for more knowledge of entrepreneur

1. 2.Avoidance of risk
[a] The meaning of tendency for risk bearing
One can become enterprising in real
sense only if he has got the strength for bearing risk.
[b] Relation between proportion of risk and return:
There is uncertainty in the industry in
which entrepreneur is ready to undertake an
enterprise because he has to spend on certain
expenses like rent, wages, interest, light, water,
transportation etc. While the income from the sale
of produced goods is uncertain.

2. Meaning of Entrepreneur
Entrepreneur is not only an individual but he
is a tremendous force because the qualities of
adventure which are present in him in the form of
that tremendous force provided him the inspiration
to do new things and by that bestows facilities that
lead man to the higher life.

3. [
• Thus, economists have presented the form of
relation between the proportion of the risk
and return on the basis of following manner:
• 1. Entrepreneur gets fixed or limited return if
there is low risk in the industry – business.
• 2. Entrepreneur gets reasonable return if
there is medium risk in the industry –
business.
• 3. Entrepreneur gets uncertain or unlimited
return if there is high[ speculation] risk in the
industry – business.

4. Definitions
According to Peter F. Drucker,” The
entrepreneur searches for changes, responds
to it and exploits it as an opportunity.”
Arthur Dewing: he says that, “
Entrepreneur is the one who transforms ideas
into a profitable business.”

5. Characteristics of Entrepreneur
1) Leadership
2) Avoidance of risk
3) Decision making
4) Business planning
5) Other Characteristics:
Lover of freedom
Hard work is the satisfaction
Trust oriented dealings
Expectation of profit in return
Entrepreneur, a path pointer
Qualities of research
Getting maximum benefit from opportunities

6. Functions of leader
• Comprehensive planning of business
• Choose the location
• Do proper management of production factor
• Bear risk
• Organise the capital

7. [c] Types of risks
• 1. Technological risks
• 2. Financial risks
• 3. Social risks
• 4. Environmental risk

8. [d] Theoretical point of view of view of
the concept of risk:
• 1. Interpretation by F.B. Hawley:
Hawley says giving the principle of profit, "The
return received by entrepreneur for bearing risk is
called profit.” In other words, profit is an inspiring
factor for risk bearing.
There is one or the other risk in every business.
There are uncertainties in the matters of demand of
goods produced by entre. , increase or decrease of
price or business may suffer because of accidents
like fire, earthquake etc.

9. 2. Interpretation by Prof. Knight:
• Knight says that in reality , profit can’t gained from
all types of risks but it can be gained only by
unknown risks. To clarify this facts knight divides
risks into two parts:
• 1. Anticipated risks
• 2. Unanticipated risks

10. 1. Anticipated risks:
• There risk are also called insurable risks. Prof.
knight says that certain risks of industry or
business can be known in advance and one
can be free from risks by covering the business
under insurance against risks. Like fire, theft,
and accident.

11. 2. Unanticipated risks:
• Knight informs, “ profit is gained not as a
reward of all kinds of risks but as a reward of
risk against which there is no insurance.”
According to him such uncertainties
in business are as follows:
• 1. Entry of new rivals in business.
• 2. Adopting of new technological methods in
production by other firms.
• 3. Government creates new rules that
interfering in business.
• 4. Sudden decrease in the demand of goods.

12. 3. DECISION MAKING
• [a] Meaning – definition of decision making:
Decision making means the choice of
best alteration among the available alteration
or selection of course of action for getting
desired results.
According to Wheeler,” The process
of choosing one special course of action from
among numerous options is decision making.”

13. According to the opinions of terry,”
decision making is the selection of one
alternatives from two or more possible
opinions depending on few standards.”
Hose and Johnson say that,”
Selection of one course of action from
available many opinions is decision making.

14. [b]Issues regarding decision making
• 1. Things to be produced.
• 2. The place of production.
• 3. The size of production and capital investment.
• 4. How to combine production factors.
• 5. Arrangement of raw material.
• 6. Decision regarding the price of produced
goods.
• 7. Arrangement for the sale.

15. [c] Stages of decision making:
• 1. Basic Decisions:
• 2. Production – oriented decisions:
• 3. Decisions regarding sales management:
• 4. Decision regarding organization:

16. 4. Business Planning:
• [a] Meaning of business planning:
Business planning is one of the
remarkable characteristics present in an
entrepreneur because planning of business using
foresightedness is the basic requirement before
starting any business.
“ Planning is the process or technique
of seeing future.”

17. Definitions:
Samuel Ellan says that, “ Business
planning is direction and the most capable
association of institute’s material and other
material facilities through the best method in order
to achieve decided intentions and targets.”
Richard B. Chase and Nicholas J. Aquilano
say, “ Business planning is entire arrangement
related to the development of special course of
required process for production method.”

18. [b] Aims of business planning:
• 1. To gain fixed profit.
• 2. To get expected right on the market demand.
• 3. manage industry at the level of pre – decisied
skill.
• 4. Settlement of objections that rise against
business.
• 5. Maintain personal and business reputation and
maintain its consistency.
• 6. Increase capacity and eligibility for facing risks
and challenges.
• 7. Carry the social and economic responsibility.

19. Other Characteristics:
• 1. Lover of Freedom:
• 2. Hard work is the satisfaction:
• 3. Qualities of research:
• 4. Getting maximum benefit from opportunities:
• 5. Trust oriented dealing:
• 6. Optimistic approach:
• 7. Expectation of profit in return:
• 8. Dynamism:
• 9. Entrepreneur. A path pointer:

20. Ch.2
Emergence of
Entrepreneurial
Class

21. Introduction
Entrepreneurial class is a very important and
inevitable factor for the development of any nation.
“Looking from historical point of view, Entrepreneurial
class has contributed in the initiation of socio-
economic development process and as the leader for
maintaining change.”
Entrepreneurial class is a great gift for the
world because he has contributed in giving new color,
new shape and beautiful form to the world. But its
emergence is not easy, it is very difficult. It is rightly
said in this reference that,” New Entrepreneur is like a
child whose imagination gives joy but its birth is very
difficult and painful.”

22. Emergence and Development of
Entrepreneurial
class
• [A] Emergence and Development of
Entrepreneurial class at the world level
1. Economic Development:
 Traditional Economic System
 Developing Economic System
 Developed Economic System

23. • 2. Social Development:
Primary Society
Feudal Society
Industrial Society
Post Industrial Society
3. Emergence and Development of Entrepreneurial
class in various Eminent Countries of the World:
Emergence and Development of Entrepreneurial
class in England
Emergence and Development of Entrepreneurial
class in America
Emergence and Development of Entrepreneurial
class in Russia
Emergence and Development of Entrepreneurial
class in Japan

24. [B] Emergence and Development of
Entrepreneurial
class
Ancient Age
Middle Age
Emergence and Development and obstacles of
Entrepreneurial class before independence
Emergence and special steps for the development of
entrepreneurial class during the time of planning
A. Importance and development of Entrepreneurial
class in India after independence
B. Steps taken for the Emergence and Development of
Entrepreneurial
class in india
1. Steps regarding policy 2. Real steps

25. • 1. Steps regarding policy:
• Encouragement by Industrial Policy
• Formation of various committees
• Desirable business policies
• 2. Real steps:
• Quick permission to the project report
• Arrangement for the training facility
• Arrangement for organization guidance
• Arrangement for preparing trainers
• Establishment of industrial colonies
• Planning of seminars and workshops
• Literature and propaganda

26. • Interest subsidy scheme
• Establishment of enterprise aid unit
• Special encouragement to women entrepreneurs
• Entrepreneurship development program me
• Standardization of goods
• Encouraging tax policy
• 100% Export promotion scheme
• Encouragement to Foreign Capital Investment[FDI]

27. Causes for the insufficient
Development of Entrepreneurial Class
in India
• Non-materialistic approach
• Social Evils
• Hereditary working system
• Doubtful approach towards progress
• Scarcity of capital
• Limited training facility
• Lack of technical education

28. • Less attention towards industrial research
• Insufficient Govt. facilities
• Loose policy of administration
• Fears of rivals
• Strict legal system and control
• Lack of enterprising tendency
• Obstruction of development of public sector
• High rates of direct taxes

29. Suggestions for the Quick
Development of Entrepreneurial
Class in India
• Change in the educational method
• Scholarship to trainees
• A permanent arrangement for guidance to
entrepreneurs
• Develop technique for entrepreneur identity
• Search for the possible industrial field
• Intensity the advertising system

30. • Extension of self-employment oriented plans
• Arrangement for every guidance to the new
entrepreneurs from one place
• Arrangement where all requirements can be
satisfied by one institute
• Suppress [ contain] the concept of bureaucracy
• Execution [effective]of long term policy
• Give priority to backward areas
• Encourage industrial research
• Reforms in industrial policy according to the time
• Adopt encouraging tax system

31. Ch. 3
Principles of the
behavior of an
Entrepreneur

32. Innovation and Entrepreneur
According to Joseph A.
Schumpeter, Entrepreneurship is called an
Entrepreneur. Entrepreneur is such a person
who does innovation. It means cons he
innovates and executes his innovation.
Innovation also gives solutions of business
problems and in this way Entrepreneur is
considered the leader solving business
problems. By using this capacity, he gets a
kind of satisfaction.

33. Form of Innovation
New thing
To introduce new things pr services in
the production and sale field in the business is
called innovation. Like flat tv. email
Improved thing or a thing with a new quality
New production method
Search of the new market
New sources for the provision of raw material
Novelty in the field of industrial organization

34. Inventor and Innovation
An inventor finds at new production
method while innovator uses these inventions
and discoveries for the development of his
own business.
As a result, he is able to produce
better things, goods of better quality and
increase his satisfaction and profit. An
inventor produces ideas while the innovator
implements these ideas.

35. Concept of Intrapreneur
• In 1895, Gifford Pinchot noted in his book
‘Intrapreneuring” that Intrapreneur is the
word used for such people who left their
present high positions offering them good
salary with an intention to start their own
industrial enterprise.
• Intrapreneur put into practice new things,
new services and new production methods
which made the company capable of getting
success and for development in the changing
environment.

36. Behavior of
Entrepreneur and
Psychological
Principles

37.  Achievement Motive
 Will power to impress others
 Feeling of being impressive
 Desire for freedom
 Hope for success
 Desire for risk bearing
 Feed-back
 Tendency for self-restrain
 Method of changing leadership
 Expectation from Employees
 Inspiration for Expansion
 Concern for the society
 Social consciousness

38. 1] Achievement Motive:
• According to McClellland, desire for high
level of success or inspiration to reach a
special level of excellence in his working
filed is the main quality of Entrepreneur.
He always works for higher goals or
purposes, challenging acts and excellent
results. So, he is diligent, dynamic and
ambitions in his life. He is believes in
struggle and prefer to look different type
of individual than other.

39. 2] will power to impress others
• On the basis of the essence of
their researches they percent
achievement motive inspires a
person to become an
entrepreneur.

40. 3] Feeling of being impressive
• An entrepreneur concentrates on all his work
and activities for the achievement of his
target. He has full faith in his eligibility and
working methods. He doesn’t try to avoid
problem but tries to find proper solutions for
them. He has a tendency of self-confidence.

41. 4] Desire for freedom
• An entrepreneur has an important
temperamental characteristic of
independence and feeling which provides him
inspiration for his independence business. He
doesn’t want to work under any observation
of anyone else.

42. 5] Hope for success
• An ent. Is always hopeful about the
future success of his industrial
enterprise. It creates self-confidence
in him. As a result, his personality
becomes dynamic.

43. 6] Desire for risk bearing
• He prefer to face challenges in business.
V

44. Ch. 4
ENTREPRENEURSHIP

45. CHARACTERISTICS OF
ENTREPRENEURSHIP
1. Capacity for risk bearing
2. Tendency for innovation
3. Process based on innovation
4. Activity based on theory
5. Tendency for Constructive Activity
6. Tendency for Creating Resources
7. Result of change
8. Unfavorable Environment condition
9. Rejection of new progressive thoughts
10. Obstruction of Large Industries
11. Defective Government System

46. Factors Obstructing Entrepreneurship
Development
1) Social Structure
2) Traditional Ideology
3) Non-productive Capital Investment Approach
4) Non-Economic Life Approach
5) Defective Education System
6) Insufficient Training and Facilities of
Encouragement
7) Servile Mentality

47. Chapter-5
Principles of
Entrepreneurship

48. [A] Economic Theory of
Entrepreneurship
1) Economic Theory of Entrepreneurship
2) X- effiency Theory
3) Harvard School Theory
4) Profit Theory
5) Economic Incentive Theory

49. 1] Economic Theory of
Entrepreneurship
• Mark Casson has presented the economic
theory of entrepreneurship in his book “ The
Entrepreneur: An Economic Theory”.
• In this theory, the definition of entrepreneur is
related to his work and why the work of
entrepreneur is very important has been
discussed.

50. • This theory presents following reason for the
emergence of the demand of
entrepreneurship:
• [a] Requirement of adaptation with social
changes is raised.
• [b] Provision of entrepreneurship is limited
and so there is relative scarcity of
entrepreneurs.
• [1] Lack of required personal qualities in an
entrepreneur.
• [2] Power of imagination
• [3] Skill [4] Professional Insight [5] Leadership

51. • In India, efforts are undertaken to develop
these qualities under entrepreneurship
development programme and by it become
rapid in the country and we can get success in
raising the economic growth rate.

52. 2] X – efficiency Theory
• This principle has been presented by Harvey
Leibenstein. This theory is used at present to
analyse the role of entrepreneur. X – efficiency
is the method for knowing what is the level of
inefficiency of the firm’s production factors.
• If the production is done till the point where a
firm’s average expense is minimum, it can be
said that the production capacity of a firm is
completed used.

53. • But in reality, X-effiency emerges in the firm.
Following reason can be given for this:
• 1] Production means of the firm are used in a
wrong manner and get wasted in this way.
Certain means remains unsed.
• In these circumtances, an entrepreneur has to
take the following actions:
• [1] Achievement of such production means
that make improvements in the current
production method.

54. • The reason behind this is that all the inputs of
the production function are not sold in the
market. Certain outputs like innovation and
leadership are uncertain.
• In this way, according to Harvey Leibenstein’s
opinion, input completing and gap filling roles
of an entrepreneur.
• Such role of an entrepreneur plays very
important role in the development of different
field of economy. As a result, the development
of entire economy can become rapid and
people’s standard of living can be improved.

55. 3] Harvard School Theory
• The main expounder of this theory is Arthur H.
Cole. According to this theory, entrepreurship is
such an objective activity that starts the business
that gives profit,, maintain and develop it. He
keeps in mind the internal condition of business.
• [1] He does activity regarding management of
business.
• [2] He observes changes in socio-economic
development

56. • According to Harvard’s traditional ideology, an
entrepreneur does activities like finding
economic opportunities and evaluating them.
• Entrepreneur work in uncertain condition of
imbalance is a more realistic event ans so
entrepreneurship has to remain alert and
aware of elements that snatch away
opportunities of profit so that other firm will
not share its profit.
• Such tendency of entrepreneur constantly
inspires him for innovation in his business. By
innovation, he can maintain or increase his
profit.

57. 4] Profit Theory
• Frank H. Knight has presented the profit
theory. According to his opinion, an
entrepreneur bears risks and uncertainty and
in return he gets profit. Knight says that
uncertainty of business can be reduced by
consolidation. Be cause of this uncertainty
includes reduction in the demand of a thing,
new rivals entre in the market, inconvenient
changes in government policy regarding
business for the firm etc.

58. 5] Economic Incentive Theory
• G.F.Papanek and J.R.Harris are the main
originators of economic incentive theory. These
economists believe that the tendency of getting
economic profit is always connected with a
person’s inner motivation.
• Papanek and harris believe that every society
possesses motivation for getting economic profit.
Every society wishes to increase its real income.
• In India, efforts of encouraging competition in the
field of business or industry have been made by
globalization, lib.eralization and privatization

59. [B] Sociological theory of
Entrepreneurship
1)Frank W. Young’s Theory
2)Max Weber’s Theory
3)B.F.Hozelitz’s Theory
4)Cultural Value Theory
5)Stocke’s Theory

60. 1] Frank W. Young’s Theory
• This theory does not accept entrepreneurship
at individual level. According to this theory,
new industrial enterprise is developed not by
individuals but by the groups of
entrepreneurs, because groups have capacity
to face challenges of business. Young’s theory
is connected with the ideology of social
change.

61. • When the following three events take place at a
time in the society,
• 1. When any group experiences low status or
position in the society.
• 2. When that group fails to reach that society level
or position which can be called important.
• 3. When that group has better institutional
resources than other groups.

62. CHAPTER – 6
SOCIAL
RESPONSIBILITY
OF
ENTREPRENEUR

63. Meaning of E.S.R.
• “ Entrepreneur’s social responsibility means
whatever is to be returned by him to the
society from moral point of view as a reward
of various outs types acquire ad sense

64. Determi
ning
Factors
of
Entrepre
neurship
Develop
ment
[A] Factors
Related to
Individual
[B] Factors
Related to
Environment
[C] Social Factor [D] Factors
Related to
Assistance or
help
1] Motivation 2] Enterprise
oriented
knowledge
1] Industrial
policy of
Government
1] Approach of
Encouraging
Lifestyle
1] Establishment
of Industrial
Colonies
# Eligibility for
Influencing
others
# Knowledge
Regarding
Industry
2] Economic
policy of
Government
# Family
Inspirations
2] Education
system
promoting
enterprising
tendency
# Capacity for
Taking
Challenges
# Knowledge
Regarding
Environment
3] Professional
Environment
# Capacity for
taking up
Challenges
3] Contribution
of assisting
Institutes
# Technical
Knowledge
4] Convenient
Rule and Legal
System
# Self-Reliant
[depend]
approach
4] Research and
Information