Entrepreneurship and small business management Flashcards
Entrepreneur
Someone who organizes a
business venture and assumes the risk for it.
Entrepreneurship
is the process of creating something new, with value, by devoting the
necessary time and effort, assuming the
accompanying financial, psychic, and social risks,
and receiving the resulting rewards of monetary and personal satisfaction and independence
Central task of an entrepreneur
To take moderate risk and invest money to earn profits by exploiting an opportunity
Importance of entrepreneurship
Creates wealth for the nation and for individuals as
well.
Provides employment to huge mass of people.
Contributes towards research and development
It is a challenging opportunity for the people.
Provides self-sufficiency.
Sky-scraping heights of apparent prospect
Characteristics of entrepreneurs
❖A skillful person ❖An innovator ❖Decision making person ❖A person of creative personality ❖Self confident ❖Ambitious ❖Dynamic ❖Risk taker ❖Adventurous
Factors influencing entrepreneurship
Educational: Designing a suitable program of entrepreneurial education
and introduction of entrepreneurship, as a subject for study at
early school levels make the young minds realize the
importance of entrepreneurship.
Legal: The law must protect the weak to encourage new
entrants. Entrepreneurs in small sectors have limited resources and
often cannot compete with large-scale manufactures.
Infrastructure: This has to do with: Land and factory sheds at
concessional rates(controlled by govt), adequate supply
of power, water, coal and other sources of energy,
transport facilities, availability of wagons etc.
Institutional: Entrepreneurs need advice on the following: lines of
manufacture, which may be suitable, sources of raw
materials, finance and other facilities like technical knowhow, tools and equipment, etc.
Financial: The lack of financial resources deters potential entrepreneurs to start new ventures.
Procedural: The bureaucratic procedure of government offices and financial institutions is a great hindrance to the growth of new
enterprises. It would be better for the potential and existing entrepreneur, if the number of procedural and legal restrictions of the entrepreneurs is reduced and an administrative mechanism is
developed to look after all the needs and requirements of the entrepreneurs.
Rapid Changes: IT and communication revolution, the networking within
the industry and outside the industry has increased. The exchange of information and availability of resources is bringing changes in the industry faster than ever before in history.
R&D Technology:
Companies today are investing lots of money in R&D
activities to develop new products and new processes to
compete in the global market.
Types of entrepreneurship (classification on the basis of ownership)
Pure entrepreneurs: As the term suggests, they are those individuals who are the founders. They are the ones who conceptualize a business plan and then put in efforts to make the plan a success.
Second-generation operators of family-owned businesses: They are the individuals who have inherited the business from their fathers and forefathers.
Franchises: take up a working business model
Types of entrepreneurship (classification on the basis of personality traits and their style of running business)
The Induced Entrepreneur: These types of entrepreneurs
are induced by some external factors to start a business. The external factors could be supporting government
policies, unemployment, family support, facilitating
institutional support, etc. These types of
entrepreneurs turn out to be more
realistic in their approach. For instance, when the
government announced subsidies, tax rebates and
financial support to small scale industries, several
entrepreneurs started their business as SSIs.
The Achiever: These types of entrepreneurs have personal desires to excel.
The drive that pushes them is the desire to achieve
something in life, the desire to make a mark in society,
the desire to prove their excellence.
The Idea Generator: These kinds of entrepreneurs are
highly creative people who are always in search of
innovative ideas for setting up new business ventures.
They have the ability to sense the demand much ahead of others.
Types of entrepreneurship (classification based on the type of business)
Industrial Entrepreneur: Industrial entrepreneur is an
entrepreneur who is into manufacturing of a product. He identifies the needs and wants of customers and
accordingly manufactures products to satisfy these needs
and wants.
Trading Entrepreneurs: A trading entrepreneur is one who undertakes the buying and selling of goods and
services and is not concerned with the manufacturing of
products. He identifies potential markets, stimulates demands and
generates interests among buyers to purchase a product.
Corporate Entrepreneur: Corporate entrepreneur is a
person who demonstrates his innovative skill in organizing and managing a corporate undertaking (which is registered under some statute or act that gives it a
separate legal entity).
Agricultural Entrepreneur: those entrepreneurs who
undertake business related to agricultural activities. Like
farm equipment, fertilizers and other inputs of agriculture.
Types of entrepreneurships (other classifications)
Imitative Entrepreneurs: Imitative entrepreneurs adapt a
successful innovation. They are risk-aversive and so they do not try out new ideas or products, but if a new idea is accepted by the
market, they imitate the new idea and hence join in the
competition.
Fabian Entrepreneurs: Fabian entrepreneurs are highly cautious and skeptic in their approach. They are not readily interested in introducing any change in their organization and when they do so it is because, ..unless they the change they would be out of the market..
Corporate entrepreneurship
The process by which teams within an established
company: conceive, foster, launch and manage a new business that is distinct from the parent company but leverages the
parent’s assets, market position, capabilities or other resources
Entrepreneurial Models
The enabler- dedicated and diffused.
The producer- dedicated and focused
The opportunist- Ad Hoc and diffused
The advocate- Ad Hoc and focused
The opportunist
All companies begin as opportunists. Without any designated organizational ownership or
resources, corporate entrepreneurship proceeds based on
the efforts and serendipity of “project champions”
People who toil against the odds, creating new businesses
often in spite of the corporation.
The enabler model
The basic premise of the enabler model is that employees across an organization will be willing to develop new concepts if they
are given adequate support. Dedicating resources and processes (but without any formal
organizational ownership) enables teams to pursue opportunities
on their own in so far as they fit the organization’s strategic frame. In the most evolved versions of the enabler model, companies
provide the following:
clear criteria for selecting which opportunities to pursue, application guidelines for funding, decision-making transparency,
both recruitment and retention of entrepreneurially minded employees and, perhaps above all, active support from senior management.
Advocate model
In the advocate model, a company assigns organizational
ownership for the creation of new businesses while
intentionally providing only modest budgets to the core group.
For specific initiatives, advocate organizations have to go out there and find money. Advocate organizations sell themselves to SBUs
