Module -1 Entrepreneur

Module 1: Entrepreneur
Meaning of entrepreneur, evolution of concept, functions of an
Entrepreneur, types of Entrepreneur, Intrapreneur-an emerging class,
concept of Entrepreneurship, development of Entrepreneurship, the
Entrepreneurial culture, stages of Entrepreneurial process.

Module – 1
ENTREPRENEUR

Meaning of Entrepreneur-
The word entrepreneur is original from French word “Entrependre” means one who undertake
risk to start up the business.

An entrepreneur is a person who starts an enterprise. He searches for change and responds to
it.one who recognizes and manages enterprise especially involving high risk. If taken literally,
this definition seems fine, but it is quite incomplete. Researches have shown that
entrepreneurs are not necessarily high risk takers. However, a clever entrepreneur performs to
reduce risk and increase the likehood of success. The definition nowhere mentions anything
about opportunities or resources allocated to achieve the success. the only point mentioned in
the definition is regarding high risk, which might not even necessary to be successful.

One can choose your career from two broad categories of options.-wage employment or
entrepreneurship. The term “career “signifies a continuous ever evolving,ever expanding
opportunity for personal as well as business growth and development.

Entrepreneurshipcan be defined as a career in your own business (YOB) rather than wage
employment(JOB).if you opt foa a job then you will work for others.in case you opt for
entrepreneurship you will be your own boss.in case of wage employment one is engaged in
routine work carried on for others for which he receives salary or wages. He has to follow
instructions and execute plans laid down by his superior.one can choose to be employed in
government service or the public sector or the private sector.

1725: Richard Cantillon: An entrepreneur is a person who pays a certain price for a product
to resell it at an uncertain price, thereby making decisions about obtaining and using the
resources while consequently admitting the risk of enterprise.

1803: J.B. Say: An entrepreneur is an economic agent who unites all means of production-
land of one, the labour of another and the capital of yet another and thus produces a product.
By selling the product in the market he pays rent of land, wages to labour, interest on capital
and what remains is his profit. He shifts economic resources out of an area of lower and into
an area of higher productivity and greater yield.

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1934: Schumpeter: According to him entrepreneurs are innovators who use a process of
shattering the status quo of the existing products and services, to set up new products, new
services.

1961: David McClleland: An entrepreneur is a person with a high need for achievement. He
is energetic and a moderate risk taker.

1964: Peter Drucker: An entrepreneur 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.

1971: Kilby: Emphasizes the role of an imitator entrepreneur who does not innovate but
imitates technologies innovated by others are very important in developing economies.

1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure and have an
internal locus of control.
Examples:
Bill Gates – The founder of Microsoft
Ratan Tata – The founder of Tata Groups
Steve Jobs – The founder of Apple
Diru Bhai Ambani – The founder of Reliance groups
Mark Zuckerberg – The founder of Face book
V G Siddarath – The founder of CCD (Cafe Coffee Day)

Management experts defines entrepreneur as a person who has a vision and generates action
plan to achieve it.to put in simple words, an entrepreneur is someone who perceives
opportunity, organizes resources needed for exploring the opportunity and exploring it.

Evolution of the concept

The word entrepreneur has a variety of meanings. Originally, the word entrepreneurship has
been derived from the French word “entreprendre” which means ‘to under take’. The word
has undergone many changes over a period of five centuries. In the early 16th century, a
leader of the military expedition was called an entrepreneur. In the 17th century construction
and fortification contractors were called entrepreneur. The Oxford dictionary (1897) defines
the word entrepreneur as “the director or manager of a public musical institution, one who
gets up entertainment especially musical performance”. Later in the 18th century the word
was used to refer to as ‘those engaged in economic activity’’. In 19th century, entrepreneurs
were views from an economic perspective. A close look at these meaning which has evolved
with time seems to suggest that in the earliest period, a person who was strong, took orders &
went in search of new lands as part of military expedition was an entrepreneur which later
shifted to mean a person with extraordinary idea to build forts that could stand all attacks (an
engineering or technical man) was an entrepreneur. Whatever is the road that these terms as

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taken one thing seem to stand out, i.e., a person with a rare blend of qualities like
organising skill, mental ability, adventurous attitude, love for hard work, clear in goals,
objectives, highly optimistic, emotionally stable, self-confident, positive attitude with
desire to take risk is an entrepreneur

Functions of an Entrepreneur:The major functions of an entrepreneur are as follows

Idea generation and scanning of the best suitable ideas
Determination of the business objective
Product analysis and market research
Determination of form of ownership
Completion of promotional formalities
Raising necessary funds
Procuring machine and materials
Recruitment of labour
Undertaking the business operations
Decision making
Management control
Portfolio management
Risk taking and uncertainty bearings

Characteristics of Entrepreneur:
 Vision-An entrepreneur has a dream and he visualizes the ways and means to achieve
that dream.in doing so he visualizes market demands, socio-economic and the
technological environment and then based on the dynamics, he visualizes a future for
his business venture.
 Knowledge-an entrepreneur has sound conceptual knowledge about all the
technicalities of his business.be it technical, operational, financial or market dynamics.
 Desire to succeed- An entrepreneur has strong desire to succeed in life. Their dreams
are not just limited to achieving one single goal but they constantly work to achieve
higher goals.
 Independence-an entrepreneur needs independence in work and decision making.
They don’t follow the rule of thumb but make their own rules and destiny.
 Optimism-entrepreneur are highly optimistic about achieving their vision.
 Value addition-entrepreneurs do not follow the conventional rules of thumb. They
have a constant desire to introduce something new to existing business. they create
innovate or even add value to the existing products/services and therefore, stand out in
market.

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 Leadership-an entrepreneur exhibits the qualities of a leader. they are good planners,
organizers have good communication skills are empathetic towards their employees
are good decision makers, take initiatives to implement plans and are result oriented.
 Risk taking ability-Frank Knight has identified risk taking ability as the most integral
element in defining entrepreneurial characteristics.

Types of Entrepreneur:

 Based on functional entrepreneur:

Innovative Entrepreneurs: Innovating entrepreneurs are dynamic & enthusiastic. They are
interested in introducing new projects and they experiment and conduct permutation and
combinations of ideas to yield new products and services.; using new raw materials trying
new methods of production; discovering new markets; & re-organising the enterprise. Such
entrepreneurs are found only in developed economies.

Imitative Entrepreneur: These entrepreneurs are ready to adopt successful innovating

undertaken by innovative entrepreneurs. They themselves do not innovate new things but
imitate the methods, techniques & technologies which are successful in the market. Such
entrepreneurs are found in developing economies.

Fabians Entrepreneurs:Fabians entrepreneurs are very cautious in bringing any change in

their enterprises. They are lazy and slow in adopting the changes. They avoid taking risks.
They imitate the changes made by others only when they feel that otherwise they lose the
market or relative position in the market. They strongly believe in customs and traditions.
They do not change products unless they are out of market.

Drone Entrepreneurs:Drone Entrepreneurs are not open to creativity and change they do not
like changing the working of organisations with the changing times. . They are conservative in
their outlooks. They continue with the old method at the cost of reduced turnover & market
share. They are purchased out of the market in long run.

 Based on personality traits and their style of running the business-

Achiever-these types of Entrepreneurs have personal desires to excel. The only drive that
pushes them is the desire to achieve something in life, the desire to make a mark in society,
the desire to prove their excellence.no matter how many hurdles come in their way, they are
totally determined. They do not need any external stimulus but are self-driven. Their
characteristics can be termed as achievement personified. They can rightly be called as go-
getters. This personality will often cause them to build their business around their own
personal brand. These Entrepreneurs have dreams and dare to fulfil their dreams.

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The induced Entrepreneur-these types of Entrepreneurs are induced by some external

factors to start a business. The external factors could be like supporting government policies,
unemploymentand familysupport; facilitating institutional support etc. these types of
Entrepreneurs turn out to be more realistic in their approach. For instance-when the
government announced subsidies,tax debates and financial support to small scale industries,
several Entrepreneurs started their business as SSIs.

Idea generator-these kinds ofEntrepreneurs are highly creative people who0 are always in
search of innovative ideas for setting up new business ventures. they have the ability to sense
the demand much ahead of others. they enjoy the first movers advantage and are able to skim
higher profits from the market. they can rightly be given the title of essence of
Entrepreneurship.

 Based on type of business-

Trading Entrepreneurs:Trading Entrepreneurs is one who undertakes trading activities

(buying and selling of good s and services) and is concerned with the manufacturing of
products. He identifies potential market,stimulates demands and generatesinterest among
buyers to purchase a product.
For example, distributors would buy from the manufacture and sell the same to the whole-
sellers or retailers. While retailers buy either from whole seller or distributor and sell the same
to the customers.

Industrial Entrepreneurs: Industrial entrepreneurs are those who undertake some

manufacturing activity. They identify the needs of the customers and conceive an idea of
manufacturing a new product. They make use of technology and economic resources to create
a profitable venture. They are the owners of small industrial units who run establishments on
their own with the help of new workers and assistants.

Corporate Entrepreneurs:Corporate Entrepreneurs is a person who demonstrates his

innovative skill in organising and managing a corporate undertaking (which is registered
under some stature or act that gives it a separate legal entity.

Agricultural Entrepreneurs: Individuals who undertake agricultural operations using

modern mechanical devices and raise crops other than traditional ones may be called
agricultural entrepreneurs. They risk growing crop and experiment with new techniques to
raise crops

 Based on ownership-

Pure Entrepreneurs: individuals who are the founders of the business. They are the ones
who conceptualize a business plan and then put in efforts to make the plan a success. Ex-
Dhirubhai ambani

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Second generation operators of family-owned business-They are the individuals who have
inherited the business from their fathers and forefathers. like mukesh ambani and anil ambani
sons of dhirubhai ambani of the reliance group now split into two .

Franchises- Franchises has been derived from a french word which means free.it is a method
of doing business wherein the parent owner (the franchiser)licenses his trademarks and tired
and proved methods of doing business ton a franchisee in exchange for a recurring payment.
Here franchisees has not conceptualized the business but has invested his money and time in
the business. Example-NIIT

 Based on stages of development-

First Generation Entrepreneurs: Are those who started the business on their own efforts
and skill. These people are entrepreneurs in the real sense. They will have all the qualities of
an entrepreneur.

Modern Entrepreneurs:-A modern Entrepreneur is one who undertakes business to satisfy

the contemporary demands of the markets. They undertake those ventures which suit the
current socio-cultural needs.

ClassicalEntrepreneurs: A classical Entrepreneur is a stereo-type Entrepreneur, whose aim

is to maximize the economic returns at a level consistent with the survival of the firm, with or
without element of growth.

 Based on scale of operation-

Small Entrepreneurs: Individuals who carry on small operation on small scale are called
small entrepreneurs. The investment made would be comparatively less. They use more of
labours less or no technology. Production is limited & they generally cater to the needs of
local people.

Medium-scale Entrepreneurs: Medium Scale Entrepreneurs are bigger than small scale
entrepreneurs but smaller than large-scale entrepreneurs. Investment in technology and other
resources more or less equal. They cater to bigger market comparatively.

Large scale Entrepreneurs: Group of individual who come to establish a large scale
enterprises may be considered a large scale entrepreneurs. Heavy investment is made and
mass production is undertaken. They cater to the needs of national and international markets.

 Based on Gender-
Men Entrepreneur
Women Entrepreneur

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Other types of Entrepreneurs are as follows:

Public Entrepreneurs: In many countries government itself established enterprises for the
benefits of the society at large. As the government is the owner of such units they are called
public enterprises. Here government acts as an entrepreneur.

Private Entrepreneurs: Entrepreneurs other than the government are called private
entrepreneurs. Most of the entrepreneurs in our country are being run by private entrepreneur.
The primary objective of private entrepreneurs is maximum profit

Forced Entrepreneurs: Entrepreneurs who start enterprises on the external pressure may be
called forced entrepreneurs. People who do not get job which suits their qualification may
start their own enterprises.

Artisan Entrepreneurs: Skilled person in rural areas are considered are artisan
entrepreneurs. These people acquire their skill through inheritance and training since
childhood. They are blacksmith, carpenter, shoemaker, potter, weavers, and like.

INTRAPRENEURS:
The term intrapreneur emerged during the 1970s.several senior executives of big corporations
left their jobs to start their own small business because the top bosses in these corporations
were not receptive to innovative ideas. These executives turned entrepreneur achieved
phenomenal success in their new ventures; posing a threat to the corporations they had left.
These types of entrepreneurs came to be known as “Intrapreneurs”

An Intrapreneur is an inside entrepreneur within a large firm, who uses entrepreneurial skills
without incurring the risks associated with those activities. Intrapreneurs are usually
employees within a company who are assigned to work on a special idea or project, and they
are instructed to develop the project like an entrepreneur would. Intrapreneurs usually have
the resources and capabilities of the firm at their disposal.

Intrepreneurs are the people working in big organisations holding key position. They are
quite innovative and bring many changes in products and the methods of production.

They possess all the qualities of entrepreneurs. They have many new ideas which are
converted into product or service or anything that satisfies human wants or needs. They may
or may not undertake research and development for the purpose. They appear to be de-factor
owners of the organisation in which they are seen working and by their acts, deeds and talents
they can be easily mistaken to be so. But the main difference between entrepreneurs and
intrepreneurs is the element of risk. The former is prepared to take-up while the later does not.

Top managements in big establishments encourage people holding key positions to come out
with new ideas so that they can bring in changes in product and services offered by them.
More the variety of products more is the goodwill enjoyed by the organisation. The fast

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changing markets and consumer preferences have increased the role of intrepreneurs in the
success of big organisations. To develop successful innovation, a corporation should establish
a conducive organizational climate. The process of establishing Intrapreneurship within an
existing organisation requires the commitment of management, particularly top management.
The organization must carefully choose leaders, develop general guidelines for ventures and
delineate expectations. Training sessions are an important part of the process. A system of
incentive and reward should be also in place as a means of encouragement. This climate
creates a person who develops into an Intrapreneur with all the skills, talents, ability etc that is
required to hold the reins of venture. Such people are now on the raise and are emerging as a
class.

Characteristics:
 Intrapreneurs bridge the gap between inventors and mangers. They take new ideas and
turn them into profitable realities.
 They have vision and courage to realize it.
 They can imagine what business prospects will follow from the way customers
respond to their innovations.
 They have ability to plan necessary steps for actualization of the idea.
 They have high need for achievement and they take moderate calculated risk.
 They are dedicated to their work that they shut out other concerns. Including their
family life.

Difference between Entrepreneur and Intrapreneur

Bases of difference Entrepreneur Intraprenenur
Meaning Entrepreneur refers to a person who Intrapreneur refers to an
set up his own business with a new employee
idea or concept of the organization who is in
charge of undertaking
innovations
in product, service, process etc.
Resources Uses own resources. Use resources provided by the
company.
Enterprise Newly established An existing one
Dependency An entrepreneur is independent But, an intrapreneur is dependent
in his operations. on the entrepreneur, i.e., the
owner.
Freedom Has freedom and autonomy. Need Has the freedom and autonomy
not report to anyone unless has for professional growth, but may
investors. have to report to whoever hired
them.
Raising of Funds An entrepreneur himself raises Funds are not raised by the
funds required for the enterprise. intrapreneur.
Risk Entrepreneur bears the risk involved An intrapreneur does not fully
in the business. bear the risk involved in the

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enterprise.
Operation An entrepreneur operates from out- On the contrary, an intrapreneur
side. operates from within the
organisation itself.
Core objective To increase competitive strength To innovate something new of
and market sustainability of the socio economic value.
organization.
Decisions Collaborative decisions to execute Independent decisions to execute
dreams. dreams.

Concept of Entrepreneurship
Entrepreneurship can be described as a process of action an entrepreneur undertakes to
establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create and
build something from practically nothing. It is a knack of sensing opportunity where others
see chaos, contradiction and confusion. Entrepreneurship is the attitude of mind to seek
opportunities, take calculated risks and derive benefits by setting up a venture.

It comprises of numerous activities involved in conception, creation and running an

enterprise. According to Peter Drucker Entrepreneurship is defined as ‘a systematic
innovation, which consists in the purposeful and organized search for changes, and it is the
systematic analysis of the opportunities such changes might offer for economic and social
innovation.’

Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of complex

socio-economic, psychological, technological, legal and other factors. It is a dynamic and
risky process. It involves a fusion of capital, technology and human talent. Entrepreneurship is
equally applicable to big and small businesses, to economic and noneconomic activities.
Different entrepreneurs might have some common traits but all of them will have some
different and unique features. If we just concentrate on the entrepreneurs then there will be as
many models as there are ventures and we will not be able to predict or plan, how and where,
and when these entrepreneurs will start their ventures. Entrepreneurship is a process. It is not a
combination of some stray incidents. It is the purposeful and organized search for change,
conducted after systematic analysis of opportunities in the environment. Entrepreneurship is a
philosophy- it is the way one thinks, one acts and therefore it can exist in any situation be it
business or government or in the field of education, science and technology or poverty
alleviation or any others.

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Definition of Entrepreneurship
B. HIGGINS: “ The function of seeing investment & production opportunities; organising an
enterprise to undertake a new production process; raising capital; hiring labour, arranging for
raw material, finding a site & combining these factors of production into a going concern;
introducing new techniques, new commodities, discovering new sources of natural resources
& selecting top-managers for day-to-day operations.”
SCHUMPETER: “Entrepreneurship is based on purposeful & systematic innovation. It
includes not only the independent businessman but also company directions & managers who
actually carryout innovative functions.”

Enterprise
Entrepreneur is a person who starts an enterprise. The process of creation is called
entrepreneurship. The entrepreneur is the actor and entrepreneurship is the act. The outcome
of the actor and the act is called the enterprise. An enterprise is the business organization that
is formed and which provides goods and services, creates jobs, contributes to national income,
exports and overall economic development.

Difference between Entrepreneur and Entrepreneurship

Entrepreneur Entrepreneurship
He is a person It refers to a process
He is an organiser It refers to organization
He is an innovator It refers to innovation
He is a risk bearer It refers to risk bearing
He is a motivator It refers to motivation
He is a creator It refers to creation
He is a visualisor It refers to vision
He is a leader It refers to leadership
He is an initiator It refers to initiation
He is a planner It refers to planning
He is a decision maker It refers to decision
He is a communicator It refers to communication

Evolution of Entrepreneurship:
The industrial health of a society depends on the level of entrepreneurship existing in it. A
country might remain backward not because of lack of natural resources or dearth of capital

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[as it is many times believed] but because of lack of entrepreneurial talents or it inability to
tap the latent entrepreneurial talents existing in that society. Entrepreneurs historically have
altered the direction of national economies, industry or markets- Japan, Singapore, Korea,
Taiwan to name a few.
Development of Entrepreneurship:
Towards the end of the sixties, two significant contributions were made in the field of
entrepreneurship .One was that there is a positive linkage between entrepreneurship and
economic development and the other was regarding the emergence of a strong hypothesis that
entrepreneurship can be developed through planned efforts1. Consequently planners realized
that absence of a strong entrepreneurial base acts as a
serious handicap in the industrial development of a region. The identification and
development of first generation entrepreneurs through Entrepreneurial Development
Programmes is an important strategy. There is a growing realization that presence of resources
and favourable government policies cannot automatically manufacture economic
development. It is the entrepreneurial spirit of the people, which can transform the economy
of that region. Both the quantity and quality of entrepreneurs are of utmost
significance for achieving the goal of economic development. The myth that entrepreneurs are
born with some innate traits is fortunately no longer held. You will learn more about this in
the lesson on motivation. Many research studies have brought out that entrepreneurship can be
taught and learned. Entrepreneurship is a discipline and like all disciplines it has models,
processes and case studies, which can help an individual to study this subject. The necessary
competencies required of a successful entrepreneur can be acquired through training and
development. Numerous courses in entrepreneurship are being taught all over the world in
schools and colleges, seminars and conferences are being organized and EDPs are 1 [Sharma
K.M. ‘Economic Development in India, New Thrust on Small Scale Industries’, in Sammi
Udin et.al. [ed.] Entrepreneurship Development in India. Mittal Publications, New Delhi
1990, p. 23] being conducted. The thinking today is why just create managers why not create
people who can absorb managers.

One can acquire the traits and learn the skills for becoming an entrepreneur e.g. a person can
learn to be achievement oriented, self- confident, perseverant etc. which are all part of the
characteristics of a successful entrepreneur.

Usually the model used for entrepreneurial education has three phases:

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Stimulatory Phase- This phase involves planned publicity for opportunities, motivation
training and help and guidance in selection of product or service.
Support Phase- This provides help in registration of units, arrangement of finance as well as
land, sheds, power, water, common facility centres etc. Help is also provided in marketing of
products.
Sustenance Phase- Once the enterprise is set up then help is provided for modernization,
diversification, additional finance etc.
Entrepreneurship and economic development:
Entrepreneurship is basically concerned with creating wealth through production of goods and
services. this result is process of upward change whereby the real per capita income of a
country rises overtime or in other words. economic development takes place. Thus
Entrepreneurial development is key to economic devlopnment.in fact it is one of the most
critical inputs in the economic development of a region.it speeds up the process of activating
factors of production leading to a higher rate of economic growth, dispersal of economic
activities and development of backward regions. If a region is unable to throw up a sufficient
number of entrepreneurs then alien Entrepreneurs usually step in t provide goods and services
needed by people.
However the profits earned by these Entrepreneurs are usally not ploughed back repatriated to
their place of region.as a result development in that region cannot take place.DR. MM Akhori
refers to thispractices “The leach effect “the above reiterates the importance Entrepreneurship
development for fuelling economic growth of a region. Entrepreneurship begets and also
injects entrepreneurship by starting a chain reaction when the Entrepreneur continuously tries
to improve the quality of existing goods and services and add new ones.Ex:when computers
came into the market there was continuous improvement in the models,their functions etc. like
first generation computers, personal computers, laptop, plamtops etc. not only had this
forecasted the development of the software industry, computer education institutes, computer
maintenance and stationary units etc. But also other industries like banking railways,
education, travel, films, medical and legal transciptions, BPO etc. IN this manner by
harnessing the entrepreneurial talent a society comes of traditional lethargy to modern
industrial culture. India needs entrepreneurs to capitalize on new opportunities and to create
wealth and new jobs.
In recent years, the following are the areas where entrepreneurs have contributed towards the
economy most importantly in developing economies.
1. Product evaluation process

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2. Increase in per-capita income & GDP,

3. initiating & contributing change,
4. increase in literacy
5. increase in employment & in employment opportunities
6.Distribution of wealth
7.Import of technology & modern business concepts.

Entrepreneurial Culture
The concept of culture is used to distinguish human societies from animal groups. The
customs, ideas and attitudes shared by a group, which make up its culture, are transmitted
from generation to generation by learning processes rather than biological inheritance.
Adherence to these customs and attitudes is regulated by systems of rewards & punishments
peculiar to each culture. Language and other symbolic media are the chief vehicles of culture
transmission but many behaviour patterns are acquired through experience alone.

In almost all successful business firms there have been leaders who revived and changed the
culture and course of those firms. In most cases such changes are based on retaining and
developing what is good in an existing culture and adding to it new elements that will
stimulate growth. A total rejection of all that existing can be devastating. Therefore the skill in
reforming the culture of a company is to identify and retain the pride and honour in what is
good while recognising what is to be rejected or modified. At the same time the management
of the firm should seek, generate and embrace new ideas and practices that can energise the
firm and propel it forward with new vigour. A culture is usually divided into sub-culture
based upon geography, language, ethnic background, human characteristics and such other
qualities that stem out from human characteristics. In recent years this has the effect of the
alien culture too. For an entrepreneur the culture is, therefore, a sum total of all these
interacting innate factors.
Like nations, business firms also have their distinctive cultures & need to inculcate these
aspects into managing affairs. Many firms are not aware of their culture or sensitive to its
distinct characteristics. They become aware of it when they have to induct managers and other
personnel from other firms with different cultures or even more acutely when mergers and
acquisitions take place. Perhaps this is the reason why international human resource
management has developed itself into a discipline and has become a part and parcel of
academic studies in MBA.

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The areas where entrepreneurial culture is showcased are as follows:

Business Culture/Ethics: Ethics is that branch of philosophy which is concerned with

rightness or wrongness, goodness or badness of human conduct. No doubt that these days
various legislations are in place to ensure adherence to norms. But the underlying fact is that
since ages the social norms, which we call as morals have led people adopt them and progress.
Thus even before laws can guide people the customs, tradition and social values have led
them.
Productivity Culture: Productivity improvement is not just doing things better. It is more
importantly doing better in the right manner. All productivity improvement stems from people
productivity as people constitute the motive power behind all the resources. Like machine
which stands idle, human potential diminishes if not properly utilised. This suboptimal
manpower utilisation is the major reason for brain drain in many developing countries. Thus,
there is no point in improving skills until the organisation can use them. Organisation must
periodically conduct opinion survey or a feedback session for corrective actions for area of
concern. Besides the well know tools for improving productivity like motivation,
communication, etc.
Quality Culture: In many western countries price and quality go hand in hand. If product is
comparatively highly priced it connotes better quality than the lower priced one. But this does
not appear to be so in India. Use of chemicals harmful to humans in manufacture of food or
drinks, no adequate measure for dangerous manufacturing processes, etc reflects the scant
respect for quality as a culture. Thus Indian organisations, at this juncture, will realise it
increasingly necessary to combine their peculiar ways of doing business with the global
practices of business they are involved in.
Organisational culture: Culture enables organisation to function as a collective unit. The
cultural glue consists of strong norms and values that heavily influence the way people
behave, how they work together and how they pursue the goals of the organisations. To
strengthen an organisation’s culture, a set of values, behaviour characteristics procedural
rituals, role model for the professionals working in an organisation should be identified.
Structure reflects the organisation of work roles. The roles may be production, finance,
marketing, personnel etc. The structure of the organisation embodies the fundamental division
of labour, describes the nature and duties of the jobs to be done and aggregates them into
groups or business.

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Stages in Entrepreneurial Process-

The process of starting a new venture is embodied in the entrepreneurial process, which
involves more than just problem solving in a typical management position. An entrepreneur
must find, evaluate & develop an opportunity by overcoming the forces that resist the creation
of something new. The process has four distinct stages
a. Identification and evaluation of the opportunity,
b. Development of a business plan suiting opportunity,
c. Determination of the required resources
d. Managing the resulting business enterprise.

1. Identification & evaluation of the opportunities: It is very difficult task. Most good
business opportunities do not suddenly appear, but rather result from an entrepreneur’s
alertness to possibilities or in some cases, the establishment of mechanism that identify
potential opportunities. For example, entrepreneur asks at every cocktail party whether anyone
is using a product that does not adequately fulfil its intended purpose. This person is
constantly looking for need and an opportunity to create a better product. Another
entrepreneur always monitors the play habits and toys of her nieces and nephews. This is her
way of looking for any unique toy product niche for a new venture. In this stage the
entrepreneur needs to develop his thinking on the following aspects side by side.
(a) Opportunity assessment,
(b) Creation & length of opportunity,
(c) Real & perceived value of opportunity,
(d) Risk & returns involved in the opportunity,
(e) Opportunity versus personal skill and goals,
(f) Competitive environment,
(g) National priorities & State’s intentions.
It is important to mention here that opportunity here could of marketing a visible, tangible
physical product service & may involve technical logistics too. Sometimes technical oriented
business opportunities are conceptualised while working on some other related or even
unconnected projects. It is also very pertinent to mention here that business opportunity or
idea may spring up from consumers, business associates, bankers, channel members, technical
people, reports citations or demand-supply gap reports of the state etc. What ever is the
opportunity or source of idea opportunity analysis needs to be undertaken. Opportunity

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analysis, or what is frequently called an opportunity assessment plan, is a method for

evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be
shorter, focus on the opportunity not the venture and provide the basis for decision making
whether or not to act on the opportunity.

2. Developing Business Plan: A good business plan must be developed in order to explicit
the defined opportunity. It is as good as a preparation of a report. This is perhaps the most
time consuming but an important process. An Entrepreneur usually would not have prepared a
business plan before and may not have the resources available to do a good job. Even if the
Entrepreneur has prepared a plan before, it may not be for the opportunity for one on hand at
present. Although the preparation needs lot of information & expertise the information varies
from the type of product, service or targeted consumers. The following are the important
issues that are considered under the development of a business plan.
(a) Develop a Report / Business Plan:
(i) Title page
(ii) Table of contents
(iii) Executive Summary
(iv) Major section:
(1) Description of business
(2) Technology plan
(3) Marketing plan
(4) Financial plan
(5) Production plan
(6) Organisation plan
(7) Operational plan
(8) Summary
(v) Appendix (Exhibits).

3. Determine the Resources Required: This process starts with an appraisal of the
entrepreneur’s present resources. Any resources that are critical need to be differentiated from
those that are just helpful. Care must be taken not to underestimate the amount and variety of
resources needed. The downside risk associated with insufficient or inappropriate resources
should also be assessed. Here resources would also mean the talent, skills, expertise, and
knowledge, name of the sponsor besides usual resources like men, money, machine, materials

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& management. It is in this phase that besides listing various resources side by side the
suppliers are also listed. This ensures scientific approach such that an entrepreneur can
structure a deal that enables the resources to re acquired at the lowest possible cost and least
loss of control.

4. Manage the Enterprise: This phase involves implementing a management style and
structure, as well as determining the key variables for success. A control system must be
established, so that any problem areas can be quickly identified and resolved. Some
entrepreneurs have difficulty managing and growing the venture they created.
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Assignment Questions:
 List out the successful Indian Entrepreneurs
 Internal and external Problems faced by entrepreneurs
 List out the failure Indian Entrepreneurs

Entrepreneur Entrepreneurship Enterprise

Person Process of action Object

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