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Entrepreneurship Management

Who is an entrepreneur
One who creates a new business in the
face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

As per Joseph A-Schumpeter


Entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the commercial organization going with his ability to identify them and opportunities which others are not able to identify and is able to fulfil such economic opportunities

As per Peter Ducker


An entrepreneur is one who always searches for change, responds to it, exploits it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship."

CONCEPT OF ENTREPRENEURSHIP
Like other economic concepts,
entrepreneurship has been a subject of much debate and discussions, it is an elusive concept. Hence different authors define it differently. While some call entrepreneurship as 'risk-bearing; others view it as 'innovating' and yet others consider it thrill-seeking'.

Let us consider some important definitions of


entrepreneurship to understand what entrepreneurship is all about.

According to Schumpeter, "Entrepreneurship


is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions

In the above definition, entrepreneurship refers to


the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is thus, process of giving a birth to a new enterprise. Innovation and risk bearing are regarded as the two basic elements involved in entrepreneurship. Let us understand what these two terms actually mean.

INNOVATION
Innovation, i.e., doing something new or something
different is a necessary condition to be called a person as an entrepreneur.

The entrepreneurs are constantly on the look out to do


something different and unique to meet the changing requirements of the customers.

They may or may not be inventors of new products or


new methods of production, but they possess the ability to foresee the possibility of making use of the inventions for their enterprises.

Let some facts speak. In order to satisfy the changing preference of customers, now-a-days fruit
juice is sold in small cartons (Mango Fruity) instead of bottles so that customers can carry it and throw away the container after drinking the juice.

Let us take another example. Lipton offers its tea in small packs known as
'PUDIYAS' to meet the requirements of its rural customers.

You may have heard of Henry Ford, the founder of the Ford Motor
Company in the United States. Remember, Henry Ford himself did not invent the automobile. Foreseeing the people's desire to have passenger cars at somewhat lower rates, he applied new methods of mass production to offer passenger cars to the customers at affordable price.

Since customers' taste and preferences


always keep on changing, hence the entrepreneur needs to apply invention after invention on a continuous basis to meet the customers' changing demands for products.

Risk BEARING
Starting a new enterprise always involves risk and trying
for doing something new and different is also risky. The reason is not difficult to seek. The enterprise may earn profits or incur losses because of various factors like increasing competition, changes in customer preferences, and shortage of raw material and so on. An entrepreneur, therefore, needs to be bold enough to assume the risk involved in the enterprise. In fact he needs to be a risk-taker, not risk avoider. His risk-bearing ability enables him even if he fails in onetime or one venture to persist on and on which ultimately helps him succeed.

Though the term entrepreneur is often used


interchangeably with entrepreneurship, yet they are conceptually different. The relationship between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned with the performance and coordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.

ENTREPRENEUR & HIS SIGNIFICANCE IN THE ECONOMY


An Entrepreneur brings in overall change
through innovation for the maximum social good. Human values inspire him to serve society. He has firm belief in social betterment and he carries out this responsibility with conviction. In the process, he accelerates: 1. personal, economic as well as 2. human development.

An Entrepreneur is a visionary and an integrated


man with outstanding leadership qualities, With a desire to excel, the Entrepreneur gives top priority to Research & Development.

He always works for the well being of the


society.

Entrepreneurial activities, includes all


fields/sectors and develops a spirit of enterprise for the welfare of mankind.

Entrepreneur is one of the most important inputs in the


economic development of a country or of regions within the country. Entrepreneurial competence makes all the difference in the rate of economic growth.

The small-scale industrial sector and business are left


completely to private Entrepreneurs.

Therefore, an increasingly important role has been assigned to the identification and promotion of Entrepreneurs for the small-scale sectors.

There is a need for Entrepreneurship in India to


speed up the process of activating the factors of production, leading to:

a higher rate of economic growth, dispersal of economic activities, development of backward and tribal areas, creation of employment opportunities improvement in the standard of living of the society and involvement of all the sections of the society in the
process of growth.

Thus entrepreneurs play a significant role to speed up the economic development of the country.

OBJECTIVES AND STRATEGIES OF ENTREPRENEURSHIP


The most critical and difficult task in
planning is to establish objectives and strategies for the future. Strategic management, managing towards and by the objectives, and strategies of the organization, these are the new and dramatic developments in management and planning.

The basic values of management, how it views its customers, the competition it faces, government regulations, how it deals with its employees, suppliers and others, determine the character and image of a small-scale industrial project. To the extent possible the philosophy or management ought to be stated explicitly and incorporated in the internal planning literature at this point.

A capsule statement of existing corporate strategies for each of the major businesses should be prepared for the guidance of executive management. It is important that members of the management agree on major thrusts of policy. For example, if executive management has not agreed on a location strategy, every proposal for a new location must be examined and evaluated as an entirely new decision.

An examination of its strengths and weaknesses, its opportunities and the threats it faces would probably uncover some core problems which need to be attacked by the management-for example, the need to establish a consistent pricing policy for all the customers or the means of payment for services rendered.

The identification of these core problems and the assignment of


responsibilities for their solution are important at this point in the planning process.

The next step in establishing objectives and strategies is to


formulate existing objectives into a concise and consistent set of statement covering atleast a financial and market Personnel and public responsibility.

These statements communicated to every


executive in the organisation and applied to daily activities become powerful guiding for the smallscale industrial unit.

The time has come now to assemble the


statement of environmental analysis and situation appraisal as well as statements of current objectives, strategies and categories of corporate objectives for the future.

Characteristics of Entrepreneurs
Desire for responsibility Preference for moderate risk Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation Skilled at organizing Value achievement over money

ARE ENTREPRENEURS BORN OR MADE


Professor of Psychology Alan Jacobowitz,
holds that Entrepreneurs are born, not made. This is because he observed that entrepreneurs commonly share certain personality characteristics. These include: restlessness, independence and tendency to be a loner and extreme self-confidence, innovative, action oriented.

In addition to identifying personality


traits personality common to entrepreneurs, Jacobowitz devised a chronological scheme of entrepreneurial indicators, which he calls as the FIVE AGES of the entrepreneurs.

The ages include Early childhood exposure Trouble in school. Problems with work. Desire to risk. Bliss in business independence. A classic example is that of Mr. Dhirubai Ambani. because he had all the dynamic qualities of a successful Entrepreneur, as a result of which today, he was the owner of the largest private company in India. All decisions, which he had taken to grow, were instinct and no one had taught him to take decisions.

CHARACTERISTICS OF ENTREPRENEURSHIP
The characteristics or the personal qualities that
contributes to the success of an Entrepreneur are as follows: 1. Risk Taking Entrepreneurs are moderate risk takers. They enjoy the excitement of a challenge, but they do not gamble. Entrepreneurs avoid low-risk situations because there is a lack of challenge. They avoid highrisk situations because they want to succeed. They like achievable challenges.

They do not tend to like situations where the outcome of a quest


depends upon a chance and not on their efforts.

They like to influence the outcome of their quest by putting in more


efforts and then experiencing a sense of accomplishment.

A risk situation occurs when an entrepreneur is required to make a choice between two or more alternatives whose potential outcomes are not known and must be evaluated in advance, with limited information. size of the business expands the problems and opportunities become more numerous and complex.

A risk situation involves potential gain and potential loss. As the

2. Self-Confidence
A man with self-confidence has clear thoughts and welldefined goals to achieve in his life. An entrepreneur gets into business or industry with a high level of selfconfidence.

He is able to evaluate his competencies and capabilities


in a realistic manner. He can set realistic and challenging goals. He is confident of achieving these goals. He possesses a sense of effectiveness, which ultimately contributes to success of his venture. He puts forward his case confidently and gets needed help from concerned agencies/authorities. . "'

3. Optimist
An entrepreneur is able to visualize the hidden
opportunities in the environment and translate them into business realities. An entrepreneur exhibits a positive and optimistic attitude towards such opportunities. The entrepreneur approaches his task with the hope of success and not with a fear of failure.

In the process of accomplishing his task


he may also fail but the failure experience does not change his thinking.

He is always an optimist in his outlook.


The positive outlook develops a drive in the entrepreneur to attempt new things and innovate.

4. Need for achievement


The need to excel, known as achievement,
is a critical factor in the personality of an entrepreneur. People with high need for achievement have desire for success in competition with others or with a self-imposed standard of excellence. They try to accomplish something new and try to involve themselves in long-term goals.

They try to accomplish challenging tasks.


They know their own strengths and weaknesses, the facilitating factors and constraints in the environment and the resources needed to accomplish their tasks. If the objectives are accomplished they feel elated.

5. Need for independence


The need for independence is the prime characteristic that has
driven the entrepreneurs to start their own business.

These entrepreneurs do not like to be controlled by others. They do not wait for direction from others and choose their own
course of action.

They set their own challenging goals and put efforts to achieve
these goals.

independence provides opportunity for trying out new ideas and


helps them achieve their goals.

6. Creativity
Entrepreneurs are highly creative people. They
always try to develop new products, processes or markets. They are innovative, flexible and are willing to adopt changes. They are not satisfied with conventional and routine way of doing things. They involve themselves in finding new ways of doing the things for the better.

7. Imaginative
Successful entrepreneurs possess a high
degree of imagination and foresightedness. Entrepreneurs have a great vision. Knowing the present and the past the entrepreneur is able to predict the future events about the business more accurately than others. It is because of their visionary nature and power of imagination that helps them in anticipating problems and evolving actions strategies for such problems.

8. Administrative Ability
A successful Entrepreneur is always a good
administrator. He knows the art of getting things done by other people without hurting their feelings or self-respect.

He has a strong motivation towards the


achievement of a task and puts in necessary efforts in getting things done by others.

9. Communication Ability.
Communication ability is the ability to communicate
effectively.

Good communications 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 bankers will always succeed in their business.

10. Clear Objectives


An Entrepreneur has a clear objective as
to the exact nature of the business, the nature of the goods to be produced and the subsidiary activities to be undertaken.

A successful Entrepreneur has the


objective to establish the product, to make profit or to render social service.

11. Business Secrecy


An Entrepreneur who is successful always
guards his business secrets.

Leakage of business secrets to trade


competitors is a serious matter; therefore, an Entrepreneur should carefully guard it.

An Entrepreneur must be able to make a proper


selection of his assistant since; most of the time it is the assistant who leaks the trade secret.

12. Emotional Stability.


The most important personality factors contributing to the success of
an Entrepreneur are emotional stability, personal relations, consideration and tactfulness.

An Entrepreneur must maintain good relations with the customers if


he wishes to enjoy their continued patronage.

He must also maintain good relation with his employees, whom he


shall motivate to perform their jobs at a high level of efficiency.

An Entrepreneur who maintains good human relations with


customers, employees, suppliers and the community has a better chance to succeed in his/her business.

13. Open-mindedness
Open-mindedness means a free and frank
approach in accepting one's own errors and change for the better. An entrepreneur must be willing to learn from his past experience, mistakes and moulds himself for better.

14. Technical knowledge


Technical knowledge implies, knowledge about
the product, process or technology used in manufacturing.

An entrepreneur who has a reasonable level of


technical knowledge will always be successful. Technical knowledge is easy to acquire if the entrepreneur tries hard to acquire it.

15. Patience
Patience means ability to wait. Patience also
means doing the work and then waiting for the result.

A certain amount of patience is necessary in


any type of vocation. An entrepreneur should not wait for actions but can certainly wait for result for his efforts.

16. Hard Working & Energetic


Ability and willingness to work hard is an
important quality of an entrepreneur.

A person having physical and mental stamina to


cope with the hard work and human relation is fit to become a successful entrepreneur. By carrying out well-planned and systematic work, success is always the end result.

17. Good organizer


Entrepreneurs are good organizers of resources like men, machines, materials and money needed to start and run the business smoothly. They can convince the employees, investors, customers and co- ordinate the activities of individuals and groups in the accomplishment of business objective. An entrepreneur works like a coordinating force among the resources, mould and manages them effectively.

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