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1. entrepreneurship

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1. entrepreneurship

  1. 1. Evolution and concept of Entrepreneurship
  2. 2. WHAT IS ENTREPRENEURSHIP & ITS CONCEPT..!!  The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses. Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise In economics, entrepreneurship combined with land, labor, natural resources and capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace.
  3. 3. CHARACTERISTICS OF ENTREPRENEURSHIP  Economic and dynamic activity:-Entrepreneurship is an economic activity because it involves the creation and operation of an enterprise with a view to creating value or wealth by ensuring optimum utilisation of scarce resources. Since this value creation activity is performed continuously in the midst of uncertain business environment, therefore, entrepreneurship is regarded as a dynamic force.  Related to innovation:- Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an individual to continuously evaluate the existing modes of business operations so that more efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a continuous effort for synergy (optimization of performance) in organizations.  Profit potential: -“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the risk of developing an idea into an actual business venture.” Without profit potential, the efforts of entrepreneurs would remain only an abstract and a theoretical leisure activity.  Risk bearing: -The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and implementation of new ideas. New ideas are always tentative and their results may not be instantaneous and positive.
  5. 5. 1. Idea Generation: To generate an idea, the entrepreneurial process has to pass through three stages: a. Germination:  This is like seeding process, not like planting seed. It is more like the natural seeding. Most creative ideas can be linked to an individual’s interest or curiosity about a specific problem or area of study. b. Preparation:  Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a search for answers to the problems. Inventors will go on for setting up laboratories; designers will think of engineering new product ideas and marketers will study consumer buying habits. c. Incubation:  This is a stage where the entrepreneurial process enters the sub- conscious intellectualization. The sub-conscious mind joins the unrelated ideas so as to find a resolution.
  6. 6. 2. Feasibility study:- Feasibility study is done to see if the idea can be commercially viable. It passes through two steps: a. Illumination:  After the generation of idea, this is the stage when the idea is thought of as a realistic creation. The stage of idea blossoming is critical because ideas by themselves have no meaning. b. Verification:  This is the last thing to verify the idea as realistic and useful for application. Verification is concerned about practicality to implement an idea and explore its usefulness to the society and the entrepreneur.
  7. 7. IMPORTANCE OF ENTREPRENEURSHIP  Development of managerial capabilities:- Entrepreneurship results into creation of organisations when entrepreneurs assemble and coordinate physical, human and financial resources and direct them towards achievement of objectives through managerial skills.  Creation of organizations:-Entrepreneurship results into creation of organizations when entrepreneurs assemble and coordinate physical, human and financial resources and direct them towards achievement of objectives through managerial skills.  Improving standards of living:-By creating productive organisations, entrepreneurship helps in making a wide variety of goods and services available to the society which results into higher standards of living for the people  Means of economic development:- Entrepreneurship involves creation and use of innovative ideas, maximization of output from given resources, development of managerial skills, etc., and all these factors are so essential for the economic development of a country.
  8. 8. ENTREPRENEURIAL FUNCTIONS & TASKS  Planning  Organization  Decision-making/ Leadership  Management  Innovation  Risk bearing  Uncertainty bearing  Delegation of work  Idea Generation or Creativity  Employment Generation for others
  9. 9. FACTORS AFFECTING ENTREPRENEURSHIP Personality Factors  Initiative (does things before being asked for)  Proactive (identification and utilization of opportunities)  Perseverance (working against all odds to overcome obstacles and never complacent with success)  Problem-solver (conceives new ideas and achieves innovative solutions)  Persuasion (to customers and financiers for patronization of his business and develops & maintains relationships)  Self-confidence (takes and sticks to his decisions)  Self-critical (learning from his mistakes and experiences of others)  A Planner (collects information, prepares a plan, and monitors performance)  Risk-taker (the basic quality). Environmental factors  These factors relate to the conditions in which an entrepreneur has to work. Environmental factors such as political climate, legal system, economic and social conditions, market situations, etc. contribute significantly towards the growth of entrepreneurship. For example, political stability in a country is absolutely essential for smooth economic activity Unfair trade practices, irrational monetary and fiscal policies, etc. are a roadblock to the growth of entrepreneurship. Higher income levels of people, desire for new products and sophisticated technology, need for faster means of transport and communication, etc. are the factors that stimulate entrepreneurship.
  10. 10. TYPES OF ENTREPRENEURS  Innovative entrepreneurs: These entrepreneurs have the ability to think newer, better and more economical ideas of business organisation and management. They are the business leaders and contributors to the economic development of a country. Eg; Tata Nano (Ratan Tata), Reliance Mobiles  Imitating entrepreneurs: These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They imitate innovative entrepreneurs because the environment in which they operate is such that it does not permit them to have creative and innovative ideas on their own. Such entrepreneurs are found in countries and situations marked with weak industrial and institutional base which creates difficulties in initiating innovative ideas. In our country also, a large number of such entrepreneurs are found in every field of business activity and they fulfill their need for achievement by imitating the ideas introduced by innovative entrepreneurs. Development of small shopping complexes is the work of imitating entrepreneurs. All the small car manufacturers now are the imitating entrepreneurs.
  11. 11.  Fabian entrepreneurs: The dictionary meaning of the term ‘fabian’ is ‘a person seeking victory by delay rather than by a decisive battle’. Fabian entrepreneurs are those individuals who do not show initiative in visualising and implementing new ideas and innovations wait for some development which would motivate them to initiate unless there is an imminent threat to their very existence.  Drone entrepreneurs: The dictionary meaning of the term ‘drone’ is ‘a person who lives on the labor of others’. Drone entrepreneurs are those individuals who are satisfied with the existing mode and speed of business activity and show no inclination in gaining market leadership. In other words, drone entrepreneurs are die-hard conservatives and even ready to suffer the loss of business.  Social Entrepreneur: Social entrepreneurs drive social innovation and transformation in various fields including education, health, human rights, workers’ rights, environment and enterprise development. They undertake poverty alleviation objectives with the zeal of an entrepreneur, business practices and dare to overcome traditional practices and to innovate. Dr Mohammed Yunus of Bangladesh who started Gramin Bank is a case of social entrepreneur.
  13. 13. MAJOR PROBLEMS FACED BY SMALL SCALE ENTREPRENEURS WITH RESPECT TO INFRASTRUCTURE  Inadequate infrastructural facilities creates the problem of acute shortage of basic raw materials, especially those which are scarce and need to be imported from distant places, needed by small and medium scale enterprises.  Small and medium scale entrepreneurs find it difficult to distribute their products to the markets which are located at far off places because of incomplete construction or non-existence of basic roads/ highways.  Lack of proper airways and waterways facilities also restricts the growth prospects of those medium/small scale firms whose target market is located abroad.  Small and Medium scale enterprises face shortage of power supply, due to which they are unable to make full utilization of plant capacity. Most of them find it difficult to install their own power generating plants, so as to ensure their uninterrupted operations, due to lack of required funds.  Most of them are located in rural areas or remote areas of the country, due to which they find it difficult to communicate with people outside the region. This is because of non-existence of proper telecom network
  14. 14. SCOPE OF SMALL BUSINESS ACTIVITIES IN INDIA Small entrepreneurs cover a wide range of business activities. The range of products manufactured by small-scale industries is very wide from baskets to precision electronic and optical instruments  1) Manufacturing Industries: This type of small entrepreneurs is involved in producing complete articles used for direct consumption and also for processing industries:  (2) Village and Cottage Industries: Village and cottage industries are industries which are carried on in homes of workers which we have designated as cottage industries.  (3) Handlooms and Handicrafts: These industries cover artisans, skilled craftsmen and technicians who can work in their own houses if their work requires less than 300 square feet space, less than 2 kW power less than 5 workers and no pollution is caused. Handicrafts, toys, dolls, small plastic and paper products, electronic and electrical gadgets are some examples of these industries.  4) Modern Small Entrepreneurs: These industries are : (a) Small Entrepreneurs: According to Government of India, 2000, small scale industry is an undertaking having an investment in plant and machinery of not more than Rs. 1 corer. (b) Ancillary Industries: These are industrial undertakings having fixed investment in plant and machinery not exceeding Rs. 75 lakes (Government of India, 1991) engaged in…… (i) the manufacture of parts components, sub-assemblies, tooling or intermediaries, or
  15. 15. (ii) the rendering of services supplying 30% of their production or services, as the case may be, to other units for production of other articles (iii) Tiny Units: This refers to undertakings having fixed investment in plant and machinery not exceeding Rs. 5 lakes. These also include undertakings providing services such as laundry, zeroing, repairs and maintenance of customer equipment and machinery, hatching and poultry etc.  (5) Trading Industries: These types of small entrepreneurs are engaged in sale and purchase or exchange of goods and services. These industries act as middlemen between producers and consumers. This type of units includes wholesaler, retailer and commission agents.  (6) Service Industries: These small entrepreneurs’ establishments are engaged in personal or household services in rural areas and towns with population not exceeding 5 lakes and having fixed investment in plant and machinery not exceeding Rs. 2 lakes. These industries include: (a) Professional services e.g. services of law, accounting medicine, consultancy etc. (b) Commercial services e.g. transport, constructing warehousing, real estate, repair shops etc. (c) Personal services e.g. fashion shops, dry cleaning restaurants, etc.
  16. 16. ROLE OF SMALL BUSINESS IN INDIAN ECONOMY Small scale firms are helpful in the achievement of these goals in the following ways: 1. Employment: Small scale firms use labour-intensive techniques and, therefore, they have high potential to provide employment to a larger number of people per unit of capital. For every worker employed in large scale industries about three workers are engaged in small scale and cottage industries. Next to agriculture small business constitutes the most popular occupation of people in India. Small firms promote self-employment particularly among the educated and professional class. They also provide employment to agriculturists who remain idle during a part of the year. 2. Balanced Regional Development: small scale industries promote decentralized development and help to remove regional disparities in industrialisation. Decentralized development contributes to the process of self-sustained growth and avoids concentration of industries in particular areas. By providing employment in rural areas they help to check migration and overcrowding in urban areas. Small scale firms can be a useful means of rural reconstruction and development. Development of decentralized sector also improves the standard of living of people in backward regions. 3. Optimization of Capital: Small scale firms require less capital per unit of output and, therefore, greater output can be obtained with small investment. The Annual Surveys of industries reveal that fixed capital per employee in case of small scale industry was Rs. 3,706 as compared to Rs. 27,757 in case of large scale industry. Small firms also provide quick returns after their establishment on account of short gestation period. In India where the rate of capital formation is low, small scale industries are very suitable.
  17. 17. 4. Mobilization of Local Resources: Small scale industries facilitate Mobilization and utilization of local resources and family skills which might otherwise remain talent or utilized. Small business promotes a new cadre of small entrepreneurs and self-employed and encourages local talent. The growth of small enterprises helps in tapping talent resources like entrepreneurial skills and small savings specially in rural areas. Small business helps to protect technical skills and handicrafts. 5. Exchange Earnings: Small scale industries help in reducing pressure on the country's balance of payments in two ways. First, they do not require imports of sophisticated machinery and equipment. Secondly, they earn valuable foreign exchange through exports of their products. 6. Egalitarian Society : Small scale industries help in reducing concentration of economic power in a few hands. They promote a more equitable distribution of national income and wealth. Development of small scale industries helps to reduce monopolies and exploitation of consumers. Benefits of small scale firms are derived by a wider population. A large part of the earnings is distributed among workers. 7. Feeder to Large industries: small scale sector is complementary to the large scale industries. Small scale industries manufacture various types of components, spare parts, tools and accessories which are required by the large scale sector. 8. Social Advantage: Small scale units offer opportunity for an independent way of life to people with small means. They offer savings in social overheads like education, housing and medical facilities by taking industry nearer to the people. They help to raise per capita income an standard of living in the country. A system of widely diffused ownership permits wider participation of people in the process of economic development. Small scale sector provides a base for democracy, socialism and self-government.
  18. 18. GOVERNMENT POLICY TOWARDS SMALL BUSINESS (i) Small scale industries operate the local or State level. Different State Governments an local bodies have framed their own regulations and it is necessary to coordinate and supplement their efforts for the development of small scale units. (ii) Full employment is a fundamental goal of economic planning in India. Small scale industries offer large employment potential as they use labour-intensive methods of production. (iii) A major cause of our under development is the underutilization of resources. In order to tap the local and latent resources and skills, national policy of the growth of the Decentralized sector is necessary. (iv) Development of small business at the national level helps to achieve a balanced development of various regions, in particular the backward regions of the country. Small scale industries are an important means of rural development. (v) Small scale industries face several managerial, technical and financial problems, and there is need to develop institutional an other facilities for them. A national policy is required to create coordination between small scale and large scale sectors. (vi) A national policy on small scale industries is helpful in the creation of a socialistic pattern of society. Small Scale industries help in raising national income an standard of living in rural areas They help to preserve skills an handicrafts. Small scale units are useful for reducing concentration of economic power, monopolies and exploitation in the country.
  19. 19. Thank you