1. Entrepreneurship Development SAGIB KUMAR GHOSH M.Com (DU), MBA (AIT), MIM (France) Associate Professor Department of Marketing University of Chittagong Email: sghoshcu@yahoo.com sghoshcu@yahoo.com

2. Lecture Contents Definition and Nature of Entrepreneurship Definition and Nature of Entrepreneurship Who is an Entrepreneur? Who is an Entrepreneur? Characteristics of an Entrepreneur Characteristics of an Entrepreneur Functions of Entrepreneur Functions of Entrepreneur Difference between Entrepreneur and Manager Difference between Entrepreneur and Manager

3. Entrepreneurs Challenging the Unknown Entrepreneurs Entrepreneurs Recognize opportunities where others see chaos or confusion Recognize opportunities where others see chaos or confusion Are aggressive catalysts for change within the marketplace Are aggressive catalysts for change within the marketplace Challenge the unknown and continuously create the future Challenge the unknown and continuously create the future

4. Entrepreneurship: A Mindset Entrepreneurship is more than the mere creation of business: Entrepreneurship is more than the mere creation of business: Seeking opportunities Seeking opportunities Taking risks beyond security Taking risks beyond security Having the tenacity to push an idea through to reality Having the tenacity to push an idea through to reality Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.

5. The Evolution of Entrepreneurship Entrepreneur is derived from the French entreprendre, meaning “to undertake.” Entrepreneur is derived from the French entreprendre, meaning “to undertake.” The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject. Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject.

6. Definition of Entrepreneurship Entrepreneurship is the act of being an entrepreneur, who starts any economic activity for being self-employed. Entrepreneurship is the “process of the entrepreneur”. It is an attempt to create value through recognition of business opportunity. It is basically communicative and management functions to mobilize financial and material resources. The entrepreneurial activity is governed by varying combination of socio- economic, psychological, cultural and other factors: Caste/religion, Family background, Level of education, Level of perception, Occupational background, Migratory character, Entry into entrepreneurship, Nature of enterprise, Investment capacity and Ambition/moderation.

7. A Summary Description of Entrepreneurship Entrepreneurship (Robert C. Ronstadt) Entrepreneurship (Robert C. Ronstadt) The dynamic process of creating incremental wealth. The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service. This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service. The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources. The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources.

8. An Integrated Definition Entrepreneurship Entrepreneurship A dynamic process of vision, change, and creation. A dynamic process of vision, change, and creation. Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essential ingredients include: Essential ingredients include: The willingness to take calculated risks—in terms of time, equity, or career. The willingness to take calculated risks—in terms of time, equity, or career. The ability to formulate an effective venture team; the creative skill to marshal needed resources. The ability to formulate an effective venture team; the creative skill to marshal needed resources. The fundamental skills of building a solid business plan. The fundamental skills of building a solid business plan. The vision to recognize opportunity where others see chaos, contradiction, and confusion. The vision to recognize opportunity where others see chaos, contradiction, and confusion.

9. An Integrative Model of Entrepreneurial Inputs and Outcomes Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship: An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31.

10. Need for Entrepreneurship Increases national production Increases national production Balanced area development Balanced area development Dispersal of economic power Dispersal of economic power Reinvestment of the profit for the welfare of the area of profit generation Reinvestment of the profit for the welfare of the area of profit generation Development is the function of motivation and human resource Development is the function of motivation and human resource Entrepreneurial awareness Entrepreneurial awareness

11. Entrepreneur An entrepreneur is defined as “person in effective control of commercial undertaking; one who undertakes a business or an enterprise”. Entrepreneur is an innovative person who maximizes his profits by following new strategies or venturing into new products or services.

12. Entrepreneurial Characteristics Being an entrepreneur requires specific characteristics and skills that are often achieved through education, hard work, and planning. Risk Taker Businesses face risk. Entrepreneurs minimize risk through research, planning, and skill development. Perceptive Entrepreneurs view problems as opportunities and challenges. Curious Entrepreneurs like to know how things work. They take the time and initiative to pursue the unknown.

13. Entrepreneurial Characteristics Imaginative Entrepreneurs are creative. They imagine solutions to problems that encourage them to create new products and generate ideas. Persistent True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal with money, family, or stress problems. But they still stick to their dreams of seeing the venture succeed. Goal-setting Entrepreneurs are motivated by the excitement of staring a new business. Once achieved, they seek out new goals or ventures to try. Hardworking Entrepreneurs need a great deal of energy to see a venture start and succeed. Yet they are not deterred by the long hours to achieve their goal.

14. Entrepreneurial Characteristics Self-confident Entrepreneurs believe in themselves. Their self-confidence takes care of any doubts they may have. Flexible Entrepreneurs must be flexible in order to adapt to changing trends, markets, technologies, rules, and economic environments. Independent An entrepreneur’s desire for control and the ability to make decisions often makes it difficult for them to work in a controlled environment.

15. Common Characteristics of Entrepreneurs Total Commitment, determination, and perseverance Total Commitment, determination, and perseverance Drive to achieve and grow Drive to achieve and grow Opportunity and goal orientation Opportunity and goal orientation Taking Initiative and personal responsibility Taking Initiative and personal responsibility Persistent problem solving Persistent problem solving Seeking feedback Seeking feedback Internal locus of control Internal locus of control Tolerance for ambiguity Tolerance for ambiguity Realism and a sense of humor Realism and a sense of humor Calculated risk taking Calculated risk taking Tolerance for failure Tolerance for failure High energy level High energy level Creativity and Innovativeness Creativity and Innovativeness Vision Vision Self-confidence and optimism Self-confidence and optimism Independence Independence Team building Team building

16. Functions of an Entrepreneur There has been a great deal of confusion and contradiction in literature on the functions of an entrepreneur. FUNCTIONS 1. Innovations: J. Schumpeter has made substantial contribution to the literature of entrepreneurship. The process of innovations may be in the form of: Introduction of a new product. Use of new methods of production. Opening of a new market. The conquest of new source of supply of raw material. A new form of organisation.

17. Functions of an Entrepreneur 2. Risk-taking: Richard cantillon states that entrepreneur is an agent who buys means of production at certain prices and sells them at uncertain prices. The entrepreneur performs the function of reducing uncertainty in his plan of investment and expansion of the enterprise. J.b. Say also stresses risk-taking as the specific function of an entrepreneur. 3. Decision Maker: Entrepreneur as a decision maker describes the following functions of an entrepreneur. The determination of objectives of an enterprise and the change of those objectives as conditions required or made advantageous, The development of an organization including efficient relations with subordinates and all employees Securing adequate financial resources, the relations with existing and potential Investors, The acquisition of efficient technological equipment and the revision of it as new machinery appears,

18. Functions of an Entrepreneur 4. Organization and Management: Marshall recognized organization and management of the enterprise as the important functions of an entrepreneur. When the organisation grows bigger, the entrepreneur effectively delegates authority and finds responsibility at various levels of management. The network of decision making becomes more complex. The functions of organization and management includes: Planning of an enterprise, Co-ordination, administration and control, Routine type of supervision.

19. DISTINCTION BETWEEN AN ENTREPRENEUR AND A MANAGER ENTREPRENEURS ENTREPRENEURS 1. Status: An entrepreneur is the owner of his enterprise. He makes his own investment and owns his business. 2. Target: The main target of an entrepreneur is to start his venture by setting up as a sole- trader or firm or a company. 1. Status: An entrepreneur is the owner of his enterprise. He makes his own investment and owns his business. 2. Target: The main target of an entrepreneur is to start his venture by setting up as a sole- trader or firm or a company. MANAGERS MANAGERS 1. Status: A manager is just an employee in the enterprise which is owned and run by entrepreneur. 2. Target: The main goal or motive of a manager is give his services to an enterprise set up by someone else i.e. an entrepreneur. 1. Status: A manager is just an employee in the enterprise which is owned and run by entrepreneur. 2. Target: The main goal or motive of a manager is give his services to an enterprise set up by someone else i.e. an entrepreneur.

20. ENTREPRENEURSENTREPRENEURS 3. Decision making: All of the policies and strategic decisions, like those comprising of expansion diversification, take-over etc are taken by the entrepreneur. 4.Rectification of wrong decisions: The wrong decisions taken by the entrepreneur may not be rectificable and may result in losses or even closure of the unit. 3. Decision making: All of the policies and strategic decisions, like those comprising of expansion diversification, take-over etc are taken by the entrepreneur. 4.Rectification of wrong decisions: The wrong decisions taken by the entrepreneur may not be rectificable and may result in losses or even closure of the unit. MANAGERSMANAGERS 3. Decision making: While all those managerial, operational decisions which would have impact on the short-and medium- term results are taken by the managers. 4. Rectification of wrong decisions: Whereas the wrong decisions taken by the managers can be amended and rectified by the entrepreneur. 3. Decision making: While all those managerial, operational decisions which would have impact on the short-and medium- term results are taken by the managers. 4. Rectification of wrong decisions: Whereas the wrong decisions taken by the managers can be amended and rectified by the entrepreneur.

21. ENTREPRENEURS ENTREPRENEURS 5. Innovations: An entrepreneur innovates and exploits his innovation commercially. 6. Risk bearing: An entrepreneur being the owner of his unit undertakes all risks and uncertainty of running his enterprise. 7. Skills: The skill expected from an entrepreneur is in the form of creativity, innovation, desire for high achievement, intuition etc. 5. Innovations: An entrepreneur innovates and exploits his innovation commercially. 6. Risk bearing: An entrepreneur being the owner of his unit undertakes all risks and uncertainty of running his enterprise. 7. Skills: The skill expected from an entrepreneur is in the form of creativity, innovation, desire for high achievement, intuition etc. MANAGERS MANAGERS 5. Innovations: A manager is merely an officer or an executive who is appointed for the promotion of the unit. 6. Risk bearing : A manager doesn’t bear any risk because he is paid fixed salary. 7. Skills: Whereas manger depends on public dealing abilities and conceptual abilities. 5. Innovations: A manager is merely an officer or an executive who is appointed for the promotion of the unit. 6. Risk bearing : A manager doesn’t bear any risk because he is paid fixed salary. 7. Skills: Whereas manger depends on public dealing abilities and conceptual abilities.

22. ENTREPRENEURS ENTREPRENEURS 8. Qualification: An entrepreneur doesn’t need to have distinct degree from a reputed university. 9. Rewards: The reward of an entrepreneur is the profit earned by him. 8. Qualification: An entrepreneur doesn’t need to have distinct degree from a reputed university. 9. Rewards: The reward of an entrepreneur is the profit earned by him. MANAGERS MANAGERS 8. Qualification: On the other hand, a manager now a days need to possess degree in the stream of management theory and practice. 9. Rewards: A manager gets his monthly salary as his reward for the services rendered by him. 8. Qualification: On the other hand, a manager now a days need to possess degree in the stream of management theory and practice. 9. Rewards: A manager gets his monthly salary as his reward for the services rendered by him.