ENTREPRENEURSHIP

Understanding
Entrepreneurship
Chapter # 1

Market Opportunity

Entrepreneurship

Entrepreneurship is the practice of starting new

organization or revitalizing mature organization,
using unique and new ideas and based on
identified market opportunities.
Entrepreneurship ranges in scale from solo
projects (even involving the entrepreneur only
part-time) to major undertakings creating many
job opportunities.
Entrepreneurship is often a difficult undertaking,
as a vast majority of new businesses fail.

Entrepreneurship is a Process
To reform

and revolutionize the pattern of

producing things by using new ways and
techniques for producing a new
commodity or producing an old one in a
new way. In simple words:
Entrepreneurship means doing things that
are not generally done in the ordinary
course of business routine.

ENTREPRENEUR
The word Entrepreneur is taken from

French word entreprendre which means

Undertaker i.e. the person who
undertakes to organize, manage and
assume the risks of new enterprise.

Defining Entrepreneur
A person who bring resources together in
unusual combination to generate profits.
An Entrepreneur is a person who organizes
and manages a business undertaking,
assuming the risk for the sake of profit. Any
person (any age) who starts and operates a
business is an entrepreneur.
In behavioral terms, An achievement
oriented individual driven to seek challenges
and new accomplishments

Defining Entrepreneur (contd)

The Entrepreneur is an inventor or a

developer who:

Recognizes opportunities
Converts those opportunities into
workable/marketable ideas
Adds value through time, effort, money or skill
Assumes the risks of the competitive
marketplace to implement those ideas
Realizes the rewards from these efforts.

Contributions of Entrepreneur
Develop new markets
Discover new sources of materials
Mobilize capital resources
Introduce new technologies
Create employment

BACKGROUND OF
ENTREPRENEURSHIP

The concept of Entrepreneurship is derived from the

Economic theory.

Adams Smith (1776) The Wealth of Nations:.

According to Adam Smith, Entrepreneur is an economic

agent with unusual foresight who could recognize
potential demand of goods and services.

An economic risk taker.

Importance of Entrepreneurship
Economic

Majority of new jobs are created by

entrepreneurs and small businesses
Small high growth companies account
for 70% of economic growth over last
decade
Over 1/3 of difference in national
economic growth may be due to
difference in entrepreneurial activity
Entrepreneurship accounts for at least
2/3 of all technological innovation

Why Entrepreneurship Education

Objective is to become entrepreneurially

minded with the potential to act on this by
discovering or creating business
opportunities.
Entrepreneurs are not bornthey
become through the experiences of their
lives
Entrepreneurs have a great diversity of
personal characteristics, the common one:
being willing to take a risk in return for a
profit

Anyone can be an entrepreneur at

any time of ones life
Entrepreneurship is NOT learned
by reading a textbook and then
taking a test to prove you are one.
Entrepreneurship education
activities are a real-life vehicle for
developing academic skills
Entrepreneurs are found in every
occupation and career
Entrepreneurship education
opportunities are important at all
levels of education

Carl Menger (1871)

View of Entrepreneur

According to Menger, economic change does

not arise from circumstances but from the
awareness and understanding of those
circumstances, its the individuals who sense
these circumstances and bring about
changes/improvements.
Entrepreneur is a change agent who transform
resources into useful goods and services.

Mengers Model of value added Transformation

VALUE
OPPORTUNITIES

Low value produce

Value added
Transformation

Entrepreneurial
activity

Profit / Loss

High value produce

Mengers Model of value added

Transformation
Low value produce

Producing Grain
Harvesting Grain
Grinding Grain

Producing Bread
High value produce

Delivering Bread

Intermediate Points
of Transformation

Mengers Model of value added

Transformation
Identifies intermediate

points of
transformation each with opportunities to
add value to the original resource in such a
way to eventually satisfy human needs, e.g.
producing/harvesting wheat, grinding grain,
making bread and delivering it.
When value is added to a product/process,
that value is rewarded by profit.

Entrepreneurial Process
1.
2.
3.
4.

Identification and analysis of Opportunity.

Developing Business plan
Determination of required resources
Starting and Managing the Enterprise

Identification and analysis of

Opportunity
Potential and length of opportunity
Risks and returns of opportunity
Competitive situation

Developing Business plan

Business plan is a formal document that

describes all internal and external

elements and strategies for starting a new
business.

Determination of required
resources
Identification of source and resources.
Analyzing Gap between needed and

available resources.
Organizing to generate resources.

Starting and Managing the

Enterprise
Launch of the Venture
Managing business operations
Developing sales/revenue
Improving cash flows.

Characteristics of Entrepreneurs

Self-confident & Optimistic

Able to take calculated risks
Responsive to challenges
Adaptive
Versatile knowledge
Creative, energetic & intelligent
Initiator & dynamic leader with a vision to excel
Have strong ability to foresee and observe
Tolerance for failure