B.Com.-I FUNDAMENTALS OF ENTREPRENEURSHIP
FUNDAMENTALS OF ENTREPRENEURSHIP
INTRODUCTION
The entrepreneurs are key persons of any country for promoting economic
growth and technological changes. Entrepreneurs are backbone of industrial
development. By accepting the importance of entrepreneur, a large amount is
allotted for entrepreneurship development programs in various five year plans
of our nation. Moreover various institutions have been established at state and
national level for entrepreneurship development in India. In the present era,
it is being realized that entrepreneurship contributes to industrial
development of a country in several ways i.e. assembling and harnessing various
inputs, bearing the risks, innovating new techniques of production, increasing
the level of quality etc. Entrepreneurship in the country like India is regarded
as the ultimate determining factor for the economic and industrial development
of the country and leads people towards self-employment. That is why various
universities have introduces a paper entitles "Fundamentals of
Entrepreneurship" at B.Com. Degree since some years as a compulsory paper,
in order to create self-employment opportunities in commerce graduates.
MEANING AND DEFINITION
OF ENTREPRENEUR
An entrepreneur is a person having specific skill, ability, knowledge,
awareness and self-confidence who bears the risk of operating a business in the
face of uncertainty about the future conditions. The word 'entrepreneur' was
applied to business initially by the French economist Richard Cantillien, who
describes an entrepreneur as a person who purchases the means of production for
combining them into marketable products at profit motive in future.
According to J. B. Say, Entrepreneur is a person who is an organizer and
supervisor of a business enterprise and lifts, economic resources out of an
area of lower into an area of higher productivity and greater yield.
According to Joseph A. Schumpeter, An entrepreneur is a person who
introduces innovative changes in an enterprise.
Adam Smith describes an entrepreneur as a person who only provides
capital without taking part in the leading role in enterprise.
Peter Drucker defines entrepreneur as one who always searches for change,
responds to it and exploits it as an opportunity.
Frenk Night defines entrepreneurs as a group of experts who bear the risk
of operating a business in the face of uncertainty about the future conditions
for taking business advantages.
In short, an entrepreneur is a person who thinks to start his own
industrial enterprise for achieving planned return, implements it and manages
as well as makes his uni. profitable by his intelligence, skill and wealth.
CHARACTERISTICS OF AN ENTREPRENEUR
1. Establishment of a business unit:
An entrepreneur establishes his own business unit by accepting the
responsibility of risk. He maintains, manages and develops it and centrals to
its distribution and production.
2. Specific personality
A good entrepreneur has specific personality, as has ability to inspire
confidence in people and to motivate them to work with him.
3. Different from manager, technician and capital provider
An entrepreneur is neither technician nor manager. But having different
personality in compared to them. An entrepreneur can get technician, manager or
capital from market but an entrepreneur cannot be received from the market.
4. Entrepreneur is a person or group of persons
An entrepreneur establishes a business unit for production and marketing,
for which different forms of business organizations are utilized like sole
proprietorship, partnership, joint stock company etc. In sole proprietorship,
an entrepreneur is a person and in other forms, entrepreneur is a group of
persons.
5. Risk of uncertainty
The risk of uncertainty is largely involved in a new venture. An
entrepreneur bears risk in a venture, in which there is not any certainty of
profit.
6. Co-ordinates means of production
Entrepreneur is the economic agent, who co-ordinates means of production-
land, labor and capital for profit motive, due to which the society gets
valuable goods and services.
7. Motive of economic growth
Profit is a backbone of any business activity. Entrepreneur also
establishes a business unit for economic motive. Though he also fulfils social
and psychological motives but the ultimate motive is profit making.
8. Innovative person
The role of entrepreneur has been recognized as a prime source of
innovation. He inspires innovation. By innovation he searches new products,
services, production methods, market etc and helps rapid economic development.
9. Flexibility
Most successful entrepreneurs tend to change if the situation so demands.
They do not hesitate in revising their decisions. They are the people with open
mind and are not rigid.
10. Useful to society and nation -
Entrepreneur plays a vital role in the development of society and nation.
They are useful to us by producing innovative goods and services, promoting new
enterprises, creating employment opportunities etc.
11. Creates new opportunities
An entrepreneur establishes a new business enterprise. From it, new
opportunities are created by his experiences and takes optimum benefit of such
opportunities.
12. Burning desire to excel
An entrepreneur has a burning desire to achieve excel. He has strong
self-confidence to excel achievement. He is result oriented. He enjoys in
accepting challenges. He always tries to do his last best performance.
13. Adjustable to any type of environment
An entrepreneur is easily adjustable to any type of environment. More
over he makes the environment suitable to his business unit.
14. Creation of self-employment -
Entrepreneur establishes a business unit and there by creates
self-employment opportunities.
15. Motivator
An entrepreneur must build a team, keep it motivated and provide an
environment for individual growth and carrier development.
16. Decision making ability
One of the most important functions of an entrepreneur is decision
making. So an entrepreneur must be reasonably intelligent and should have
creative thinking for selecting the best alternative.
17. Leadership ability
An entrepreneur has to get the things done through and by his employees.
So he must provide sound leadership to his employees.
MEANING AND DEFINITION
OF ENTREPRENEURSHIP
Entrepreneur is a person having technical competence, initiative, good
judgment, leadership qualities, creativeness, who establishes an enterprise and
while entrepreneurship is a process undertaken by an entrepreneur to establish
and to develop a new enterprise. It is a process of converting the idea of establishing
an enterprise into its implementation. Peter Drucker defines entrepreneurship
as "Entrepreneurship is neither a science nor an art but it is a practice,
which has a knowledge base."
CHARACTERISTICS OF
ENTREPRENEURSHIP
1. Entrepreneurship is a process
2. It is a creative
3. It is objective oriented activity
4. It is moderate risk taking activity
5. It has an objective of economic welfare
also
6. Closely related with innovation
7. It is organising function
8. Management is the vehicle of
entrepreneurship
9. It is a profession
10. It is result oriented activity
11. Many forms of business organisation can
be used by it
12. Qualities of entrepreneurship can be
developed
13. Many subsidiary services necessary for
entrepreneurship development
COMPARATION OF
DIFFERENT TERMS
Entrepreneur V/S Entrepreneurship
1. Meaning
Entrepreneur is a person who purchases means of production for combining
them into marketable products at profit motive in future, with being the risk
of uncertainty. So entrepreneur refers to a person. Entrepreneurship is a
process of converting the idea of establishing a new enterprise into its
implementation. So entrepreneurship refers to a process.
2. Specific qualities
Entrepreneur needs qualities like creativity, decision-making ability,
leadership, management efficiency, flexibility etc.
Entrepreneurship is the specific quality shown in an entrepreneur due to
which he can establish a new enterprise.
3. Function
The prime function of an entrepreneur is establishment of an enterprise.
So he is the engine of organization.
The prime function of entrepreneurship is to motivate entrepreneur. So it
is an energy like petrol or diesel that creates energy into the engine of an
entrepreneur.
4. Economic point of view
From economic point of view, for entrepreneur the words like initiator,
innovator, leader, planner; risk taker, motivator, organizer etc are used.
From economic point of view, for entrepreneurship the words like
initiative, innovation, leadership, planning, risk-taking, motivation etc are
used.
Thus entrepreneur and entrepreneurship are the wheels of industrial
sector, around which industrial activities are moving.
Entrepreneur V/S Intrapreneur
1. Risk of business
Entrepreneur is an independent industrialist who bears complete risk of
business.
Intrapreneur is semi-independent who does not bear complete risk of
business.
2. Guarantee of return
Entrepreneur collects capital from different sources and he has to give
guarantee of return. Intrapreneur does not collect capital. So he does not need
to give guarantee to lenders.
3. Scope
Entrepreneur manages an enterprise internally as well as externally. So
his scope is widely extended.
Intrapreneur is a person of the enterprise, having higher designation in
the company. So his scope is comparatively limited than entrepreneur.
Thus entrepreneur and intrapreneur both are innovator. Both establish an
enterprise and also manage it. But both's reference of working is different and
the level of bearing risk in business is different.
Entrepreneurship V/S Self-employment
1. Meaning
Entrepreneurship means risk bearing ability, desire to establish
industrial unit, creativity and innovative ability shown in an entrepreneur.
Self-employment means to establish a business or industrial unit by own
self, organize it and manage for profit motive.
2. Size of unit
Entrepreneurship leads entrepreneur from small-scale industry to
large-scale industry.
In self-employment generally the size of unit is comparatively small. By
self-employment tiny scale, cottage or home industry is started on small scale.
3. Creation of new opportunities
By entrepreneurship new and new opportunities can be created
continuously.
In self-employment there is lower probability of creating new and new
opportunities continuously.
Entrepreneur V/S Capitalist
1. Meaning
Entrepreneur is a person, who always searches for change, responds to it
and exploits it as an opportunity.
While Capitalist is a person who provides financial sources.
2. Function
The prime function of an entrepreneur is to establish an enterprise and
to manage it.
While the prime function of a capitalist is to provide capital in various
forms to an entrepreneur for starting a new enterprise and to develop it.
3. Risk of uncertainty
There is higher degree of risk of uncertainty in entrepreneur. While
there is lower degree of risk of uncertainty in capitalist.
4. Qualities
In entrepreneur creativity, motivation, clarity, intelligence etc
qualities are show.
While in capitalist qualities other than lending capital is not shown.
5. Role
The role of entrepreneur is very wider than the role of capitalist.
While the role of capitalist is very limited than the role of
entrepreneur.
Entrepreneur V/S Manager
1. Meaning
Entrepreneur is a person who establishes a business unit and manages it
for profit motive.
While manager is a person who manages a business unit established by an
entrepreneur.
2. Function
Important functions of an entrepreneur are promotion of a new unit, risk
taking, decision-making, leadership and planning.
While important functions of a manager are planning, organizing,
staffing, co-coordinating and controlling.
3. Risk and uncertainty
Risk and uncertainty are largely involved in entrepreneur.
While the level of risk and uncertainty are comperatively lower in
manager.
4. Involvement
Manager is involved in entrepreneur.
While entrepreneur is not involved in manager.
5. Prime motives
Entrepreneur wants freedom, goal oriented, self-reliance and
self-motivated.
While manager wants promotion, traditional corporate rewards and he is
power motivated.
MPORTANCE OF
ENTREPRENEURSHIP
1. He bears the
uncertainty of reward
2. He bears the risk of erosion of capital
fund
3. Creation of useful goods and services for
consumers
4. Creation of raw materials and semifinalist
goods for customers
5. Increases opportunity of employment
6. Remarkable role in economic and industrial
development of a country
7. Gives benefit of innovation to the Society
and Nation
8 Establishes stability in society
9. Plays important role in balanced
regional development
10. Earnings of foreign exchange by export
promotion
11. Optimum utilization of national resources
12. Pays taxes to government
13. Development of subsidiary industries
14. Raise the living standards of society
FUNCTIONS OF
ENTREPRENEUR
1. Search of new ideas
2. Procure the factor of production
3. To establish and industrial enterprise
4. To manage business
5. To develop strategies
6. To assume risk of uncertainty
7. To develop business
8. To take business decisions
9. To apply innovation
10. To provide leadership
11. To meet social responsibility
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