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Chapter One What is Entrepreneurship? Generally to express the desire to do something after getting new ideas about something new is called entrepreneurship. It is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence. What is Entrepreneurship? According to Webster Dictionary, “Organize the economical organizations and the ability of taking risk is called entrepreneurship." According to Basu and Moulik, "Entrepreneurship means – a. To employ economic opportunities properly; b. To establish institutions; and c. To make the institution profitable by maintaining it effectively." . What is Entrepreneurship? In final it can be said that, to establish a new institution, new invention in the establishment, taking the risk and the desire and power to take steps to maintain the institution is called entrepreneurship Definition of Entrepreneur The term entrepreneur has derived from the French word Entreprendre that means to take the responsibility or initiative of doing something. In 17th century the word entrepreneur was used to mean the architects and contractors of the Public Works. In 16th century someone who successful did something in the field of military service was called an entrepreneur. At the end of 18th century Oxford Dictionary defined an entrepreneur who worked as a director in a music institution. After that century the term began to change and started to use in the field of economy. Definition of Entrepreneur An entrepreneur is s/he who utilizes capital, labor and other wealth is such a way that their price and importance increase than before. Jean Baptist says, "An entrepreneur is the most important agent of production who provides continuing management and brings together the factors of production. S/he must have judgments, perseverance, the knowledge of the world as well as that of business." Is Entrepreneur a manager? An entrepreneur is such a person who takes initiatives to do something new which adds new dimension to society. A manager is such a person who is involved with supervising all daily activities of an institution. The differences between managers and entrepreneurs are given below: Manager vs. Entrepreneur Topics of Difference Manager Entrepreneur 1.Times consideration: 1.Managers want to do 1. S/he works for long everything immediately. time. S/he makes S/he uses daily, weekly, policies to achieve monthly, and yearly growth for the year reports to evaluate results three to ten. of works. 2. S/he does not depend 2.Enforce of power on 2. S/he depends on others on others and wants others: and applies power on to succeed depending others. on themselves. Topics of Difference Manager Entrepreneur 3. Risk: 3. S/he takes less risk. 3. S/he adopt medium S/he is somehow a type risk. S/he evaluates conservative and wants risk and take the development of opportunity of getting organization. more profit. 4. Structure: 4. S/he always believes in 4. S/he depends on the improvement of organization structure structure. S/he s/he conducts activities determines structure by on the basis of formal and adjusting structure with line structure. environment. 5. Thought 5. Their through are 5. Their thought are relative or unlimited, specific or limited in more tolerant and works scope less to learnt, and with uncertainly. They are them works with security creative and imaginative Topics of Difference Manager Entrepreneur 6. S/he likes one faced 6. S/he communicates in 6. Communication: communication in most the double faced way. S/he cases. S/he wants favorable is ready for both favorable reply. and adverse reaction. 7. His managerial 7. Their managerial 7. Managerial Efficiency: efficiency is very high. efficiency is low. They are They used to having formal generally expert in complex management training. or technical aspect of business. 8. Them communication or 8.Activities: relation is existent in 8. They are to take decision different levels of the whole relating to all activities of organization. the institution. omplex or technical Four Aspects of an Entrepreneur I) Creating something new of value 2) Devotion of time and effort 3) Assuming the Necessary risks 4) Rewards of being an entrepreneur: independence, personal satisfaction, money The Entrepreneurial Decision Process 1.1 to 1.9 million new companies formed each year. Despite recession, inflation, high interest rate, lack of infrastructure, economic uncertainty, and high probability of failure. Entrepreneurial decision process entails a movement from a present lifestyle to forming a new enterprise. Decisions for a Potential Entrepreneur Form new enterprise Change from Desirable present lifestyle 1. Cultural Work environment 2. Sub-cultural 3. Family Disruption 4. Teachers 5. Peers Possible 1. Government 2. Background 3. Marketing 4. Financing 5. Role models Change from Present Lifestyle: Work Environment Research & Development: individuals develop new product ideas and processes and often leave to form their own companies. Marketing: individuals have become familiar with the market and customer’s unfilled need, and leave to start new business to fill these needs. Change from Present Lifestyle: Disruption Companies are formed by people who have retired, relocated or fired. Completion of educational degree is another form of disruption ( not receiving the desired promotion after completion of MBA degree). Form New Enterprise The decision to start a new business occurs when an individual perceives it both desirable and possible. Desirability of New Venture Formation: Culture A culture that values entrepreneurship American culture places high value on being one’s boss, having individual opportunities, being a success and making money-all aspects of entrepreneurship. Some cultures do not value new businesses highly and failure is disgraceful. Desirability of New Venture Formation: Sub- culture Many subcultures that shape value systems operate within cultures. Pockets of entrepreneurial sub-cultures within USA: Route 128 (Boston), Silicon Valley (California), Cleveland, Austin. These subcultures support and promote entrepreneurship as the best occupation. Desirability of New Venture Formation: Family Founders of many companies had parents who valued independence. Independence achieved by company owners, professionals, artists, professors, or farmers permeates their family life. Desirability of New Venture Formation: Teachers Teachers can influence individuals to regard entrepreneurship as desirable and viable career path. The number of entrepreneurship courses a person takes increases the probability of starting a venture. MIT and Harvard are located near Route 128, Stanford in Silicon Valley facilitates entrepreneurship. An areas having a strong education base is strong support factor for entrepreneurial activity. Desirability of New Venture Formation: Peers Entrepreneurial pool and meetings where people can discuss ideas, problems, and solutions spawns more new companies. Possibility of New Venture Formation: Govt. The government contributes by providing infrastructure to help and support a new venture. Roads, communication and transportation systems, utilities, and economic stability. Tax rate. Possibility of New Venture Formation: Background Formal education and previous business experience. Individuals will be more successful in forming businesses in fields where they have worked. Possibility of New Venture Formation: Marketing Presence of sufficient market size is not enough to succeed, marketing know-how matters. Putting together the best total package of product, price, distribution and promotion. Companies are more easily formed when driving force is more from the market demand than a technology push. Possibility of New Venture Formation: Role Models Seeing someone else succeed makes it easier to picture oneself in similar activity. “ If that person can do it, so can I” Possibility of New Venture Formation: Financial Resources Start up money for a new company comes from personal savings, credit, friends, and relatives. Risk capital availability plays a role in growth of entrepreneurial activity. Types of Start-Ups Lifestyle Firm: A small venture that supports the owners and usually does not grow. Foundation Company: A type of company formed from research and development that usually does not go public. High-potential venture: A venture that has high growth potential and therefore receives great investor interest. Role of Entrepreneurship in Economic Development Increasing per capita output and income. Involves initiating and constituting change in the structure of business and society. This change is accompanied by growth and increased output, which allows for more wealth to be divided by the various participants. Innovations stimulate investment interest in the new venture. This new investment works on both the demand and the supply side of the growth equation. The new capital created expands the capacity for growth (supply side), and the resultant new spending utilizes the new capacity and output (demand side). Intrapreneurship vs. Entrepreneurship Intrapreneurship is entrepreneurship within an existing business culture. Existing businesses have the financial resources, business skills, and the marketing and distribution systems to commercialization innovation successfully. However, bureaucracy, focus on short term profits and highly structured organization inhibit creativity and prevent new products from development. Intrapreneurship vs. Entrepreneurship Entrepreneurship bridges the gap between innovation and marketplace. Entrepreneurs may lack managerial skills, marketing capability or financial resources. Their inventions are often unrealistic, requiring significant modifications to be marketable. They also do not know how to interface with the necessary entities: banks, suppliers, customers, venture capitalists, distributors, and advertising agencies. Yet, entrepreneurship is presently the most effective method for bringing new products and services to the market place. The Drawbacks of Entrepreneurship: Uncertainty of Income Risk of losing your entire Investment Long Hours and Hard Work Lower Quality of Life until the business get established High level of stress Complete Responsibility Ten Deadly Mistakes of Entrepreneurship: Business entrepreneurship fail because:- Management Mistakes Lack of Experience Poor financial control Weak marketing efforts Failure to develop a strategic and effective plan Uncontrolled Growth Poor location Improper inventory control Incorrect or unsuitable pricing The inability of to move into entrepreneurial thinking mindset from the previous secured permanent managerial position held. How to avoid failure in a Entrepreneurial business? Know your business in depth. Develop a good, effective and solid Business Plan. Manage your financial resources effectively. Have a thorough and complete financial statement. Learn hire and manage people effectively. Keep physically fit, consume healthy foods, and avoid addictive consumption cigarettes and alcohol.
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