INTRODUCTION TO ENTREPRENEUR

Entrepreneur is a person who undertakes a business venture by combining the resources for production of goods and services and selling them to earn a profit. Entrepreneur is a person who has already started an enterprise or is in the process of starting an enterprise. “Entrepreneur is one who ORGANISES, MANAGES, and ASSUMES THE RISK of a business enterprise”. Entrepreneur is an action oriented highly motivated individual with a strong desire to be the successful who take risks to achieve goal.

} Entrepreneur is an individual responsible for the operation of a business including,

ü Choice of the product

ü Mobilization of resources

ü Decision

ü Prices

ü Market

ü Employment of labour

ü Extending or reducing the scope of his business.

Definition:

According to Webster’s……… “An Entrepreneur is defined as an individual who forecasts future demand for the product or services and arranges business enterprise to respond to their demand”

According to J B Say …….“Entrepreneur is an economic agent to unities all the means of production”

According to David McClleland: “An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker”.

ENTREPRENEURSHIP

} Entrepreneurship is the activity performed by an entrepreneur to organize and run an enterprise (Business).

ENTREPRENEURSHIP=Entrepreneur + Enterprise

} Entrepreneur is generally to be the owner, manager of an enterprise.

} Entrepreneurship is the activity of an entrepreneur which includes all the activities performed from the inception stage of an enterprise till its death.

} Entrepreneurship is a person-oriented task where the entrepreneur creates a small world of his own and becomes the master of his own business universe.

} Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. It is a knack of sensing opportunity where others see chaos, contradiction and confusion. Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive benefits by setting up a venture. It comprises of numerous activities involved in conception, creation and running an enterprise.

Definition….

} According to J.A Schumpeter ,

“Entrepreneurship is a creative activity , the entrepreneur being an innovator who introduces something new into the economy , a new method of production not yet tested by experience in the branch of manufacture concerned ,a product with which customers are not familiar , a new source of raw materials and other similar innovation”.

} According to Peter Drucker

“Entrepreneurship is defined as ‘a systematic innovation, which consists in the purposeful and organized search for changes, and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation.’

} According to A.H Cole

“Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or organize a profit oriented business unit for the production for distribution of economic goods and services.”

7 key Qualities of Entrepreneur

Ø Inner Drive to succeed

Entrepreneurs are driven to succeed and expand their business. They see the bigger picture and are often very ambitious. Entrepreneurs set massive goals for themselves and stay committed to achieving them regardless of the obstacles that get in the way.

Ø Strong Belief in themselves

Successful entrepreneurs have a healthy opinion of them-selves and have often have a strong and assertive personality. They are focused and determined to achieve them.

Ø Search for New Ideas and innovation

All entrepreneurs have a passionate desire to do things better and to improve their products or service .They are constantly looking for ways to improve .They are creative, innovative and resourceful.

Ø Openness to change

Entrepreneurs know the importance of keeping on top of their industry and the only to being a number one is to evolve and change with the times. They are up to date with the latest technology or service technique and are always ready to change if they see a new opportunity arise.

Ø Competitive by Nature

Successful entrepreneurs thrive on competition .The only way to reach their goals and live up to their self-imposed high standards is to compete with other successful businesses.

Ø Highly Motivated and Energetic

Entrepreneurs are always on the move, full of energy and highly motivated. They are driven to succeed and have an abundance of self-motivation. The high standard and ambition of many entrepreneurs demand that they have to be motivated!

Ø Accepting of constructive criticism and rejection

Innovative entrepreneurs are often at the forefront of their industry. They readjust their path if the criticism is constructive and useful to their overall plan. Also the best entrepreneurs know that the rejection and obstacles are a part of any leading business and they deal with them appropriately.

SOME MORE CHARACTERISTICS / QUALITY OF AN ENTREPRENEUR

Desire to Excel:

The entrepreneur should always engage in competitions with self-imposed standards with himself to beat his last best performance. According to Mc Clelland, this high achievement motive strengthened him to overcome the obstacles, suppress anxieties and repair misfortunes. The entrepreneur must have a strong desire to be a winner.

Hard Work:

Entrepreneurs who successfully build new enterprises possess an intense level of strong determination and willingness to work hard. They possess a capacity to work for long hours and in spurts of several days with less than normal amount of sleep.

Self Confidence:

Entrepreneurs must have confidence and belief in them to achieve their desired objectives. They strongly believe that they can beat anyone in the field.

Initiative:

An entrepreneur must have initiative seeking personal responsibility for actions and use the available resources for optimisation of objectives. They take full credit for the success and assume full responsibility for the failure of the enterprise.

Moderate Risk-Taker:

An entrepreneur must be a moderate risk taker and learn from failures. The successful entrepreneurs are neither high risk takers, nor gamblers. They work in between the two extremes. They take moderate challenging risk to attain moderate returns which are influenced within their abilities and decisions.

Motivation:

An entrepreneur should have a strong motivation towards the achievement of a task and must be able to get things done by others. He should be a person who likes working with people and has skills in dealing with them.

Optimistic:

Entrepreneurs do not believe that the success or failure of a new business venture depends mostly upon luck or fate or external uncontrollable factors. They are highly optimistic about the success of the enterprises. They use positive knowledge to support their thinking. They always look at the brighter side of the situation.

Analytical Ability:

Entrepreneur must be realistic in their approach. They should not be affected by the personal likes and dislikes. At the time of crisis, they must select experts rather than their friends and relatives to solve the problems. They must analyse the problem in detail before taking any decisions.

Mental Ability:

Mental ability refers to the inner strength of an entrepreneur which helps him to reach his goal. It is that ability which helps him to quickly respond to difficult situation. It consists of intelligence and creative thinking of an entrepreneur.

Communication Ability:

An entrepreneur must be good with the art of communication. It is that skill through which both the sender and receiver understand each other and are being understood. Entrepreneurs are required in many situations to influence customers, employees, suppliers, creditors, and government and make them think in his way and act accordingly. An entrepreneur who can effectively communicate and convince the above people will be more likely to succeed than the entrepreneur who does not.

Flexibility:

Entrepreneurs should be flexible in their decisions in the sense that they should not be very rigid in the decision making process. If the situation demands a change in the decision that will be beneficial to the enterprise, then after analysing the pros and cons of the decision, the entrepreneur should revise or modify or change the decisions.

Independence:

Successful entrepreneurs do not like to be guided by others. They prefer to work in an environment free from interference. They like to be independent in the matters of decision making of their own business.

15. Leadership:

An entrepreneur must have an ability to lead so that he can induce the people to work with confidence and zeal. It is an aid to authority and helps in better utilization of manpower.

16. Good Human Relations Ability:

Entrepreneurs must have the abilities to maintain and establish good relations with customers, employees, suppliers, financiers and other people related with the business to run it effectively and efficiently. An entrepreneur who maintains good human relations is much more likely to succeed in his business than the individual who does not practice such relation.

SKILLS REQUIRED FOR AN ENTREPRENEUR

A successful entrepreneur must have knowledge and skill. Skill is the ability to translate the knowledge into action/ practice. An entrepreneur should have the following skill

Conceptual Skills.
Technical Skills.

Human Relation Skill
Communication Skill
Diagnostic Skill
Decision-Making Skill
Marketing Skill
Management Skill
Other Skill
Project Development Skill

Difference between Entrepreneur and Manager

Bases of Difference	Entrepreneur	Manager
Motive	The main motive of an entrepreneur is to start a venture by setting up an enterprise. He understands the venture for his personal gratification.	But, the main motive of a manager is to render his services in an enterprise already set up by someone else i.e., entrepreneur.
Status	An entrepreneur is the owner of the enterprise.	A manager is the servant in the enterprise owned by the entrepreneur.
Risk Bearing	An entrepreneur being the owner of the enterprise assumes all risks and uncertainty involved in running the enterprise.	A manager as a servant does not bear any risk involved in the enterprise.
Rewards	The reward an entrepreneur gets for bearing risks involved in the enterprise is profit which is highly uncertain.	A manager gets salary as reward for the services rendered by him in the enterprise. Salary of a manager is certain and fixed.
Innovation	Entrepreneur himself thinks over what and how to produce goods to meet the changing demands of the customers. Hence, he acts as an innovator also called a ‘change agent’	But, what a manager does is simply to execute the plans prepared by the entrepreneur. Thus, a manager simply translates the entrepreneur’s ideas into practice.
Qualifications	An entrepreneur needs to possess qualities and qualifications like high achievement motive, originality in thinking, foresight, risk -bearing ability and so on.	On the contrary, a manager needs to possess distinct qualifications in terms of sound knowledge in management theory and practice.

EVOLUTION OF THE CONCEPT OF ENTREPRENEUR

The word ‘entrepreneur’ is derived from the French word entreprendre. It means ‘to undertake’.

Thus, entrepreneur is the person who undertakes the risk of new enterprise. Its evolution is as follows.

} EARLY PERIOD: The earliest definition of the entrepreneur as a go-between is Marco Polo. He tried to establish trade route to the far East. He used to sign a contract with a venture capitalist to sell his goods. The capitalist was the risk bearer. The merchant adventurer took the role of trading. After his successful selling of goods and completing his trips, the profits were shared by the capitalist and the merchant.

} MIDDLE AGES: The term entrepreneur was referred to a person who was managing large projects. He was not taking any risk but was managing the projects using the resources provided. An example is the cleric who is in charge of great architectural works such as castles, public buildings, cathedrals etc.

} 17^th CENTURY: An entrepreneur was a person who entered into a contractual arrangement with the Govt. to perform a service or to supply some goods. The profit was taken (or loss was borne) by the entrepreneur.

} 18^th CENTURY: It was Richard Cantillon, French Economist, who applied the term entrepreneur to business for the first time. He is regarded by some as the founder of the term. He defined an entrepreneur as a person who buys factor services at certain prices with a view to sell them at uncertain prices in the future

} 19^th CENTURY: The entrepreneurs were not distinguished from managers. They were viewed mostly from the economic perspective. He takes risk, contributes his own initiative and skills. He plans, organizes and leads his enterprise.

} 20^th CENTURY: During the early 20^th century Dewing equated the entrepreneur with business promoter and viewed the promoter as one who transformed ideas into a profitable business. It was Joseph Schumpeter who described an entrepreneur as an innovator. According to him an entrepreneur is an innovator who develops untried technology.

} 21th CENTURY: Research Scientists live De Bone pointed out that it is not always important that an individual comes up with an entirely new idea to be called an entrepreneur, but if he is adding incremental value to the current product or service, he can rightly be called an entrepreneur.

FUNCTIONS OF ENTREPRENEUR

i. Entrepreneurial functions consisting of organization building, risk taking and innovation.

ii. Promotional functions consisting of discovery of idea, detailed investigation; assembling of requirements and financing the proposition.

iii. Managerial functions consisting of planning, organizing staffing, directing, coordinating and controlling.

iv. Commercial functions representing production, finance marketing, accounting and personnel.

Enterprise

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 overall economic Development.

Fig.1

TYPES OF ENTREPRENEURS

Entrepreneurs may be classified in a number of ways.

A. ON THE BASIS OF TYPE OF BUSINESS.

Entrepreneurs are classified into different types. They are

1) Business Entrepreneur: He is an individual who discovers an idea to start a business and then builds a business to give birth to his idea.

2).Trading Entrepreneur: He is an entrepreneur who undertakes trading activity i.e; buying and selling manufactured goods.

3) Industrial Entrepreneur: He is an entrepreneur who undertakes manufacturing

activities.

4) Corporate Entrepreneur: He is a person who demonstrates his innovative skill in organizing and managing a corporate undertaking.

5) Agricultural Entrepreneur: They are entrepreneurs who undertake agricultural activities such as raising and marketing of crops, fertilizers and other imputs of agriculture. They are called agripreneurs.

B. ON THE BASIS OF USE OF TECHNOLOGY: Entrepreneurs are of the following types.

1) Technical Entrepreneur: They are extremely task oriented. They are of craftsman type. They develop new and improved quality goods because of their craftmanship. They concentrate more on production than on marketing.

2) Non-Technical Entrepreneur: These entrepreneurs are not concerned with the technical aspects of the product. They develop marketing techniques and distribution strategies to promote their business. Thus they concentrate more on marketing aspects.

3) Professional Entrepreneur: He is an entrepreneur who starts a business unit but does not carry on the business for long period. He sells out the running business and starts another venture.

C. ON THE BASIS OF MOTIVATION:

Entrepreneurs are of the following types:

1) Pure Entrepreneur: They believe in their own performance while undertaking business activities. They undertake business ventures for their personal satisfaction, status and ego. They are guided by the motive of profit. For example, Dhirubhai Ambani of Reliance Group.

2) Induced Entrepreneur: He is induced to take up an entrepreneurial activity with a view to avail some benefits from the government. These benefits are in the form of assistance, incentives, subsidies, concessions and infrastructures.

3) Motivated Entrepreneur: These entrepreneurs are motivated by the desire to make use of their technical and professional expertise and skills. They are motivated by the desire for self-fulfillment.

4) Spontaneous Entrepreneur: They are motivated by their desire for self-employment and to achieve or prove their excellence in job performance. They are natural entrepreneurs.

D. ON THE BASIS OF STAGES OF DEVELOPMENT: They may be classified into;

1) First Generation Entrepreneur: He is one who starts an industrial unit by means of his own innovative ideas and skills. He is essentially an innovator. He is also called new entrepreneur.

2) Modern Entrepreneur: He is an entrepreneur who undertakes those ventures which suit the modern marketing needs.

3) Classical Entrepreneur: He is one who develops a self supporting venture for the satisfaction of customers’ needs. He is a stereo type or traditional entrepreneur.

E. CLASSIFICATION ON THE BASIS OF ENTREPRENEURIAL ACTIVITY: They are classified as follows:

1) Novice: A novice is someone who has started his/her first entrepreneurial venture.

2) Serial Entrepreneur: A serial entrepreneur is someone who is devoted to one venture at a time but ultimately starts many. He repeatedly starts businesses and grows them to a sustainable size and then sells them off.

3) Portfolio Entrepreneurs: A portfolio entrepreneur starts and runs a number of businesses at the same time. It may be a strategy of spreading risk or it may be that the entrepreneur is simultaneously excited by a variety of opportunities.

F. CLASSIFICATION BY CLARENCE DANHOF: Clarence Danhof, On the basis of American agriculture, classified entrepreneurs in the following categories:

1) Innovative Entrepreneurs: They are generally aggressive on experimentation and cleverly put attractive possibilities into practice. An innovative entrepreneur, introduces new goods,

inaugurates new methods of production, discovers new markets and reorganizes the enterprise.

Innovative entrepreneurs bring about a transformation in lifestyle and are always interested in introducing innovations.

2) Adoptive Or Imitative Entrepreneurs: Imitative entrepreneurs do not innovate the changes themselves, they only imitate techniques and technology innovated by others. They copy and learn from the innovating entrepreneurs. While innovating entrepreneurs are creative, imitative entrepreneurs are adoptive.

3) Fabian Entrepreneurs: These entrepreneurs are traditionally bounded. They would be cautious. They neither introduce new changes nor adopt new methods innovated by others entrepreneurs. They are shy and lazy. They try to follow the footsteps of their predecessors. They follow old customs, traditions, sentiments etc. They take up new projects only when it is necessary to do so.

4) Drone Entrepreneurs: Drone entrepreneurs are those who refuse to adopt and use opportunities to make changes in production. They would not change the method of production already introduced. They follow the traditional method of production. They may even suffer losses but they are not ready to make changes in their existing production methods.

There is another classification of entrepreneurs. According to this, entrepreneurs may be broadly classified into commercial entrepreneurs and social entrepreneurs.

Commercial Entrepreneurs: They are those entrepreneurs who start business enterprises for their personal gain. They undertake business ventures for the purpose of generating sales and profits. Most of the entrepreneurs belong to this category.

Social Entrepreneurs: They are those who identify, evaluate and exploit opportunities that create social values and not personal wealth. Social values refer to the basic long standing needs of society. They focus on the disadvantaged sections of the society. They play the role of change agents in the society. In short, social entrepreneurs are those who start ventures not for making profits but for providing social welfare.

RISKS INVOLVED WITH ENTREPRENEURSHIP

1) FINANCIAL RISK: The entrepreneurship has to invest money in the enterprise on the expectation of getting in return sufficient profits along with the investment. He may get attractive income or he may get only limited income. Sometimes he may incur losses.

2) PERSONAL RISK: Starting a new venture uses much of the entrepreneur’s energy and time.He or she has to sacrifice the pleasures attached to family and social life.

3) CARRIER RISK: This risk may be caused by a number of reasons such as leaving a successful career to start a new business or the potential of failure causing damage to professional reputation.

4) PSYCHOLOGICAL RISK: Psychological risk is the mental agonies an entrepreneur bears while organizing and running a business venturesome entrepreneurs who have suffered financial catastrophes have been unable to bounce back.

FACTORS AFFECTING ENTREPRENEURIAL GROWTH

There are large number of varied factors which contribute to the growth of entrepreneurship. These factors can be broadly classified into five.

Ø PSYCHOLOGICAL FACTORS: - Inspiration for achievement prepares an entrepreneur to set higher goals and achieve them. The important psychological factors influencing entrepreneurial growth may be outlined as below:

(A) Need for Achievement: - Need for achievement means the drive to achieve a goal. People having need for achievement will be so much self – confident that they do not believe in mere luck. If an individual has need for achievement, he will become a successful entrepreneur.

(B) Personal Motives: - These have been found to be one of the crucial factors responsible for entrepreneurship amongst individuals. Bill Gates dreamt that one day he would become the richest person. His dream became a reality later.

(C) Recognition: - Many people become successful entrepreneurs just for getting recognition from others.

(D) Need of Authority: - ‘Need of authority’ will inspire men to work. When they become entrepreneurs, they can exercise authority over managers, employees etc.

Ø CULTURAL FACTORS: - Culture consists of (1) Tangible man – made objects like furniture, buildings etc.., (2). Intangible concepts like Laws, morals, knowledge etc.., (3) Values and behaviour acceptable within the society. The important cultural factors influencing entrepreneurial growth are briefly explained as follows:

(A) Culture: - Culture is closely related with accepted values and human behaviour. For e.g. some societies have customs of polygamy and some have not.

(B) Religious Belief: - According to Max Weber, entrepreneurism is a function of religious belief and the impact of religion shapes the entrepreneurial culture. He emphasized that the entrepreneurial energies are exogenous supplied by means of religious belief.

(C) Minority Groups: - Hoselitz explained that the supply of entrepreneurship is governed by cultural factors, and culturally minority groups are the spark plugs of entrepreneurial and economic development. Minority groups like the Jews and Greeks in Medieval Europe, the Lebanese in West Africa, the Indians in East Africa has important roles in promoting economic development.

(D) Spirit of Capitalism: - It guides the entrepreneur to engage in activities that can bring more and more profits. The profit motive character coupled with the attitude towards acquisition of money urges the individual to start new venture.

Ø SOCIAL FACTORS: - What mould a man into an entrepreneur is the sociological and environmental factors during childhood, and at the school, personal experience in adult life at the college and job environments, the mobility, occupation and support from parents. The social factors include:

(A) Legitimacy of Entrepreneurship: - System of norms and values within a socio – cultural setting is responsible for the emergence of entrepreneurship. The degree of approval or disapproval granted to entrepreneurial behaviour will influence its emergence and its characteristics if it does emerge.

(B) Social Marginality: - Individuals or groups on the perimeter of a given social system or between two social systems provide the personnel to assume the entrepreneurial roles. Social marginality is likely to promote entrepreneurship are largely determined by two factors, namely the legitimacy of entrepreneurship and social mobility.

(C) Family, Role Models and Association with Similar Type of Individuals: - If an individual has a supportive family, he or she is more likely to become an entrepreneur. Similarly, if an individual has role models who have been successful in entrepreneurship, certainly, he may be motivated to start ventures. If a person is in association with entrepreneurs, this may add to his or

her desire of setting up a new venture. Reliance, Tata, Birla etc. are the industries depend upon family based inheritance. Roberts (1991) has developed the idea of the ‘entrepreneurial heritage ‘

to describe the importance of the family background for the entrepreneur. This heritage includes

factors such as the father’s occupation, the family work ethic and religion, family size and the first born son, growing up experience and so on.

(D) Caste System: - Certain religions and caste encourage the growth of entrepreneurial talent. Some religious communities like the parsees, marwaris and sindhees seem to have an affinity for entrepreneurial activity. The caste system in Hindu society has promoted to the growth of business and professional skills.

(E) Occupation :- Those born in rich families with silver spoons in their mouth have not only an advantage of having financial resources for carrying out business but also learn the business skill by continuous interaction and contacts with parents, customers, employees and visitors in family shops, offices and homes.

(F) Education and Technical Qualifications: - Education is the best means of developing man’s resourcefulness which encompasses different dimensions of entrepreneurship. It may be expected that the high level of education may enable the entrepreneurs to exercise their entrepreneurial talent more efficiently and effectively.

(G) Social Status: - Every human being aspires for a high social status and once he achieves a reasonable level, his aspirations and desires for its start getting multiplied. People work hard to maintain their status as it also contributes to their entrepreneurial growth.

(H) Social Responsibility: - It is the obligation to the society in which the business enterprise operates. An entrepreneur generates employment for others besides helping himself.

Ø ECONOMIC FACTORS: - Economic factors also influence the growth of entrepreneurship. The important economic factors are:

(A)Infrastructural Facilities: - Entrepreneurship development requires certain basic infrastructure like power, transportation, communication, technical information etc. These provide external economies and improve the efficiency of investments by entrepreneurs. These infrastructural facilities are scarce in less developed countries. The entrepreneurs themselves have to procure these facilities at their own cost. They have to obtain these facilities at higher costs. This will greatly discourage the entrepreneurship development. In advanced countries, those who are desirous of starting an enterprise will find no difficulty in procuring the infrastructural facilities at reasonable costs.

(B) Financial Resources: - Finance is the life blood of business activity. Capital is required to obtain materials, machinery, equipment, etc. and to undertake innovation. Capital is regarded as lubricant to the process of production. The lack of financial resources discourages the youth and potential entrepreneurs to start new ventures. Hence, the need for fixed and working capital should be adequately met if new entrepreneurs are to come forward and grow.

(C) Availability of Material and Know – How: - Entrepreneurship is encouraged only if there is an adequate supply of materials and know-how. Easy availability of materials attracts more individuals towards entrepreneurship. Technical know-how is essential for innovation. With technical knowledge, men discover more and sophisticated techniques of production.

(D) Labour Conditions: - The quality rather than quantity of labour is another factor which influences the emergence and growth of entrepreneurship. The availability of cheep labour positively affects entrepreneurship. Labour problem can be solved not by capital intensive technologies but by increasing their mobility, by offering them facilities, incentives and concessions in every remote corner of the country.

(E) Market: - The size and composition of market influence entrepreneurship in their own ways. Practically, monopoly in a particular product in a market becomes more influential for entrepreneurship than a competitive market.

(F) Support System: - Ability, initiative and support systems include financial and commercial institutions, research, training, consultancy services, ancillary industry etc.

(G) Government Policy: - The socio- political and economic policies of the government inhibit or foster entrepreneurial growth. Land and factory sheds at concessional rates, adequate sources of power, supply of materials and other physical facilities should be provided by the government to facilitate the setting up of new enterprises. The government has a dominant role to play in the industrial development of backward regions with a view to attain a balanced regional development.

Ø PERSONALITY FACTORS: - The supply of entrepreneurship in a society is largely influenced by the presence of individuals with the initiativeness, foresightedness and organizing and managerial competence. The following personality factors contribute to the entrepreneurial development:

(A). Personality: - The entrepreneurial personality comprises of the person, his skills, styles and motives. Impressive personality and individual skill help to develop entrepreneurship. These qualities are required for entrepreneurs because they have to work with officers, managers, engineers, labourers, customers, investors, govt. officers, ministers etc.

(B). Independence:-Another personality factors which influences entrepreneurship is independence. An entrepreneur works out plans on his own, searches and explores resources and experiences and uses inner urge to make the enterprise a success instead of waiting for suggestions or directions from others.

(C). Compulsion: - Certain compelling reasons also force the people to become entrepreneurs. These include: (a) unemployment or dissatisfaction with existing job or occupation, (b) to use technical or professional knowledge and skills, (c) to put the idle funds to use. A large number of technically qualified people after gaining initial experience and confidence and not being satisfied by their growth in the profession have a compulsive reason to try entrepreneurship.

BARRIERS TO ENTREPRENEURSHIP

Entrepreneurial development is very slow in under developed and developing countries. This is due to the presence of several factors. Gunnar Myrdal pointed out that Asian societies lack entrepreneurship not because they lack money or raw material but because of their attitudes. These barriers to entrepreneurship are classified into three as follows:

A. ENVIRONMENTAL BARRIERS

1) Non-Availability of Raw Material: - Non-availability of raw materials especially during peak season is one of the obstacles inhibiting entrepreneurship. This leads to competition for raw material.

2) Lack of Skilled Labour: - This is the most important resource in any organization. Unfortunately, desired manpower may not be available in an organization. This is either due to the lack of skilled labour or due to lack of committed or loyal employees in the organization.

3) Lack of Good Machinery: - Good machines are required for the production of goods, because of rapid technological developments, machines become obsolete very soon. Small entrepreneurs find it difficult to get large amount of cash for installing modern machinery.

4) Lack of Infrastructure: - Lack of infrastructure facilities is a major barrier to the growth of entrepreneurship particularly in under developed and developing economies. The infrastructural facilities include land and building, adequate and cheap power, proper transportation, water and drainage facilities etc.

5) Lack of Fund: - There are various methods by which an entrepreneur arranges for funds, e.g., own savings, borrowings from friends and relatives, banks and other financial institutions. Many people do not enter into entrepreneurial activities because of lack of funds.

6) Other Environmental Barriers: - Lack of business education, Lack of motivation from government, corruption in administration, high cost of production etc. are the other environmental barriers that inhibit the growth of entrepreneurship in underdeveloped countries.

B PERSONAL BARRIERS

Personal barrier are those barriers that are caused by emotional blocks of an individual. Some

of the personal barriers may be outlined as below:

1) Unwillingness to Invest Money: - Even though people have money, still they do not come in entrepreneurship. They are not willing to take the risk of investing money in business.

2) Lack of Confidence: - Many people thing that they lack what it takes to become an entrepreneur. They feel that they could not master all the skills. Thus most people are reluctant to become entrepreneurs.

3) Lack of Motivation: - When an individual starts a new venture, he is filled with

enthusiasm and drive to achieve success. But when he faces the challenges of real business or bears

loss, or his ideas don’t work, he loses interest or motivation.

4) Lack of Patience: - The desire to achieve success in the first attempt or to become rich very soon is the prime motivating factor of modern youth. When such dreams do not come true , they lose interest. This gradually drives to fail in business.

5) Inability to Dream: - Entrepreneurs, who are short on vision or become satisfied with what they achieve, sometimes lose interest in further expansion/growth of business.

C SOCIAL BARRIERS

The social attitude inhibits many people even from thinking of starting a business. The important social barriers are as follows.

1) Low Status: - The society things that entrepreneurs are the people who exploit the society. Thus the attitude of the society towards entrepreneurs is not positive.

2) Custom and Tradition of People: - Most people want a real job. Even parents who are entrepreneurs wouldn’t like their children to be entrepreneurs. Thus lack of support from society

and family hinder the growth of entrepreneurs.

FACTORS FAVOURING ENTREPRENEURSHIP/ MOTIVATIONAL FACTORS OF ENTREPRENEURSHIP

1. Developed Infrastructure Facilities:

Availability of infrastructure reduces the cost & efforts and improves viability of projects through higher profit margins.

2. Financial Assistance:

Easy availability of cheap funds is vital for promoting entrepreneurship.

3. Protective and Promotional Policies:

Most of the entrepreneurship projects start very small and have no resilience. They are extremely vulnerable to competitors, market, money markets, etc., for considerable time. Favorable Govt. policies shelter them from such vagaries.

4. Growth of Education:

Science, Technology & Management – Growth of education is believed to be promoting entrepreneurship. However, there are enough examples to suggest otherwise. A very large proportion of first generation entrepreneurs are low educated. Take the case of Microsoft Chairman Mr Bill Gates or Reliance Founder Mr Dhirubhai Ambani. (We also have Mr Narayan Murthy and Mr Ajim Premji to balance this scale). On a wider spectrum, Kerala, the most literate state and West Bengal, another state high on literacy front, are least entrepreneurial states where as Punjab, with 5 rank from bottom was top on entrepreneurial charts.

5. Risk Taking Abilities:

Risk taking ability is one of the pillars of entrepreneurial spirits.

6. Hunger for Success (Capitalistic View):

Fire in the belly and dreams of riches is what drives most entrepreneurs on this risky path. Any person content with what he has would take the easier route of salaries job.

7. Environment/Culture Impact:

Entrepreneurship is contagious. Communities like Punjabis and Marwari’s are historically entrepreneurial. They are known for seeking and exploiting business opportunities in most remote areas. It is a culture that propels them.

8. Social Security:

Social security acts as a safety net against failure of enterprise. Social security guarantees basic ‘roti, kapada aur makan’ in case of failure. Entrepreneurial spirit of United States is born partly out of this security.

9. Technical/Industrial Training Facilities:

Industrial Training facilities on one hand generate skilled manpower so vitally required for setting up enterprises while on the other hand they are also nursery for future entrepreneurs. Among the educated entrepreneurs, a majority is product of technical institutes from IIT to ITI (Tier I to Tier III institutes).

10. Globalization:

Globalization has provided another avenue for business. Many dare devils have taken a head– along plunge into this uncharted water and have written new success stories.

ROLE OF ENTREPRENEURSHIP IN DEVELOPMENT OF ECONOMY

Entrepreneurship is one of the most important inputs in the economic development of a country. Entrepreneur plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy are discussed as follows.

(1) Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their own as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial activities leads to value addition and creation of wealth, which is very essential for the industrial and economic development of the country.

(2) Creates Large-Scale Employment Opportunities:

Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. With the setting up of more and more units by entrepreneurs, both on small and large-scale numerous job opportunities are created for others. As time passes, these enterprises grow, providing direct and indirect employment opportunities to many more. In this way, entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation.

(3) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to more development of backward regions and thereby promotes balanced regional development.

(4) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial development normally leads to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.

(5) Wealth Creation and Distribution:

It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy.

(6) Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product as well as per capita income of the people in a country. Increase in gross national product and per capita income of the people in a country, is a sign of economic growth.

(6) Improvement in the Standard of Living:

Increase in the standard of living of the people is a characteristic feature of economic development of the country. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.

(7) Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.

(8) Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximize profits by innovation. When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country.

(9) Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area

INTRAPRENEURSHIP

Intra-preneurship is defined as entrepreneurship within an existing business set– up. That is to say – Intrapreneurship is corporate entrepreneurship. When a corporation indulges in entrepreneurial activities, like diversification into new businesses, it is called intrapreneurship.

Intrapreneur is a manager who focuses on innovation and creativity; who brainstorms, dreams and puts ideas into profitable venture by operating within the organisational environment.

It gives managers the freedom to try new ideas by employing firm’s resources in a unique way.

CHARACTERISTICS OF AN INTRAPRENEUR

An intrapreneur is not far removed from an entrepreneur. The major difference being that an entrepreneur risks his own money where as an intrapreneur works with his employer’s money. Thus, the risk level of an intrapreneur is considerably reduced.

1. Vision – It is the basis for successful venture. An Intrapreneur has ability to visualize from idea to implementation.

2. Motivation – Intrapreneur is generally self-motivated, but expects corporation reward and recognition.

3. Orientation – Intrapreneur is achievement oriented.

4. Risk Appetite – Intrapreneur are moderate risk takers since risk acceptance depends on their skills. Wild risk takers are not affordable to corporate.

Difference between Entrepreneur and Intrapreneur

COMPARISON	ENTREPRENEUR	INTRAPRENEUR
Meaning	Entrepreneur refers to a person who set up his own business with a new idea or concept.	Intrapreneur refers to an employee of the organization who is in charge of undertaking innovations in product, service, process etc.
Approach	Intuitive	Restorative
Resources	Uses own resources.	Use resources provided by the company.
Capital	Raised by him.	Financed by the company.
Enterprise	Newly established	An existing one
Dependency	Independent	Dependent
Risk	Borne by the entrepreneur himself.	Taken by the company.
Works for	Creating a leading position in the market.	Change and renew the existing organizational system and culture.

Women Entrepreneurship

Of late entrepreneurship amongst women has become a topic of concern for all of us. Since women constitute nearly fifty percent of the total population of our country, it is necessary they play a positive and constructive role in the socio-economic development of the country. After Independence a good deal of attention has been given to spread of literacy, increasing employment through industrial development and improving health and quality of life of women in the country. Women entrepreneurs may be defined as the woman or a group of women who initiate, organize and operate a business enterprise. Any women or group of women which innovates, initiates or adapts an economic activity may be called women entrepreneurship.

Need for Women Entrepreneurship

For a long time women were confined to the limits of the home. Gradually more and more women entered professions and services. Now, finally, the women entrepreneurs have arrived. Business acumen is no longer a man’s prerogative. Women are rapidly emerging as smart and dynamic entrepreneurs.

Women have entered almost all areas of business activity, cleaning powder – you name it. Women have already entered the field. And the Indian women has ventured in areas like cement manufacturing, steel works, etc. in which most of her counterparts from the more developed countries are yet to enter. In India, certainly women to mean business, women entrepreneurship is required on the following grounds:

Society cannot afford to ignore this vast human resource with its immense potential.
Favourable changes in the socio-economic scene such as advent of labour saving devices have freed women from drudgery of long labour.
Concept of small family and break up of traditional joint family system has resulted in psychological liberation experienced by women.
Increased aspirations to widen their horizon and extend their role.

Scope of Women Entrepreneurship

In rural areas where agriculture is the prominent activity, agro-based industries like food preservation, bakery, dairy can be taken up by women. They have been helping men in all these activities without getting any credit or money with a little training they could do it on their own in a business like manner. In areas where forests predominate, forest preservation, collection, assortment and classification of medical plants too can be done by them.

In districts where industries are located, spare parts and ancillary units can be managed by women. Apart from traditional industry, women should also be encouraged in mechanical and electrical activities. They can be trained in maintenance and repairs of all small machineries and they can be encouraged to start small workshops. Technical institutes can train girls and encourage them towards self-employment.

In urban parts, apart from teaching, nursing and other traditional occupations, there are many new areas where women can start on their own. With modern technological revolution, the field is vast and open, Electronics, computer services, information and consultancy services, advertising and publicity are some of the areas that women entrepreneurs can explore. What they need is training, finance and the cooperation and encouragement from the family, the society and the governmental organisations. That will enable women entrepreneurs to enter the mainstream of the country’s economy, which in turn will speed up the economic development of our country.

Strategies for Developing Women Entrepreneurship

Entrepreneuring is much specialized field where success depends strictly on personal ability in management, creativity imagination, self discipline, emotional stability and objective thinking. Women have to be motivated to join the national main stream of entrepreneurship by participating in the economic activity. It need not necessarily be welfare oriented but productivity oriented for specific economic development. It can be stated that the entry of women to industry in the last decade coincides with the shift in economy, based on low technology to high technology. Computers, laser optics, electronics and the latest in communication technology introduced a sea change in production, technology where brain power rather than muscle power is needed for entrepreneurship.

Probably the shift in the production technology with the consequent change in customer demands also paved the way for increased women entrepreneurship.

The essentials of women entrepreneurship are opportunity, ability, motivation and attitude. When an individual is motivated by ability and opportunity factors, it results in productivity. Similarly, motivation and attitudinal factors serve as facilitators on ability and opportunity to work as catalysts for crystallising the entrepreneurship with productivity. When motivational factors are absent ability and opportunity of individuals stays dormant. The opportunity factor includes the volume of human energy, development of household technology, government laws, economic factors, social factors etc.

Problems of Women Entrepreneurs

“For starting and running the unit women have to face various problems. These problems are classified under two categories.

A. Gender Related

The biggest problem or difficulty of a women entrepreneur is that she is a women. Some psycho-social factors impeding the growth of women entrepreneurship are given as problems as women. They are:

a. Poor self Image of Women

The present education, books, the media, films and all prevailing socio-cultural norms conspire and combine to perpetuate the image of women as a weak, submissive, non- aggressive daughter, an obedient, dutiful, dependent and faithful wife and a self sacrifising mother. Women themselves are so conditioned that they too unquestioningly accept this image of themselves and denigrate other women who might choose to question or step out of this traditional acceptable mould.

b. Discrimination

The perception of the states hierarchy based on the concept of men as ‘Superior’ and women as inferior has made the women subservient. Women is denied not in terms of her relation to man. Due to this social environment prevalent, they are unable to move freely as quickly as an individual to distant places to mobilise their resources or markets. This is a hindrance to their growth of business.

c. Faulty Socialisation

Right from early childhood when the educational conditioning begins, the attitudes comments and plans of their encouragement are different for each sex, the tasks to be performed, the game to be played are different. This tend to inhibit, entrepreneurship quality in two different ways. First an ideal of feminity has been set up, the values of which are contrary to those qualities needed for entrepreneurship.

Women and young women in particular internalize those values and limit their aspirations accordingly. Second whoever resist this socialization with the exception of a token few, are punished for their feminity and independence. Because of this faulty socialisation women are not ready to enter into the business.

d. Role Conflict

A women’s role refers to the way she is expected to behave in certain situations. In the Indian context, women’s place is completely at the mercy of her male relatives, first by virtue of birth and second by marriage. Indian women find it difficult to adjust themselves to the dual role that they have to play as traditional housewives and compete with men in the field of business and industry.

Entrepreneurship requires full devotion and dedication which is difficult if not impossible due to the role overload and role conflict. Many entrepreneurs think that there is a need to establish their business, but they do not wish to undertake the same business they have no enough time to pay attention to these things, besides attending their domestic work.

e. Cultural Values

Women in our country has been worst victims of exploitation, prepetuated by an adjust socio-economic system dominated by old feudal values. The problems that women faced in entrepreneurship career are resistance, apathy, shyness, conservation, inhibition, poor response which are products of cultural traditions, value systems and social sanctions.

B. Practical Problems

· The foremost difficulty of women entrepreneur is arranging finance and capital. Money is the blood steam of any enterprise. One can borrow finance from banks and other financial institutions. But the biggest catch is that of collateral security which is required to get bank credit. Women may have some jewellery but even then they cannot give it as security without the consent of the husbands of male members of their family. The male members may even persuade women to part with their jewellery but not ready to invest anything in the projects of women members. Procedures of obtaining bank loans and delay in getting it deter many women from venturing. At the Government level the licensing authorities, labour officers and sales tax inspector ask all sorts of humitiating questions like what technical qualifications you have, how will you manage labourers, how will you manage both house and business, does your husband approve etc.

· Locational disadvantages are not uncommon for some entrepreneurs, because of their rural background and location. They are not having access ability to good markets. As a result, they are unable to get enough orders and market exposure.

· Common problems for all entrepreneurs are how to market the product. They don’t know how to contact and whom to contact. Here the middlemen try to exploit women entrepreneurs. If she decides to eliminate all the tasks, she has to perform all the tasks. In these days, of strict competition, a lot of money is required for advertisement. If the product happens to be a consumer goods then it takes time to win people away from other products and make this product popular. Because of these reasons, they could not achieve significant growth in sales. Hence they are forced not to increase the production on any large scale.

· The non-availability of raw material within their region is also a main problem to the entrepreneurs. They do not know from where they can get it at cheap rate.

· The paucity of liquid resources, i.e. working capital has been regarded as another main problem in their day-to-day operation.

· Non-availability of skilled labour is quite common and is serious problem for women. They need women workers mainly due to the nature of the product which they are producing like fabric painting, embroidery, crocket handicrafts, etc. By nature, workers could not like to come down to entrepreneurs place of work. As a result entrepreneurs are forced to go to workers place and hand over the entire work to them. This lead to high cost of production.

· Those entrepreneurs who are doing embroidery, garments, painting, etc., are facing still price competition from the agencies sponsored by the government like Rural Development Agencies. This restricts the market of their products.

VII. Remedial Measures

To overcome all such problem efforts are being taken by all the agencies on the following lines:

· Promotional Help: To formulate project in a proper form and also in drafting project report, getting concurrences from various authorities for different purposes.

· Training: Achievement of motivation and training in the particular industry are also being imparted.

· Selection of Machinery and Technology: Suitable assistance in the choice of appropriate machinery and equipment must be provided.

· Finance: Banks and other institutions agencies are adopting special schemes for rendering assistance women entrepreneurs. Concessions and preferences are also given to them.

· Marketing Assistance: Providing information relating to the market condition, price level competition and other things too, women entrepreneurs will greatly relieve them from too much of torture.

Qualities of Women Entrepreneurs

1.	Enthusiastic	8.	Persevering
2.	Imaginative	9.	Patient
3.	Realistic	10.	Self-motivated
4.	Intuitive	11.	Self-confident
5.	Optimistic	12.	Willing to take risks
6.	Enterprising	13.	Prepared to take challenges
7.	Developmental	14.	Dynamic.

Even if a woman does not possess all these qualities willingness to take up business and develop entrepreneurial activities will go a long way towards equipping her for business ventures.

RURAL ENTREPRENUETSHIP

INTRODUCTION: India is a country of villages. About three-fourth of India's population are living in rural areas out of which 75% of the labour force is still earning its livelihood from agriculture and its allied activities. Land being limited is unable to absorb the labour force in agriculture. Therefore, there is a need to develop rural industries to solve rural unemployment and rural migration to cities. Growth and development of rural economy is an essential pre-condition to development of the nation as a whole. The gap between rural urban disparities should be lessened.

The standard of living of the rural people should be increased. Entrepreneurship in rural sector provides an answer to the above problems. Indian rural sector is no longer primitive and isolated. Therefore, entrepreneurship in the rural and tribal areas looms large to solve the problems of poverty, unemployment and backwardness of Indian economy. Rural industrialisation is viewed as an effective means of accelerating the process of rural development. Government of India has been continuously assigning increasing importance and support for the promotion and growth of rural entrepreneurship.

DEFINITION:

“Rural Entrepreneurship can be defined as entrepreneurship emerging at village level which can take place in a variety of fields of Endeavour such as business, industry, agriculture and acts as a potent factor for economic development”.

OBJECTIVE:

a) To Generate new business and employment opportunities

b) To analyse the challenges faced in growth of rural entrepreneurs in India.

c) To know the importance of rural entrepreneurship in India

IMPORTANCE OF RURAL ENTREPRENUETSHIP IN INDIA:

Rural entrepreneurs play a vital role in the overall economic development of the country. The growth and development of rural industries facilitate self-employment, results in wider dispersal of economic and industrial activities and helps in the maximum utilisation of locally available raw materials and labour. Following are some of the important role which rural industries play in ameliorating the socio-economic conditions of the rural people in particular and the country in general.

Proper utilisation of local resources: Rural industries help in the proper utilisation of local resources like raw materials and labour for productive purposes and thus increases productivity. They can also mobilise rural savings which help in increase of rural funds.

Employment generation: Rural industries create large-scale employment opportunities for the rural people. The basic problem of large-scale unemployment and underemployment of rural India can be effectively tackled through rural industrialisation.

Rural exodus: Lack of employment opportunities, heavy population pressure and poverty forced the rural people to move to urban areas for livelihood. It creates rural urban imbalance. Under these circumstances, rural industries help in reducing disparities in income between rural and urban people and acts as a potential source of gainful employment. This prevents rural people to migrate to urban areas.

Fosters economic development: Rural industrialization fosters economic development of rural areas. This curbs rural urban migration on the one hand and also reduces disproportionate growth of towns and cities, growth of slums, social tensions and environmental pollutions etc. on the other.

Earnings of foreign exchange: Rural industries play an important role in increasing the foreign exchange earnings of the country through export of their produce

Producers goods of consumers' choice: Rural industries including village and cottage industries produce goods of individual consumers' choice and taste. Jewellery, sarees, artistic products are produced to cater to the needs of different consumers according to their taste, design and choice.

Entrepreneurial development: Rural industries promote entrepreneurial development in the rural sector. It encourages young and promising entrepreneurs to develop and carry out entrepreneurial activities in the rural sector which finally facilitate the development of the rural areas

ROLE OF RURAL ENTREPRENUERS IN INDIA:

· Provide employment opportunities

· Check on migration of rural population

· Balanced regional growth

· Promotion of artistic activities

· Check on social evils

· Awaken the rural youth

· Improved standard of living

NECCESSITY OF RURAL ENTREPRENUERS IN INDIA

The need for and growth of rural industries has become essential in a country like India because of the following reasons:

1. Rural industries generate large-scale employment opportunities in the rural sector as most of the rural industries are labour intensive.

2. Rural industries are capable of checking rural urban migration by developing more and more rural industries.

3. Rural industries/entrepreneurship help to improve the per capital income of rural people thereby reduces the gaps and disparities in income of rural and urban people.

4. Rural entrepreneurship controls concentration of industry in cities and thereby promotes balanced regional growth in the economy.

5. Rural entrepreneurship facilitates the development of roads, street lighting, drinking water etc. in the rural sector due to their accessibility to the main market.

6. Rural entrepreneurship can reduce poverty, growth of slums, pollution in cities and ignorance of inhabitants.

7. Rural entrepreneurship creates an avenue for rural educated youth to promote it as a career.

OPPORTUNITIES:

· Free entry into world trade.

· Improved risk taking ability.

· Governments of nations withdrawn some restrictions Technology and inventions spread into the world.

· Encouragement to innovations and inventions.

· Promotion of healthy completions among nations

· Consideration increase in government assistance for international trade.

· The establishment of other national and international institutes to support business among the nations of the world.

· Benefits of specialization.

· Social and cultural development

ROLE OF NGOs IN RURAL ENTREPRENEURSHIP

NGOs contributing to entrepreneurship development in the country. The major ones are National Alliance of Young Entrepreneurs (NAYE), World Assembly of Small and Medium Entrepreneurs (WASME), Xavier institute for Social Studies (XISS), SEWA of Ahmedabad, ‘Y’ Self-Employment of Calcutta, AWAKE (Association of Women Entrepreneurs of Karnataka), and Rural Development and Self-Employment Training Institute (RUDSETIs) based in Karnataka.

The NGOs involved in entrepreneurship development can be classified into three types:

1. Primary Level NGOs:

The NGOs who mobilize their own resources, operate at international level and execute developmental activities themselves or through intermediate fall within this category. ACTIONAID, OXFAM, Christian Children Fund, etc. are prominent examples of the primary level NGOs in India.

2. Intermediate NGOs:

These NGOs procure funds from various agencies, impart training, and conduct workshops for target work force. SEWA and AWAKE are examples of intermediate NGOs.

3. Grass Root Level NGOs:

These NGOs are those who conduct field activities by establishing direct contact with the grass-root needy people. Examples of such NGOs are RUDSETIs, ANARDE Foundation (Gujarat), Indian Institute of Youth Welfare (IIYW) of Maharashtra etc.

The training imparted to the needy by the NGOs can be classified into three broad types:

1. Stimulation:

Conducting EDPs and other training programmes for the target people with a view to stimulate enterprising attitude among them.

2. Counseling:

Providing counseling and consultancy services to the needy ones how to prepare a project, feasibility report, purchase of plant and machinery, and performing other procedural activities.

3. Assistance:

Assisting the target group in marketing their products and securing finance from financial institutions.

The role of NGOs in entrepreneurship development can better be understood in terms of their strengths and weaknesses in the context of entrepreneurship development.

The NGOs have revealed the following strengths as an edge over others:

a. The lean overhead and operating costs to reach the poor and needy.

b. Flexibility and responsiveness in operation to invent appropriate solution.

c. Nearness to client groups made them to be sensitive to community need.

d. Capacity for innovation and experimentation with new groups and untried development approach.

e. Stimulating and mobilizing interest in the community.

f. Dependence on customer satisfaction.

g. Act as a test bed and sound board for government policies and programmes.

The well-noted weaknesses the NGOs suffer from are listed as follows:

a. Role conflict as to the traditional areas of operation and micro- entrepreneurship development.

b. Doubtful leadership and succession.

c. Anti-business philosophy, lack of programme integration due to lack of proper understanding of entrepreneurship approach.

d. Inadequate opportunities to work as trainer/motivator.

e. Absence of impact assessment because of self-righteousness on the part of NGO leaders.

Rural Marketing Strategy

Definition: A rural marketing strategy refers to the planning of adequate supply of consumer goods and agricultural input to the villages at an affordable price to fulfil the needs of the consumers residing in these rural areas. Rural markets have a high potential and can generate huge sales volume for the companies which manufacture cost-efficient products and have active supply chain management.

For Example; In rural markets, most of the selling products belong to spurious brands. These with a name similar to those of well-known brands have penetrated the Indian rural markets due to the product’s look-alike feature (copy of branded products) and cheap prices.

Rural Marketing Strategies

four components of the marketing mix concerning the product being introduced in the rural market:

Product Strategies

The company first needs to analyze the requirements and demand of the rural consumers. Since whatever products are being sold in the urban areas may not be acceptable in the villages also.

Following are some of the factors which are taken into consideration while framing the product

strategies:

· Product Launch: The rural consumers earn a lump sum amount two times a year according to the crop cycle. Therefore the product must be launched only in these harvesting seasons, i.e., rabi and kharif.

· New Product Design: The product design for an urban market may not perform well in the rural market too. Thus, the company must plan for a robust model of the product (especially of durable goods) while launching it for rural consumers.

· Brand Name: Brands are gaining significance in the rural markets as the people are becoming aware and informed. However, in these markets, brands are recognized by the simplicity of their name, visual logos, taste and colour of the products.

· Small Unit Low Price Packaging: Considering the daily wage earners who have less disposable income; the product should be packed in small units with a minimal price to serve the requirements of the rural consumers.

Pricing Strategies

In rural markets, consumers are less brand conscious and more responsive to the price of the products. The company’s pricing decision is dependent upon the consumers’ occupation and income pattern. Various strategies followed by marketers while planning for the product pricing in rural

markets:

Differential Pricing: The pricing strategy for the rural markets should be different from that in urban markets. The product should be priced slightly cheaper to grab the attention of rural consumers.

Psychological Pricing: The psychological pricing is a tactic used to make the deal appealing to the consumers. A product is priced at odd amounts like Rs 9, Rs 59, Rs 99, etc. which seems less than Rs 10, Rs 60 and Rs 100 respectively. It is a fruitful strategy in rural marketing.

Create Value for Money: The rural consumers are more concerned about the durability of the products, i.e., the value it generates to the customer. They tend to pay a slightly higher amount for a better product with additional features.

Pricing on Special Events: In the rural areas, occasions and festival are highly valued and celebrated. Therefore, companies make use of these special events to attract rural consumers by giving them various offers and discounts.

Simple Packing: Rural consumers have a basic living standard. They don’t like to spend much on the products which have fancy packaging; instead, they look for the utility of the product. So it would be a waste of time and money if the brand spends on sophisticated product packaging.

Low Price Points: A consumer belonging to the rural area have limited resources out of which he or she needs to buy various daily utility products. Therefore, a product must be priced quite low to make it affordable for such consumers.

Schemes for Retailers: Rural retailers are the most significant medium of sales in the village. The companies must come up with cash discounts, gift schemes, offers and quantity discounts to build the loyalty of such retailers towards the brand and increase product sales.

Bundle Pricing: A bundle is a mix of different products in a single pack available to the consumer for a reasonable price. The marketers must plan for a product bundle pricing to make the offer appealing to the consumers and survive in the competitive rural market.

Distribution Strategies

To create a regular demand for the product, the marketer must ensure the uninterrupted supply of the goods in the rural markets. The product availability can be achieved by implementing the

following strategies:

· Local Markets: In rural areas, local markets exist in the form of fares, farmers’ market, Sunday market and feeder market. Here, rural people gather to buy goods and communicate with each other.

· Company Depots: The Company owns warehouses and depots in some major rural areas to make the goods readily available to the native consumers and that of nearby cities.

· Public Distribution System: The government runs fair price shops in the villages to sell the daily utility and durable products at a nominal price. In India, one such PDS is the ration shops.

· Retailers: The most straightforward way a rural consumer can acquire a product is through a retail shop located in the village. Therefore, companies must plan their supply chain management in such a way that the goods are regularly made available to these retailers.

· Redistribution Stockists and Clearing Agents: The redistribution stockists and the clearing agents are the intermediaries between the companies and rural consumers. They supply goods to the retailers from where it reaches the consumers.

· Delivery Vans, Traders, Sales Person, NGO: The company must run its van for delivering goods in the remote areas where there is lack of proper transportation facility.

Promotion Strategies

Promotion is the stage where the product is introduced in the market. In rural markets, the promotion mix should be planned in such a way that rural consumers can easily understand the product features.

Following promotional strategies are used by the marketers:

· Mass Media: The villages have limited means of entertainment which include tv, radio, press and cinema. The companies advertise their products through these popular mass media.

· Personalised Media: It can be seen as hiring a salesperson for performing door to door sales and collecting information and queries related to the product and the brand.

· Local Media: As we have already discussed in the distribution strategy, local media includes audio-visual vans, animal parades, fares, folk programmes, etc. Displaying advertisements, video clippings, short films, posters and paintings at these places is also useful promotional activity.

· Hiring Models and Actors for Promotion: Rural people are fascinated by the television actors and models and consider them as their role models. Therefore the marketers must engage famous faces in their tv commercials to promote the brand.

· Advertise Through Paintings: The rural consumers are attracted towards the bright colours and the pictorial representation of the products; hence, wall paintings are a good idea in the rural markets.

CONCLUSION:

Rural Entrepreneurship plays an important role for economic development in developing countries such as that of India. It is evident from the study that rural entreprenuers are ready to face the challenges associated with setting up of business. Therefore, the rural entrepreneurs need to be motivated to take up entrepreneurship as a career, with training and sustaining support systems providing all necessary assistance

SOCIAL ENTREPRENEUR

Entrepreneurs are people who venture into new areas primarily with intent of making profit out of the same. Of course there they socially responsible also and have the obligation of contributing to the well-being of the society in which they operate; but this obligation is secondary. In social entrepreneurship this obligation of contribution to social well-being is primary and in a way profit takes a back seat or is more or less secondary but essential to the survival

A social entrepreneur is somebody who takes up a pressing social problem and meets it with an innovative or path breaking solution. Since profit making is a secondary objective, therefore they are people who are passionate and determined about what they do. They possess a very high level of motivation and are visionaries who aim at bringing about a change in the way things are.

By definition social entrepreneurs are great people recruiters who present their ideas or solutions in a way that many people, who are either part of the problem or surrounding it, recognise a need for change and get on board the change bandwagon. Thus mobilizing the masses for bringing about change is a hallmark of a social entrepreneur.

Social entrepreneurs operate with an aim of changing the face of society. Be it health, sanitation, education, they are present everywhere. There are people even who work on bringing about change in the modern innovations because their impact has been detrimental to human life. They thus work towards improving systems, creating new solutions, laying down fair practices.

Some of the very famous people who inspire others to take up social entrepreneurship are:

Susan B Anthony: was the Co-Founder of the first women’s temperance movement and a prominent American civil rights leader for women’s rights in the 19th century.
Vinobha Bhave: is a prominent figure in Indian modern history and was the founder and leader of the Land gift movement that helped reallocate land to untouchables.

Maria Montessori: a pioneer in education. Developed the Montessori approach to early education in children.

Florence nightingale: she laid the foundation for the first school of nurses and worked to improve the hospital conditions.

Margaret Sanger: She was the founder and Leader of the Planned Parenthood federation of America, championed the family planning system around the world.

These are examples of some people who fought for what they believed in and brought about varying degrees of change in their respective spheres of work.

Social entrepreneurship has witnessed a boom in the past few years with more and more people getting attracted to it. There is now a healthy competition and world class graduates are giving up lucrative jobs to work and contribute in meaningful ways towards the society.

As Bill Drayton would say it aptly ‘Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the entire fishing industry’. Such is the passion and the commitment required to be called a social entrepreneur that it may not be misappropriate to say that it is more challenging that traditional entrepreneurship

Social Enterprises around the World

With an aim to generate income if not wealth, the social enterprises come up with innovative as well as people-friendly solutions to bring a positive change in the society. What makes them different from the corporate world is their basic aim; they work for the people who live below poverty line and offer flexible working environment to people. Although the concept of social entrepreneurship has been around since 1960s and is promoted by many individuals but the establishment of The Grameen Bank in Bangladesh was the first instance where the concept was thoroughly used. Under the leadership of Muhammad Yunus, it tried to address the issue of people living below poverty line and gradually has evolved as a strong identity.

The Skoll Foundation - North America

Founded by Jeff Skoll, the first president of ebay, the Skoll Foundation supports the social enterprises and highlights their work by establishing their partnerships with Sundance Institute and NewsHour with Jim Lehrer. NIKA Water Company is another social enterprise in America. The company sells bottled water in the country and brings clean water to the developing world with its profits. It uses its 100 percent profit in the activity.

Grameen Bank - Bangladesh

Social enterprise is not a new concept but it started becoming popular only in 1960s. There may be different rules and regulations for social enterprises around the world but their basic concept remains the same. Their ultimate aim is to serve the people of the society who are at the bottom of the pyramid. In Bangladesh, Muhammad Yunus incorporated the Grameen Bank, a microfinance organization that makes small loans to people living in rural areas without requiring collateral. The bank does not believe in charity but in offering help to people as an initiative to break through the poverty cycle.

Echoing Green - USA

Based in New York, Echoing Green is a non-profit organization that operates in social sector investing. For last twenty years, it has been working in this field encouraging and helping young entrepreneurs to launch new organizations.

Rang De - India

Rang De is a not profit online organization in India that lends small loans to individuals planning to start a new or grow their existing business. It is a successful attempt to bring together the two parts of India one of which is successfully progressing while one is left out due to shortage of resources. Founded in the year 2006 by Ramakrishna NK and Smita Ram, Rang De, today is a major online platform in the country.

Schwab Foundation for Social Entrepreneurship

Founded by Professor Klaus Schwab and his wife, the main purpose of Schwab Foundation for Social Entrepreneurship is to promote social innovation. The foundation does not give grants but addresses social problems and provides platforms at the country, global and regional levels.

Omidyar Network

Established in 2004, the Omidyar Network is a philanthrocapitalist investment firm that fosters economic advancement. With a network of for-profit companies, the network encourages participation in the areas of government transparency, microfinance, social media and property rights. Headquartered in Redwood City, California, it was established by Pierre Omidyar and his wife Pam.

ADVANTAGES OF SOCIAL ENTERPRISES

Social enterprises tend to operate with a purpose of creating value for the society and also generate income (if not wealth). As a thumb rule, the solutions they offer are supposed to be innovative, unique, people and environment friendly; Cost effectiveness is also a huge consideration. All of these are challenges to the sustainability of social enterprises, but the ones that are able to scale these are the ones that are able to create a huge impact. They are the enterprises that are advantageous to the society, people and the environment.

Since social enterprises typically deal with people who live at the bottom of the pyramid, therefore they are the ones who are benefited to benefit hugely from the former. In other words social enterprises are beneficial to the poor, generally by providing them with a means of livelihood.

Since social enterprises do not work typically the way corporate setups or private firms work, they offer flexible working environment which is as per the liking of many people groups. This employment may be both short term and long term in nature or it may specially targeted to a specific workgroup or a geographic community or to people with disabilities. Self Employed Women’s Association (SEWA), for example, offers various kinds of assistance to self-employed poor women.

There are advantages of a social enterprise that are entrepreneur specific like:

Social entrepreneurs find it easier to raise capital. There are huge incentives and schemes from the government for the same. Since the investment industry here is ethical, it is easier to raise capital at below market rates.
Marketing and promotion for these organisations is also very easy. Since a social problem is being tackled with a solution, it is easier to attract attention of the people and media. The degree of publicity often depends on the degree of uniqueness of the solution.
It is easier to garner support from likeminded individuals since there is a social side to the enterprise. It is also easier to get people on board at lower salaries than compared to other industry.

Similarly there are advantages that are specific to the environment, society and the people concerned. Some of them are as under:

Services in whichever section they may be offered are customized better to suit the needs of the individual or the problem. This is also designed in harmony with all other systems like the environment, society or the people.

Cost effectiveness is another advantage of a social enterprise. The solutions offered by these organisations in the form of either products or services are reasonable than compared to the same service provided by a profit making organisation. No wonder basic amenities like healthcare, education etc. have become very affordable to people world over with the help of these institutions. Micro finance, for example, today caters not to the poor but to the poorest.

Although lots of organisations have also made corporate social responsibility an integral part of their business functioning but not many actually mean to create a difference. It is just a means to achieve more profits; there is an increasing need to watch out for the same and help and advocate those who really aim to add value.

FAMILY BUSINESS ENTREPRENEURSHIP

Meaning:

Family business has been as common in the Indian economy like elsewhere in the world, it is perceived in a common sense. Various terms like ‘family-owned,’ family controlled,’ ‘family managed,’ ‘business houses,’ and ‘industrial houses’ are used to refer to family business.

The term family business conjures up different meanings to different people. While some view it as traditional business, others consider it as community business, and still others mean it as home-based business.

Types:

Classified into two types based on the structure and process involved in family business.

Structured Definitions:

“Majority ownership by a single family and direct involvement by at least two members in its operation.” — Rosenblatt, de Mik, Anderson, and Johnson.

“Single family effectively controls firm through the ownership of greater than 50 per cent of the voting shares; a significant portion of the firm’s senior management is drawn from the same family.” — Leach et al.

Process Definitions:

These definitions are based on how the family is involved in the business.

Definitions of family business

“Family business is a firm which has been closely identified with at least two generations of a family and when this link has had a mutual influence on company policy and on the interests and objectives of the family.” — R. G. Donnelley

Shankar and Astrachan (1996) note that the criteria used to define a family business can include: Percentage of ownership; Voting control; Power over strategic decisions; Involvement of multiple generations; and Active management of family members.

In an effort to resolve the definitional ambiguity surrounding family business research, Litz suggests that a business can be defined as a family business when its ownership and management are concentrated within a family unit. Furthermore, he argues that to be considered a family business; the business’ members must strive to achieve, maintain, and/or increase intra-organizational family-based relatedness.

In sum and substance, a family business can simply be defined as a business one that includes two or more members of a family with financial control of the company. In other words, a family business is one actively owned and/or managed by more than one member of the same family.

Characteristics:

a. A group of people belonging to one or more families run one business enterprise.

b. Position in family business is influenced by the relationship the family members enjoy among themselves.

c. Family exercises control over business in the form of ownership or in the form of management of the firm where family members are employed on key positions.

d. Family exercises the influence on the firm’s policy direction in the mutual interest of family and business.

e. The succession of family business goes to the next generation.

f. Family business in India is largely caste-related.

g. Every caste enjoys a dominant culture which gets duly reflected in their family businesses also.

Advantages of Running a Family Business

(i) Common Values:

Entrepreneur and his / her family are likely to share the same ethos and beliefs on how things should be done. This will give entrepreneur an extra sense of purpose and pride – and a competitive edge for his/her business.

(ii) Strong Commitment:

Building a lasting family enterprise means entrepreneur is more likely to put in the extra hours and effort needed to make the business a success. At the same time, his/her family is more likely to understand that he / she needs to take a more flexible approach to his/ her working hours.

(iii) Loyalty:

Strong personal bonds, called loyalty, means entrepreneur and family members are likely to stick together in hard times and show the determination needed for business success. Loyalty leads to commitment which gets translated into hard, work and perseverance which are the prerequisites of success in any endeavor including business.

(iv) Stability:

Purpose provides stamina and stability in efforts. Knowing one is building for future generations encourages and strengthens his / her efforts in terms of long-term thinking and tenacious efforts needed for growth and. success of his / her business. Yes, at times it can also produce counterproductive effects in terms of entrepreneur’s inability to respond to requirement.

(v) Decreased Costs:

Unlike non-family businesses, members of family business may be more willing to make financial sacrifices for the sake of the business. For example, accepting lower pay than they would get elsewhere, to help the business in the long term, or deferring wages during a cash flow crisis.

The family business can also hold down the costs of governance, in terms of special accounting systems, security systems, policy manuals, legal documents and other mechanisms to reduce theft and monitor employees’ work habits. This is possible because employees and managers of business are well related and have trust and confidence on each other.

Disadvantages of Running a Family Business

(a) Risk of Ownership:

Family members hold the impression that the family business will continue to earn profit and, thus, ensure receipt of cash and other benefits on a recurring basis. However, when business either earns less income or incurs loss, receiving cash and other benefits becomes uncertain especially for non-active members.

Then they start challenging and questioning the ownership of business to ensure their share in the business cake. This produces various implications for the business like weakens family unity and commitment, conflict surfaces between active and non-active family members and relatives, and businesses’ market share starts dwindling and ultimately the business dies out.

(b) Controlling Ambiguity:

Every entrepreneur wants the control of his/ her business should rest with the closest and trustworthy one. In practice, business control generally rests with the siblings; the minority shareholders have only a minimal control over the business.

Minority shareholders normally are given protection of their ownership by having a say in sale or merger of the company, the issuance of stock to others, borrowing money in excess of a set amount, a major capital expenditure.

(c) The Subtle Messages of a Buy/Sell Agreement:

We encourage families to put an agreement in place that will make it relatively easy for a shareholder to exit ownership of the business. However, some families believe multiple shareholders will be in place forever. In general experience, this is not the case in 99 per cent of family businesses.

Buy/sell agreements protect the company and its stock, for example, against a shareholder getting divorced and giving an ex-spouse an ownership stake, where the stock must go in case of death, what must happen to the stock in the event of a shareholder declaring personal bankruptcy, and if the stock can be pledged as security for other business investments.

Sometimes, a shareholder just wishes to have control of his or her own investments and opts out of the family business. This raises questions like: Are they disappointing their deceased parents? Are the active siblings sending a message to the non-active that they do not trust them or their intentions?

(d) Inability for Shareholders to Cash out of the Family Business:

Mostly family businesses lack the financial ability to fund the redemption of stock from one major shareholder. Funds are typically not available, and most owners will refuse to go to the bank for a loan as it might put the company in a poor financial position. Thus, the minority shareholder wanting to cash out either cannot do it or must follow certain company policy, which normally discusses the conditions and timing of a stock redemption.

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Tuesday, July 27, 2021

ENTREPRENEURSHIP DEVELOPMENT (KMB402) UNIT 1