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1. BUSINESS PLANNING AND ENTREPRENEURSHIP MANAGEMENT UNIT 1 Dr Rakhi Bhattacharya Dr Rakhi Bhattacharya 1

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3. ENTREPRENEURS Dr Rakhi Bhattacharya 3

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6. ENTREPRENEUR Is a person who combines various factors of production, processes the raw material, converts raw material into finished goods and creates utility in the product and sell them in the market in order to earn profit. Dr Rakhi Bhattacharya 6

7. Entrepreneur Promoter Business man Trader He sets up his business with an innovative idea or concept undertaking risk. A  promoter , is someone who promotes the business. He gets people to invest money into a corporation. He sets up his business with an existing idea offering product and services to the customer. He who buy goods and services from one place and sell it at another place. Dr Rakhi Bhattacharya 7

8. NEED FOR AN ENTREPRENEUR Creation of wealth Generate employment They breaks the vicious cycle of poverty They are the agent of change They improves standard of living by introducing new product. Entrepreneurs help government to change a developing economy to a developed one. Entrepreneurial activity pays revenue to the government. Earning of foreign exchange Mobilisation of resources Dr Rakhi Bhattacharya 8

9. ENTREPRENEURSHIP The functions performed by an entrepreneur is known as entrepreneurship. It is the process of identifying opportunities in the market place, arranging the resources required to pursue theses opportunities and investing the resources to exploit the opportunities to attain long term gains. It involves creating wealth by bringing together resources in a new way to start to operate an enterprise Dr Rakhi Bhattacharya 9

10. Entrepreneurship Entrepreneur Entrepreneurship Enterprise person Process of action Object Individual Collection of activities Result of entrepreneur’s effort Dr Rakhi Bhattacharya 10

11. NEED FOR ENTREPRENEURSHIP Boost economic activities Provide balanced development Improve standard of living Contributes to economic development Innovates Bring investment Earn foreign exchange Add to the revenue of the government Establish new enterprise Brings peace in the society by keeping people gainfully occupied Dr Rakhi Bhattacharya 11

12. FUNCTION OF AN ENTREPRENEUR Innovation Project planning Organising Risk taking and uncertainty bearing Taking business decision Identifying market opportunities Mobilisation of resources Financial management Leading Dr Rakhi Bhattacharya 12

13. QUALITIES OF AN ENTREPRENEUR Confidence Clear perception Risk bearing ability Team building capacity Time consciousness and time planning Interpersonal relations Communication skill Positive attitude Leadership Innovativeness ( creative thinking) Goal setting Visionary Dr Rakhi Bhattacharya 13

14. Barriers to entrepreneurship Environmental Barrier Raw Material Labour Machinery Land/building Infrastructure financial Personal Barrier Lack of confidence Lack of dependability Lack of motivation Lack of patience Inability to dream Sense of embarrassment Dr Rakhi Bhattacharya 14

15. THEORIES OF ENTREPRENEURSHIP Innovation Theory by Joseph Schumpeter. Theory of high achievement by Mc Clelland X-Efficiency Theory by Leibenstein Theory of Profit by Knight Theory of Social change by Everett Hagen Dr Rakhi Bhattacharya 15

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17. Theory of Entrepreneurship by Joseph Schumpeter -Economic Theory Entrepreneurship Innovation New product New Method New Market Exploiting profitable opportunities Dynamic leadership Creative destruction Economic development Dr Rakhi Bhattacharya 17

18. JOSEPH SCHUMPETER’S VIEW OF ENTREPRENEURSHIP Dr Rakhi Bhattacharya 18

19. Difference between Inventor Discover new method and new material Produces idea Concerned with technical work Focussed only on invention Innovator Utilises and applies invention and discoveries to make new combination Implements idea Concerned with technical performance Exploit the invention commercially Dr Rakhi Bhattacharya 19

20. CRITICISM OF JOSEPH SCHUMPETER’S THEORY RISK TAKING IS IGNORED HIS STUDIES ARE BASED ON ONLY LARGE SCALE INCOMPLETE EXPLANATION AS TO WHY SOME COUNTRIES HAVE MORE ENTREPRENEURIAL TALENT Dr Rakhi Bhattacharya 20

21. T HEORY OF ACHIEVEMENT BY DAVID McCLELLAND –PSYCHOLOGICAL THEORY Dr Rakhi Bhattacharya 21

22. Need for Achievement Theory of David McClelland According to McClelland entrepreneurs are characterised by Doing things in new and better way. Take decision under uncertainity . Mc Clelland emphasises that achievement motivation is the most important factors for entrepreneurs. He feels there is a relationship between interest in profit and need for achievement.person with high need for achievement are less influenced by profit or monetory rewards as compared to people with less need for achievement. For them profit is merely a measure of success and competency and not an ultimate goal. Dr Rakhi Bhattacharya 22

23. Characteristics of an individual with high need for achievement Dr Rakhi Bhattacharya 23

24. DAVID MCCLELLAND ACHIEVEMENT MOTIVATION THEORY Dr Rakhi Bhattacharya 24

25. It is necessary to create a climate (especially in educational institutions at various levels) to enable the children to grow to become individuals with high n-achievement.   It is possible to improve the performance of existing entrepreneurs through imparting proper training and education.   Critical evaluation of McClelland Theory Dr Rakhi Bhattacharya 25

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30. Two roles of an entrepreneur according to Leibenstein are Entrepreneur as an input provider, in order to improve the efficiency of the firm. Entrepreneur as gap filler ; like one who buys from one market at a lower price and sell in another market at higher price . According to leibenstein there are two type of entrepreneurship Routine entrepreneurship Innovative entrepreneurship Dr Rakhi Bhattacharya 30

31. THEORY OF PROFIT BY KNIGHT Dr Rakhi Bhattacharya 31

32. ACCORDING TO F.H KNIGHT ENTREPRENEUR earns PURE PROFIT. PURE PROFIT results from risk and uncertainity . Knight identifies UNCERTAINITY with a situation where probabilities of outcome cannot be easily determined. he thought newness can create UNCERTAINITY NEWNESS Happen When New Product Is Offered In The Market. when existing product is sold in new mrket Dr Rakhi Bhattacharya 32

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35. Theory of Social change by Everett E Hagen Dr Rakhi Bhattacharya 35

36. CONTRIBUTION OF HAGEN’S THEORY Dr Rakhi Bhattacharya 36

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38. ASSUMPTIONS FOR HAGEN’S THEORY WERE Entrepreneurs results from interrelationship between physical environment, social structure, personality and culture He viewed entrepreneur as creative problem solver. He rejected the idea that solution to economic development lies in imitating western technology. He indicates that historic shift is a crucial which has brought about social change and technological progress Dr Rakhi Bhattacharya 38

39. PERSONALITY TYPES RESULTING FROM WITHDRAWAL OF STATUS RETREATIST: he continues to work in society but remains indifferent to his work or status. RITUALIST: he adopts defensive behaviour and act in a way which is approved and accepted by his society. He does not expect any improvement in his status. REFORMIST: he revolts and tries to bring new norms in the society. Innovator: he is a creative individual and most likely to be an entrepreneur. Dr Rakhi Bhattacharya 39

40. The theory acts to distinguish between entrepreneurship and intra- preneurship . There are different factors within the organisation which motivate the executives and professionals to do some innovative behaviour leading to new products and services. Actually, they are not governed by status withdrawal.   The theory only suggests that the people, who had enjoyed social standing at some stage in their histories fall into a retreatist phase and with an urge to regain that lost status emerge as entrepreneurial personality. The theory also presupposes a long term perspective for entrepreneurial growth about three to five generations for the emergence of entrepreneurship.   But actually it does not happen. In India, first generation entrepreneurs are quite successful in their entrepreneurial behaviour. J.P. Gour of Jai Prakash Industries and Sunil Mittal of Bharti group etc. can be cited in this context. CRITICAL ANALYSIS OF HAGEN’S THEORY Dr Rakhi Bhattacharya 40

41. https://www.jewishvirtuallibrary.org/prominent-companies-founded-by-jews-in-america https://www.youtube.com/watch?v=A8gNHr4GjB8 BPEM b https://www.youtube.com/watch?v=nEYZeP_yBqs VIDEOS ON ENTREPRENEURSHIP Dr Rakhi Bhattacharya 41

42. Factors influencing entrepreneurship Economic factors Capital Labour Raw material Market Infrastructure Economic condition Socio Cultural Factors Community attitude towards risk Caste system Family background Education Attitude of the society Role models Political influences Stable political condition Govt support to entrepreneurship development Low taxes to encourage entrepreneurship Infrastructure Economic freedom Favourable labour and environmental law Personal Characteristics Innovator Risktaker Achievement orientation Personality Decision making skill Communication skill Dr Rakhi Bhattacharya 42

43. ENTREPRENEURIAL CULTURE An Entrepreneurial Organizational Culture (EOC) is a system of shared values, beliefs and norms of members of an organization, including valuing creativity and tolerance of creative people, believing that innovating and seizing market opportunities are appropriate behaviors to deal with problems of survival and prosperity, Dealing with environmental uncertainty and competitors' threats and expecting organizational members to behave accordingly . Dr Rakhi Bhattacharya 43

44. HOFSTEDE’S DIMENSIONS OF CULTURE Individualism and Collectivism: the degree to which people prefer to act as individuals rather than as groups. Power distance: the degree of inequality accepted by the community Uncertainity avoidance: the degree to which people avoid ambiguity/ uncertainity and prefer structure. Masculanity vs Feminity : quality of life issues like achievement and assertiveness vs relationships and concern for others Dr Rakhi Bhattacharya 44

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46. HOFSTEDE’S DIMENSION OF CULTURE The growing entrepreneurial firm should Move from high individualism to collectivism -encouraging ingroup feeling with strong sense of identity that encourages cooperation, building of relationships and network Have low power distance -egalitarian, informal and open relationships; information flow and flat organisational structures Have low uncertainity avoidance -A tolerance of risk and ambiguity, preference for flexibility and personal choice and decision making Achieve a balance between masculine vs feminine -Between outgroup achievement orientation and ingroup relationship and network building Dr Rakhi Bhattacharya 46

47. Elements of Entrepreneurial Culture • People and empowerment focused • Value creation through innovation and change • Attention to the basics • Hands-on management • Doing the right thing • Freedom to grow and to fail • Commitment and personal responsibility • Emphasis on the future Quality culture Concern for environment Concern for social development Dr Rakhi Bhattacharya 47

48. Dr Rakhi Bhattacharya 48 Why are entrepreneurs called change agent? The process of becoming an entrepreneur is _________________. Most important function of an entrepreneur is ­­­­­­­­­­______________ and ________________. _____________ is considered as a quality of an entrepreneur. Innovation theory of entrepreneurship was propounded by ________________________. Theory of high achievement is propounded by ___________________. Everett Hagen came up with the theory of _____________. Theory of profit was propounded by _____________. What is innovation according to Joseph Schumpeter? Invention ___________ new method and new material and innovation make commercial use of ____________. 3 type of need according to David Mc Clelland are ______________________________. _____________ need drive individual towards entrepreneurship. The degree of inefficiency in the use of resources within the firm is known as ____________. 2 reasons for X-efficiency are:

49. Dr Rakhi Bhattacharya 49 Role of entrepreneur in X Efficiency are _________________ and _________________. According to Leibenstein entrepreneurship are of two types _________________ and _______________. Theory of profit was propounded by _________________. ____________ profit results from risk and uncertainity . Uncertainity is caused by __________________. According to theory of social change entrepreneurship results from ____________________. Personality types resulting from withdrawal of status are _______________, ______________, ________________ and ______________. What are the factors influencing entrepreneurship?

50. Dr Rakhi Bhattacharya 50 Entrepreneurship innovation and risk taking Creativity 10) Discover 13) X efficiency 14) Actual output is lesser than output attributable to the input 15) Firms resources are used in a wrong way or are wasted 2) Routine and innovative entrepreneurship 3) Gap filler and input provider 4) Pure profit