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Transcript of Entrepreneurship development
ENTREPRENEURSHIP
DEVELOPMENT
An Introduction
11/28/2014PRAJEESH E MENON
MBA,KVM COLLEGE, Cherthala, Kerala
According to George Bernard Shaw, people fall
into three categories:
(1) those who make things happen
(2) Those who watch things happen, and
(3) those who are left to ask what did happen.
Generally, Entrepreneurs fall under the first
category.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ABOUT ENTREPRENEURSHIP…
• Entrepreneurship is a dynamic process of vision, change, and creation.
• It requires an application of energy and passion towards the creation
and implementation of new ideas and creative solutions.
• An entrepreneur is an aggressive catalyst for change in the world of
business.
• He or she is an independent thinker who dares to be different in a
background of common events thereby catering to the social and
economic upliftment.
• The prime focus of any entrepreneur is to capitalize the opportunities
and to build a strong ethical base.
• Entrepreneurial development is a pivotal issue that needs to be
addressed by any country to develop endowed entrepreneurs who can
make a mark in this world of competitions.11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
ENTREPRENEUR
PERSON
ENTREPRENEURSHIP
PROCESS
ENTERPRISE
OBJECT
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEUR
• The word entrepreneur is derived from
the French verb “enterprendre”, which
means “to undertake”.
• Entrepreneur is the person who brings
together the factors of production and
combines them into a product.
• He organizes and manages a business
unit assuming the risk for profit.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEURSHIP
• Entrepreneurship is the process of
creating value by bringing
together a unique package of
resources to exploit an
opportunity.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
EARLY PERIOD:
• The earliest definition of the entrepreneur as a go-between is
Marco Polo.
• He tried to establish trade route to the far East.
• He used to sign a contract with a venture capitalist to sell his
goods.
• The capitalist was the risk bearer.
• The merchant adventurer took the role of trading.
• After his successful selling of goods and completing his trips, the
profits were shared by the capitalist and the merchant.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
MIDDLE AGES:
• The term entrepreneur was referred to a person who was
managing large projects.
• He was not taking any risk but was managing the projects using
the resources provided.
• An example is the cleric who is in charge of great architectural
works such as castles, public buildings, cathedrals etc.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
16th CENTURY:
• The term entrepreneur was referred to a person who was
involved in military expeditions.
17th CENTURY:
• An entrepreneur was a person who entered into a contractual
arrangement with the Govt. to perform a service or to supply
some goods.
• Civil engineering activities such as construction and
fortification.
• The profit was taken (or loss was borne) by the entrepreneur.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
18th CENTURY:
3 MAIN CONCEPTS EVOLVED
• It was Richard Cantillon, French Economist, who applied the
term entrepreneur to business for the first time (1734).
• He is regarded by some as the founder of the term.
• He defined an entrepreneur as a person or an agent who buys
factor services at certain prices with a view to sell them at
uncertain prices in the future.
• Concept 1: ENTREPRENEUR = RISK BEARER
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
• Jean-Baptiste Say, (aristocratic industrialist) in 1803— An
entrepreneur is an economic agent who unites all means of
production- land, labour and capital to produce a product or
service.
• Product sales pay rent, wages, interest and what remains is profit.
• He shifts economic resources from an area of lower to an area of
higher productivity.
• Concept 2: ENTREPRENEUR = ORGANISER
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
EVOLUTION OF THE CONCEPT…
• Joseph A. Schumpeter (1934)
• The entrepreneur in an advanced economy is an individual who
introduce something new in the economy- a method of production
not yet tested by experience in the branch of manufacturing, a
product with which consumers are not yet familiar, a new source of
raw material or of new markets and the like.
• Concept 3: ENTREPRENEUR = INNOVATOR
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
• 1910: Adam Smith – An entrepreneur is a person who
only provides capital without taking active part in the
leading role in the enterprise.
• 1961: David McClelland—A person with a high need
for achievement [N-Ach] who is energetic and a
moderate risk taker.
• 1964: Peter Drucker—One who searches for change,
responds to it and exploits opportunities. Innovation is a
specific tool of an entrepreneur hence an effective
entrepreneur converts a source into a resource.
• 2013: Ronald May—Someone who commercializes his
or her innovation.11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
CHARACTERISTICS OF AN ENTREPRENEUR11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
• HARD WORK
• BUSINESS ACUMEN AND SINCERITY
• PRUDENCE
• ACHIEVEMENT MOTIVATION
• SELF-RELIANCE AND INDEPENDENCE
• HIGHLY OPTIMISTIC
• KEEN FORSIGHT
• PLANNING AND ORGANISING ABILITY
• INNOVATIVENESS
• RISK TAKING
• SECRECY MAINTENANCE
• MAINTAIN PUBLIC RELATIONS
• COMMUNICATION SKILL
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
QUALITIES OF AN ENTREPRENEUR11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
• ENTERPRISING
• RISK BEARER
• CREATIVE THINKER
• AMBITIOUS
• HIGH NEED ACHIEVEMENT
• CHANGE AGENT
• GOOD ORGANISER AND MANAGER
• DECISION MAKER
• STRONG COMMITMENT
• FIRM DETERMINATION
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
FUNCTIONS OF AN ENTREPRENEUR
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
• Risk Assumption Function
• Business Decision Making Function
• Managerial Function
• Function of Innovation
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
RISKS FACED BY ENTREPRENEURS
1. FINANCIAL RISK:
• The entrepreneurship has to invest money in the
enterprise on the expectation of getting in return
sufficient profits along with the investment.
• He may get attractive income or he may get only
limited income. Sometimes he may incur losses.
2. PERSONAL RISK:
• Starting a new venture uses much of the
entrepreneur’s energy and time.
• He or she has to sacrifice the pleasures attached
to family and social life.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
3) CARRIER RISK:
• This risk may be caused by a number of reasons such
as leaving a successful career to start a new business
or the potential of failure causing damage to
professional reputation.
4) PSYCHOLOGICAL RISK:
• Psychological risk is the mental agonies an
entrepreneur bears while organizing and running a
business venturesome entrepreneurs who have
suffered financial catastrophes have been unable to
bounce back.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
11/28/2014
TYPES OF ENTREPRENEURS
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
1. CLASSIFICATION BY CLARENCE
DANHOF:
Clarence Danhof, On the basis of
American agriculture, classified
entrepreneurs in the following categories:
a) INNOVATIVE ENTREPRENEURS
b) ADOPTIVE OR IMITATIVE
ENTREPRENEURS
c) FABIAN ENTREPRENEURS
d) DRONE ENTREPRENEURS
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
INNOVATIVE ENTREPRENEURS
• They are generally aggressive on experimentation and cleverly
put attractive possibilities into practice.
• An innovative entrepreneur, introduces new goods, inaugurates
new methods of production, discovers new markets and
reorganizes the enterprise.
• Innovative entrepreneurs bring about a transformation in
lifestyle and are always interested in introducing innovations.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ADOPTIVE OR IMITATIVE ENTREPRENEURS
• Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology
innovated by others.
• They copy and learn from the innovating entrepreneurs.
• While innovating entrepreneurs are creative, imitative
entrepreneurs are adoptive.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
FABIAN ENTREPRENEURS
• These entrepreneurs are traditionally bounded.
• They would be cautious.
• They neither introduce new changes nor adopt new methods
innovated by others entrepreneurs.
• They are shy and lazy. They try to follow the footsteps of their
predecessors.
• They follow old customs, traditions, sentiments etc. They take
up new projects only when it is necessary to do so.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
DRONE ENTREPRENEURS
• Drone entrepreneurs are those who refuse to adopt and use
opportunities to make changes in production.
• They would not change the method of production already
introduced.
• They follow the traditional method of production.
• They may even suffer losses but they are not ready to make
changes in their existing production methods.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
COLE’S CLASSIFICATION
1. EMPIRICAL ENTREPRENEUR
Who never introduces anything new in his method of production or
business.
Simply follows the rule of thumb
Like drone entrepreneurs
2. RATIONAL ENTREPRENEUR
Who is ready to introduce even revolutionary changes on the basis of
general economic conditions prevailing in that area.
Takes rational decisions himself depending up on the situation.
3. COGNITIVE ENTREPRENEUR
Who takes advices and services of experts and introduces changes.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF STAGES OF DEVELOPMENT
1) First Generation Entrepreneur: He is one who starts an industrial
unit by means of his own innovative ideas and skills. He is
essentially an innovator. He is also called new entrepreneur.
2) Modern Entrepreneur: He is an entrepreneur who undertakes those
ventures which suit the modern marketing needs.
3) Classical Entrepreneur: He is one who develops a self supporting
venture for the satisfaction of customers’ needs. He is a stereo type
or traditional entrepreneur.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF TYPE OF BUSINESS
1) Business Entrepreneur: He is an individual who discovers an idea to start
a business and then builds a business to give birth to his idea.
2) Trading Entrepreneur: He is an entrepreneur who undertakes trading
activity i.e; buying and selling manufactured goods.
3) Industrial Entrepreneur: He is an entrepreneur who undertakes
manufacturing activities.
4) Corporate Entrepreneur: He is a person who demonstrates his innovative
skill in organizing and managing a corporate undertaking.
5) Agricultural Entrepreneur: They are entrepreneurs who undertake
agricultural activities such as raising and marketing of crops, fertilizers and
other inputs of agriculture. They are called agripreneurs.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF USE OF TECHNOLOGY
Technical Entrepreneur:
• They are extremely task oriented.
• They are of craftsman type.
• They develop new and improved quality goods
because of their craftmanship.
• They concentrate more on production than on
marketing.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF USE OF TECHNOLOGY
Non-Technical Entrepreneur:
• These entrepreneurs are not concerned with the
technical aspects of the product.
• They develop marketing techniques and
distribution strategies to promote their business.
• Thus they concentrate more on marketing
aspects.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF USE OF TECHNOLOGY
Professional Entrepreneur:
• He is an entrepreneur who starts a business unit
but does not carry on the business for long
period.
• He sells out the running business and starts
another venture.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF MOTIVATION
Pure Entrepreneur:
• They believe in their own performance while
undertaking business activities.
• They undertake business ventures for their
personal satisfaction, status and ego.
• They are guided by the motive of profit.
• For example, Dhirubhai Ambani of Reliance
Group.11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
ON THE BASIS OF MOTIVATION
Induced Entrepreneur:
• He is induced to take up an entrepreneurial
activity with a view to avail some benefits
from the government.
• These benefits are in the form of assistance,
incentives, subsidies, concessions and
infrastructures.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ON THE BASIS OF MOTIVATION
Motivated Entrepreneur:
• These entrepreneurs are motivated by the desire to
make use of their technical and professional
expertise and skills.
• They are motivated by the desire for self-
fulfillment.
Spontaneous Entrepreneur:
• They are motivated by their desire for self-
employment and to achieve or prove their
excellence in job performance.
• They are natural entrepreneurs.11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
ON THE BASIS OF ENTREPRENEURIAL ACTIVITY
Novice:
• A novice is someone who has started his/her first entrepreneurial venture.
Serial Entrepreneur:
• A serial entrepreneur is someone who is devoted to one venture at a time
but ultimately starts many.
• He repeatedly starts businesses and grows them to a sustainable size and
then sells them off.
Portfolio Entrepreneurs:
• A portfolio entrepreneur starts and runs a number of businesses at the same
time.
• It may be a strategy of spreading risk or it may be that the entrepreneur is
simultaneously excited by a variety of opportunities.11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEUR VS MANAGER
ENTREPRENEUR
• Owner of the business
• Profit
• Full risk bearing
• All functions
• Innovator
MANAGER
• Servant of the business
• Salary
• No risk bearing
• Managerial functions only
• Executor
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
INTRAPRENEURS
• The new brand of corporate entrepreneurs from within an
organisation are called as intrapreneurs.
• The term intrapreneur was coined in USA in the late seventies.
• Many senior executives of big companies in America left their jobs
and started small business of their own.
• They left the organisation because they did not get any opportunity
to apply their own ideas and innovative ability.
• These entrepreneurs become successful in their own ventures.
• Some of them caused a threat to the corporations they left.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
INTRAPRENEURS
• This type if entrepreneurs have come to be called Intrapreneurs.
• They believe strongly in their own talents.
• They have desire to create something of their own.
• They want responsibility and have a strong drive for individual
expression and more freedom in their present organisational
structure.
• When this freedom is not forthcoming, they become less productive
or even leave the organisation to achieve self actualisation
elsewhere.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEUR VS INTRAPRENEUR
ENTREPRENEUR
• Independent
• Need not be highly educated
• Fund raising
• Risk bearing
• Routine work
• Operation from outside
• Strong authoritarian
INTRAPRENEUR
• Dependent
• Highly educated
• No fund raising
• No risk bearing
• Specialist
• Operation from inside
• Less authoritarian
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
COPRENEUR
• Copreneurs are entrepreneurial couples who work
together as co-owners of their business.
• They are creating a division of labour that is based on
expertise as opposed to gender studies show that
companies co-owned by spouses represent one of the
fastest growing business sectors.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ULTRAPRENEUR
• The concept of ultrapreneuring is to identify a business
opportunity, determine its viability and form a company.
• It requires assembling a super competent management team,
who then develop, produce and markets the product or service
in the shortest optimum time period.
• They create business and then sell out, merge or combine.
• In short, going beyond the simple undertaking and keeping a
focus on the benefits of that undertaking provides a sensible
definition of the word Ultrapreneur.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
The Concept of Entrepreneurship…
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
DEFINITION
According to A. H. Cole, “Entrepreneurship is the purposeful
activities of an individual or a group of associated individuals
undertaken to initiate, maintain or organize a profit oriented
business unit for the production or distribution of economic
goods and services”.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
THE ENTREPRENEURIAL PROCESS
1• IDENTIFY AN OPPORTUNITY
2• ESTABLISH VISION
3• PERSUADE OTHERS
4• GATHER RESOURCES
5• CREATE NEW VENTURE , PRODUCT OR MARKET
6• CHANGE OR ADAPT WITH TIME
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEURIAL COMPETENCIES/ TRAITS
TRAITS
KNOWLEDGE
SKILLMOTIVE
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
• KNOWLEDGE: Collection and retention of information in
ones mind
• SKILL: The ability to demonstrate a system and sequence of
behaviour which results in something that one can see
• MOTIVE: Urge to achieve one’s goal
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
TYPES OF COMPETENCIES
• HARD-SKILL COMPETENCIES:
Skills that are acquired through
education or work experience.
• SOFT-SKILL COMPETENCIES:
Skills that are generally inherent in an
individual or developed by him
consciously.
E.g., Communication Skill11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala
MAJOR ENTREPRENEURIAL COMPETENCIES
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Entrepreneurship Development Institute of India, Ahemedabad
conducted a study under Prof. David C. McClelland. The core
competencies according to the study are:
• Initiative
• Looking for opportunities
• Persistence
• Information seeker
• Quality conscious
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
• Committed to work
• Efficiency seeker
• Proper planning
• Problem solver
• Self-confidence
• Assertive
• Persuasive
• Efficient monitor
• Employees’ well wisher
• Effective strategist
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ACCORDING TO B. C. TANDON
• Entrepreneur is enough risk-bearer.
• He is ready to adapt change, if the situation warrant.
• He has the ability to Marshall the resources at his command.
• He is a good organiser as well as a good manager.
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
DEVELOPING COMPETENCIES
• Kakinada Experience.
• The procedure involves four
steps:
– Competency Recognition
– Self-Assessment
– Competency Application
– Feed back
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEUR VS ENTREPRENEURSHIP
ENTREPRENEUR
• Person
• Organiser
• Innovator
• Motivator
• Leader
• Creator
ENTREPRENEURSHIP
• Function/ Process
• Organisation
• Innovation
• Motivation
• Leadership
• Creation
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEUR VS ENTREPRENEURSHIP
ENTREPRENEUR
• Risk-bearer
• Initiator
• Visualiser
• Technician
• Imitator
• Administrator
ENTREPRENEURSHIP
• Risk-bearing
• Initiative
• Vision
• Technology
• Imitation
• Administration
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
ENTREPRENEURIAL MOTIVATION
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Motivation means….
• Willingness to exert high levels of effort toward organizational
goals
• Conditioned by the effort’s ability to satisfy some individual
need
• Motivation can be described in terms of intensity, persistence,
and direction
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Definition…
• According to Dalton E. McFarland, “Motivation refers to the
way in which urges, drives, desires, strives, aspirations and
needs direct, control or explain the behaviour of human being”
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Nature of Motivation…
• Motivation: The set of forces that leads people to
behave in particular ways
• The Importance of Motivation
– Performance depends upon motivation, ability, and
environment
– P = M + A + E
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Concepts…
• Needs and Motives
• Goals
• Behaviour
• Incentives
• Instincts
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Process of Motivation
GOAL
MOTIVEBEHAVIOR
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
MOTIVATION THEORIES
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Abraham Maslow’s Need Hierarchy Theory
Self Transcend
ence
Self actualization
Self Esteem
Social Needs
Safety and Security Needs
Physiological Needs
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
David McClelland’s Acquired Needs Theory
Power
Achievement
Affiliation
11/28/2014PRAJEESH E MENON KVM COLLEGE,
Cherthala, Kerala
Motivating Factors…
1. Intrinsic Factors:
• Desire to do something new
• Educational background
• Occupational background or experience
2. Extrinsic Factors:
• Government assistance and support
• Availability of labor and raw materials
• Encouragement from big business houses
• Promising demand for the product11/28/2014
PRAJEESH E MENON KVM COLLEGE, Cherthala, Kerala