Entrepreneurship Management Lecture Notes

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31 M. Com. (Part II) Business Management Paper V ENTREPRENEURSHIP MANAGEMENTRevised SyllabusforM.Com.(PartII) BusinessManagement-PaperV- Entrepreneurship Management Objectives 1. To understand the concept of entrepreneurship development, the theories of entrepreneurship and the relationship between theoryand practice. 2. To create awareness of the role of entrepreneurs in the growth of Indian economy. 3. To comprehend the process of creating an entrepreneurial venture. 4. To develop analytical skills for evaluating new venture ideas and understanding both the opportunities and constraints faced byentrepreneurs. 5. To critically view the role of financial institutions, government bodies in promoting entrepreneurship in India. 6. To develop an entrepreneurial spirit and have feasible ideas for ventures. Learning Outcomes On completion of the syllabus, the student will : 1. Understand the issues involved in entrepreneurship development. 2. Able to evaluate opportunitiesfor a newventure. 3. Demonstrate the ability to prepare a business plan for a venture. 4. Get insights into their creative, entrepreneurial and team skills. 5. To equip them with a platform to develop an entrepreneurial venture. Teaching Learning Plan A. Entrepreneurship DevelopmentPerspective (20) 1. Introduction, importance and significance, Entrepreneurial Development - world perspective. 2. Concept of entrepreneurship development, Evolution and growth - stages. Theories entrepreneurship. 3. Concept of Entrepreneur. Intrapreneur, Entrepreneurship and Manager. Difference between Entrepreneur and Intrapreneur, Entrepreneur and Entrepreneurship. 4. Attributes and Characteristics of successful entrepreneur. Developing entrepreneurial culture. Qualities of a successful entrepreneur. 5. Role of Entrepreneur in Indian Economy (developing economy with reference to self-employment) development. 6. Successful Entrepreneurs case studies: Dhirubhai Ambani, Aditya Birla - background, growth as an entrepreneur. Case studyon entrepreneurial development in India.II B. Creating Entrepreneurial Venture (2) 7. Business Planning Process, understanding business life cycle and product life cycle. 8. Environmental Analysis : Search and scanning- strength and weaknesses. 9. Identifying problems and opportunities - Opportunities and Threats 10. DefiningBusiness Idea, Product, location and ownership. 11. Stages in starting the new venture. 12. Entrepreneurial Models - Franchises, BPO, KPO, venture capital funding. C. Project Management (20) 13. Meaning of project, objectives and howto choose a project. 14. Preparing a business plan, marketing plan, financial plan and organization plan. 15. Estimating and Financingfunds requirement. 16. Schemes offered by various commercial Banks and Financial Institutions. 17. Working capital : Meaning, need and significance, Determinants of workingcapital. D. Role of Central and State Government in promoting Entrepreneurship (20) 18. Introduction to various incentives, subsidies and grants; Promotion of export oriented units; Fiscal and tax concessions. 19. Role of DIC (District Industries Centre) in the Entrepreneurship development and ED programmes; DIC - its functioning and objectives. 20. Entrepreneurship Training and Development. Objectives- contents-methods-execution. 21. Problems and difficulties of Entrepreneurs - Marketing Finance, Human Resource - Production; Research- external problems Future of entrepreneurship in India. 22.Women Entrepreneurs in India PaperPattern The examination paper will be of 100 marks and 3hours duration. The final exam paper will have 6 questions one of which will be a case studyanalysis. Question No. 1 (theoretical question based on concepts) will be compulsoryand the students need to answer any 4 from the rest. Each question will carry20 marks. 1 ENTREPRENEURSHIPMANAGEMENT INTRODUCTION The word entrepreneur has an interesting definitional history and it stems from the French word entreprendre which refers to ‘undertake’ i.e., individual who undertake the risk of new enterprise. Richard Cantillon of France used the word entrepreneur, in 1725 A.D. as the person who bears the risk and faces the uncertainty of an activity. He expressed that an entrepreneur is different from a person who supplies capital. Adam Smith (1776) described theentrepreneur as an individual who forms an organization for commercial purpose—who is a capitalist. Jean Baptiste Say (1803) considered deployment of factors of production as the role of entrepreneur. This French economist said, “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” He said that “an entrepreneur is the economic agent who unites all means of production, the labour force of the one and the capital and the land of the others and who finds in the value of the products which results from their employment, the reconstitution of the entire capital that the utilizes and the value of the wages, the interest and the rent which he pays as well as profit belonging to himself.” The word “entrepreneur” has its origin in the French word Enterpendre, which means “to undertake”. The early Frenchmen who led military expeditions were called entrepreneurs, It was Cantillon, the French Economist, who first applied the term in the eighteenth century to a merchant who purchased the means of production to combine them effectively into saleable products. J.B. Say, another French Economist, projected the entrepreneur as a person who organised the business activity consisting of production and distribution. John Schumpeter gave considerable importance to entrepreneurship in the process of economic development of a country. Accordingly, innovation and entrepreneurship in the initial stages of the development of a business activity is very crucial to the economic development of a country. In fact, entrepreneurship, as such is evident only in the initial stages: not in the later stages of the life of a business venture. To Arthur Dewing Stone, the entrepreneur is the promoter of the business, a person who conceptualises an idea and gives it a concrete shape. Danholf stresses decision making functions of an enterpreneur in popular parlance a distinction is often made between an entrepreneur and a2 manager. The entrepreneur is understood as a person who owns the business which he has started (often a small), bears risks involved in the process of starting it and in running it, innovates and provides leadership to the venture he runs. He is so attached to the business venture that the progress of the business is intricately linked with his own personal development. A manager is understood as a person who works for a master, who has a professional approach to getting things done and who ensures that the enterprise build up by the entrepreneur runs successfully in attaining the goals set bythe promoter. ModernConceptofEntrepreneur An entrepreneur may be defined as an individual who intends to add value to the economy by creating a new business venture through effective use of his knowledge, passion, dreams and desires. An entrepreneur is a person who evaluates the new situation in the environment and directs the making of such adjustments or alternations in the economic or manufacturing systems as he thinks necessary for achieving desired results. In recent times, the term entrepreneurial management is often used to signify that even managers working for master can (and should) innovate and take decisions involving risks and uncertainties in the same way as entrepreneurs are supposed to do. Only then will the organisations they belong to will grow. And to bring in a sense of involvement and commitment on the part of managers working in corporate organisations systems of compensation and rewards like stock option plans are created to evoke from themanagers the right responses through such incentives. DefinitionsofEntrepreneur : Different authors have given different definitions of entrepreneur. Some of the main definitions aregiven below: (1) American Heritage Dictionary, defines entrepreneur as a person who organises, operates and assumes the risk for a business venture.” (2) Richard Cantillon, described the entrepreneur an agent buying and selling goods at uncertain prices.” (3) J.B. Say, defined an entrepreneur as the economic agent who unites all means of production, the labour, the capital or land and earns profit. He has comparedentrepreneur with a farmer.”3 (4) According to Peter F. Drucker, “Entrepreneurship is neither an art nor a science, it is a process. It is a practice. It has a knowledge base. Knowledge in entrepreneurship is a means to an end. Indeed what constitutes knowledge in practice is largely defined by the ends, that is bythe practice.” (5) A.H. Cole, described, entrepreneurship as the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or organise a profit oriented business unit for the production or distribution of economic goods and services.” (6) According to Joseph A. Schumpeter, “Entrepreneur is a person who foresees the opportunity and tries to exploit it by introducing a new product, new method of production, a new market, a new sources of raw materials or a new combination of factors of production.” Entrepreneur is an individual or group of individuals who tries to create something new, searches new opportunities, bears risk, unites various factors of production (such as land, labour and capital), carries innovations and from his skill and farsightedness .faces unforeseen circumstances and thereby earn profit.” He is basicallyaninnovator, an organisation builder and a risk taker. When an entrepreneur starts a new business, he is filled with enthusiasm, uncertainty, frustration, anxiety and fear of events of the future. There is a very high failure probability of the enterprise due to low sales rate, cut throat competition, insufficient financial resources, poor planning and forecasting by the entrepreneur, lack of the knowledge of management and its functions etc. It will be a very difficult decision for a person to go for entrepreneurship in the time of ‘efficient in all respects’ Multi-National Corporations or MNCs, since small-scale enterprise can’t face tough competition with the MNCs. From the above discussion, we may conclude that “An Entrepreneur is a person who detects new opportunities, evaluates them, gathers all factors of production, innovates, bears the risk of loss and uncertainties and with the application of his skills earn profitfrom his venture.” CHARACTERISTICSOF ANENTREPRENEUR (1) An Individual or Group Individuals : Entrepreneur may be an individual or a group of many individuals. Present age belongs to large business houses and mass level of production. To commerce an enterprise on a very large basic, the capital or skills of a single individual is not sufficient. A group of individuals gathers,4 contributes their share of capital and resources and starts a business enterprise. (2) Need for achievement: It is the prime psychological drive that motivates theentrepreneur. His desire to excel in his ventureandto achieve desired goal. As a high achiever, he competes with his rivals in the venture field as well as with his own previous performance. (3) Independence or autonomy: Although there are various motivations for venturing out alone, the most frequent reason for becoming an entrepreneur is the desire for independence or autonomy—not wanting to work for anyone else. This desire to be one’s own loss ignites a fire in the heart of an entrepreneur to accept all social, psychological, financial, and technological risks and to work hard. (4) Risk Bearer : Entrepreneur has the risk bearing capacity. In fact it is the characteristics of risk bearing that distinguishes an entrepreneur from a manager. An entrepreneur is a manager but he has the distinction of performing risk bearing function. A manager alsodoes more or less the same thing but he does not take risks. (5) Innovation : An entrepreneur is basically an innovator by nature. He is always in search of new ideas and new opportunities. He tries to outshine others by taking initiative in doing new things i.e., exploring new products, new markets, new raw materials, new methods of production, etc. (6) Goal Oriented : Entrepreneur is goal oriented. He gets happiness by setting and striving for goals one by one. Reaching one goal set by entrepreneur will lead to settingup of another goal. (7) Decision-making : An entrepreneur is a rational decision- maker. He has to take several decisions to put his business idea into a reality. He recognises an idea i.e., a product, service or market. He has several alternatives before him. He has to make a choice between them. This involves decision-making as to choose the best alternative which may suit him and give maximum profit. For example, he has to decide what is to be produced, how is to be produced, whereto be produced and when to be produced etc. (8) Self-confidence : An entrepreneur has high degree of self- confidence in achieving his goals. He has the capacity to face extraordinary and unforeseen circumstances as and when they arise. (9) Initiative : An entrepreneur always takes initiative. He spend a large portion of their time in thinking over finding out new or novel5 ways of doing things differently—finding out a new raw material, a new product, a new method of production, a new style of advertisement, a new style of packaging, and so forth. While taking such initiative, entrepreneurs duly keep in mind the needs and requirements of the customers, changing tastes and fashions, changinglife-styles andattitudes, etc. (10) Motivator : An entrepreneur is a motivator. He motivates his workers by giving them incentives, and creation of team work in order to get their whole-hearted cooperation. He is able to influence people in the new business unit in the way that they will strive willingly and enthusiastically toward the achievement of unit’s goals. (11) Human Relations Ability : An entrepreneur possess sound human relations ability to deal with his employees, customers, suppliers, creditors etc. (12) Economic Planning : Planning is an activity of a highly ubiquitous character. Every action of an entrepreneur is well planned as it evident from the fact where there are production plans, sales plans, financial plans, purchase plans, research and development plans and so on. Without proper business planning the affairs of any business enterprise are likelyto be haphazard. The concept of entrepreneurship emerged in the areas of business and finance in the 18th century. Before this the concept was used in engineering and military services only. Since then various economists and socio-psychiatric scholars have expressed their views in this regard. Nevertheless, they are unanimous about the exact meaning of the term.William Bongo writes, “The matter of entrepreneurship has always been confusing.” As a result of the confusion, entrepreneurship have been used in different terms. The meaning of entrepreneurship changes with the stages of the economic development also. In general terms, entrepreneurship is bearing risks of various types inherent in business, and the ability and tendency of facing uncertainties and challenges. In modern times, entrepreneurship is establishing new enterprise, ability to control and direct and the venture capability of making new changes and improvement in the business enterprise. In this sens, entrepreneur ship is a quality of leadership and innovations by which higher profits and goals can be achieved. Entrepreneur ship is adoption in dynamic environment and ability of activating creative and innovative ideas and plans.6 DefinitionsofEntrepreneurship: 1. According to Prof. Mussel man and Jackson : “Entrepreneurship is to start a business and put money, times and efforts into it to make ita success, by bearing risks.” The above definition has not included innovation in the sphere of entrepreneurship, so, the definition is incomplete in the context of an underdeveloped economy. 2. According to prof. Rio and Math : “Entrepreneurship can be described as creative and innovative responsetothe environment.” This definition can be said modern and dynamic. It stresses on innovation and dynamic. It stresses on innovation and creativity. It says that entrepreneurship is the competence to adopt changes, and creative ideas accordingtothe changing environment. 3. According to J.E. Stephanie : “Entrepreneurship is risk bearing capacity, organizational ability and will for diversification and innovation.” This is another definition which can besaid complete. It has included risk-bearing diversification and innovation as well as abilityto organise in the main functions of the entrepreneurship. 4. According to HW Johnson : “Entrepreneurship is composition of three elements, invention, innovation and adaptation.” Adaptation of new ideas and techniques, invenstion and innovation are stressed upon in this definition. Adaptation is the key word which indicates towards the dynamic nature of the entrepreneurship. 5. According to F.H. Frentz : “Entrepreneurship is organisation and co-ordination of factors of production into one production unit. Entrepreneur is a higher notion than a manager. He is both innovator and promoter.” 6. According to Peter F. Drucker : “Maximisation of opportunities is meaningful in business, indeed a precise definition of the entrepreneurial job.” The definition of Drucker is more abstractive in nature than any other definition. He says that entrepreneurship is nothing but maximisation of opportunities. Ine can maximise business opportunities as well as the profits by making resources productive, innovating, adopting new ideas and changes, and so bearing risk, sometimes inventing and diversifying the product. Indeed, this is thetrue meaning of entrepreneurship. 7. According to Richman and Copen : “Entrepreneurship implies more creative, external or open system orientation. It involves innovation, risk bearing and relativelydynamic leadership.” The above definition links business to be environment. It assumes it as an open system and call entrepreneur a dynamic leader of the7 society. In the definition, entrepreneurship is said to be the central point of social changes. NatureorcharactersticsofEntrepreneurship 1. Risk-bearing capacity : The entrepreneur starts facing uncertainties and several types of risk right from inception of business. The business environment is dynamic and ever changing. The entrepreneur risks his capital when he invests in the business. So, the entrepreneur have the capacity to bear risks and face uncertainties as it is unknown what is hidden in the pistil of the future. 2. “Entrepreneurship Trait : Entrepreneurship is not a trait. The success of the enterprise depends on the decision-making and other capabilities of the entrepreneur. so, a person develop these capability in himself. It is often said that entrepreneurs are not born. They can be made by training and development. 3. Creative Activity : Entrepreneurship is basically a creative activity. Entrepreneur searches for new opportunities, new ideas, new techniques etc., think creatively and execute new ideas in his enterprise. It is entrepreneurship which encourages creativity and changes inthe society. 4. Result of Changes : Entrepreneurship is the result of social, political, scientific and technical changes occurring in the environment. It is not merely an economic event or activity. The changes insocial values, traditions, education, science, techniques, population and government policies are forcing people in the society to change their approaches, thinking and opinion, which is again inspiring people toadopt entrepreneurship. 5.CreationofaResource: Entrepreneurship transforms materials into ‘resource’. Therefore, the entrepreneurship is the process of developing ‘utility’, ‘economic value’ and ‘capacity of wealth creation’. 6. Essential in all Businesses and Economies : Entrepreneurship is essential in all businesses and all economies, whether big or small, developed or developing, since, the basic functions of the entrepreneurship, innovation risk bearing, adaptation to changes etc are there. It should be borne in mind that entrepreneurship exists in every society and economy. Without entrepreneurship there will be nogrowth of theeconomy. 7. Essential in Every Activity : Entrepreneur is needed in every area of life. A person can succeed in every field by adventurous nature and entrepreneurial behaviour. Education, research,8 medical, politics, military or games, all needs bearing risks, innovation or leadership to succeed in Drucker has said, “Entrepreneurship is by no means confined solely to economic institutions.” 8. Low Risk : Entrepreneurship carries a greater level of risk. But technogical and socio economic environment have made entrepreneurship less risky than ever. Entrepreneurship does not carry a very high level of risk. Infact, if the enterprise is well managed and well planned, then the entrepreneurship becomes a lowrisk game. 9. AbilitytoInnovate: Entrepreneurshipis an innovative activity. It enables application of creative ideas. The entrepreneur adopts new ideas, new techniques, new production system, new management concepts, new markets, new products and new procedures for more satisfaction and better services to the customers and more profits to the enterprise. 10. Knowledge-based : Peter F. Drucker says, “Entrepreneurship is neither a service nor an art. it is a practice based on knowledge.” The entrepreneur achieves a high place by his knowledge and understanding of thing. The quality of enterprise comes in a person after long experienceand practice. 11. Result-Oriented Behaviour : Enterprise can’t get success unless the results are favourable. The entrepreneurship stresses on results an not the fate. Entrepreneurs believes in getting good results through their efforts and hard work They achieve their goals by their ability of making sound deisions, solid planning and goals- oriented behaviour. 12. Environment-Oriented Activity : Entrepreneurship is an external and open environment-linked system. Entrepreneurs produces and take risks keeping social, economic, political and material factors of environment in view. Joseph Schumpeter said in this context, “It is a creative responsetoevery external situation.” 13. Process of Identify Transformation : Entrepreneurship is the process of identity formation and role transformation. A person can’t be an entrepreneur by merely adopting innovation, unless he involves in that activity and his identity is established as an innovator. In other words, the activity should be recurring or continuous in nature. Doing one transaction does not come under the purview of entrepreneurship. Udai Parikh and Nadkami have this view, “Entrepreneurship is not only adopting new activity or behaviour, it is transformation of personalityand establishment of a newidentifyby himself.”9 14. Business-Oriented Tendency : Entrepreneurs by their nature are business oriented and so is entrepreneurship. Entrepreneurship encourages and inspires the people to be an entrepreneur and establish a new business enterprise. Entrepreneurship motivates people to search for new business opportunity, establish a new business enterprises and makes profit by taking risk and putting his monetary and non-monetary assets on stake. This tendency make the establishment of new business and industries possible in the country. 15. Professional Activity : Entrepreneurship is emerging as a profession in developed countries like medical, law and engineering. Entrepreneurial skills are being developed by training and education like management skills. The governments of developing countries have started programmers and schemes to encourage entrepreneurial aptitude in people. Many entrepreneurial development institutions and centers are being established in these countries. 16. management is the basis of Entrepreneurship : Management is the basis of all the entrepreneurial decisions, Entrepreneur brings improvement and changes in the enterprise through management. Ducker writes, “Entrepreneur manager has become an essential part of the functions of the management today.” 17. Based on Principles, not on Intuition : Entrepreneurship is based on certain principles, concepts and particular fields of knowledge. It is not intuition based on knowledge and principles, since this is the age of ‘scientific management’. An entrepreneur need to have the knowledge of subject like economics, statistics, lawsociology and psychology etc. inorder to achievesuccess. 18. Entrepreneurial Skills : It is often stressed that entrepreneurship naturally exists in every organisation, but this is not correct. Every person and organisation have to put efforts very carefully. They have to bring entrepreneurial skills in themselves to get success. Drucker has opined, “Entrepreneurs assumes business as a duty. They are disciplined towards their enterprise and put all their efforts for its success.” Entrepreneurship is not only a work, business or profession but it is a life style also. Every person chasing a goal must be creative and imaginative for its accomplishment. he should have the ability to plan, make rational decisions and get them applied. TypesofEntrepreneurship 1. Imitative Entrepreneurship : This type of entrepreneurship is imitative in nature. It presents the existing product in an innovative10 manner. takes advantage ideas of other firms’ and simply brings to bear the weight of corporate muscle to control markets. For instance the Japanese have studied American products, found ways to improve on those products and produced them at lower costs and exported them to American markets. This type is very oftencalled espionage. Consumers are very much benefited, due to the cheap availability of existing costly products or services. Thus, products become commercially viable because of improvement in quality at lower price. 2. Incubative Entrepreneurship : In this type, new ideas materialise. For instance new venture development unit that is often provided seed capital and corporate resources and functions almost independently and is semi-autonomous in implementation of responsibilityfrom inceptiontocommercialisation. 3. Opportunistic Entrepreneurship : In this type the managers are given the responsibilities and they do not report through existing management hierarchies but enjoy a semi-autonomous work environment. This gives scope for innovation. 4. Administrative Entrepreneurship : Researchers are supported while providing them with corporate resources for making their ideas commercial realities. Thus, inventions are enthusiastically led by a champion and the organisation encourages the development of the new product. 5. Acquisitive Entrepreneurship : This type is a step further from traditional method of growth and development. Here, we find alternative growth strategies through mergers, acquisitions, joint ventures, etc. EssentialsofaSuccessfulEntrepreneur : 1. Imaginative : Creative thinking and imagination are important entrepreneurial qualities since innovation comes with these qualities. An imaginative entrepreneur is always in search for new ideas and is a competent reader of the future events which are uncertain and poses the maximum risk before the enterprise. Entrepreneur plans to profit and to avoid or mitigate risks using his imaginative capabilities and execute these plans for realisation of the profit, sales budget etc. Imaginative entrepreneur can smell the future problems and make plans in advance to tackle those problems.11 2. Sharp Memory : Successful entrepreneurs always have a memory sharper than people in general. Every event of the recent past should be in his mind when he is making any important decision as regards the organisation. He has to meet several people, take numerous decisions and keep a score of plans, reference etc. in his mind, which are necessary for accurate decision-making and success of the organistion. 3. Self confident : Entrepreneur should be confident that what he is doing or whatever he is going to do in future is right, but he should keep a place reserved too, i.e, he should be very confident but his actions should not fall preyto over confidence. Emerson has said, “Self confidence is the secret of success.” 4. Maturity : A matured entrepreneur performs his duties well and remains honest towards his responsibilities. He is not irritated upon his criticism and maintains his cool while communicating or during conversation with anyone. His thoughts and feelings are filled with maturity. 5. Foresighted : The entrepreneur can evaluate the events even before they are occurred with the help of his foresight. He can analyse the results of the present action and plans. Foresighted entrepreneur is future—oriented, which enables the enterprise to avoid problems which it mayface in near future. 6. Dynamic Ideas : The success of the entrepreneur and the enterprise depends on the ideas or thinking of the entrepreneur also. Conservative approach or traditional ideology proves to be hurdle in the success of the enterprise. Entrepreneur should be a man of dynamic ideas and only then he would be interested in using modern management techniques, latest machineries, plans, and process etc. for his enterprise’s success. Dynamic thinking paves the way for innovationandmodernisation in the organisation. 7. Willingness of challenges : An entrepreneur should have the tendency of accepting new challenges. He should prefer challenging jobs. “Entrepreneur should have the spirit of enterprise (venture).” “One who chooses challenges between security and challenge is the trueentrepreneur.” 8. Optimism : The entrepreneur should be an optimistic one. He should see failure as a steps towers success. If he does not have this quality than he can’t drive his enterprise towards the road of success. A shock of despair creates vacuum in the mind such as paralysis creates in the human body. “So an entrepreneur should always avoid trustration and be optimistic about the future of the enterprise. Only an optimistic entrepreneur can face the risks and12 uncertainties of a business enterprise. So, pessimism should be a retired word from his dictionary of words. 9. Ambition : The ambition to do something and get ahead of others must be there. If it’s not there in entrepreneur, he can’t succeed. David McClleland has called it an ‘urge to Achieve’. Andrew carnegi says “A person who does not hold desire for success and achievement, can’t get to the higher goals in his life.” Whether a sportsperson, anartist, a politician or ascientist, all have an urge or desire to achieve, and so they become popular for the field or working area they are in. They can not get ahead of their competitors, if they does not possess desire to do so. It is the same for entrepreneur also. First he should have the desire and then he should work to march past others. 10. Foresightedness : A successful entrepreneur must have foresightedness. If the entrepreneur is unable to foresee, he will not be alert about the possible uncontrollable factors. An entrepreneur should have the most forward looking strategy and vision. Today we face some key challenges due to globalisation, liberalisation and privatisation. Hence, the need of the day is constant competition and change. Small changes will not be enough; entrepreneurs will have to transform themselves not once or twice but continuously and manytimes over. The topmost task of the entrepreneur would be to create a dynamic environment and make dynamism and transformation the permanent organisation culture. Entrepreneurs must also have the ability to “mind your mind”, which means quickly recognising when one is wrong and changing track accordingly. Also the entrepreneur should not be egoistic but should have asense of humility. 12. Time Management : A successful entrepreneur must value time. If the entrepreneur is not able to manage time, he will also not be able to complete the project before the deadline. While an entrepreneur seeks to minimise risk to the enterprise, encourages work-life balance, monitors quarter-on-quarter results, engages in long-range planning, cost optimisation, he happens to neglect adherence to strict timeliness for delivering results which. This puts enormous pressure and is not surprising if it creates a crisis of identityand confidence. Entrepreneur should be able to manage his time to address all the issues and will not succeed if he addresses issues solelyfrom any one perspective. 13. TechnicalManagementSkill: A successful entrepreneur must have managerial skill and technical knowledge. If he is not able to manage the resources (human, material, capital, equipment) he will risk losing business. Hence young and emerging entrepreneurs13 must be able to perform multiple roles and be able to create his own distinctiveform of entrepreneurship. An entrepreneur who has superior technical and managerial knowledge should not neglect soft skills and attitude. He should not be egoistic but should have a sense of humility. The entrepreneur’s inexperience m ay result in a crisis but an intelligent person is he who would overcome this drawback by mustering the emotional and intellectual equity of the people and also gaining their trust and commitment to the vision. “Entrepreneurship is all about plugging into the minds and hearts of people”. It is about rallying them around to a compelling and exciting vision of the future. It is about uppingthe qualityof imagination of the organisation. It is about encouraging a spirit of intellectual ferment and constructive dissent so that people are not bound and are given space and free play. Entrepreneurs should hence build highest level of empathy and trust their people. So the important lesson in entrepreneurship is perhaps 90 percent leadership and only about 10 percent managing. Entrepreneur of today should have knowledge if not experience of all thearenas. 14. Risk-bearing Capacity : In any venture there is some amount of risk. However you may try to take the necessary precautions and measures and only take calculated risks; yet there exists some degree of risk due to uncertain nature of environment. Anything untoward may happen and if you are not able to cope with the ups and downs and not able to docrisismanagement you will fail. To meet the industry’s requirement and create the world-beating requirement the entrepreneur must aim for making the big leap. But this will not happen by itself; at critical times there should be radical leaps. These leaps may sound unrealistic but they are mandatory for the survival of the enterprise. 15. Decision-making : If the entrepreneur is not able to make quick or spontaneous decisions he will also not be able to work with confidence. Infact due to the competitive nature of small business one delayed decision made by the entrepreneur may lead to years of rectification. A successful entrepreneur is one who has come to terms with the new reality and adopted new methods of communication and information technologies. Net trading has opened door for service sector. The technology is changing daily but the minds will change by the generation. Those entrepreneurs who would be able to make decisions rightly and make the leap sooner would emerge the winners and benefit the profits of their better positions.14 ImportanceandSignificanceofEntrepreneurship : Entrepreneur has to play an important role in the economic growth of a country. The mobilisationof human andphysical resources of a country is a major function of an entrepreneur. He utilises these resources using innovation as an important tool. He engages in some activities which helps in the generation of employment and the opportunities. he is responsible in providing employment to thousand of persons. An entrepreneur can face-lift a backward on rural area by establishing his business unit there. He can send his products to foreign countries producing quality goods. These exports by entrepreneurs can balance the trade or the payments. Evident that an entrepreneur is the main element accelerating economic growth of the country. One of the important inputs in any economic development of a country is entrepreneurship. More the entrepreneurship activity better the development. Entrepreneurship is the life blood of any economy and it applies more to a developing economy like India. The areas of development are : (i) Taking to higher rate of economic growth by creation of value. (ii) Speed up the process of industrial use of the factors of production. (iii) Creation of employment opportunities. (iv) Dispersal of economic activities to different sectors of economy and identifying new avenues of growth. (v) Development of backwardand tribal areas. (vi) Better social changes. (vii) Improvement of the standard of living of different weaker sections in the society. (viii) Bring socio political change in the society. (ix) Developtechnological know-how. (x) Improve culture of business andexpand commercial activities. (xi) Entrepreneurship act as a change agent to meet the requirements of the changing market and customer preferences. (xii) Develop aculture of achievement orientation. Entrepreneurship is the primary element of the socio-economic process in a country. The origin and development of entrepreneurship takes place in socio-economic environment. Whereas on one side socio-economic environment provides an area and opportunity to the entrepreneur for working and development, at the same time on another side suitable economic environment provides necessary resources to the entrepreneur on account of which the entrepreneur continue to proceeds on the15 development path. Several socio-economic problems like backwardness, ignorance, poverty, illiteracy, hunger, unemployment, low standard of living etc. can be solved through the development of entrepreneurship. Economic development of a country is a complex phenomena, which is dependent upon socio- economic environment. Role of socio-economic environment can bestudied under the following two heads: SocialEnvironmentinEntrepreneurialDevelopment: An entrepreneur is born in society. He performs different types of activities as a member of the society. Without entrepreneur, the existence of the society is nil. Different social factors, such as, caste, creed, community, religion, family background, social values, ideals, educational, background, occupational back group, customs, traditions, technical development and innovations, motivation, managerial ability, initiative, professional background, training facilities, migration thinking pattern, ‘self-confidence etc. play vital role in the development of entrepreneurship. Social process effects the habits, outlook, thinking, method of living, ambitions of a man considerably: The entire development and total personality of an entrepreneur takes place in the society. Society provides necessary field to the entrepreneur for the development of entrepreneurial qualities, such as, self-confidence, initiative, freedom, desire to earn prestige, use of opportunities, desire for achievements and capacityto facechallenges and risks etc. History also supports this view. For example, Marwaries, Gujaratis, Banias, Mahajan etc. are found in trade, business and business in every concern of the world. Entrepreneurial talent is found in the blood of certaincastes, families and communities. For example, Birla, Tata, Dalmia, Modi, Kirloskar, J.K. etc. all have family traditions of being engaged in trade, commerce and industry. Further, Gujaratis, Marwaris, Sikhs etc. have high migratory character as they can be seen almost in every corner of the world in search of economic activities and have become most successful entrepreneurs. Economic Environment in Entrepreneurial Development — Economic environment occupy an important place in the entrepreneurial development. Economic environment refers to all those factors which provide necessary resources to the entrepreneur, such as, capital, land, equipment, material, manpower, machinery, building, technical-know-how, market, investment opportunities and other needed inputs. The dependence of trade, business and industry on the economic environment is total. For example, the more is the technical know-how of the entrepreneur, the more and better shall be production as to quantity, quality and economical. Reduction in the cost of production will lead to wide market and increase in profits.16 Moreover, economic stability, healthy, competition, sound working conditions, availability of trained labour force, healthy investment and saving environment, stability of prices, availability of cheap finance, high level of income etc. also affects the entrepreneurial development. EconomicSystemanditsImpactonEntrepreneurship : We can broadly classify the economic systems into : (a) Capitalist, (b) Socialist and (c)Mixed economy. Capitalistic Economy : In a capitalistic economy the means of production are privately owned; there is free competition, free access to any industry. Anyindividual can enter into any fieldwhere he perceives a business opportunity. Competition and survival of the fittest is the rule. There is very little intervention by the State. In such an environment, a manufacturer who produces what the society wants at prices which themembers of the society are willing to pay, will be able to gain a foothold, and survive. An entrepreneur who is not able to pass this crucial test will be left behind. However, under this kind of system, it is not normal for the bigger units in an industry to dominate over the smaller ones. In the process, the smaller units often get crushed and go out of business. Failure of small business units is a real problem in the U.S.A. Therefore, a number of specialised agencies have been set up in the U.S.A. to help the small units to stand the competition from the larger ones in the market place. Of course, there is no direct state intervention in the matter of regulating the formation and running of these businesses. The essence of the capitalist system is freedom. Entrepreneurs who survive in such a system acquire recognition and social status. It is not unusual for one-time small businesses to grow at a very fast pace and to eventually dominate the market place. IBM, for example, had to face competition from an unknown unit, Apple Computers. May be system arouses the entrepreneurial spirit latent in the individual and spurs him to work hard. Many large U.S. Corporation were started by single individuals who now hold the reigns of the empire they wereresponsible to establish. Socialist Economy : In a Socialist economy, the means of production are owned and controlled by the State. The allocation of the means of production is done by the State by some centrally administered machinery which monitors the social needs and ensures that resources flow where the needs be properly met. Very little of private enterprise or entrepreneurship is seen in such economies. Mixed Economy : In a mixed economy we have a dominant public sector through which the State controls the economic17 activity, e.g., steel, heavy industry, aviation, banking, insurance etc. There is also a large private sector as in agriculture, services, industries etc. Even in the private sector, the state could play a positive role by : (a) reservingcertain areas for the small scale units (b) providing incentives and concessions so essential, particularly in the initial stages of a business venture (c) providing markets for their finished products and assisting these units inobtaining scarcerawmaterials (d) ensuring that the larger units do not dominate over the smaller ones. The mixed economy, such as we have in India, provides a very favourable climate where entrepreneurship can be nourished very well. There is an umbrella of protection available until the small scale unit that is launched is able to takeoff andstand on its own. SUMMARY Entrepreneur is a person who perceives an idea of establishing a ‘ new business enterprise and then bring together manpower, land, equipment, material and arranges necessary capital needed for business. He is a person with vision, original idea, decision making ability and courage to undertake risky projects. The entrepreneur is an innovator who brings in new ideas, new processes and encourages his team in newactivities. Entrepreneurship is “a creative and innovative response to the environment”. Entrepreneurship is a process of doing something new, and innovative. We can find entrepreneurship in all such occupations as : service, trading, industry, academics, agriculture, or professions. Entrepreneurs are around us in our offices, our factories, our educational institutions. Entrepreneurs are known for doing new things or doing things in a new way. Entrepreneurs have “the abilityto see and evaluate business opportunities, to gather the necessary resources to take advantage of them and to initiate appropriate action to ensure success”. They are found in all professions like banking, education, medicine, engineering, architecture, information technology, supply chain management and eveninoutsourcing business. Entrepreneurship development passes through the following stages in the process of growth and development : (i) The entrepreneur perceives an opportunity and wishes to strive to make the most of it : in the process he desires to meet his personal goals.

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