Introduction Entrepreneurship Lecture notes

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3. Services Mehandi art Running the school canteen T-shirt painting Running the stationery shop Sale of saplings Games Sale of second hand books/novels Any other suggestion by the teacher 4. Occasions Parent Teachers Meet Carnivals, school fests Weekly canteen specials Important events in schools where parents and children are there and are a source of purchasing power. The students can think of innovative ways to promote such events. Important for the teacher to take permission from the Principal before planning such an event The School Head, Teacher and Students decide what to do with the profits thus generated. Allocation of Marks S. No. Basis Marks 1 Group Work 02 2 Presentation/Creativity 02 3 Understanding and Learning 02 4 Documentation of records 02 5 Viva-voce 02 Total 10 III. AN EXHIBITION The teacher divides the class into seven groups (1 for each unit). Each group is given a unit and asked to exhibit the content of that unit in any of the following forms. IV (Teacher to keep the nature of unit content in mind while forming these groups) 1. Charts 8. Debates 2. Models 9. Puppet shows 3. Acronyms 10. Power Point Presentation 4. Skits 11. Story Telling 5. Quizzes 12. Songs 6. Puzzles 13. Poetry 7. Games 14. Film Clips/ 15. Documentary A date should be fixed in advance to allow more schools to be invited for the exhibition. Students can exhibit their case studies or any other project work done during the academic year. The exhibits have to be explained by the groups, making the concepts of their respective units simpler and easily understood even by a layman. Allocation of Marks S. No. Basis Marks 1 Group Work 03 2 Presentation/Creativity 04 3 Understanding/Delivery 02 4 Audience Response 01 Total 10 IV. VISIT TO DISTRICT INDUSTRIES CENTRE (DIC) Objective: To understand The grants/schemes offered by the Government Various training centres for skill development Testing centres for quality assurance for helping the entrepreneurs Financial institutions offering assistance to the Entrepreneurs Process: Teachers to arrange a trip for all the students to the District Industries Centre in their area, to understand the grants/schemes offered by the Government to Entrepreneurs V Teachers to take permission from school administration for taking the students on a field visit to DIC Students prepare a list on what kind of information they would expect to find from DIC such as: Assistance provided for start-ups Whether mentorship is provided or not Level of technical assistance provided Setting up of a small scale industry Registrations required Grants/schemes provided Specific grants provided for women entrepreneurs Financial assistance provided After the students have noted all the points, they prepare the report on the basis of any small scale industry which they would like to start. For example: If the student wants to start an Export Oriented Unit, he/she must consider the legal procedures involved in it. As a woman entrepreneur why assistance is provided by the government. Students need to submit a report on the basis of all the points covered Expected Learning Outcomes from the Project: Students learn the procedure of setting up of a small scale industry Understand the various statutory legislations involved in the process Understand the financial assistance provided for the enterprises Allocation of Marks S. No. Basis Marks 1 Content 08 2 Report 02 Total 10 VI UNIT 1 Entrepreneurship: Concept and Functions Learning Objectives: After studying this lesson the students should be able to: Understand the concept of Entrepreneurship Explain the functions of Entrepreneurship Appreciate the need for Entrepreneurship in our economy State the myths, advantages and disadvantages of Entrepreneurship Describe the process of Entrepreneurship Case Study The Earth at this Innovator’s Feet Mansukhbhai Prajapati remoulded his family‘s struggling pottery business to produce the Mitticool range of ingenious earthenware, including a fridge that works without electricity. Reporting on the devastation and thousands of lives lost during the 2001 earthquake in Gujarat, local newspapers had this intriguing headline describing the havoc wreaked at a potters‘ colony: ‗Garibonna fridge no bhookon‘ (pieces of the poor people‟s fridge). Among the debris were the shards of hundreds of broken clay pitchers. That headline proved to be a game-changer for Wakaner- based potter, Mansukhbhai Prajapati, who literally picked up the pieces to begin afresh on a remarkably innovative idea — the Mitticool refrigerator, which is made of mud/clay and works without electricity. Originally from Morbi village in Rajkot, South Gujarat, Prajapati, a tenth- standard dropout, began working at a tea-stall after his father discouraged him from entering the family‘s pottery business as the income was negligible. Later, he became a supervisor at a roof-tile manufacturing company and eventually, in 1989, returned to his passion for pottery by producing tavdi or tawa (frying pan) from clay. Although his father-in-law desired him to continue working at the roof-tile company, Prajapati‘s wife encouraged him to experiment with the family business all over again. It was this abiding interest in innovation that led him to develop the Mitticool water filter, way back in 1997. A lot of rigorous experimentation went into his work on the Mitticool refrigerator, which he launched in 2002. 1 Besides a tank for cooling and storing 10 litres of water, the earthenware refrigerator has two compartments for storing 5 kg of vegetables, fruits and other food. It takes about seven days to make one Mitticool fridge. The special terracotta clay used is baked at 1,200 degree Celsius to harden it. Like any clay pot used to cool water, the fridge too works by keeping the inside temperature 10 degrees lower than the outside. The natural cooling process keeps vegetables and fruits fresh for up to five days, and milk products for up to three days. Measuring 27 inches high and 15 inches wide, the fridge costs between Rs.3,000 to Rs.3,500. As it works without electricity, it is especially useful in villages that experience frequent power cuts. Entrepreneurship Entrepreneurship is a ship on a voyage that has on board, innovative and creative men and women, who like to do all those constructive things which nobody could lay his/her hands on before. They make a fortune out of ideas. Success never goes to their heads and each set back makes them bold enough to carve their future, aiming for excellence. Entrepreneurship is the freedom to do what one likes to do, with all its attendant profits and risks. Entrepreneurship is defined by results and not by attributes. It is a passion and all about commercial risks. A true entrepreneur uses not only his/her senses one to five, but six, seven, eight and nine. Six to nine do not really exist, but he/she develops them through his/her exposure, experience, failures and following the concept of listening to understanding. Are these people Entrepreneurs? Vegetable vendor, Newspaper distributor, Laundry service. To a large extent they are also risk takers. They may not be innovative, but they take risks up to their own potential and level. Entrepreneurship has evolved through the centuries and it has been viewed differently according to conditions prevailing in the world economy. The new-age business ventures are more idea–centric and not just product-based. The key to success in business is not just inheritance; it is creation of more wealth and the constant innovation, from the prevailing to the next best practices. Accordingly, a wide range of small and mid-sized businesses have emerged and gained popularity with the affluent middle class, determined to spend more, as well as derive value out of every rupee spent. Earlier, any business venture was product based – manufacturing of cars, production of dress material, watches etc. If we analyse carefully we find that there are many entrepreneurs found in these ventures, and there was a monopoly in certain areas. But as the economy grew, and companies started competing with one and another globally, we see a lot of idea-centric and need-based companies mushrooming all over the country. For instance, Mumbai‘s Dabbahwalaah, crèches, ready to eat food, instant noodles etc. 2 The Concept of Entrepreneurship Entrepreneur Entrepreneurship Enterprise Person Process or action Outcome (Subject) (Verb) (Object) Concept of Entrepreneur An entrepreneur is a person responsible for setting up a business or an enterprise. He has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green field projects that create wealth, opens up many employment opportunities and leads to growth of other sectors. ENTREPRENEUR is a person who: Develops and owns his own enterprise. Is a moderate risk taker and works under uncertainty for achieving the goal. Is innovative. Is a persuader of deviant pursuits. Reflects a strong urge to be independent. Persistently tries to do something better. Is dissatisfied with routine activities. Is prepared to withstand the hard life. Is determined, but patient. Exhibits a sense of leadership. Exhibits a sense of competitiveness. Takes personal responsibility. Is oriented towards the future. Tends to persist in the face of adversity An entrepreneur is a person who starts an enterprise and converts a situation into opportunity. He/she searches for change and responds to it. A number of definitions have been given of an entrepreneur. The economists view him/her as the fourth factor of production, along with land labour and capital. Sociologists feel that certain communities and cultures promote entrepreneurship; for example, in India, we say that particular communities are very enterprising. Still others feel that entrepreneurs are innovators who come up with new ideas for products, markets or techniques. 3 To put it very simply, an entrepreneur is someone who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it. Computers, mobile phones, washing machines, ATMs, credit cards, courier services, and ready-to-eat foods, are all examples of entrepreneurial ideas that got converted into products or services. The word „entrepreneur‟ is derived from the French word „entreprendre‟ which means „to undertake‟ i.e. individuals who undertake the risk of a new enterprise. The word „entrepreneur‟, therefore, first appeared in the French language in the beginning of the sixteenth century. The word was coined by Richard Cantillon, an Irishman, living in France. Definitions of an entrepreneur Richard Cantillon: As a person, who pays a certain price to 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. Adam Smith: An individual, who undertakes the formation of an organization for commercial purposes by recognizing the potential demand for goods and services, and there by acts as an economic agent and transforms demand into supply. Joseph Schumpter: Entrepreneurs are innovators, who use the process of entrepreneurship to shatter the status quo of the existing products and services, to set new products, new services. He describes entrepreneurs as innovators. Peter F. Drucker: An entrepreneur is one who always searches for changes, responds to it and exploits it as an opportunity. He believes in increasing the value and consumer satisfaction. Thus, a professional manager who mobilises resources and allocates them to make a commercial gain from an opportunity, is also called an entrepreneur. To sum up, entrepreneurship may be defined as a systematic innovation which consists of the purposeful and organised search for changes, and a systematic analysis of the opportunities that such change might offer for economic and social transformation. Enterprise An 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 contributes to the overall economic development. Entrepreneur versus entrepreneurship The term „entrepreneur‟ is often used interchangeably with „entrepreneurship‟‟ but, conceptually, they are different, yet they are just like the two sides of a coin. Both the terms are co-related. An entrepreneur is a person who bears the risks, unites various factors of production and carries out creative innovations. He/she is an individual or one of a group of individuals who 4 try to create something new. He/she always attempting to bring about change in terms of factor proportions, which is known as innovation. On the contrary, entrepreneurship is the set of activities performed by an entrepreneur. It is process of identifying opportunities in the market place and marshalling the resources required to pursue these opportunities for long term gains. It is the attempt to create value. Functions of an Entrepreneur Functions of an entrepreneur Commercial Entrepreneurial Promotional Managerial Functions Functions Functions Functions Innovation Planning Investigation of Production an Idea Risk-taking Organising Marketing Detailed investigation Personnel Organisation Assembling the Staffing building requirements Financing the proposition Directing Accounting Leadership, Communication, Finance Motivation, Motivation Co-ordination Controlling Rajesh Marwaha and J. S. Mehandipur in their book “Entrepreneurship and Small Business‖, have given a comprehensive classification of the functions of entrepreneurs. A. Entrepreneurial functions Innovation: It is the basic function of an entrepreneur. As an innovator, the entrepreneur has to introduce new combinations of the means of production, new product, new market for a product and new sources of raw material. They introduce something new in any branch of economic activity. He/she foresees a potentially profitable opportunity and tries to exploit it. Example: I-Pod, Smart phones, Induction cook top etc. 5 Risk-taking: It refers to taking responsibility for a loss that may occur due to unforeseen contingencies in the future. An entrepreneur reduces uncertainty in his/her plan of investment, diversification of production and expansion of the enterprise. He/she is a self-confident and highly optimistic person, willing to assume the risks involved in innovations, new ventures and expansion of an existing venture. For example, narrating an incident from Dhirubhai‟s life, his son Mukesh recalls that, when Dhirubhai was flown to Jamnagar and shown a piece of barren land, he asked why mangoes could not be grown there. The officials informed him that the land was not fertile enough for mango crop. Dhirubhai took it as a challenge and told those officials that it was for the same reason why mangoes ought to be grown there. After just a few years, the entire land of about 2000 acres had been converted green and 6000 tonnes of mango crop was harvested from the same land. So Dhirubhai took a risk here and believed in its success, thus translating it into the best of mango variety, the „Alphonso‟, which is being grown in that region. Organisation Building: Organisation and management are the main functions of an entrepreneur. They refer to the bringing together of the various factors of production. The purpose is to allocate the productive resources in order to minimise losses and reduce costs in production. All decisions relating to an enterprise is taken by the entrepreneur. He/she alone determines the lines of business to expand and capital to employ. Thus, an entrepreneur is the final judge in the conduct of his/her business. B. Promotional functions Discovery of an idea: The entrepreneur visualizes that there are opportunities for a particular type of business and it can be profitably run. The idea may be to exploit new areas of natural resources, more profitable venture, or an existing line of business. He/she develops the idea with the experts in the field, and if they are convinced, then he/she will go ahead with more exhaustive analysis. For example, Karsan Bhai Patel, the creator of Nirma Washing Powder, who was working as a factory chemist in Gujarat Mineral Development Corporation, started making detergent powder in his kitchen for poor rural women of Gujarat and selling his product by visiting different villages. His efforts culminated in the whitish yellow detergent powder named Nirma. The idea behind was need and the problem of the society that could not afford other brands of detergent powders because of their high cost. Today, Nirma is one of the world‟s biggest detergent powder manufacturer. The brand sells over 8 lakh tonnes annually. It holds 40% of the Indian market, with a turnover of more than Rs. 2500/- crores. This is creative effort and risk taking ability of a person who turned out to be an entrepreneur. The strength of being capable is the plus point in an entrepreneur. 6 Detailed Investigation: The entrepreneur will estimate the total demand for the product. After determining the prospective demand for goods, he/she will think of arranging finances for the venture, along with the availability of power, labour, raw materials and machinery. The work of estimation becomes complicated if it is a new line of business. The estimates should be based on proper analysis of various factors. Assembling the Requirements: After making sure that the proposition is practical and profitable, the entrepreneur proceeds to assemble the requirements. He persuades some more people to join him on board. He may also be required to acquire some patent rights if he has invented something new. The entrepreneur selects the factory site, decides about plant and machinery and contacts suppliers of raw materials. Preliminary contracts are finalised and project is set to begin. Financing the Proposition: The entrepreneur decides about the capital structure of the enterprise. The requirements of finances are estimated first, then the sources from which money will come up are determined. Long term and short term financial requirements are estimated and the type of source of funds is also decided- share, debenture, loan etc. For example, when Narayana Murthy started Infosys in 1981, he had no capital and his wife Sudha Murthy gave him Rs. 10,000/- which she had saved for a rainy day. C. Managerial functions Planning: It is the basic managerial function of an entrepreneur. It helps in determining the course of action to be followed to achieve various entrepreneurial objectives. Planning is concerned with the mental state of the entrepreneur. It is decision making in advance: what to do, when to do, how to do and who will do a particular task. Organizing: Every business enterprise needs the service of a number of persons to look after its different aspects. The entrepreneur sets up the objectives or goals to be achieved by its personnel. The function of organising is to arrange guide, co-ordinate, direct and control the activities of the factors of production. Staffing: The function involves making appointments for the positions created by the organisational process. It is concerned with the human resources of an enterprise. It consists of human resources, manpower planning, recruitment, selection and placement of manpower, human resource development, promotion, transfer, appraisal and determination of employee‟s remuneration. 7 Directing: It is concerned with carrying out the desired plans. It initiates organised and planned action, and ensures effective performance by subordinates towards the accomplishment of group activities. Leadership: It is the process by which an entrepreneur imaginatively directs/guides and influences the work of others in choosing and attaining specified goals by mediating between the individual and organisation in such a manner that both will get the maximum satisfaction. Communication: It constitutes a very important function of the entrepreneur. It is observed to be the most prevalent problem among entrepreneurs today. It has been established that entrepreneurs spend 75% to 90% of their working time communicating with others. It refers to the exchange of ideas, feelings, emotions, knowledge and information between two or more persons. Nothing happens in management until effective communication takes place. Motivation: It is the psychological process of creating an urge among the subordinates to do certain things or behave in the desired manner. The importance of motivation can be realised from the fact that the performance of a worker depends upon his/her ability and the motivation. A sound motivational system must be productive, competitive, comprehensive and flexible, and it must consider the psychological, social, safety, ego and economic needs of the worker. Supervision: After issuing instructions, the entrepreneur has to see that the given instructions are carried out. Supervision refers to the job of overseeing subordinates at work to ensure the maximum utilisation of resources, to get the required and directed work done, and to correct the subordinates whenever they go wrong. Co-ordination: It is one of the most important functions, as, it is essential to channelize the activities of various individuals in the organisation, for the achievement of common goals. The entrepreneur has to make sure that the work of different segments is going according to pre-determined targets and corrective measures have to be initialised if there is any deviation. Controlling: Control is the process which enables the entrepreneur to get his/her company‟s policies implemented and take corrective action if performance is not according to the pre- determined standards. The process begins with establishing standards of performance, measuring actual performance, comparing the actual performance with the standard, finding variations and finally, taking corrective action. 8 D. Commercial Functions Production: It is the key function of an entrepreneur. The activities of production are independent of the size of the undertaking. In a small concern, one person may be undertaking this function whereas, in large organisations, this activity may be undertaken by various individuals or separate teams. It is the creation of goods and services. It consists of manufacturing, ancillary and advisory activities. Finance: It is the most important aspect in all enterprises. It remains a focus of all business activities. The need for money is continuous. It starts with the setting up of an enterprise and remains at all times. The development and expansion of an enterprise rather needs more commitment for funds. It is the duty of the entrepreneur to look and analyse into the various sources of finance and appropriately arrange for them as and when required. Marketing: It is primarily concerned with the movement of goods and services from the producer to the ultimate consumer. It is directed towards the satisfaction of consumer wants. Marketing plays a significant role in promoting the well-being of the business enterprise. So it is the role of the entrepreneur to strategically place his company in an advantageous position to secure the top position in the market. Personnel: This function is concerned with employment, development and compensation for the personnel, the provisions of working conditions and welfare measures to maintain a good work force in the organisation. Accounting: It is defined as a systematic recording of entrepreneurial transactions of an enterprise and the financial position of the enterprises. The entrepreneur should look into the record keeping of the entries of all transactions which take place in the organisation so that he/she is aware of his/her financial position. Need For Entrepreneurship The main need for entrepreneurship State in any country is for Economic Development. In capitalist and developed countries, private entrepreneurs play an important role in economic development. In socialist countries, the state (Government) is the entrepreneur. In under-developed countries, private entrepreneurship is not encouraged because of the degree of risk involved. The government has to play a vital role in economic development. But in a developing country like India which follows a mixed economy, the role of both the government and the private entrepreneurs is equally important. The role of the private entrepreneurs has further increased because of the liberal economic policies followed by the Indian government since 1991. 9 Economic growth depends on the rate of innovation in the economic field, which in turn, depends on the number and quality of entrepreneurs in the society. Thus, entrepreneur is an agent of progress in the society. The reason for slow progress of our Indian economy during the first four decades of independence is that, the Indian entrepreneur has been shy. But as our economy has been progressing, we have seen an upsurge in the number of entrepreneurs emerging in all fields, but more needs to be done for increased economic growth in our country. The need for Entrepreneurship can be highlighted thus: Life-line of a nation: No country can progress without the development of entrepreneurship. Every country is trying to promote its trade so that it is able to share the benefits of development. Therefore, entrepreneurship is the yardstick to measure the level of development of a country. Provides innovation: Entrepreneurship provides new ideas, imagination and vision to the enterprise. An entrepreneur is an innovator as he tries to find new technology, products and markets. He increases the productivity of various resources. The entrepreneur stands at the centre of the whole process of economic development. He conceives business ideas and puts them into effect, to enhance the process of economic development. Change of growth /Inclusive growth: An enterprise operates in a changing environment. The entrepreneur moulds the enterprise in such a changing environment. The latter moulds not only the enterprise, but also alters the environment itself, to ensure the success of the enterprise. In order to meet the challenge of automation and the complexities of advanced technology, there is a need for the development of entrepreneurship. Increased profits: Profits can be increased in any enterprise, either by increasing the sales revenue or reducing cost. To increase the sales revenue is beyond the control of an enterprise. Entrepreneurship, by reducing costs, increases its profits and provides opportunities for future growth and development. Employment opportunities: Entrepreneurship and its activities provide the maximum employment potential. Large numbers of persons are employed in entrepreneurial activities in the country. The growths in these activities bring more and more employment opportunities. Social Benefits: It is not only beneficial to the business enterprise, but to the society at large. It raises the standard of living by providing good quality products and services at the lowest possible cost. It also makes the optimum use of scarce resources and promotes peace and prosperity in the society. 10 Myths of Entrepreneurship According to Guy Kawasaki, many entrepreneurs believe a set of myths about entrepreneurship, the most common being: 1. Starting a business is easy Actually it is not. Most people, who begin the process of starting a company, fail to get one up and running. Seven years after beginning the process of starting a business, only one- third of entrepreneurs have a new company with positive cash flow greater than the salary and expenses of the owner for more than three consecutive months. But small entrepreneurships are comparatively easier to start. 2. It takes a lot of money to finance a new business The typical start-up only requires about Rs.1,50,000/- to get going. The successful entrepreneurs, who don‟t believe the myth, design their businesses to work with little cash. They rent instead of buying. And they turn fixed costs into variable costs by, say, paying people commissions instead of salaries for example; Infosys was started with only Rs. 10,000/-. 3. Start-ups can’t be financed with debt Actually, debt is more common than equity. A lot of entrepreneurs use debt rather than equity to fund their companies. However, the composition of debt and equity will have to be worked upon. 4. Banks don’t lend money to start-ups This is another myth. Banks and various government schemes have been implemented with the idea of providing finance to budding entrepreneurs. 5. Most entrepreneurs start businesses in attractive industries Most entrepreneurs head right for different industries for start-ups. The correlation between the number of entrepreneurs starting businesses in an industry and the number of companies failing in the industry is 0.77. That means that most entrepreneurs are picking industries in which they are most likely to fail. Mahima Mehra started Hathi Chaap. It was totally a new venture where different raw materials were tried out to make handmade paper. After researching a lot, they found that elephant dung had more fibre content which made it easy to make handmade paper. 6. The growth of a start-up depends more on an entrepreneur’s talent than on the business he chooses This is not true as the industry that an entrepreneur chooses to work has a huge effect on the odds that it will grow. For instance, various dotcom companies mushroomed all over the world during the Y2K problem in the year 2000. 11 7. Most enterprises are successful financially This is also another myth. Entrepreneurship creates a lot of wealth, but it is very unevenly distributed. The typical profit of an owner-managed business is Rs.2, 40,000 per year. Only the top ten percent of entrepreneurs earn more money than employees. And, the typical entrepreneur earns less money than he/she otherwise would have earned, working for someone else. Advantages and Disadvantages of Entrepreneurship To everything in life, there are advantages and disadvantages; entrepreneurship is no exception. As a matter of fact, entrepreneurship involves a lot of risk taking. Yet, it can pay off very well, with rewards such as profits, the opportunity to be your own boss and make your own decisions. Here are some advantages and disadvantages to consider: Advantages Excitement: Due to its high capacity for risk, there is a lot of adventure for example, Steve Jobs left his position in Apple Inc., and started Pixar, which later turned out to be a successful venture. Originality: Some feel that they can offer a new service or product that no one else has offered before, i.e., I-pod and I-pad Independence: Some wish to be their own boss and make all the important decisions themselves. Rational salary: They are not being paid what they are worth and would rather work on their own and earn the money they should be earning for their efforts. Freedom: Entrepreneurs can work on any idea which they feel will eventually turn out to be a successful venture, for instance, Richard Branson’s idea of space mission. Disadvantages Salary: Starting your own business means that you must be willing to give up the security of a regular pay check. Benefits: There will undoubtedly be fewer benefits, especially when considering that your business will be just starting off. Work schedule: The work schedule of an entrepreneur is never predictable; an emergency can come up in a matter of a second and late hours may become the norm. Administration: All the decisions of the business must be made on his/her own; there is no one ranked higher on the chain of command in such a business, and the fear of a wrong decision can have its own effect. Incompetent staff: Most of the time, the entrepreneurs will find themselves working with employees who "don't know the ropes" as well as they do, due to lack of experience. 12 Process of Entrepreneurship Although enterprises are as different and unique as the entrepreneurs who create them, most of them appear to work through a process. The diagram given below describes the process through which most of them create their enterprise. 1. Self-Discovery: Learning what they enjoy doing; examining their strengths and weaknesses. Examining work experience and relating it to potential opportunities. 2. Identifying opportunities: Looking for needs, wants, problems, and challenges that are not yet being met, or dealt effectively. 3. Generating and evaluating ideas: Using creativity and past experience to devise new and innovative ways to solve a problem, or meet a need, and then narrowing the field to one best idea. 4. Planning: Researching and identifying resources needed to turn the idea into a viable venture. Doing the research in the form of a written business plan preparing marketing strategies. 5. Raising Start-up capital: Using the business plan to attract investors, venture capitalists and partners. This stage can involve producing prototypes or test-marketing services. 6. Start-Up: Launching the venture, developing a customer base, and adjusting marketing and operational plans as required. 7. Growth: Growing the business: developing and following strategic plans, adapting to new circumstances. 8. Harvest: Selling the business and harvesting the rewards. For many entrepreneurs, this also means moving on to new venture and new challenges. 13 SUMMARY 1.0 Entrepreneurship may be defined as a systematic innovation which consists of the purposeful and organised search for changes, and a systematic analysis of the opportunities that such change might offer for economic and social transformation. 1.1 ENTERPRENEUR is a person who: Develops and owns his own enterprise Is a moderate risk taker and works under uncertainty for achieving the goal. Is innovative Is a Persuader of deviant pursuits Reflects a strong urge to be independent Persistently tries to do something better Is dissatisfied with routine activities. Is prepared to withstand the hard life. Is determined but patient Exhibits sense of leadership Exhibits sense of competitiveness Takes personal responsibility Is oriented towards the future. Tends to persist in the face of adversity Functions of an entrepreneur A. Entrepreneurial Functions B. Promotional Functions C. Managerial Functions D. Commercial Functions A. Entrepreneurial functions Innovations Risk-taking Organisation building B. Promotional functions Investigation of ideas Detailed investigation Assembling requirement Financing the proposition C. Managerial Function Planning Organizing 14 Staffing Directing Leadership Communication Motivation Supervision Co-ordination Controlling D. Commercial Functions Production Finance Marketing Personnel Accounting E. Need for Entrepreneurship Life-line of a nation Provides Innovation Change of Growth/Inclusive Growth Increased Profits Employment Opportunities Social Benefits 1.2 Entrepreneurial Myths: Starting a business is easy Takes a lot of money to finance a new business Start-ups can‘t be financed with debt Banks don‘t lend money to start-ups Start business in mostly attractive industries Growth of start-up depends more on entrepreneurial talent Success is assured financially 1.3 Advantages Excitement, Originality, Independence, Rational Salary, Freedom 1.4 Disadvantages Salary, Benefits, Work Schedule, Administration, Incompetent staff 15 1.5 Process of Entrepreneurship: Self-Discovery, Identifying Opportunities, Generating and Evaluating Ideas, Planning, Rising Start-up Capital, Start up, Growth, Harvest. Q.1. Answer each of these questions in about fifteen words: (i) What is an enterprise? (ii) Who is an Entrepreneur? (iii) Who plays the role of an entrepreneur in a socialist country? Q.2. Answer each of these questions in about fifty words: (i) Explain any two advantages of being an Entrepreneur? (ii) Explain any two disadvantages of being an Entrepreneur? (iii) Differentiate between entrepreneur and entrepreneurship. Q.3. Answer each of these questions in about one hundred and fifty words: (i) Describe entrepreneurial functions of an entrepreneur? (ii) What is the need of entrepreneurship in an economy? (iii) Mehak wants to start a textile unit near Gurgaon. Discuss the commercial functions which she will require to plan and perform for the same. (iv) Explain any four managerial functions of an entrepreneur? (v) Explain any four promotional functions of an entrepreneur? Q.4. Answer each of these questions in about two hundred and fifty words: (i) Describe the process of entrepreneurship? (ii) What is the need of entrepreneurship in an economy? Give at least six benefits. Q.5. HOTS: (Higher Order Thinking) (i) Differentiate between Entrepreneurial functions and Managerial functions of an Entrepreneur? (ii) “Innovation is the hallmark of Entrepreneurship”. Why is “innovation” referred as the basic function of an entrepreneur? (iii) “Entrepreneurs, in their drive and pursuit to create something new, at times, results in causing major loss to the Nation‟s natural resources. Shouldn‟t they be discouraged? Justify giving reasons for your answers. (iv) Starting a venture is not an easy task. A series of activities needs to be planned and undertaken to create an enterprise. Discuss them briefly. (v) Why are Entrepreneurs called „agents of progress‟ for a nation? What role do they play in the Nation‟s development? 16

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