Entrepreneurship

Editor's Notes

• #3: The word ‘entrepreneur’ is derived from French word ‘Entreprendre’ which was used to designate an organizer of musical or other entertainments. Later in 16th century it was used for army leaders. It was extended to cover civil engineering activities such as construction in 17th century. But it was Richard Cantillon, an Irishman living in France who first used the term entrepreneur to refer to economic activities. According to Cantillon “An entrepreneur is a person who buys factor services at certain prices with a view to selling its product at uncertain prices”. In a conference of entrepreneurship held in USA, it is defined, as “Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk taking appropriate to the opportunity and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition”. A.H. Cole has defined entrepreneurship as “the purposeful activity of an individual or group of associated individuals, undertaken to initiate, maintain or earn profit by production and distribution of economic goods and services”. Verghese Kurien (26 November 1921 – 9 September 2012) was an Indian social entrepreneur known as the "Father of the White Revolution. Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Most entrepreneurs start with a routine business activity without any innovative idea. It may be as common a business as a pan shop. So, if a farmer’s son opens a pan shop, there is no innovation but it is entrepreneurship. Whereas, if a panwalla’s son opens a new pan shop away from his father’s shop, it is not even an entrepreneurship. But yes, if he later finds a way to export his pan to some foreign country, there is innovation of finding a new market for his product and it is entrepreneurship. He has gone into a territory which was new to him and probably even to his trade. 2. A new breed of entrepreneurs is coming to the fore in large industrial organizations. They are called as ‘Intrapreneurs’. In large organizations, the top executives are encouraged to catch hold of new ideas and then convert them into products through R and D activities within the framework of organizations. It is found in developed countries that such Intrapreneurs in large number are leaving the organization and started their own enterprises. Many of such Intrapreneurs have become exceedingly successful in their ventures. 3. In US, only one out of 10 new businesses survive beyond 2nd year. Harland David Sanders, better known as Colonel Sanders (not a Army Colonel but an honorary one) started his famous Kentucky Fried Chicken business quite late in his varied career. But commonly, men are often in the age group of 25 – 35 and women in the age group of 30– 45. The term entrepreneur is used to describe men and women who establish and manage their own business. The process involved is called entrepreneurship. Entrepreneurship is an abstraction whereas entrepreneurs are tangible people. Entrepreneurship is a process and an entrepreneur is a person. Entrepreneurship is the outcome of complex socio-economic, psychological and other factors. Entrepreneur is the key individual central to entrepreneurship who makes things happen. Entrepreneur is the actor, entrepreneurship is the act. Entrepreneurship is the most effective way of bridging the gap between science and the market place by creating new enterprises. An entrepreneur is the catalyst who brings about this change. 4. 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 overall economic development. Arun Jain, Chairman & CEO of Polaris Software Lab Limited, Madhuri Mathur, made the life of ladies in kitchen easier by bringing out the idea of a kitchen machine that would blend, chop, mince and grind that culminated into sumeet mixer, Shahnaz Husain introduced herbal cosmetics to the world. Her creams and lotions have found their way into salons in different parts of the globe. She has 650 salons at 104 countries, DAN HOLTSHOUSE of “Xerox,
• #4: 2. Aziz: It used to manufacture cooking oil under the brand name Sunflower Vanaspati, and a laundry soap called 787. take charge of Wipro. The company, which was called Western Indian Vegetable Products at the time, dealt in hydrogenated oil manufacturing but Azim Premji later diversified the company to bakery fats, ethnic ingredient based toiletries, hair care soaps, baby toiletries, lighting products, and hydraulic cylinders. In the 1980s, the young entrepreneur, recognising the importance of the emerging IT field, took advantage of the vacuum left behind by the expulsion of IBM from India, changed the company name to Wipro and entered the high-technology sector by manufacturing minicomputers under technological collaboration with an American company Sentinel[10] Computer Corporation.[11] Thereafter Premji made a focused shift from soaps to software. Dhirubhai : Dhirubhai Ambani returned from Yemen to India and started "Majin" in partnership with Champaklal Damani, his second cousin,[5] who lived with him in Aden, Yemen. Majin was to import polyester yarn and export spices to Yemen. While Damani was a cautious trader and did not believe in building yarn inventories, Ambani was a known risk-taker and believed in building inventories, anticipating a price rise to make lots of profit. Franchise retail outlets were started and they used to sell "only Vimal" brand of textiles. Innovation : Innovation: Innovation is doing something new or something different. Entrepreneurs constantly look out to do something different and unique to meet the changing requirements of the customers. Entrepreneurs need not be inventors of new products or new methods of production or service, but may possess the ability of making use of the inventions for their enterprises. For example, in order to satisfy the changing needs of the customers, now-a-days fruit juice (mango, fruits etc.) in being served in tins, instead of bottles so that customers can carry it and throw away the containers after drinking the juice. Ratan Tata did not invent automobile. Foreseeing the peoples desire to have small cars at lower price, he applied new methods of mass manufacturing, made use of new, lights and relatively cheaper materials. Hence entrepreneurship needs to apply inventions on a continuous basis to meet customers changing demands for products. Schumpeter further distinguished between invention and innovation. An inventor discover a new method and new materials, and an innovator utilizes inventions and discoveries in order to make new combinations and thus produces newer and better goods which yield him profit and satisfaction. Risk Taker : Risk bearing: Giving birth to a new enterprise involves risk. Doing something new and different is also risky. The enterprise may earn profit or incur loss, which depends on various factors like changing customer preferences, increased competition, shortage or raw materials etc. An entrepreneur needs to be bold enough to assume the risk involved and hence an entrepreneur is a risk-bearer not risk-avoider. This risk-bearing ability keeps him to try on and on which ultimately makes him to succeed. The Japanese proverb “Fall seven times, stand up eight” applied to entrepreneur. Uncertainty can be of three types- (1) Risk : measurable statistically, such as probability of drawing red ball from a jar containing five red and five white ball. (2) Ambiguity : hard to measure statistically, such as probability of drawing a red ball from a jar containing five red balls but unknown numbers of white balls. (3) True Uncertainty : impossible to estimate, probability of drawing a red ball from jar containing unknown numbers of red and white balls. Organizer : According to J Baptist Say “an entrepreneur is one who combines the land of one, the labor of another and capital of yet another, and thus produces a product. By selling the product in the market, he pays interest on capital, rent on land and wages to laborers and what remains is his/her profit”. Say made distinction between the role of capitalist as a financer and the entrepreneur as an organizer. This concept of entrepreneur is associated with the functions of coordination, organisation and supervision.
• #5: the fraction of employment accounted for by business startups in the U.S. private sector over the 1980-2005 period is about 3 percent per year. This exceeds the 1.8 percent average annual net employment growth. This pattern implies that job destruction exceeds job creation at existing businesses and highlights the importance of business startups for job creation in the U.S. economy. The economic history of the presently developed countries, for example, USA and Japan tends to support the facts that the economy is an effect for which the entrepreneurship is the cause. Parson and Smelter described entrepreneurship as one of the two necessary conditions for economic development, the other being increased output of capital. Y.A. Say high describes entrepreneurship as a necessary dynamic force for economic development. In the post 1990, the new class of entrepreneurs like Dhirubhai Ambany of Reliance, Brijmohanlal of Hero Honda, Anji Reddy of Dr.Reddy Lab, Narayana Murthy of Infosys, Azim Premji of Wipro, Ramalingaraju of Satyam Computers and many more have taken the country as one among the most preferred countries for investment in the world. There are about 2542 listed companies in the Bombay Stock Exchange. The market capitalization of the traded companies on Bombay Stock Exchange is Rs. 22, 51,012 crores . Entrepreneurship begets and also injects entrepreneurship by starting a chain reaction when the entrepreneur continuously tries to improve the quality of existing goods and services and add new ones. E.g. when computers came into the market there was continuous improvement in the models, their functions etc. like first generation computers, personal computers, laptops, palmtops etc. Not only had this fostered the development of the software industry, computer education institutes, computer maintenance and stationery units etc. but also other industries like banking, railways, education, travel, films, medical and legal transcriptions, business process outsourcing [BPOs] etc. In this manner by harnessing the entrepreneurial talent a society comes out of traditional lethargy to modern industrial culture. India needs entrepreneurs to capitalize on new opportunities and to create wealth and new jobs. New entrepreneurship 8 % of country’s GDP, 45 % of manufacturing outputs, 40 % of country’s total exports, 13 lacs of job every year and maximum employement after agriculture in India.
• #6: If a region is unable to throw up a sufficient number of entrepreneurs then alien entrepreneurs usually step in to provide goods and services needed by the people. However the profits earned by these entrepreneurs are usually not ploughed back but repatriated to their place of origin. As a result development in that region cannot take place. Dr. M.M. Akhori refers to this practice as ‘The Leech Effect’. In the excavation in Harappan and Mohanjodaro the handcraft items and metal molded items were found. It is also found that the craftsmen of the time made, handicraft items as part of their contribution to the society in which they lived. The entrepreneurship to make handicraft items existed in India around 2500 B.C. People developed their own social system and village economy in India. India also developed cast-based divisions of work, which helped in the development of skills of artisans. That is to say East India Company made some contribution toward entrepreneurial growth in India 4. 65% OF Indians are below 35 years old. The actual emergence of manufacturing enterprise can be noticed in the second half of nineteenth century. In 1854 Cowasjee Nanabhoy started textile mill at Bombay, R. Chotelal started textile mill in 1861 in Ahamdabad, and in 1880 Nawrojee Wadia opened a mill in Bombay. Jamshadjee Tata established first steel industry in 1911. Though late, other commercial community namely jains, vaishyas changed their attitude from commercial entrepreneurship to industrial entrepreneurship. 2. In 1948 Indian government came forward with the first Industrial policy, which was revised from time to time. The government identified the responsibility of the state to promote, assist and develop industries in the national interest and recognized the role of private sector in accelerating industrial development. Because of this small-scale units emerged very rapidly and their number increased from 1,21,619 in 1966 to 1,90,727 in 1970. There are also examples that some entrepreneurs grew from small to medium-scale and from medium to large scale manufacturing units during the period. With the invention of digital computer, information technology era started in 1970. IBM was one of the pioneers in this field. 3. cost, technology, discovery of market, new method of production, reorganizing, challenge, intention, less initiative, risk,
• #7: 3. Sachin Bansal: Flipkart (Company) was founded in 2007 by Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked for Amazon.com, and left to create their new company incorporated in October 2007 as Flipkart Online Services Pvt. Ltd.[9] The first product they sold was the book Leaving Microsoft To Change The World.[10][11][12] Flipkart now employs more than 33000 people.[13] Flipkart allows payment methods such as cash on delivery, credit or debit card transactions, net banking, e-gift voucher and card swipe on delivery. Motorola Mobility, previously owned by Google but then sold to Lenovo, in an exclusive tie up with Flipkart launched its budget smartphone Moto G in India on 5 February 2014;[61][62] more than 20,000 units were sold within hours of launch on Flipkart[citation needed]. After this Flipkart was looking for a long term tie up with Motorola Mobility,[63] They also launched their Android smartphone, the Moto X, on 19 March 2014.[64][65] Flipkart later sold the Moto E, cheaper than Moto G, from 13 May 2014. The sale of high-end smartphone Xiaomi Mi3 produced by Xiaomi Tech was launched in India on an exclusive tie-up with Flipkart. The first batch was sold out within 39 minutes[67] on 22 July 2014, the second in 5 seconds[68] on 29 July 2014. The sale was proceeded on pre-registration mode where more than 150,000 buyers booked for the 5 August 2014 sale. This got sold off in less than 2 seconds.[69] Following this Xiaomi Tech sold 20,000 units in the next sale on 12 August 2014.[70] On 2 September 2014 Flipkart held a flash sale of the Xiaomi Redmi 1S budget Android smartphone which was launched in India in July 2014. 40, 000 units priced at Rs 5999 each were sold within seconds.[71] A further 40,000 units were sold within 4.5 seconds on Sept 9, 2014.[72] The third Redmi 1S sale on Sept 16, 2014 sold 40,000 units in 3.4 seconds;[73] In the 4th round of sale of Redmi 1S, 60,000 units sold in 5.2 seconds on Sept 23, 2014.[74] On 30 September 2014 60,000 units sold in 13.9 seconds.[75] Redmi Note in India exclusively through Flipkart; 50,000 units sold in 6 seconds on 2 December 2014. In July 2014 Flipkart launched its own set of tablet, mobile phones & Phablet. The first among these series of tablet phones was Digiflip Pro XT 712 Tablet. In July 2014 Flipkart launched its first networking router, under its own brand name named DigiFlip WR001 300 Mbit/s Wireless N Router. In September 2014 Flipkart launched its in-house home appliances and personal healthcare brand Citron. The label includes a wide range of cooking utilities and grooming products. 2. V.G. Siddhartha : After doing his Masters he joined J M Securities Limited in Mumbai as a management trainee/intern in trading on the Indian Stock Market under Mr. Mahendra Kampani. After two years with J M Securities Limited, when Siddhartha returned to Bangalore, his father gave him money to start a business of his choice. Siddhartha bought a stock market card for Rs 30,000, along with a company called Sivan Securities, which was renamed in 2000 as Way2wealth Securities Ltd with vision to set "new standards in the retail financial services in India". Its venture capital division came to be known as Global Technology Ventures (GTV) as well as a site in the city in 1984 and turned it into a highly successful investment banking and stock broking company. He was the first entrepreneur in Karnataka to set up a cyber café in 1996 (Café Coffee Day, a chain of youth hangout coffee parlors). Now, he has 1550 Coffee Day Cafes in India. Siddhartha also hopes to win the contract to take his chain to all the airports of Karnataka and then to the rest of the country. Siddhartha was awarded the Entrepreneur of the year title in 2003 by The Economic Times for "crafting a successful pan Indian brand for a commodity business and giving Indian consumers a new lifestyle experience that is within reach of the common man“. From a handful of cafés in six cites in the first five years, Café Coffee Day has become India's largest and premier retail chain of cafes with 1,423 cafes in 209 cities/towns. He has planted banana trees on 3,000 acres (1,214 ha) and plans to export bananas. 1.
• #8: 3. Sam Walton, the founder of Wal-Mart, grew up poor in a farm community in rural Missouri during the Great Depression. The poverty he experienced while growing up taught him the value of money and to persevere. After attending the University of Missouri, he immediately worked for J.C. Penny where he got his first taste of retailing. He served in World War II, after which he became a successful franchiser of Ben Franklin five-and-dime stores. In 1962, he had the idea of opening bigger stores, sticking to rural areas, keeping costs low and discounting heavily. The management disagreed with his vision. Undaunted, Walton pursued his vision, founded Wal-Mart and started a retailing success story. When Walton died in 1992, the family's net worth approached $25 billion. Today, Wal-Mart is the world's #1 retailer, with more than 4,150 stores, including discount stores, combination discount and grocery stores, and membership-only warehouse stores (Sam's Club). Learn Walton's winning formula for business.