Meaning of entrepreneur

• An entrepreneur is a person who has already started or is in the process of starting an enterprise.

Definition • Joseph Schumpeter ”Entrepreneur is an innovator who brings

economic development through new combinations of factors of production”.

Definitions• Webster’s dictionary “ one who organizes, manages and assumes the risk of a

business or Enterprise”.

• A. H.Cole “ Entrepreneurship is a purposeful activity of an

individual or a group of associated individuals, undertaken to initiate, maintain or organize profit oriented business unit for the production and distribution of economic goods and service.

Introduction to Entrepreneurship

• What is Entrepreneurship?– 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

ENTREPRENEURSHIP

• Is the process by which individuals pursue opportunities without regard to resources they currently control.

• The essence of entrepreneurial behavior is identifying and putting useful ideas into practice.

• The task typically requires creativity, drive and willingness to take risks that can be accomplished by either an individual or a group

Entrepreneurship

Process of creating something new & assuming the risks & rewards

- Creation Process (for entrepreneur & audiences)

- Devotion of time & effort- Assuming Risks (Financial, Psychological & Social) - Rewards (Independence, satisfaction & monetary

rewards)

Historical Evolution Of Entrepreneurship Earliest Period Middle Ages 17th Century 18th Century 19th & 20th Century

THE ABILITY TO INNOVATE CAN BE OBSERVED THROUGHOUT THE HISTORY

Nature & Development Of Entrepreneurship

EARLIEST PERIOD

the earliest definition of entrepreneur may be related to the person (merchant – adventurer) who attempted to establish trade routes to the far east

they would sign a contract with money person to sell his goods.

the capitalist was a passive risk bearer. merchant adventurer took the active role in trading bearing

all the physical and emotional risks while the capitalist was a passive risk bearer.

when he completes the trip, the profits divided (capitalist – 75% , adventurer – remaining 25%)

MIDDLE AGES

• the term was used to describe both an actor and a person who managed large production projects

• did not take any risks but merely managed using the resources provided usually by the government of the country

• a typical entrepreneur in the middle ages was cleric – the person in charge of great architectural works, such as castles and fortifications, public buildings, abbeys and cathedrals

• 18th Century:– 1725: RICHARD CANTILLION ( person bearing risks

is different from one supplying capital)• 19th Century:

– 1803: JEAN BAPTISTE SAY (separated profits of entrepreneur from profits of capital)

– 1876: FRANCIS WALKER (distinguished between those who supplied funds and received interest and those who received profit from managerial capabilities)

• 20th Century:– 1934: JOSEPH SCHUMPETER (entrepreneur is an

innovator and develops untried technology)– 1961: DAVID McClelland (entrepreneur is an

energetic, moderate risk taker)– 1964: PETER DRUCKER (maximizes opportunities)

– 1975: ALBERT SHAPERO (takes initiative, organizes some social and economic mechanisms, and accepts risks of failure)

– 1980: KARL VESPER (entrepreneur seen differently by economists, psychologists, business persons and politicians)

– 1983: GIFFORD PINCHOT (intrapreneur is an entrepreneur within an already established organization)

Characteristics or Personal Competency of an Entrepreneur.Initiative Sees and Acts on OpportunitiesPersistenceInformation seekingConcern for High Quality Work and Output – Increased

Productivity.Commitment to Work ContractEfficiency OrientationSystematic and organized planningProblem SolvingSelf ConfidenceAssertiveness – Negotiation with suppliers & customersPersuasive & Influential – Peers and stakeholdersInspirational - employeesEffective Communicator – external & internal of

organization

Main features of entrepreneurship

An economic activity

A Creative activity

An innovative function

A dynamic process

An organizing function

A risk bearing function

A gap filling function

A goal oriented activity

Common Characteristics of Entrepreneurs •Commitment, determination, and perseverance •Drive to achieve •Opportunity orientation •Initiative and responsibility •Persistent problem solving •Seeking feedback •Internal locus of control •Tolerance for ambiguity

•Calculated risk taking •Tolerance for failure •High energy level •Creativity and Innovativeness •Vision •Self-confidence and optimism •Independence •Team building

Entrepreneurial Characteristics – Indian Perspective1. Vision : Dream and visualizing the ways and means to achieve,

visualizing market demands, socio-economic and technological environment

¨ Without the vision of making a big mark on the mobile industry Dhirubhai and now Anil Ambani could not have made what Reliance Communication (An Anil Dhirubhai Ambani Group) is today.

2. Knowledge : Conceptual knowledge and technicalities of technological, operational, financial & market dynamics.

¨ Without sound knowledge of computers Naryanmurthy could not have made Infosys.

3. Desire to Succeed

¨ Constantly work to achieve higher goals.¨ Without a desire to succeed constantly Mukesh

Ambani would not have planned to ventured into Retail, Real Estates and Biotech.

4. Independence¨ Needs independence in work and decision making

without following rules of thumb and make their own rules and destiny.

¨ Without a desire for independence, Sabeer Bhatia would not have quit his job to start enterprise own his own and created Hotmail.com and Arzoo.com

5. Optimism

¨ Highly optimistic about achieving their vision.¨ Without optimism Narayanmurthy (who took loan from his wife

as not having enough finances) would not have left a lucrative job and created Infosys.

6. Value Addition¨ Not rule of thumb , but a constant desire to introduce something

new to existing business.¨ Create, innovate or even add value to the existing products.¨ Without value addition of ‘life time free incoming calls’ Tata

Indicom would not have been able to create space in already saturated mobile markets.

7. Leadership

¨ Exhibits qualities of a leader -Good Planners, Organizers, Good Communication Skills, Empathetic toward their employees, good decision-makers, initiative to implement plans, result oriented

8. Hard working¨ At time also called as workaholics.¨ Continuous efforts to achieve success and know that

there is no substitute for hard work9. Desire to control over their own fate ¨ Do not move in herds like sheep but pave own paths.¨ Do not believe in luck or destiny but create their own

destiny.

Attributes and Skills

¨ These so called entrepreneurial characteristics can be looked at to determine a set of skills useful for entrepreneur to possess.¨Group Skills –work and learn together, task force, project teams¨Technical Skills – technological, writing, mgt, organizing.¨Business mgt skills, DM and analytical skills¨Personal Entrepreneurial Skills- risk, innovative, visionary, persistent, manage change.

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Types of Entrepreneurs

• Novice Entrepreneur– Has no prior business ownership experiences as a business

founder, inheritor, or purchaser• Habitual Entrepreneur

– Has prior business ownership experience• Nascent Entrepreneur

– In the process of starting a new business– Can be either a novice or a habitual entrepreneur

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Types of Entrepreneurs (cont’d)

• Serial Entrepreneur– Has sold or closed an original business and

establishes another new business – Continues the cycle of selling/closing and

establishing• Portfolio Entrepreneur

– Retains an original business and builds a portfolio of additional businesses

• Through inheriting, establishing, and purchasing the businesses

IMPORTANCE OF ENTREPRENEURIN

ECONOMIC DEVELPOMENT

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Current Importance of Entrepreneurship

• Three areas of importance1. Innovation

• Process of creating, changing, experimenting, transforming, and revolutionizing

2. Number of New Start-ups• Important because new firms contribute to

economic development through benefits such as product-process innovation

3. Job Creation• Vital to the overall long-term economic health of

communities, regions, and nations

• Entrepreneurship is the dynamic need of a developing nation and sustains the process of economic development in the following ways:

• Employment generation • National income• Dispersal of Economic power• Balanced Regional development • Harnessing Locally available resources and

Entrepreneurship• Reducing unrest and social tension amongst youth• Innovations in enterprises • Improvement in living standards • Economic independence

Entrepreneurial Environment

• Entrepreneurial Environment is a combination of factors that play a role in the development of entrepreneurship.

• First, it refers to the overall economic, socio-cultural, and political factors that influence people’s willingness and ability to undertake entrepreneurial activities.

• Second, it refers to the availability of assistance and support services that facilitate the start-up process.

Steps in the Entrepreneurial Process

1. Discovery2. Concept

Development3. Resourcing4. Actualization5. Harvesting

Steps in the Entrepreneurial Process

1. Discovery: The stage in which the entrepreneur generates ideas, recognizes opportunities, and studies the market

Idea

OpportunityInnovation

Steps in the Entrepreneurial Process

2. Concept Development: – Develop a business plan: a

detailed proposal describing the business idea

Executive summaryObjective

Mission Statement

Steps in the Entrepreneurial Process

3. Resourcing: The stage in which the entrepreneur identifies and acquires the financial, human, and capital resources needed for the venture startup, etc

Start-up resources

Steps in the Entrepreneurial Process

4. Actualization: The stage in which the entrepreneur operates the business and utilizes resources to achieve its goals/objectives.

$$ Grand Opening $$

Day-to-Day Operations

Steps in the Entrepreneurial Process

5. Harvesting: The stage in which the entrepreneur decides on business’s future growth/ development, or demise

What is your 5-year or 10-year plan?

Consider adding locations or providing different products/services

Will you go public?