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Kuvempu university
Institute of Management Studies
Jnana Sahyadri, Shankaraghatta.
Subject: Entrepreneurial Development and Small BusinessManagement
Presented by
Dr. R Hiremani Naik M.com , PhDReader and Chairman
Institute of Management Studies
Kuvempu university
Shankaraghatta.
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Entrepreneurship Development:
Concept of entrepreneurship origin in early 16th
century in French word; enterprend it means toundertake people engaged in leading military
expedition. They were give more importance toexpanding the territory entrepreneur is combinationof many things.
F.H Knight described the entrepreneur as the bearer ofrisk under uncertainty. Entrepreneur is a new
economic functionary endowed with knowledge,judgment, foresight confidence in his own judgmentand having capacity for ruling others.
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Definitions of Entrepreneur
1. According to Adam Smith describedentrepreneur as a person who only providescapital without taking active part in the
leading role in an enterprise.
2. According to Richard CantillonEntrepreneur is an agent who buys factors of
production at certain prices in order tocombine them in to a product with a view toselling it at uncertain prices in future
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Definitions of entrepreneurs (conti.,)
3. According to Schumpeter entrepreneurs isan innovator whose function is to carry out newcombinations of means of production. He
introduces something new in to the economy:a. A new good
b. Finds a new market
c. Conquers a new source of supply of rawmaterials and
d. Carries out a new organization of an industry.
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Types of Entrepreneurs
1. Innovative entrepreneurs
2. Imitating entrepreneurs
3. Fabian entrepreneurs
4. Drone entrepreneurs
1. Innovative Entrepreneurs: entrepreneurs whocarry out new combinations of means of
production fall in this category. Suchentrepreneurs will emerge only after a certainlevel of development is attained.
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Types of Entrepreneurs (conti.,)
2. Imitating entrepreneurs: imitating
entrepreneurs are different from innovation.
They adopt the technology and products
already developed to serve their own interest.
They found in large numbers in newly
industrializing economies. However the fillip
they provide to the process of economicgrowth is considered to be stronger than that
provided by innovations.
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Types of Entrepreneurs (conti.,)
3. Fabian Entrepreneurs: Fabian entrepreneurs are apeculiar type of entrepreneur. They are very cautions andskeptical in adopting and implementing any changes.They stick to custom religion, traditions. Past experience
and following the foot steps of their ancestors. They arerisk averse and imitate new changes only when it is clearthat their survival is in danger without doing so.
4. Drone Entrepreneurs : The characteristics of DroneEntrepreneurs are that they are very conventional andnot in favour of adopting any new changes in theirenterprise. They bear loss rather than make changes intheir production process. They struggle to exist but notgrow.
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Functions of entrepreneurs
1. Perceiving market opportunities
2. Purchasing inputs
3. Gaining command over scare resources
4. Marketing of the products and responding tocompetition
5. Managing human relations within the firm
6. Managing customer and supplier relations
7. Managing finance
8. Managing production
9. Industry engineering
10. Upgrading process and product
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Features of entrepreneurs
1. Economic activities
2. Innovative activities
3. The creation of new goods4. The introduction of new method of production
5. Opening of new market
6. A function of high achievement7. Creating to purposeful activities
8. Entrepreneurship is risk bearing
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Intrapreneur
According to Donald Myers Intrapreneur isone who champions an innovation within thecorporations but is not assuming financial risk
of the business.
According to H. Holt Intrapreneur is a personwho pursues an innovation becoming achampion for its development but does sofrom within the security of his or herorganizational position.
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Functions of entrepreneur
1. Assumption of risk
2. Business decisions
3. Managerial function
4. Function of innovation
Assumption of Risk: the entrepreneur assumes allpossible risks of business. A business risk alsoinvolves the risk due to the possibility of changes in
the tastes of consumers, techniques of productionand new inventions. Such risks are not insurable. Ifthey materialize, the entrepreneur has to bear theloss himself.
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Functions of entrepreneur
2. Business decisions : The entrepreneur has todecide the nature and type of goods to beproduced. He enters the particular industrywhich offers name the best prospects andproducts and produces whatever commoditieshe thinks will pay him the most and employsthose methods of production which seem tohim the most profitable. He effects suitable
changes in the size of the business, its location,techniques of production and does everythingthat is needed for the development of hisbusiness.
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Functions of entrepreneur
3. Managerial Function: The entrepreneurperforms the managerial functions though themanagerial functions are different from
entrepreneurial functions. He formulatesproduction plan, arranges finance, purchases rawmaterials, provides production facilities,organizes sales and assumes the task of personal
management. In a large establishment, thesemanagement functions are delegated to the paidmanagerial personnel.
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Functions of entrepreneur
4. Function of Innovation: An important
function of an entrepreneur is innovation He
conceives that idea for the improvement in
the quality of production line. He considers
the economic viability and technological
feasibility in bringing about improved quality.
The introduction of different kinds ofelectronic gadgets is an example of such an
innovation of new products.
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Theories of Entrepreneruship
Druckers views of Entrepreneur: Peter Drucker definesan entrepreneur as one who always searches forchange, responds to it, and exploits it as anopportunity. Entrepreneurs innovate.
Mr. Peter Drucker has aptly observed that, innovation isthe specific tool of entrepreneurs, the means by whichthey exploit changes as an opportunity for a differentbusiness or a different service. It is capable of beingpresented as a discipline, capable of being practiced.
Entrepreneurs need to search purposefully for thesources of innovation, the changes and their symptomsthat indicate opportunities for successful innovation.
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Druckers views of entrepreneur
Systematic innovation, according to him, consists inthe purposeful and organised search for changesand in the systematic analysis of the
opportunities such changes might offer scope foreconomic and social innovation.
According to Drucker, three conditions have to befulfilled:
1. Innovation is work. It requires knowledge. Itrequires ingenuity. It makes great demands ondiligence, persistence and commitment.
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Druckers views of entrepreneur
2. To succeed, innovation must build on theirstrengths.
3. Innovation always has to be close to the
market, focused on the market, indeed market-driven.
Specially, systematic innovation means monitoringsix sources for innovative opportunity.
The first three sources lie within the enterprise,whether it be a business or a public serviceinstitution or within an industry or servicesector.
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Druckers views of entrepreneur
They are , therefore, visible primarily to people withinthat industry or services sector. They are basicallysymptoms. But they are highly reliable indicators ofchanges that have already occurred or can be made tooccur with little effort. These four sources areas are:
The unexpected the unexpected success, theunexpected failure, the unexpected outside event.
The incongruity- between reality as it actually is andreality as it is assumed to be or as it ought to be.
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Druckers views of entrepreneur
Innovation in industry structure or marketstructure that catches everyone unawares.
The second set of sources for innovative
opportunity, a set of three, involves changesoutside the enterprise or industry:
a. Demographic (population changes)
b. Changes in perception, mood and meaning.c. New knowledge, both scientific and non
scientific.
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Druckers views of entrepreneur
Principles of innovations
According to Drucker, the principles of innovation
requires a few dos and a few donts. He also
enumerates what he calls conditions
The Dos
1. Purposeful, systematic innovation begins with
an analysis of opportunities. It begins withthinking through what he has called the sources
of innovative principles.
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Druckers views of entrepreneur
Principles of innovation:
2. Innovation is both conceptual and perceptual.
The second imperative of innovation is to go
out to look, to ask, and to listen.
3. An innovation to be effective has to be simple
and it has to be focused. It should do only one
thing, otherwise it confuses. If it is not simple,it wont work.
4. A successful innovation aims at leadership
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Druckers views of entrepreneur
Principles of innovation
The Donts
1. The fist is simply not to try to be clear.
Innovations have to be handled by ordinaryhuman beings.
2. Do not diversify. Innovations that stray from acore are likely to become diffuse. They remain
ideas and do not become innovations.3. Finally, do not try to innovate for the future.Innovate for the present.
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Walkers views on enterpreneur
According to Francis A.Walker, the trueentrepreneur is one who is endowed with morethan average capacities in the task of organizingand coordinating the various other factors ofproduction. He should be pioneer, a caption ofindustry. The supply of such entrepreneurship ishowever quite limited and enterprise in generalconsists of several grades of organizational skill
and capability. The more efficient entrepreneursreceive a surplus reward over and above themanagerial wages and this sum constitutes trueprofile ascribable to superior talent.
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Factors influencing Entrepreneureship
1. Economic factors
2. Political factors
3. Psychological factors
4. Organizational factors
5.Educational factors
6. Industrial Estate
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Psychological Inputs to develop
entrepreneurial personality
Need for Achievement
Moderate Risk
Responsibility
Task performance
Thinking
High level of aspiration
Organizational Skill
Decision Making
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Mistakes made by the Entreprenurs
Lack of management
Lack of Knowledge
Wrong decision making
Strategic plan Lack of Experience
Poor financial control
Poor Location
Improper inventory control Incorrect pricing
Uncontrolled growth
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Entrepreneurial Development
Programmes
Meaning
It is a programme designed to help an individual inacquiring skills and capabilities necessary for
playing his entrepreneur role effectively.
Objectives:
1. Develop the Entrepreneurs
2. Necessary skills and knowledge3. Managerial skills
4. To provide post-training assistence
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5. To Develop this Industrialization
6. To Small scale as well as large scale
organization7. To have a Rural and backward areas balance
8. To generate self employment
9. To improve their managerial skills
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Phases of EDP
Pre-Training
Training
Post-Training
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Pre-Training
Selection of training
Creation of infrastructure facilities
Syllabus
Faculty
Inauguration
Publicity Finding interest area of training
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Training Programme
Technical knowledge and skills
Achievement motivation training
Support system and the procedure
Market survey
Managerial skill
Project preparation