CHAPTER 1. ENTREPRENEURSHIP CONCEPT AND FUNCTIONS NOTES Part 1
Entrepreneurship concept and functions Chapter end Question and answer
LEARNING OBJECTIVES OF ENTREPRENEURSHIP CONCEPT AND FUNCTIONS:
After studying this lesson the students should be able to:
- Understand the concept of Entrepreneurship.
- Explain the function of Entrepreneurship.
- Appreciate the need for Entrepreneurship in our economy.
- State the myths, advantages and disadvantages of Entrepreneurship.
- Describe the process of Entrepreneurship.
ENTREPRENEURSHIP CONCEPT AND FUNCTIONS
The Earth at this Innovator’s Feet
Mansukhbhai Prajapati remoulded his family’s struggling pottery business to produce the Mitticool range of ingenious earthenware, including a fridge that works without electricity.
The Mitticool refrigerator, which is made of mud/clay and works without electricity.
Prajapati’s wife encouraged him to experiment with the family business all over again.
It was this abiding interest in innovation that led him to develop the Mitticool water filter, way back in 1997.
A lot of rigorous experimentation went into his work on the Mitticool refrigerator, which he launched in 2002.
The natural cooling process keeps vegetables and fruits fresh for up to five days, and milk products for up to three days.
Measuring 27 inches high and 15 inches wide, the fridge costs between Rs.3,000 to Rs.3,500. As it works without electricity, it is especially useful in villages that experience frequent power cuts.
ENTREPRENEURSHIP (Definition) : Entrepreneurship is Capacity and willingness to Organize, develop and manage a business venture along with any of its risks in order to make a profit. The best example of entrepreneurship is the starting of new business. Entrepreneurship is defined by results and not by attributes.
Entrepreneurship may be defined as a systematic innovation which consists of the purposeful and organized search for a change, and a systematic analysis of the opportunities that such change might offer for economic and social transformation.
ENTREPRENEURS (Definition) : A Entrepreneur is a person who starts up business and takes financial risk to attain profit from the business. He has the initiative, skill for innovation and he looks for higher achievements.
An Entrepreneur is a person who starts an enterprise and converts a situation into opportunity. The Economists view him/her as the fourth factor of production, along with land labor and capital.
Entrepreneurs are innovators who come up with new ideas for products, markets or technique.
The word entrepreneur is derived from the French word “Entreprendre” which means to undertake that is individuals who undertake the risk of a new enterprise. The word Entrepreneur therefore first appeared in the France language in the beginning of the 16th century. The word was coined by Richard Cantillon an Irishman living in France.
IMPORTANT POINTS ABOUT AN ENTREPRENEUR:
Develops and own his own enterprise.
- Is a Moderate risk taker and works under uncertainty for achieving the goal.
- Is innovative.
- Is a persuader of deviant pursuits.
- Reflects a strong urge to be independent.
- Persistently tries to do something better.
- Is dissatisfied with routine activities.
- Is prepared to withstand the hard life
- Is determined but patient.
- Exhibits a sense of leadership.
- Exhibits a dense of competitiveness.
- Takes personal responsibility.
- Is oriented towards the future.
- Tends to persist in the face of adversity.
DEFINITIONS OF ENTREPRENEURS BY:
Richard Cantillon: As a person, who pays a certain price to a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise.
Adam Smith: An individual, who undertakes the formation of an organization for commercial purposes by recognizing the potential demand for goods and services, and there by acts as an economic agent and transforms demand into supply.
Joseph Schumpter: Entrepreneur an innovators, who use the process of entrepreneurship to shatter the status quo of the existing products and services, to set new product, new services. He describes entrepreneur as innovators.
Peter F. Drucker: An entrepreneur is one who always searches for changes, responds to it and exploits it as an opportunity. He believes in increasing the value and consumer satisfaction. Thus, o professional manager who mobilizes resource and allocates them to make a commercial gain from an opportunity, is also called an entrepreneur.
An entrepreneur is a person who starts an enterprise. The process of creation is called entrepreneurship. The entrepreneur is the actor and the 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 contributes to the overall economic development.
FUNCTION OF AN ENTREPRENEUR
Innovation: As an innovator, the entrepreneur has to introduce new combinations of means of production, new product, new market for a product and new sources of raw material.
Risk- taking: It refers to taking responsibility for a loss that may occur due to unforeseen contingencies in the future.
Organisation Building: Organisation and management are the main functions of an entrepreneur. They refer to the bringing together of various factors of production. The purpose is to allocate the productive resources in order to minimize losses and reduce costs in production.
Discovery of an idea: The entrepreneur visualizes that there are opportunities for a particular type of business and it can be profitably run. The idea may be to exploit new areas of natural resources, more profitable venture, or an existing line of business. He/she develops the idea with the experts in the field, and if they are convinced, then he/she will go ahead with more exhaustive analysis.
Detailed Investigation: The entrepreneur will estimate the total demand for the product. After determining the prospective demand for goods, he/she will think of arranging finances for the venture, along with the ability of power, labour, raw materials and machinery.
Assembling the Requirements: After making sure that the proposition is practical and profitable, the entrepreneur proceeds to assemble the requirements.
Financing the Proposition: The entrepreneur decides about the capital structure of enterprise. The requirements of finances are estimated first, then the source of money will come are determined. Long term and short term financial requirements are estimated and the type of source of funds is also decided-share, debenture, loan etc.
Planning: Planning is concerned with the mental state of entrepreneur. It is decision making in advance: what to do, when to do, and who will do a particular task.
Organizing: The function of organising is to arrange guide, co-ordinate, direct and control the activities of the factors of production.
Staffing: Staffing is concerned with the human resources of an enterprise. It consists of human resources, manpower planning, recruitment, selection and placement of manpower, human resource development, promotion, transfer, appraisal and determination of employee’s remuneration.
Directing: It is concerned with carrying out the desired plans. Towards the accomplishment of group activities, it initiates organized and planned action, and ensures effective performance by subordinates.
Leadership: It is the process by which an entrepreneur imaginatively directs/guides and influences the work of others in choosing and attaining specified goals by meditating between the individual and orginisation in such a manner that both will get the maximum satisfaction.
Communication: It refers to the exchange of ideas, feelings, emotions, knowledge and information between two or more persons. Nothing happens in management until effective communication take place.
Motivation: It is the psychological process of creating an urge among the subordinates to do certain things or behave in the desired manner. A sound motivational system must be productive, competitive, comprehensive and flexible, and it must consider the psychological, social, safety, ego and economic needs for the worker.
Supervision: Supervision refer to the job of overseeing subordinates at work to ensure the maximum utilization of resources, to get the required and directed work done, and to correct the subordinates whenever they go wrong.
Co-ordination: It is essential to channelize the activities of various individuals in the organisation, for the achievement of common goals.
Controlling: Control is the process which enables the entrepreneur to get his/her company’s policies implemented and take corrective action if performance is not according to the pre-determined standards.
Production: It is the creation of goods and services. It consist of manufacturing, ancillary and advisory activities.
Finance: The development and expansion of an enterprise rather needs more commitment for funds. It is the duty of the entrepreneur to look and analyse into the various sources of finance and appropriately arrange from them as and when required.
Marketing: Marketing plays a significant role in promoting the well-being of the business enterprise. So it is the role of the entrepreneur to strategically place his company in an advantageous position to secure the top position in the market.
Personnel: This function is concerned with employment, development and compensation for the personnel, the provisions of working condition and welfare measures to maintain a good work force in the organisation.
Accounting: It is defined as a systematic recording of entrepreneurial transaction of an enterprise and the financial position of the enterprises. The entrepreneur should look into the record keeping of the entries of all transaction which takes place in the organisation so that he/she is aware of his or her financial position.
Entrepreneurship concept and function Chapter end Question and answer
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