Kerala Plus Two Business Studies Notes Chapter 13 Entrepreneurial Development
Meaning
All activities undertaken by an entrepreneur to bring a business unit into existence are collectively known as entrepreneurship. Entrepreneur is the person who undertakes the risk of new enterprise. The business unit is called an enterprise.
Characteristics of Entrepreneurship
- It is a systematic and purposeful activity.
- The object of entrepreneurship is lawful business.
- Entrepreneurship is a creative response to the environment and an ability to exploit an economic opportunity.
- It is concerned with employing, managing, and developing the factors of production.
- Entrepreneurship involves risk. Profit is the reward of risk taking.
Relationship between Entrepreneurship and Management
Entrepreneurship:
- The main motive of an entrepreneur is to start a venture by setting up an enterprise.
- An entrepreneur is the owner of the enterprise.
- An entrepreneur assumes all risks and uncertainty.
- An entrepreneur gets profit.
- An Entrepreneur acts as an innovator.
- Entrepreneur is self motivated
Management:
- The main motive of a manager is to render his services in an enterprise already set up by someone.
- A manager is the servant in the enterprise.
- A manager does not bear any risk involved in the enterprise.
- A manager gets salary.
- Manager executes the plans prepared by the entrepreneur.
- Manager is motivated by entrepreneur.
Functions (Role) of Entrepreneurs in Relation to Economic Development
1) Contribution to GDP: Entrepreneurs explore and exploit opportunities, encourage effective resource mobilisation of capital and skill, bring in new products and services and develops markets for growth of the economy. In this way, they help increasing gross national product (GDP) as well as per capita income of the people in a country.
2) Capital Formation: Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ these resources for setting up an enterprise.
3) Generation of Employment: With the setting up of more andmore business units by entrepreneurs, a large number of employment opportunities are created.
4) Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas.
5) Reduces Concentration of Economic Power: A large number of entrepreneurs needs to be developed, which will help reduce the concentration of economic power amongst the population.
6) Improvement in the Standard of Living: Entrepreneurs enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living.
7) Promotes Export Trade: Entrepreneurs help in promoting a country’s export-trade, which is an important ingredient of economic development.
8) Facilitates Overall Development: The entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and invite others for overall development of the area.
Role of Entrepreneurs in Relation to their Enterprise
- Perceiving market opportunities
- Gaining command over scarce resources.
- Marketing of the products.
- Face the competition
- Dealing with public bureaucracy (concession, licenses and taxes)
- Managing the human relation within the firm.
- Managing customer and supplier relations.
- Managing finance.
- Acquiring and overseeing assembly of the factory.
- Improve the quality of the products
Process of Setting up a Business
Entrepreneurial Competencies
- He has the ability to take or initiate the first move towards setting up of an enterprise.
- He is always on the lookout or searching for opportunity and is ready to exploit it in the best interest of the enterprise.
- Successful entrepreneur finds ways to do things faster with fewer resources at tower costs.
- He belives in systematic planning and its proper execution to reach goals.
- An entrepreneur is never disheartened by failures. He follows try-try again for overcoming the obstacles.
- An entrepreneur is always in search of new ideas from various sources.
- He has the ability to understand and solve business problems.
- He must be optimistic
Qualities of an entrepreneur can be summarised as follows
Entrepreneurial Motivation
The entrepreneurial motivation may be defined as the process that activates and motivates the entrepreneur to exert higher level of efforts for the achievement of organisational goals.
1) Need for Achievement (N-Ach.): Need for achievement implies a desire to accomplish something difficult. They are intrinsically motivated. They prefer work that has a moderate chance for success (about 50/50) and tend to avoid situations that are low-risk and those that are high-risk.
2) Need for Power (N-Pow): Need for Power is the concern for influencing people or the behaviour of others for moving in the chosen direction and attaining the envisioned objectives.
3) Need for Affiliation (N-Aff.): The need for affiliation is characterised by a desire to belong, an enjoyment of teamwork, a concern about interpersonal relationships, etc.
4) Need for Autonomy (N-Aut.): The need for autonomy is a desire for independence and being responsible and accountable to oneself rather than some external authority for performance.
Entrepreneurial Values and Attitudes
Entrepreneurial values and attitudes refer to the behavioural choices of individuals make for success in entrepreneurship.