneurship?

He or she is an individual who actively forms or leads their own business and nurtures it for growth and prosperity. ~ UiTM Entrepreneurship Study Group ORA person who creates and manages change by the recognition of opportunities (needs, wants, opportunities, problems, and challenges) and develops people and manages resources and thus, creates a venture (profitable business). ~ Eston Kimani, MIT



Introduction

In order for the firm or organization to carry out its tasks in a planned manner, a person who is willing to take responsibility for the firm’s decisions and risks is needed.

What is the need for an entrepreneur?

An entrepreneur basically manages the whole firm and organizes the production, takes important decisions regarding production, hires/purchases factors of production, and bears the risks and uncertainties involved therein.

Not just anybody can become an entrepreneur. A person should have the leadership qualities, desire to innovate, and the willingness to take risks in order to become a successful entrepreneur.

What does an entrepreneur do?

What does it require to become an entrepreneur?



FunctionsWhat type of functions does an entrepreneur perform?

According to some economists, the functions of an entrepreneur are classified into five broad categories :

• Risk Bearing - Involves uncertainties related to production, investments, and profits.

• Organizational - Involves bringing together factors of production and organizing them. In the proper combination.

• Innovative - Involves choosing and introducing profitable innovations and applying them to earn more profits.

• Managerial - Involves rewarding the factors of production with acknowledgement of their relative contribution to the production process.

• Decision Making - Involves making decisions regarding selection of the commodity to be produced, selection of design and quality of the product, selection of location of the factory/base, scale of production, and techniques of production.



Role of an Entrepreneur in Economic DevelopmentThe economic development of a country is

determined by the number and quality of its entrepreneurs. Thus entrepreneurs play a definitive role in the economic development of a country in the following ways:

• Increasing the per capita output and income of the people of the country.

• Initiating and creating change in the structure of business and society.

• Generation of innovation that leads to the creation of new product and service.

• Improvisation and modification on existing product to better suit market and customers’ needs.

• Creation of self employment and to cut back the dependency of potential employment of new workers in government sectors.

• Streamline of the private sector and encourage the inclusion of new technology that is less labor dependent.

How does an entrepreneur help in the economic development of a country?

• Increase in the national output which in turn lead to greater and stronger economic growth.

• Laying the seed bed for creating new entrepreneur in various new technologies such as Bio Technology, Bio Technology Medicine, Nano Technology , New Material Technology etc.



Difference b/w An Entrepreneur and An Organizer

The organizer begins manufacture of goods in expectation of compensation but is not obligatory that he may always get gain. Occasionally the organizer has to abide some defeat also. Whereas, the work of embarking on jeopardy is termed as “enterprise”.

Before machines came into existence, manufacture was accepted on a small scale and in the cottage industries. There was no disparity amidst organization and enterprise for the reason that the work of organizing and risk taking was executed by the same person.

However, with the materialization of large scale industries the joint stock companies have detached the organization and the enterprise. In JSC, investors are careful regarding profit and loss. Hence the enterprise is related to the investors.

The actual work of organization and administration is approved by the paid managers or directors. Thus organizers and entrepreneurs are dissociate in modern productive system such as JSCs. Here the charge of organization and administration and the task of risk abiding are embarked on by various persons.

Whereas in small scale industries, the entrepreneur himself is the organizer. In such a situation, where operations of organization and enterprise are performed by the same man, there is no disparity amidst them.



Difference b/wAn Entrepreneur and A Laborer

Entrepreneur• An entrepreneur hopes to get profit.• An entrepreneur has to bear all the risks of business and his income is not certain and fixed.• An entrepreneur has to perform all jobs concerning with the business.

Laborer• Laborers get wages for the tasks they perform.• Laborers have nothing to do with the risks involved in the business. They will be sure to get wages. • Laborers are supposed to perform activities allotted to them.By www.icsehelpline101.wordpress.com


Conclusion

All in all, we may say that other factors of production have a role as important as that of an entrepreneur. However, we fail to consider the fact that without an entrepreneur to take the initiative and decide on the starting of a company and its production process, land, capital, and labor would not be required. Thus, we can see now, what a big role the entrepreneur plays in the setting up of a company, no matter how big or small. This is why it is rightly said that entrepreneurship is an indispensable factor of production.

You may also realize why it is important for us to learn at least a bit about something so relevant in our daily lives.



The act of working under a firmand being paid a salary.

The act of creating something new, of value, and

accepting the risks involved therein.



To look after other factors of productionand make sure that they are

used appropriately.

To organize a company and manage itwhile accepting the risks involved.



FalseTrue



Managerial Labor Work

SupervisingSetting Up Firm

Decision MakingRisk Bearing

OrganizationalProducing Goods

Willingness to bear risksGood communication skills

LeadershipWilling to travel

Social NatureReadiness to take risks

LeadershipWillingness to Innovate

What qualities are required in an Entrepreneur?



True False



Yes No



To help people start new companiesTo create awareness about

the production of goods

To streamline the public industryTo increase use of new

technology

To increase per capita incomeTo decrease national output

To increase national outputTo create self-employment

Invents new factors ofproduction

Makes projects and plans for the company

Introduces profitableinnovations

Implements new setup plans



True False

True or FalseAn entrepreneur always

earns profit.



Yes No



Entrepreneur earns wages.Laborer does not

earn wages.

Entrepreneur has to bear risks.Laborer does not have to

bear risks.

Entrepreneur works under supervision.

Laborer manages the firm.

Entrepreneur gets profit.Laborer earns wages.





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