EDP Notes 3 Rd Sem

8/3/2019 EDP Notes 3 Rd Sem

1/31

Kuvempu university

Institute of Management Studies

Jnana Sahyadri, Shankaraghatta.

Subject: Entrepreneurial Development and Small BusinessManagement

Presented by

Dr. R Hiremani Naik M.com , PhDReader and Chairman

Institute of Management Studies

Kuvempu university

Shankaraghatta.


2/31

Entrepreneurship Development:

Concept of entrepreneurship origin in early 16th

century in French word; enterprend it means toundertake people engaged in leading military

expedition. They were give more importance toexpanding the territory entrepreneur is combinationof many things.

F.H Knight described the entrepreneur as the bearer ofrisk under uncertainty. Entrepreneur is a new

economic functionary endowed with knowledge,judgment, foresight confidence in his own judgmentand having capacity for ruling others.


3/31

Definitions of Entrepreneur

1. According to Adam Smith describedentrepreneur as a person who only providescapital without taking active part in the

leading role in an enterprise.

2. According to Richard CantillonEntrepreneur is an agent who buys factors of

production at certain prices in order tocombine them in to a product with a view toselling it at uncertain prices in future


4/31

Definitions of entrepreneurs (conti.,)

3. According to Schumpeter entrepreneurs isan innovator whose function is to carry out newcombinations of means of production. He

introduces something new in to the economy:a. A new good

b. Finds a new market

c. Conquers a new source of supply of rawmaterials and

d. Carries out a new organization of an industry.


5/31

Types of Entrepreneurs

1. Innovative entrepreneurs

2. Imitating entrepreneurs

3. Fabian entrepreneurs

4. Drone entrepreneurs

1. Innovative Entrepreneurs: entrepreneurs whocarry out new combinations of means of

production fall in this category. Suchentrepreneurs will emerge only after a certainlevel of development is attained.


6/31

Types of Entrepreneurs (conti.,)

2. Imitating entrepreneurs: imitating

entrepreneurs are different from innovation.

They adopt the technology and products

already developed to serve their own interest.

They found in large numbers in newly

industrializing economies. However the fillip

they provide to the process of economicgrowth is considered to be stronger than that

provided by innovations.


7/31

Types of Entrepreneurs (conti.,)

3. Fabian Entrepreneurs: Fabian entrepreneurs are apeculiar type of entrepreneur. They are very cautions andskeptical in adopting and implementing any changes.They stick to custom religion, traditions. Past experience

and following the foot steps of their ancestors. They arerisk averse and imitate new changes only when it is clearthat their survival is in danger without doing so.

4. Drone Entrepreneurs : The characteristics of DroneEntrepreneurs are that they are very conventional andnot in favour of adopting any new changes in theirenterprise. They bear loss rather than make changes intheir production process. They struggle to exist but notgrow.


8/31

Functions of entrepreneurs

1. Perceiving market opportunities

2. Purchasing inputs

3. Gaining command over scare resources

4. Marketing of the products and responding tocompetition

5. Managing human relations within the firm

6. Managing customer and supplier relations

7. Managing finance

8. Managing production

9. Industry engineering

10. Upgrading process and product


9/31

Features of entrepreneurs

1. Economic activities

2. Innovative activities

3. The creation of new goods4. The introduction of new method of production

5. Opening of new market

6. A function of high achievement7. Creating to purposeful activities

8. Entrepreneurship is risk bearing


10/31

Intrapreneur

According to Donald Myers Intrapreneur isone who champions an innovation within thecorporations but is not assuming financial risk

of the business.

According to H. Holt Intrapreneur is a personwho pursues an innovation becoming achampion for its development but does sofrom within the security of his or herorganizational position.


11/31

Functions of entrepreneur

1. Assumption of risk

2. Business decisions

3. Managerial function

4. Function of innovation

Assumption of Risk: the entrepreneur assumes allpossible risks of business. A business risk alsoinvolves the risk due to the possibility of changes in

the tastes of consumers, techniques of productionand new inventions. Such risks are not insurable. Ifthey materialize, the entrepreneur has to bear theloss himself.


12/31


2. Business decisions : The entrepreneur has todecide the nature and type of goods to beproduced. He enters the particular industrywhich offers name the best prospects andproducts and produces whatever commoditieshe thinks will pay him the most and employsthose methods of production which seem tohim the most profitable. He effects suitable

changes in the size of the business, its location,techniques of production and does everythingthat is needed for the development of hisbusiness.


13/31


3. Managerial Function: The entrepreneurperforms the managerial functions though themanagerial functions are different from

entrepreneurial functions. He formulatesproduction plan, arranges finance, purchases rawmaterials, provides production facilities,organizes sales and assumes the task of personal

management. In a large establishment, thesemanagement functions are delegated to the paidmanagerial personnel.


14/31


4. Function of Innovation: An important

function of an entrepreneur is innovation He

conceives that idea for the improvement in

the quality of production line. He considers

the economic viability and technological

feasibility in bringing about improved quality.

The introduction of different kinds ofelectronic gadgets is an example of such an

innovation of new products.


15/31

Theories of Entrepreneruship

Druckers views of Entrepreneur: Peter Drucker definesan entrepreneur as one who always searches forchange, responds to it, and exploits it as anopportunity. Entrepreneurs innovate.

Mr. Peter Drucker has aptly observed that, innovation isthe specific tool of entrepreneurs, the means by whichthey exploit changes as an opportunity for a differentbusiness or a different service. It is capable of beingpresented as a discipline, capable of being practiced.

Entrepreneurs need to search purposefully for thesources of innovation, the changes and their symptomsthat indicate opportunities for successful innovation.


16/31

Druckers views of entrepreneur

Systematic innovation, according to him, consists inthe purposeful and organised search for changesand in the systematic analysis of the

opportunities such changes might offer scope foreconomic and social innovation.

According to Drucker, three conditions have to befulfilled:

1. Innovation is work. It requires knowledge. Itrequires ingenuity. It makes great demands ondiligence, persistence and commitment.


17/31


2. To succeed, innovation must build on theirstrengths.

3. Innovation always has to be close to the

market, focused on the market, indeed market-driven.

Specially, systematic innovation means monitoringsix sources for innovative opportunity.

The first three sources lie within the enterprise,whether it be a business or a public serviceinstitution or within an industry or servicesector.


18/31


They are , therefore, visible primarily to people withinthat industry or services sector. They are basicallysymptoms. But they are highly reliable indicators ofchanges that have already occurred or can be made tooccur with little effort. These four sources areas are:

The unexpected the unexpected success, theunexpected failure, the unexpected outside event.

The incongruity- between reality as it actually is andreality as it is assumed to be or as it ought to be.


19/31


Innovation in industry structure or marketstructure that catches everyone unawares.

The second set of sources for innovative

opportunity, a set of three, involves changesoutside the enterprise or industry:

a. Demographic (population changes)

b. Changes in perception, mood and meaning.c. New knowledge, both scientific and non

scientific.


20/31


Principles of innovations

According to Drucker, the principles of innovation

requires a few dos and a few donts. He also

enumerates what he calls conditions

The Dos

1. Purposeful, systematic innovation begins with

an analysis of opportunities. It begins withthinking through what he has called the sources

of innovative principles.


21/31


Principles of innovation:

2. Innovation is both conceptual and perceptual.

The second imperative of innovation is to go

out to look, to ask, and to listen.

3. An innovation to be effective has to be simple

and it has to be focused. It should do only one

thing, otherwise it confuses. If it is not simple,it wont work.

4. A successful innovation aims at leadership


22/31


Principles of innovation

The Donts

1. The fist is simply not to try to be clear.

Innovations have to be handled by ordinaryhuman beings.

2. Do not diversify. Innovations that stray from acore are likely to become diffuse. They remain

ideas and do not become innovations.3. Finally, do not try to innovate for the future.Innovate for the present.


23/31

Walkers views on enterpreneur

According to Francis A.Walker, the trueentrepreneur is one who is endowed with morethan average capacities in the task of organizingand coordinating the various other factors ofproduction. He should be pioneer, a caption ofindustry. The supply of such entrepreneurship ishowever quite limited and enterprise in generalconsists of several grades of organizational skill

and capability. The more efficient entrepreneursreceive a surplus reward over and above themanagerial wages and this sum constitutes trueprofile ascribable to superior talent.


24/31

Factors influencing Entrepreneureship

1. Economic factors

2. Political factors

3. Psychological factors

4. Organizational factors

5.Educational factors

6. Industrial Estate


25/31

Psychological Inputs to develop

entrepreneurial personality

Need for Achievement

Moderate Risk

Responsibility

Task performance

Thinking

High level of aspiration

Organizational Skill

Decision Making


26/31

Mistakes made by the Entreprenurs

Lack of management

Lack of Knowledge

Wrong decision making

Strategic plan Lack of Experience

Poor financial control

Poor Location

Improper inventory control Incorrect pricing

Uncontrolled growth


27/31

Entrepreneurial Development

Programmes

Meaning

It is a programme designed to help an individual inacquiring skills and capabilities necessary for

playing his entrepreneur role effectively.

Objectives:

1. Develop the Entrepreneurs

2. Necessary skills and knowledge3. Managerial skills

4. To provide post-training assistence


28/31

5. To Develop this Industrialization

6. To Small scale as well as large scale

organization7. To have a Rural and backward areas balance

8. To generate self employment

9. To improve their managerial skills


29/31

Phases of EDP

Pre-Training

Training

Post-Training


30/31

Pre-Training

Selection of training

Creation of infrastructure facilities

Syllabus

Faculty

Inauguration

Publicity Finding interest area of training


31/31

Training Programme

Technical knowledge and skills

Achievement motivation training

Support system and the procedure

Market survey

Managerial skill

Project preparation

Documents

EDP Notes 3 Rd Sem