452792973-1-entrepreneur-entrepreneurship-ppt.pptx

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1. 1 Entrepreneurship

2. CHAPTER 1 ENTREPRENEUR AND ENTREPRENEURSHIP 2

3. OBJECTIVES After going through this lesson you should be able to: Define and know the Meaning of the terms Entrepreneur, Entrepreneurship Entrepreneurship as a Career Differentiate between Wage employment, Self-employment and Entrepreneurship Differentiate the roles of an Entrepreneur and a Manager The entrepreneurial process Role of Entrepreneurship in Economic development 3

4. 4 Definition(s) Entrepreneurs An individual who takes risk and start something new one who organizes, manages, and assumes the risks of a business. Entrepreneur as an innovator, an individual developing something unique. Process of creating something new and assuming the risk and rewards.

5. 5 “ Entrepreneurship is the process of creating something new with value by devoting necessary time and efforts, assuming the accompanying financial and social risk and receiving the resulting rewards of monitory and personal satisfaction and independence .” Entrepreneurship

6. INTRODUCTION Do you know that there are millions of unemployed youth in the country and by the time you graduate, this number would have increased substantially? Do you want to be part of that group which keeps knocking from pillar to post, checking with employment exchanges, relatives, friends, and neighbors and still not able to get a job to their liking and then settle for a second or third rate job? 6

7. ENTREPRENEURSHIP AS A CAREER option After finishing your graduation you will be at the crossroads of life. You will face the dilemma of choosing what you have to do in life. The vast majority of human beings direct their activities towards earning a living, generating wealth and improving their standard of living. You can choose your career from two broad categories of options, Wage Employment or Entrepreneurship. 7

8. Difference between Wage Employment and Entrepreneurship Wage Employment Entrepreneurship Work for Others Own Boss Follow Instructions Make own plans Routine Job Creative activity Earning is fixed, never negative Can be negative sometimes, generally surplus Does not create wealth Creates Wealth, contributes to GDP Can choose from- Government service Public Sector Private Sector Can choose from- Industry Trade or Service Enterprise 8

9. TERMS OF EMPLOYMENT GENERATION Three terms of employment generation are mostly use: Income generation Self-employment Entrepreneurship 9

10. INCOME GENERATION Income generation is the initial stage in the entrepreneurial process in which one tries to generate surplus or profit. They are often taken on part- time or casual basis to supplement income e.g. a man with some surplus money might put his money in a fixed deposit account in a bank or a chit -fund to earn some interest. 10

11. SELF-EMPLOYMENT Self-employment is the second stage in the entrepreneurial process and refers to an individual’s fulltime involvement in his own occupation. e.g. a person who starts a tea shop and remains happy and satisfied and has no plans to add on any other items like samosas, buns, soft drinks etc. or to grow in any other manner e.g. supplying tea/coffee/sandwiches to others in the vicinity. 11

12. About ENTREPRENEUR An entrepreneur is always in search of new challenges. An entrepreneur is not a routine businessman he might not have resources but he will have ideas. He is innovative and creative. He can convert a threat into an opportunity. He also creates employment opportunities for others. 12

13. Difference between entrepreneur and Entrepreneurship Entrepreneur Entrepreneurship entrepreneurs are tangible people Entrepreneurship is an abstraction entrepreneur is a person Entrepreneurship is a process Entrepreneur is the key individual central to entrepreneurship who makes things happen Entrepreneurship is the outcome of complex socio-economic, psychological and other factors. Entrepreneur is the actor, entrepreneurship is the act An entrepreneur is the catalyst who brings about this change. Entrepreneurship is the most effective way of bridging the gap between science and the market place by creating new enterprises The term entrepreneur is used to describe men and women who establish and manage their own business. The process involved is called entrepreneurship. 13

14. ENTREPRENEUR vs. MANAGER RELATIONSHIP Entrepreneur Manager An entrepreneur is involved with the start-up process A manager with running the business over a long period of time An entrepreneur assumes financial, material and psychological risks. A manager does not have to bear risks An entrepreneur is driven by perception of opportunity A manager work with the resources he currently possesses An entrepreneur initiates change A manager follows rules & procedures An entrepreneur is his own boss A manager is a hired employee An entrepreneur gets uncertain rewards A manager gets fixed rewards and salary 14

15. The Entrepreneurial Process “ is the process of pursuing a new venture, whether it would be new products into existing markets, existing products into new markets and/or the creation of a new organization.”

16. Phase 1 – Identify & Evaluate the Opportunity “ Opportunity identification is the process by which an entrepreneur comes up with the opportunity for a new venture.” Opportunities are identified mostly through informal mechanisms such as consumers, business associates, channel members, technical people etc. Window of Opportunity- The time period available for creating the new venture.

17. Phase 1 – Identify & Evaluate the Opportunity Evaluation process involves looking at the length of opportunity, its real & perceived value, its risks and returns, its fit with personal skills and goals of entrepreneur, and its uniqueness or differential advantage in its competitive environment. - What market need does it fill? - What personal observations have you experienced that market need? - What social conditions underlies this market need? - What market research data can be assembled to describe this market need? - What patents might be available to fulfill this need? - What competition exists in this market? How would you describe the behavior of this competition? - Where is the money to be made in this activity?

18. Phase 2- Develop a Business Plan The description of the future direction of business is called a business plan. Time consuming but essential for developing the opportunity and determining the resources required, obtaining those resources and successfully managing the resulting venture.

19. 19 Business Plan includes Title page Table of contents Executive summary Major section Description of business Description of industry Technology plan Financial plan Production plan organization plan operational plan summary Appendixes

20. Phase 3- Determine the resources required Starts with the appraisal of present resources and grading of resources required in order of importance. Next step is acquisition of required resources in timey manner while maintaining maximum ownership. Identification of alternative suppliers.

21. Phase 4 – Manage the enterprise Management function requires the entrepreneur to use acquired resources for implementation of business plan. Dealing with operational problems Determining management style and structure. Establishing control system

22. Management function requires the entrepreneur to use acquired resources for implementation of business plan. Dealing with operational problems Determining management style and structure. Establishing control system Aspects of Entrepreneurial Process Identify & evaluate opportunity Develop business plan Resources required Manage the enterprise Opportunity assessment Creation & length of opportunity Real & perceived value of opportunity Risks & returns of opportunity Opportunity versus personal skills & goals Competitive environment Title Page Table of Contents Executive Summary Major section 1. Description of business 2. Description of Industry 3. Technology Plan 4. Marketing Plan 5. Financial Plan 6. Production Plan 7. Organization plan. 8. Operational Plan 9. Summary - Appendix Determine resources needed Determine existing resources Identify resource gaps and available suppliers Develop access to needed resources. Develop management style, Understand key variables for success. Identify problems Implement control system Develop growth strategy.

23. Role of Entrepreneurship in Economic development Boosts per capita output and income. Initiates and constitutes changes in the structure of business and society. Stimulates product evolution process ( process for developing and commercializing an innovation. Interactive synthesis: The intersection of knowledge and social needs that starts the product development process and leads to a marketable innovation.

24. Ethics and social responsibility of Entrepreneurs Business ethics The study of behavior and morals in a business situation. Social Responsibility is an ethical ideology or theory that an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem. 24

25. Link between Ethics and Social Responsibility The business ethics and corporate social responsibility (CSR), These two concepts are closely linked:  A socially responsible firm should be an ethical firm  An ethical firm should be socially responsible 25