Eibm Unit 1
Eibm Unit 1
Eibm Unit 1
UNIT- 1
Meaning an Entrepreneur
Before the concept of entrepreneurship is explored, it is important to, first, understand the
meaning of ‘entrepreneur’ & also know who can be an entrepreneur. An entrepreneur is
someone who exercises initiative by organizing a venture to take benefit of an opportunity
and, as the decision maker, decides what, how, and how much of a good or service will be
produced. An entrepreneur supplies risk capital as a risk taker, and monitors and controls the
business activities. The entrepreneur is usually a sole proprietor, a partner, or the one who
owns the majority of shares in an incorporated venture. If one desires to be an entrepreneur,
the given equation is what describes, what an entrepreneur actually is
Definitions
(v) Peter F. Drucker’s Views on Entrepreneur – “An entrepreneur is the one who always
searches for change, responds to it and exploits it as an opportunity. Innovation is the specific
tool of entrepreneurs, the means by which they exploit changes as an opportunity for a
different business or different service”.
(vi) In the 20th century the theorist Arthur H. Cole defined an entrepreneur as
an ‘organization builder’.
History of the term ‘Entrepreneur’
The term entrepreneur is a French word, and is derived from the French word
“enterprendre”. It means “to undertake”. It is commonly used to describe an individual
who organizes and operates a business or businesses, taking on financial risk to do so.
Around 1700 A.D. the term was used for architects and contractor of public works. In
many countries, the term entrepreneur is often associated with a person who starts his/her
own new business.
Characteristics/Qualities of an Entrepreneur
Entrepreneurs have many of the same character traits as leaders, similar to the Great Man
Theory of Leadership. Entrepreneurs possess several qualities, which according to
Napoleon are 90 attributes. Some of those have been listed below.
Believer in
Independent Opportunity Systematic
Information seeker quality and
& achiever grabber planner
efficiency
Well versed in
Persuasive Independent High IQ, EQ Go – getter &
managerial skill
and and self- and SQ Never say die
and strong team
networker confident levels* spirit
builder
However, there are some negative characteristics as well, some of which have also been
listed below :
Types of Entrepreneurs
Depending upon the level of willingness to create innovative ideas, there can be the following
types of entrepreneurs:
(i) 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. Inventions like the
introduction of a small car ‘Nano’ by Ratan Tata, organised retailing by Kishore Biyani,
making mobile phones available to the common man by Anil Ambani are the works of
innovative entrepreneurs.
(ii) 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. In our country also, a large number of such entrepreneurs are found in
every field of business activity. Development of small shopping complexes is the work of
imitating entrepreneurs. All the small car manufacturers now are the imitating entrepreneurs.
(iii) Fabian Entrepreneurs – Fabian entrepreneurs are those individuals who do not show
initiative in visualising and implementing new ideas and innovations. On the contrary, they
like to wait for some development, which would motivate them to initiate unless there is an
imminent threat to their very existence.
(iv) Drone Entrepreneurs – 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.
(v) Social Entrepreneurs – Social entrepreneurs drive social innovation and transformation
in various fields including education, health, human rights, workers’ rights, environment
and enterprise development. Dr. Mohammed Yunus of Bangladesh who started Gramin
Bank is a case of social entrepreneur.
(vi) Agricultural Entrepreneur – The entrepreneurs who undertake agricultural pursuits are
called Agricultural Entrepreneurs. They cover a wide spectrum of agricultural activities like
cultivation, marketing of agricultural produce, irrigation, mechanization and technology.
(vii) Trading Entrepreneur – As the name itself suggests, the trading entrepreneur
undertakes the trading activities. He/she procures the finished products from the
manufacturers and sells these to the customers directly or through a retailer. These serve as
the middlemen as wholesalers, dealers, and retailers between the manufacturers and
customers.
(x) Inventors & Challenger Entrepreneurs – Inventor entrepreneurs with their competence
and inventiveness invent new products. Their basic interest lies in research and innovative
activities & Challenger entrepreneurs plunge into industry because of the challenges it
presents. When one challenge seems to be met, they begin to look for new challenges.
Skills of an entrepreneur
Business management skills are essential for entrepreneurs to effectively plan, organize,
direct, and control the resources of an organization. These skills can build credibility,
improve efficiency, manage risks, implement effective strategies, create a positive company
culture, and grow a business.
Leadership
Strategic thinking
Budget management
Business acumen
Communication
2. Communication and Listening
Communication skills allow individuals to express thoughts, ideas, and feelings clearly
through speaking, writing, and other forms of expression. Listening skills provide the ability
to understand and retain information and respond appropriately. Both communication and
listening are essential entrepreneurship skills that can make a difference in how you run your
business as they help you to build trust, maintain relationships, resolve conflicts, understand
needs and perspectives, and make informed decisions.
Written communication
Non-verbal communication
Stress management
Active listening
Emotion control
3. Critical and Creative Thinking Skills
Strong critical and creative thinking skills are essential for entrepreneurs to build and expand
their businesses. Critical thinking allows you to objectively analyze information using the
evidence to make informed decisions and solve problems. Creative thinking provides a way
to look at issues from various angles, consider alternative perspectives, and come up with
original ideas.
Analysis
Brainstorming
Visualization
Evaluation
Research
4. Strategic Thinking and Planning Skills
Strategic thinking and planning skills allow entrepreneurs to analyze information, adapt,
manage projects, solve problems, and make informed decisions. These entrepreneurship
skills are vital in helping leaders overcome challenges and ensure efficient allotment of
resources and achievement of goals.
Analysis
Implementation
Flexibility
Attention to detail
Assertiveness
5. Branding, Marketing, and Networking Skills
In today’s competitive business environment, branding, marketing, and networking skills are
essential for scaling the business and boosting opportunities. These skills enable
entrepreneurs to promote and sell products or services. Branding creates a unique and
memorable image of a product, service, or organization, and marketing promotes them to
target consumers. Networking builds relationships and allows individuals to connect with
potential customers, partners, suppliers, or colleagues.
Branding, marketing, and networking skills include:
Collaboration
Communication
Interpersonal skills
Creativity
Collaboration
6. Entrepreneurial Skills in the Workplace
The skills in the workplace refer to qualities that enable individuals to effectively create and
manage their businesses, as well as drive innovation and growth within organizations.
Time management
Finance skills
Sales
Adaptability
Problem-solving
7. Teamwork and Leadership Skills
Teamwork and leadership are highly critical entrepreneurship skills that foster a positive and
collaborative organizational culture, leading to increased employee satisfaction and improved
performance. These qualities can enable leaders to effectively inspire, motivate, work in
teams, and lead the company toward success.
Communication
Emotional intelligence
Empathy
Delegation
Conflict resolution
8. Time Management and Organizational Skills
Great leaders should know how to delegate and prioritize tasks, manage their time and
resources, and maintain a well-structured and efficient work environment. Effective time
management and organization skills can enable you to achieve goals, manage stress, maintain
a healthy work-life balance, and improve well-being and satisfaction.
Prioritizing
Goal setting
Multi-tasking
Decision making
Collaboration
9. Sales Skills
Sales skills are vital for salespeople and valuable for entrepreneurs, as they need to know how
to sell their businesses to potential customers and investors. Developing sales skills can help
entrepreneurs make sales, pitch ideas, negotiate, and create great relationships with their
customers, investors, and stakeholders to build a strong business.
Business acumen
Negotiation
Relationship-building
Data analysis
Social selling
10. Stress Management Skills
Leading a business can take a toll on an entrepreneur’s well-being. They need to know how
to efficiently manage and cope with stress for themselves, their employees, and their
business. Stress management skills allow leaders to maintain good physical and mental
health, enhance personal and professional relationships, and improve the overall quality of
life.
Meditation
Positive thinking
Mindfulness
Sleep hygiene
Exercise
How to Develop Entrepreneurial Skills
Define goals: Establish your business objectives, strengths, weaknesses, and what
you want to achieve
Learn: Podcasts, books, and seminars can be great sources of information to enhance
your skills
Take online courses: Online courses are an excellent way to boost the skills you
want to develop
Look for a mentor: Mentorship can make a significant impact on your life and
career; seek mentorship from successful leaders to enhance your skills
Work hard: Develop a strong work ethic and be consistent in your efforts to grow
Be adaptable: Stay open to change and embrace new ideas and opportunities as they
arise
Foster a growth mindset: Focus on continuous learning and seek out new
opportunities to develop your skills
Examples of Entrepreneurial Skills
Function of an entrepreneur
1.Innovation: Innovation is one of the most important functions of an entrepreneur according
to Schumpeter. An entrepreneur uses information, knowledge and intuition to come up with
new products, new methods of reducing costs of a product, improvement in design or
function of a product, discovering new markets or new ways of organization of industry.
Through innovation, an entrepreneur converts a material into a resource or combines existing
resources into new and more productive configurations. It is the creativity of an entrepreneur
that results in invention [creation of new knowledge] and innovation [application of
knowledge to create new products, services or processes. Systematic innovation means
monitoring the following for innovative opportunity:
i. The unexpected success or failure or any unexpected outside event, (e.g. when the IT
bubble burst the ITES sector started growing.)
ii. Innovation based on process need [e.g. plate based cameras, film based cameras, digital
cameras]
iii. Changes in industry and market structure [e.g. video cassette VCD, DVD, Blue ray disc]
iv. Demographics changes (e.g. increasing number of working women and nuclear families in
most metropolitan cities)
According to Kilby in a developing country even the imitator entrepreneurs are very
important and the entrepreneurial role encompasses the following:
In brief
Entrepreneurship
Entrepreneurship is the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit. The most prominent
example of entrepreneurship is the starting of new businesses.
In economics, entrepreneurship connected with land, labour, natural resources and capital can
generate a profit. The entrepreneurial vision is defined by discovery and risk-taking and is an
indispensable part of a nation’s capacity to succeed in an ever-changing and more
competitive global marketplace.
These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber,
electrician, etc. These people run or own their own business and hire family members or local
employee. For them, the profit would be able to feed their family and not making 100 million
business or taking over an industry. They fund their business by taking small business loans
or loans from friends and family.
This start-up entrepreneur starts a business knowing that their vision can change the world.
They attract investors who think and encourage people who think out of the box. The
research focuses on a scalable business and experimental models, so, they hire the best and
the brightest employees. They require more venture capital to fuel and back their project or
business.
These huge companies have defined life-cycle. Most of these companies grow and sustain by
offering new and innovative products that revolve around their main products. The change in
technology, customer preferences, new competition, etc., build pressure for large companies
to create an innovative product and sell it to the new set of customers in the new market. To
cope with the rapid technological changes, the existing organisations either buy innovation
enterprises or attempt to construct the product internally.
4. Social Entrepreneurship-
This type of entrepreneurship focuses on producing product and services that resolve social
needs and problems. Their only motto and goal is to work for society and not make any
profits.
Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:
Ability to take a risk- Starting any new venture involves a considerable amount of
failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate
and take risks, which is an essential part of being an entrepreneur.
Innovation- It should be highly innovative to generate new ideas, start a company
and earn profits out of it. Change can be the launching of a new product that is new to
the market or a process that does the same thing but in a more efficient and
economical way.
Visionary and Leadership quality- To be successful, the entrepreneur should have a
clear vision of his new venture. However, to turn the idea into reality, a lot of
resources and employees are required. Here, leadership quality is paramount because
leaders impart and guide their employees towards the right path of success.
Open-Minded- In a business, every circumstance can be an opportunity and used for
the benefit of a company. For example, Paytm recognised the gravity of
demonetization and acknowledged the need for online transactions would be more, so
it utilised the situation and expanded massively during this time.
Flexible- An entrepreneur should be flexible and open to change according to the
situation. To be on the top, a businessperson should be equipped to embrace change in
a product and service, as and when needed.
Know your Product-A company owner should know the product offerings and also
be aware of the latest trend in the market. It is essential to know if the available
product or service meets the demands of the current market, or whether it is time to
tweak it a little. Being able to be accountable and then alter as needed is a vital part of
entrepreneurship.
Importance of Entrepreneurship:
Meaning Management makes the entire Entrepreneurship is defined as someone who has
ecosystem of a business organized the ability and desires to establish, administer, and
and structured succeed
Process The method includes surveys, The process includes surveys, planning, and
planning, and operating the business. operating the business.
Discipline Management has a vast spectrum and Entrepreneurship is a single part of the
includes all business functions. management.
Works for Creating a leading position in the Change and renew the existing organizational
market. system and culture.
Entrepreneurs focus on
Entrepreneurship is focused on
identifying business
creating and managing a successful
opportunities and turning them
Focus business. It includes the long-term
into profitable ventures. They
management and growth of that
have a narrower focus on the
business.
initial creation of a business.
1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the issues of industrial
securities. Investment of public savings in industry results in productive utilization of
national resources. Rate of capital formation increases which is essential for rapid
economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in Per Capita Income:
Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources
like land, labour and capital into national income and wealth in the form of goods and
services. They help to increase net national product and per capita income in the country,
which are important yardsticks for measuring economic growth.
3. Generation of Employment:
Entrepreneurs generate employment both directly and indirectly. Directly, self-
employment as an entrepreneur offers the best way for independent and honorable life.
Indirectly, by setting up large and small scale business units they offer jobs to millions.
Thus, entrepreneurship helps to reduce the unemployment problem in the country.
Public sector steel plants and private sector industries by Modis, Tatas, Birlas and others
have put the hitherto unknown places on the international map.
6. Economic Independence:
Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture
indigenous substitutes of hitherto imported products thereby reducing dependence on
foreign countries. Businessmen also export goods and services on a large scale and
thereby earn the scarce foreign exchange for the country.
Such import substitution and export promotion help to ensure the economic
independence of the country without which political independence has little meaning.
These are backward linkages. By increasing the supply of steel, the plant facilitates the
growth of machine building, tube making, utensil manufacturing and such other units.
The economic history of the presently developed countries like America, Germany, and
Japan leads to support the fact that the economy is an effect for which entrepreneurship
is the cause. The crucial role played by the entrepreneurs in the development of the
western countries has made the people of under-developed countries too much conscious
of the significance of entrepreneurship for economic development.
Now people have begun to realise that for achieving the goal of economic development,
it is necessary to increase entrepreneurship both qualitatively and quantitatively in the
country. It is only active and enthusiastic entrepreneurs who fully explore the
potentialities of the country’s available resources land, tech., capital, material etc.
2. Under the conditions of paucity of funds and the problem of imperfect market, the
entrepreneurs are bound to launch their enterprises on a small scale. Also initiator
entrepreneurs are preferred in such regions. Thus, initiation of innovations introduced in
developed regions on a massive scale bring about rapid economic-development in
underdeveloped/developing regions.
4. Generation of employment
Thus, small scale entrepreneurship in such industrial structure plays an important role to
achieve balanced regional development, generation /creator of wealth etc.