UNIT - IV ENTREPRENEURESHIP

UNIT - IV

ENTREPRENEURESHIP

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 neighbours and still not able to get a job to their liking and then settle for a second or third rate job?

CONCEPTS AND DEFINITIONS

So let us see is setting up one’s business that simple and easy or is there more to it. In order to know what being enterprising is all about we need to understand the following terms Entrepreneur, Entrepreneurship and Enterprise.

ENTREPRENEUR

 An entrepreneur is a person who starts an enterprise. To put it very simply an entrepreneur is someone who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it.  Computers, mobile phones, washing machines, ATMs, Credit Cards, Courier Service, and Ready to eat Foods are all examples of entrepreneurial ideas that got converted into products or services.

Some definitions of an entrepreneur are listed below: 

1725: Richard Cantillon: An entrepreneur is a person who pays a certain price for 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. 

1803: J.B. Say: An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.

1934: Schumpeter: According to him entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services. 

1961: David McClleland: An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker.

1964: Peter Drucker: An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.

ENTREPRENEURSHIP

Entrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. It is a knack of sensing opportunity where others see chaos, contradiction and confusion. Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive benefits by setting up a venture. It comprises of numerous activities involved in conception, creation and running an enterprise. Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of complex socio-economic, psychological, technological, legal and other factors. Different entrepreneurs might have some common traits but all of them will have some different and unique features.

ENTERPRISE

Entrepreneur is a person who starts an enterprise. The process of creation is called entrepreneurship. The entrepreneur is the actor and 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 over all economic development. 

OBJECTIVES

The general objectives of the entrepreneurship are as follows:

• Inculcate the Desire to take up Entrepreneurship as a Career 

• Differentiate between Wage employment, Self-employment and Entrepreneurship

• Define and know the Meaning of the terms Entrepreneur, Entrepreneurship and Enterprise

• Learn about the Functions performed by an Entrepreneur

• Understand the Role of Entrepreneurship in Economic Development 

• Differentiate the roles of an Entrepreneur and a Manager

Difference between Wage Employment and Entrepreneurship 

Wage Employment	Entrepreneurship
Work for Others	Make own plans
Follow Instructions	Creative activity
Routine Job	Can be negative sometimes
Earning is fixed	Generally surplus
Never negative	Creates Wealth
Does not create wealth	Contributes to GDP
Can choose from-       Government service       Public Sector       Private Sector	Can choose from-      Industry      Trade or      Service Enterprise

FUNCTIONS OF AN ENTREPRENEUR

An entrepreneur frequently has to wear many hats. He has to perceive opportunity, plan, organize resources, and oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk. The main functions of an entrepreneur are as follows:

1. Innovation

2. Risk and uncertainty bearing

3. Organization building

ENTREPRENEUR vs. MANAGER RELATIONSHIP

The terms entrepreneur and manager are many times used interchangeably yet they are different. An entrepreneur starts a venture then a manager takes over to organize and co-ordinate continuous production. An entrepreneur is being enterprising as long as he starts something new then the routine day-to-day management of the business is passed on to the manager. The main differences between the two are summed up below:

Differences between Entrepreneur and Manager

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 by 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

QUESTIONS

1. Distinguish between wage-employment, income-generation and entrepreneurship.

2. Discuss the main functions of an entrepreneur.

3. Explain the role of entrepreneurship in economic development.

4. Distinguish between entrepreneurs and managers.

5. ‘Entrepreneurs are born not made.’ Comment.

HUMAN RESOURCE MANAGEMENT

Human Resource Management focuses on all issues related to ‘people’ in the organization.  The people in an organization are undoubtedly the most important assets. Therefore, special care must be exercised in managing them.  Human resource management is concerned with practices involved in the acquisition, development, motivation and maintenance of people.  This is important to achieve the organizational goals. The people in the organization are instrumental to its success.  If human resource management practices are good, then the organization will be effective and efficient.

ROLE OF HUMAN RESOURCES MANAGERS

Human Resources Managers are involved in the process of organizing, developing, motivating and maintaining the human resources in the organization.

• Acquisition implies a need to put the right people on the right job.  It therefore emphasizes the need to select the right person as well as to define jobs completely. 
• Developing indicates the need to hone the skills of employees in order to enable them to perform well on their job. 
• Motivation is concerned with sustaining the level of performance of each and every employee in the organization.  In today’s context of high attrition, there is a need to design attractive measures to retain high performers. 

Organizations are realizing that this task is perhaps of prime concern. The maintenance function is concerned with such issues that have a direct impact on building employee relationships.

GOALS OF HUMAN RESOURCES MANAGERS

Following are the main goals of the human resource managers

• Acquisition
• Human Resource Planning
• Recruiting
• Selection
• Induction and Socialization
• Development
• Employee Training
• Management Development
• Organizational Development
• Career Development
• Maintenance
• Improving Work Conditions
• Benefits and Services
• Safety and Health
• Employee Relationships
• Motivation
• Performance Appraisal
• Linking Reward to Performance
• Ensuring Satisfaction