Maharashtra Board Class 12 Organization of Commerce and Management Chapter 3 Entrepreneurship Development. PDF Download

Entrepreneurship Development

3.1 Introduction

Entrepreneurship is a full time job which requires dedication and hard work. Entrepreneurs are innovators. They are owners, producers, market creators, decision takers and risk takers. Entrepreneurs are referred to as fourth 'Factor of Production' along with the other factors such as land, labour and capital. They generate employment opportunities so they are the backbone of nation's economic progress. They play a very important role in the development of any country.

Teacher's Note

An entrepreneur is someone who starts their own business and takes risks. Like a shopkeeper who opens a small store in your neighborhood is an entrepreneur.

Exam Trick

Remember: Entrepreneur = Innovator + Risk Taker + Job Creator. Think of your local chai wala who starts his own small business - he is an entrepreneur.

Points to Remember

Entrepreneurs are innovators and risk takers.
They create new jobs and employment.
They are called the fourth factor of production.
Entrepreneurship requires hard work and dedication.
Entrepreneurs help in the growth of the country.

3.2 History

In the early 16th century the term 'Entrepreneur' was used by a Frenchman to denote men leading in military expeditions.

Around 1700 A.D. the term was used in France for contractors or architects.

By the early 18th century the term was applied to Business and economic activities by the French Economist Richard Cautillon.

In 1848, the famous economist John Sturt Mill described 'Entrepreneurship' as the founding of a Private enterprise.

As far as India is concerned, several factors are responsible for the slow growth of entrepreneurship in pre independent India. At the time of independence, the industrial base of our economy was very poor. The industries were facing many difficulties, like shortage of raw material, shortage of capital, marketing problems etc. However, the Indian Government is considerably enhancing the ease of doing business.

Teacher's Note

The word entrepreneur came from France long ago. In India, we had few entrepreneurs before independence because businesses faced many problems like lack of money and raw materials.

Exam Trick

Remember: Entrepreneur word origin = French (1500s) > Contractors (1700s) > Business activities (1800s). This shows how the meaning changed over time.

Points to Remember

The word 'Entrepreneur' comes from France.
It was first used for military leaders.
Then it was used for contractors and builders.
Later it was used for business people.
India had few entrepreneurs before independence.

3.3 Concept

The concept of entrepreneur varies from industry to industry, country to country as well as from time to time.

Economists never had a consistent definition of "entrepreneur" or "entrepreneurship". The word "entrepreneur" comes from the French verb entreprendre, it means "to undertake".

An entrepreneur is "a person who starts a business and is willing to risk loss in order to make money".

The common keywords 'businesses' and 'risk' are interrelated. If there is no real business or risk, a person cannot be called as an entrepreneur.

The small businessman who has founded your neighborhood grocery shop is an entrepreneur.

The founder of the startup laundry service across the street is an entrepreneur.

The founder of the multi-billion Reliance Co. Ltd. with his hi-tech world-leading application is an entrepreneur.

The freelancing plumber who works for himself and unclogs your drains is an entrepreneur.

Entrepreneurship means the willingness of an individual to start a new business venture by taking risk and managing it in this technology enabled competitive global environment.

The entrepreneurs are passionate to innovate, lead, invent or pioneer with a disruptive product or technology.

The size of the business, the type of work involved, the age or the formal education of the entrepreneur etc. does not restrict the entry of the entrepreneur. Similarly, the label of success or failure also does not matter.

Entrepreneurs are the people who have the courage to offer and to share an idea or a product or a service with the world. They try to make market a better place where the needs of consumers can be satisfied.

Teacher's Note

Entrepreneur = anyone who takes a risk to start a business. Your local tea shop owner, a plumber with his own shop, or a big company founder - all are entrepreneurs.

Exam Trick

Remember: Entrepreneur = Risk + Business + New Idea. No risk and no real business = NOT an entrepreneur.

Points to Remember

Entrepreneur means "to undertake" in French.
An entrepreneur takes business risk to make money.
Small and big businesses both have entrepreneurs.
Size and education do not matter for an entrepreneur.
Entrepreneurs innovate and create new products.

3.4 Definitions

Howard Stevenson, a longtime professor at Harvard Business School, defines, "Entrepreneurship is the pursuit of opportunity beyond resources controlled."

Webster dictionary gives a definition, "An entrepreneur is a person who starts a business and is willing to risk loss in order to make money."

The Oxford English Dictionary defines "an entrepreneur is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so."

Teacher's Note

Different people define entrepreneur in different ways. But all agree that an entrepreneur starts a business and takes risks. This is like how different people describe a mango tree differently, but all agree it is a mango tree.

Exam Trick

Remember three definitions: 1) Harvard = opportunity beyond resources. 2) Webster = risk loss to make money. 3) Oxford = organize business with financial risk.

Points to Remember

Entrepreneur = person who starts business.
Entrepreneur takes financial risk.
Entrepreneur pursues new opportunities.
Entrepreneur organizes and operates business.
Different experts give different definitions but all agree on risk and business.

3.5 Characteristics Of An Entrepreneur

Entrepreneurs have some special characteristics like creative thinking, imagination, enthusiasm, sincerity etc. The characteristics of an entrepreneur may be briefly stated as follows:

1) Intellectual Capabilities

An entrepreneur is a creative thinker. He has reasonably good intelligence. He has ability to analyze business situations. This ability will help him to take proper decisions.

2) Future Vision

The entrepreneur has a good foresight about future market situation. He should also have knowledge about external business environment. This will help him to take proper decisions according to the situations and changes in the market. So, he can take timely actions for the same.

3) Hard Work

An entrepreneur is ready to work hard. It is more necessary when a new venture is started. He has to work for long hours. Many a times he has to handle the main areas of business independently. This will make him successful.

4) Technical Knowledge

An entrepreneur has good technical knowledge about his business. The entrepreneur has the ability to update himself with the latest knowledge about the product, process and technology.

5) Communication Skills

An entrepreneur needs to communicate with different people like customers, suppliers, creditors, employees, etc. He must be able to express his ideas and strategies effectively. It is necessary that there is a proper understanding between the sender and the receiver of the message.

6) Highly Optimistic

An entrepreneur has to always think positively. He is always hopeful and confident about the market situations even in failure times. Such positive attitude helps him to run his business successfully.

7) Risk Bearing Capacity

Successful entrepreneur takes calculated risks. He is ready to face challenges and always seeks new and more opportunities.

8) Self Confidence

An entrepreneur has self-confidence. He has positive desires to achieve his goals. Such self-motivation keeps him strong and confident to face various obstacles.

Teacher's Note

Good entrepreneurs have 8 main characteristics. They think creatively, work hard, speak well, and are not afraid of risks. A shop owner who learns new ways to sell items and stays happy even when sales are slow has these characteristics.

Exam Trick

Remember 8 C's: Creative, Communicator, Confident, Can-do attitude, Calculated risk, Capability, Commitment, Courage. These are the 8 characteristics of an entrepreneur.

Points to Remember

Entrepreneurs are creative thinkers with good intelligence.
They can see the future and plan ahead.
They work very hard for many hours.
They know their business well and keep learning.
They can speak and explain things clearly to others.

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