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8/3/2019 Entrepreneurship New Venture Creation 31 Module 1712 110909070051 Phpapp01

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Entrepreneurship &New Venture

Creation-(3.1)

BU-MBA-Semister-3



Entrepreneur

The term entrepreneur is derived from the

French word entreprendre which means to

undertake.

It means the person who undertakes the risk

of the new enterprise

In the 16th century the Frenchman who

organized and led military expeditions were

referred as Entrepreneurs



According to Richard Cotillion

An entrepreneur is a person who buys factor services at certainprices with a view to selling its product at uncertain price (un-expected price)

According to International Labor Organization (ILO)

Entrepreneurs as those people who have the ability to see andevaluate business opportunities, together with the necessaryresources to take advantage of them and to initiate appropriateaction to ensure success

According to Peter F.Drucker

An entrepreneur is one who always searches for change, responds toit and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, that means by which they exploit change as anopportunity for a different business or service



Nature/Characteristics of Entrepreneur

Entrepreneur is a keyplayer in economic

progress

Entrepreneurs

introduce new things inthe economy

They are considered as

the business leader and

not as simple owner of

capital.

Importance of Entrepreneurs

The importance of anyentrepreneur is as

follows:-

Develop new markets

Discover new sources of

materials

Mobilize capital

resources

Introduce new

technologies

Create employment



Finally to become successful entrepreneur one should have the

following characteristics:-

Need to achieve (goals should achieve)

Independence (start business their own) Risk bearing (ready to face uncertainty) Locus of control (governing and shaping the goals with high control) Determination (working sincerely on goal achieving) Positive self-concept (thinking positive and analyze anything by

SWOT analysis) Ability to find and explore opportunities (finding/grab

opportunities) Hope success (feeling success in each and every step they move no

failure)

Flexibility (measuring pros and cons of decision and tend to changeif situation demands)

Analytical ability of mind (unaffected by personal likes and dislikes) Sense of efficacy (oriented always to goals no deviation or diversion

by external influence)



Openness to feedback and learning from experience (ready to acceptfeedback)

Confronting uncertainty (they are always optimistic, they take odd as theopportunity)

Interpersonal skills (they like dealing with people at all levels) Need to influence others (they influence the others by their goals and their

procedures/convince others) Stress takers (ready to work for long hours with full energy)

Time orientation (they will stick on to the time, time is important) Innovators (they will introduce new products and services) Business communication skill (they must have good communication to lead

market) Telescopic ability (they will think every activity in microscope) Leadership (they will act as leaders to lead business)

Business planning (they will plan present and future course of action) Decision making (they have quick decision making ability) Ability to mobilize resources (they will mobilize 6-Ms: Man, Money,

Machinery, Market and Method) Self-confidence (they must have self-confidence about their goal

achievement)



FUNCTIONSPrimary

FunctionsEntrepreneur Function Functions Important

for DevelopingCountries

Other Functions

1. planning 1. Idea generation 1. Management of share resource

1. Diversification of production

2. Organizing 2. Determination of

objectives

2. Dealing with

public

2. Expansion of the

enterprise

3. Decision

making

3. Raising of funds 3. Acquiring and

assembly of the

factory

3. Maintaining

cordial employer

and employee

relations4. managing 4. Procurement of raw

materials

4. engineering 4. Tackling labor

problem

5. innovation 5. Procurement of

machinery

5. New product 5. Coordination with

outside agencies

6. Risk

bearing

6. Market research 6. Parallel

opportunities

7. Un-certainty

bearing

7. Determination of form of enterprise

7. marketing

8. Recruitment of

manpower

8. management

9. Implementation of

the project

9. Customer

relation



Role of Entrepreneur

1. Initiator A key man who imagine new opportunities, techniques,

new products/services2. innovator Brings overall change by innovation and creativity

3. coordinator Coordinate social and economic values of society

4. leader act as a leader with outstanding leadership qualities5. Social worker He always works for the wellbeing of the society

6. Welfare agent He will encompass/cover all sectors and fields welfare

7.

employer He will act as employer by in taking some unemployed8. Development

agent

Contributes service for development the country and

building country economy



Q uality of a Successful Entrepreneur

Inner drive to succeed

( should have feeling towin in the heart)

Strong belief in

themselves Search for new ideas

and innovation

Openness to change

Competitive by nature

Risk taker

Accepting of constructive

criticism and rejection(ready to accepts

mistakes)

Time management

Vision and leadership

Ethics and morals

Discipline yourself

Highly motivated and

energetic



Ethics and Social Responsibility of

Entrepreneurs The word ethics is

derived from Greek word

ethos which means

standard or ideals that

should prevail Entrepreneurship ethics

are the moral principles

which should govern the

entrepreneurshipactivities.

It also referred businessethics

Business ethics refers to

the application of ethics to

business Business ethics is a

specialized study of moral

right or wrong. It

concentrates on moralstandards as they apply to

business policies,

institutions and behavior



Principles of Entrepreneurs Ethics

An Entrepreneur will think of themselves as a

part of community not just profit maker An Entrepreneur will treat the environment

as a silent stakeholder, a party to which they

are wholly accountable An Entrepreneur will protect the privacy

rights of the suppliers, customers and

employees

An Entrepreneur will deliver what they

promises, and promise what they can deliver



Misconceptions about Entrepreneurs

Entrepreneurs are born and Entrepreneurship

is Hereditary Entrepreneurs are profit Hungry and

Exploit(hard work done by Labor)

Entrepreneurs are Dishonest(fraud &

cheating)

Entrepreneurs are favored by luck

Only Rich people can become entrepreneurs

Entrepreneurship is monopoly (a market in

which there are many buyers but only one

seller )of certain communities



Entrepreneurship The Entrepreneurship was defined as , Entrepreneurship is

the attempt to create value through recognition of businessopportunity, the management of risk taking appropriate tothe opportunity and through the communicative andmanagement skills to mobilize human, financial and materialresources necessary to bring a project to successful

According to A.H.Cole, Entrepreneurship is the purposefulactivity of an individual or a group of associated individuals,undertaken to initiate, maintain or maximize wealth, profit byproduction or distribution of economic goods and services

Entrepreneurship = Entrepreneur + Enterprise

(Process) (Person) (Object)



Nature/Characteristics of Entrepreneurship

Purposeful activity

Decision making Accepting challenges Risk taking Building organization

Dynamic process (bring new opportunities) Gap filling function (filling goods and services tosociety)

Skillful management Innovation

Mobilization of resources

Economic Activity (creation and operation of an enterprise)



DifferenceENTREPRENEUR ENTREPRENEURSHIP

1. Refers to a person 1. Refers to a process

2. visualizer 2. vision

3. creator 3. creation

4. organizer 4. organization

5. innovator 5. innovation

6. technician 6. technology

7. initiator 7. Initiative

8. Decision maker 8. decision

9. planner 9. planning

10. leader 10. leadership

11. motivator 11. motivation

12. programmer 12. action

13. Risk taker 13. Risk taking

14. communicator 14. communication

15. Administrator 15. administration



Factors Affecting Entrepreneuship

Internal Factors

EntrepreneurOriented Factors

Production RelatedFactors

Finance RelatedFactors

Marketing RelatedFactors

1. Low Risk

Bearing

capacity

1. Location

Disadvantages

1. Lack of access

to non-

institutional

finance

1. Promotional

plans

2. Low

motivation

2. High cost of

Inputs

2. Excessive

dependence

on financial

institutions

2. Expansion plans

3. Lack of

technical

Knowledge

3. Poor capacity

utilization

3. Inadequate

working

capital

3. New Product

introductions

4. Lack of

Training

4. Poor quality

controls

4. non

availability of

credit at right

time

4. Product

cancellations

5.Lack of properEstimation 5.

Inadequateinventory 5.

Delay inpayment of

customers

5.

Sales forcechanges

6. Delay in loan

sanction

6. Pricing policies

7. Market

expansion to

new customers



External Factors

Government polices & regulations

Shortage of power, water,

transport and critical raw

materials

Business trends

Changes in population

Economic fortunes of customer

Changes in buying habits

Competitive pressures and

conditions

Economic cycles

Changing demand patterns

Industry trends

Unions

Inflation

International events

Competitors

Rigid institutional formalities

State of technology



Entrepreneurial Decision Process

Entrepreneurship is the process of creating

something new with value by devoting thenecessary time and effort and assuming the risk

The new venture is formed through a very personal

human process

There are 3 steps in the entrepreneurial decision

process

The decision to leave a present career or lifestyle

The decision to form new venture

The decision that both external and internal factors

make new venture creation possible



Types of Start Up Firms by Entrepreneurs

1. SalarySubstituteFirms

These are small firms that afford their owner or owners a level of

income similar to what they would earn in a conventional job (fixed

income)

Example:- Dry cleaners, saloons

2. Life stylefirms

Lifestyle firms provide their owner or owners the opportunity topursue a particular lifestyle and earn a living while doing

Example:- Tour Guides

3. EntrepreneurialFirms These firms create value towards the customersExample:- E-Bay, Google



Scope of Entrepreneurship

Entrepreneurship Works in different ways indifferent economic systems, such as

Capitalism

Socialism

Mixed Economy



Scope of Entrepreneurship

Capitalism(Private) Socialism(Public) Mixed Economy(Private+

Public)

A capitalist economy

represents free

enterprise, which

means freedom to save

and invest Free competition

very less interference

from Government

Price of the

product/Service may bedetermined on the

basis of the force of

demand and supply

A Socialism economy

represents free

service towards the

society development

No competition Good Interference

from Government

Price of the

Product/Service may

be determined onthe basis of service

providers /sponsors

A Mixed economy

represent both services for

free of cost and sometimes

pay and use

Good Competition They have to satisfy the

customer and Government

This is Stability in Nature

Price of the

Product/Service may bedetermined by the

Government Sometimes



Role of Entrepreneurship in Economic Development

Increase in National Income

Balanced Regional Development

Bringing Change in Structure of Business and

Society

New Products, New Services and New Business

Dispersal of Economic Power

Better Standards of Living

Creating Innovation

Production Evolution Process



Product/Service Evolution Process

Before starting a product or service an

Entrepreneur should follow the evolution steps

in order to produce a product or provide a

service

1.Exploration2.Screening

3.Business Analysis

(risk/return/features/recommendations/creativity)

4.Development

5.Testing

6.Commercialization (full scale production )



Problems of Entrepreneurship

Wrong surveys

Lack of identification of projects

Lack of infrastructure

Lack of quality control

Lack of market promotion

Lack of technology

Lack of finance

Lack of consulting services



Factors Favoring Entrepreneurship as a Career Options

High need for Independence

To satisfy the dream of having high financialrewards

Opportunity to deal with all aspects of a business Achievement orientation

Implantation of Ideas Insecurity of Job Family Business Risk Taking

Government Economic Policy (Assistance fromGovernment)

Vision to Leave a Long Lasting Mark (Zeal toInnovate new product/Service)



Indian Entrepreneurs

Dhirubhai Ambani

JRD Tata

Jamsetji Tata

Adi Godrej

Anil Ambani

Dr. K. Anji Reddy

Azim Premji

Bhai Mohan Singh

B.M. Munjal Ekta Kapoor

Ghanshyam Das Birla

Karsanbhai Patel

Kiran Mazumdar Shaw

K.P. Singh

Kumar Mangalam Birla

Lalit Suri M.S. Oberoi

Mukesh Ambani

Nandan Nilekani

Kasturbhai Lalbhai

S.L. Kirloskar

Naresh Goyal

Dr. Pratap Reddy

Rahul Bajaj

Ramalinga Raju

Ratan Tata

Raunaq Singh

Shiv Nadar

Subhash Chandra

Subroto Roy Sunil Mittal

Tulsi Tanti

Verghese Kurien

Vijay Mallya

Mallika Srinivasan

Naina Lal Kidwai

Shahnaz Hussain Sulajja Firodia Motwani

Shobhana Bhartia

Aditya Vikram Birla

Gulshan Kumar

Vaman Srinivas Kudva



Creating Indian Entrepreneurs

A recent Mckinsey & Company-Nasscom report estimatesthat India needs at least 8,000 new businesses to achieveits target of building a US$87 billion IT sector by 2008.

Similarly, in the next 10 years, 110-130 million Indiancitizens will be searching for jobs, including 80-100

million looking for their first jobs. This does not include disguised unemployment of over

50% among the 230 million employed in rural India.

Since traditional large employers- including thegovernment and the old economy player-may find itdifficult to sustain this level of employment in future, it isentrepreneurs who will create these new jobs andopportunities.



Todays knowledge based economy is fertile

ground for entrepreneurs, in India. It is rightly believed that India has an

extraordinary talent pool with virtually

limitless potential to become entrepreneurs. Therefore, it is important to get committed to

creating the right environment to develop

successful entrepreneurs.

To achieve this, India must focus on Four

areas as follows.



The Four Areas

1. Create the Right Environment

for Success

2. Ensure that Entrepreneurs have

access to the Right Skill3. Ensure that Entrepreneurs have

access to µSmart Capital¶

4. Enable Networking andExchange



Society¶s support of

entrepreneurship should alsocontinue.This support is critical in providing

both motivation and public support.

A major factor in the developmentof this societal approval is themedia. The media should play a powerful

and constructive role by reportingon the general entrepreneurialspirit in the country highlightingspecific success cases of this spiritin operation.

entrepreneurship new venture creation 31 module 1712 110909070051 phpapp01

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