MANAGEMENT AND ENTREPRENEURSHIP FOR IT INDUSTRY 18CS51

Module – 3
Entrepreneur – meaning of entrepreneur, characteristics of entrepreneurs, classification and
types of entrepreneurs, various stages in entrepreneurial process, role of entrepreneurs in
economic development, entrepreneurship in India and barriers to entrepreneurship.
Identification of business opportunities, market feasibility study, technical feasibility study,
financial feasibility study and social feasibility study.

1. Define Entrepreneur according to the various personalities.

Ans: Entrepreneur is an innovator who carries out new combinations in ever changing
environment to initiate & accelerate the process of economics social & technological
development.
Entrepreneur is the person having a dynamic activity to prime changes in the process of
production, innovations in business, new ideas & usages of resources, establishing new
markets.

Schumpeter’s view on Entrepreneur “ The entrepreneur in an advanced economy is an

individual who introduce something new in the economy – a method of production not yet
tested by experience in the branch of manufacturing , a product with which consumer are not
yet familiar, a new source of raw material or of new markets and the like ”.

Drucker’s view on Entrepreneur “An entrepreneur is the one who always searches for
changes responds to it & exploits it as an opportunity. Innovation is the specific tool of
entrepreneurs, the means by which they exploit changes as an opportunity for a different
business or different service.”

ILO view on Entrepreneur “Management is the complex of continuously coordinated

activity by means of which any undertaking administration/public or private service conducts
its business”.

Lawrence A. Appley view on Entrepreneur “Management is guiding human and physical

resources into a dynamic, hard hitting organization until that attains its objectives to the
satisfaction of those served and with a high degree of morale and sense of attainment on the
part of those rendering the service”.

Francis A. Walker view on Entrepreneur “A true entrepreneur is one who is endowed with
more than average capacities. He is a pioneer & captain of industry”

E. E. Haggen view on Entrepreneur “Entrepreneur is an economic man who tries to

maximize his profits by innovations”

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2. What are the characteristics of an Entrepreneur?

Ans. Dynamism: Dynamism revises the targets of the enterprise upwards time and again. A
dynamic entrepreneur is always pragmatic. He sets attainable goals, which are to be
accomplished within specific time frames. A good entrepreneur –manager trains his staff
continuously besides undergoing the same process himself. A Dynamic entrepreneur believes
in action rather than depending on lengthy paper correspondence. Profitable enterprises are
known for their dynamic and aggressive leadership.

Innovation: Entrepreneurs innovate. Innovation creates a resource. Successful

entrepreneurs, whatever their individual motivation, try to create something of value and to
make a contribution. Innovation is the most important function of an entrepreneur. Innovative
spirit is fed by information, knowledge or even by intuition.

Goal Orientation: Goal setting is the achievement of targets and objectives for successful
performance of an entrepreneur, both long run and short run. It helps to measure how well
individuals and groups are meeting the performance standards.

Commitment: Will power and commitment to the task undertaken are important
characteristics of an entrepreneur. Strong determination with sound thinking fortifies will
power.

Risk-Taking and decision Ability: Entrepreneurs are persons who take decisions under
conditions of uncertainty, and therefore are willing to bear risk, but never gamble with
results. Risk bearing and decisions making calls for absolute clarity in thinking and
coordinated actions.
Decision making in an environment of uncertainty requires anticipation of risk. Profit is said
to be the reward for anticipating and taking such a risk. The risk, however, needs to be well
calculated and access to liquid resources may be desirable to overcome uncertainties and
unforeseen contingencies.
Profit Potential: “Profit Potential is the likely level of return or compensation to the
entrepreneur for taking on the risk of developing an idea into an actual business venture.”
Without profit potential, the efforts of entrepreneurs would remain only an abstract and a
theoretical leisure activity.
• A good entrepreneur should be action oriented enthusiastic & energetic & ready to take
risk at all levels to achieve the goal.
• Should have determination & commitment.
• Creativeness & result oriented, hard working
• Accepts responsibilities with enthusiasm,
• Self confident deactivated & self disciplined
• Future vision intelligent, imaginative & self directed

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3. What is Entrepreneurship? Explain various types of Entrepreneurs.

ANS: Entrepreneurship is a process undertaken by an entrepreneur to augment his business
interests. Some authors define it as “ Entrepreneurship as the indivisible process flourishes,
when the interlinked dimensions of individual psychological entrepreneurship,
entrepreneurial traits, social encouragement, business opportunities, government policies,
availability of resources and opportunities converge towards the common good, development
of the society and economy.

Different types of Entrepreneurs are:

1. Based on functional characteristics
a) Innovative Entrepreneur: Such entrepreneurs introduce new goods or new
methods of production or discover new markets or reorganize their enterprises.
b) Imitative or Adoptive Entrepreneur: Such entrepreneurs do not innovate
themselves, but imitate techniques and technology innovated by others.
c) Fabian Entrepreneur: Such entrepreneurs display great caution and skepticism in
experimenting with any change in their enterprise.
d) Drone Entrepreneur: Such entrepreneurs are characterized by a die-hard
conservatism and may even be prepared to suffer the loss of business.
2. Based on development angle
a) Prime Mover: This entrepreneur sets in motion a powerful sequence of
development, expansion and diversification of business.
b) Manager: Such an entrepreneur is just content staying in business.
c) Minor Innovator: This entrepreneur contributes to economic progress by finding
better use for existing resources.
d) Satellite: This entrepreneur assumes a supplier’s role and slowly moves towards a
productive enterprise.
e) Local Trading: Such an entrepreneur limits his business to the local market.
3. Based on Types of Entrepreneurial Business
a) Manufacturing: An entrepreneur who runs such a business actually produces the
products that can be sold using resources and supplies.
b) Wholesaling: An entrepreneur with such a business sells products to the middle
man.
c) Retailing: An entrepreneur with such a business sells the products directly to the
people who use or consume them.
d) Service: An entrepreneur in this business sells services rather than products
4. Based on nine personality types
a) The Improver: He is focused on using the company to improve the world. Runs
business with high integrity and ethics.
b) The Advisor: Provides an extremely high level of assistance and advice to
customers.
c) The superstar: Business centered on the charisma and high energy of the
superstar CEO.
d) The artist: He is a reserved but a highly creative type.
e) The visionary: A business built by a visionary will often be based on the future
vision and thoughts of the founder.

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f) The analyst: The focus is on fixing problems in a systematic way. Analysts excel
in problem solving.
g) The fireball: A business owned and operated by a Fireball is full of life, energy
and optimism.
h) The Hero: he has an incredible will and ability to lead the world and business
through any challenge.
i) The Healer: A healer provides nurturing and harmony to the business.
5. Based on Schools of thought on Entrepreneurship
a) Assessing personal qualities:
• The great person school of entrepreneurship.
• The psychological characteristics school of entrepreneurship.
b) Recognizing opportunities:
• The classical school of entrepreneurship
c) Acting and managing:
• The management school of entrepreneurship.
• The leadership school of entrepreneurship
d) Reassessing and adopting:
(i) The Intrapreneurship school of entrepreneurship.
6. According to the use of technology:
a) Technical entrepreneur
b) Non technical entrepreneur
c) Professional entrepreneur
7. According to motivation:
(a) Pure entrepreneur : not for economic rewards awn satisfy by psychological
(b) Induced entrepreneur: Polices measures provides assistance, incentives by the support
of government & institutions
(c) Motivated entrepreneur: Self fulfillment for making & marketing same things new
(d) Spontaneous entrepreneur : Inherent national talent by boldness initiative in any
8. According to the growth
a) Growth entrepreneur
b) Super growth entrepreneur
9. According to the stages of development
a) First generation entrepreneur
b) Produce entrepreneur
c) Classical entrepreneur
10. According to the area
a) Urban entrepreneur
b) Rural entrepreneur
11. According to age & gender
a) Young entrepreneur
b) Old entrepreneur
c) Male entrepreneur
d) Female entrepreneur

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12. According to the scale of operation

a) Small scale entrepreneur
b) Medium scale entrepreneur
c) Large scale entrepreneur
13. Others or Unclassified
a) Professional & Non professional
b) Modern entrepreneur
c) Traditional entrepreneur
d) Skilled & non- skilled entrepreneur
e) Forced entrepreneur
f) Inherited entrepreneur
g) National & international entrepreneur
h) Immigrant entrepreneurs
i) Bureaucratic
j) International

4. Explain the stages of entrepreneurial process.

ANS: Entrepreneurial development can be explained in 5 stages.
(i) Identification of opportunity
(ii) Evaluation of opportunity
(iii) Preparation of business plan
(iv) Determination & organizing the resources
(v) Management of enterprise.

1 Identification of opportunity: First step in entrepreneual process, this may be done

from his own idea or from external sources like Consumers & business association,
members of distribution system, independent technical Organizations, consultants entry etc.
government organizations & R&D centers also provide new ideas.
2 Evaluation of opportunity: It involves length of opportunity, its real perceived value its
risks & resources, with personal skills goals of entrepreneur & its uniqueness or differential
advantages in its competitive environment The length of opportunity and size & share are
two main aspects for deciding the risk & gains or profits. SWOT (Strength, weakness,
opportunities & treats) analysis.
This plan includes
• Description of product
• Agreement of opportunity
• Assessment of the entrepreneur
• Resources needed
• Amount & sources of capital
• Profit expected
3 Development of a business plan: To achieve proposed business opportunity, well
defined business plan need to be developed. Business plans contains:
• Title of project, table of contents & executive summary
• Description of business & industry.

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• Technology plan
• Financial plan
• Organization plan
• Production & operation plan
• Marketing & distribution plan
• Summary
4 Determination & organizing the resources : Begins with assessment of present
resources. Organizing the required recourses at the appropriate time is another important
aspect of entrepreneurial process. Alternative sources of supply, process of manufacture,
are to be planned.
5 Management of enterprise: After resources are acquired, the entrepreneur must use
them to implement the business plan. Operational problems of growing enterprise must also
be examined otherwise increased administrative expenses sometimes it could result in
heated arguments.

5 Differentiate between entrepreneur, Intrapreneur and Manager

Ans: The differences between entrepreneur, Intrapreneur and Manager are as given below:

Sl No. Point Entrepreneur Intrapreneur Manager

1 Goal Independent, Starts Independent, innovates Works towards goals of the
management new venture, sets new ideas organization, Delegates and
the goals and has supervises rather than direct
direct involvement involvement
2 Status Not concerned Not concerned about Concerned about status
about status traditional status, but
wants recognition
3 Risk Bears all the risks Owns moderate risk Does not bear any risk
and uncertainty
4 Rewards Since there is risk, Gets fixed reward for Performs his service or
he may get profit or his work, may get extra duty, works for salary
loss depending on for his innovations which is fixed and definite
outcome
5 Decision Very much involved Moderate, limited to Delegates the decision of
making in decision making his work top management
6 Innovation Very innovative Innovative Need not be innovative. He
manages the ideas of Top
management

6 Explain the role of entrepreneurs in economic development

ANS: The role of entrepreneurs in economic development involves more than just increasing
the output and income. It involves in initiating and effecting the change in the structure of
business or society. The change gives way to growth and higher outputs that leads to higher
profits. Innovation plays an important role in economic development both in product or

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service and stimulating idea of investment in new ventures. This new investment works on
both the demand and supply sides of growth. The new capital created expands the capacity
for the growth on supply side and the resultant new spending brings new capacity and
increased output on demand side.
Entrepreneur bridges the gap between science and the market place, creating new enterprises
and brings new products and service into the market. The following points emphasis the
importance of an entrepreneur in economic development.
➢ Entrepreneurship promotes effective capital formation by mobilizing the idle savings of
the public.
➢ It provides large scale direct and indirect employment to the unemployed youth in the
country and thereby helps the government to overcome socio-economic problems
➢ Improves standard of living
➢ Promotes balanced regional development
➢ Helps reduce concentration of wealth & economic power in the hands of a few people.
➢ It stimulates equitable distribution of material resources, wealth, income and even
political power in the interest of the country.
➢ Encourages effective resource mobilization of capital and skill which might otherwise
remain unutilized and idle.
➢ Helps in harnessing vast natural material resources of the country for economic growth
➢ Promotes backward and forward linkages which in turn, stimulate the process of
economic development of the country.
➢ Contributes substantially in country’s export trade and thereby helps the country to earn
vital foreign exchange.
➢ Helps the country in overall development improving its status in the world.

7 Discuss Entrepreneurship in India.

ANS: The spirit of enterprise makes a person is entrepreneur. Entrepreneur thus is an
innovator who carries out new combinations in ever changing environment to initiate &
accelerate the process of economics social & technological development.
The evolution of entrepreneurship in India is the efforts of great people as well as
professionals. It varies from country to country, time to time & the level of economic
development of the place. This word is derived from French verb. Which is entreprendre
means to undertake
It started as family business around 1850s with the starting of cotton mills in Mumbai. From
then on, entrepreneurship has grown in all directions from cotton mills to manufacturing,
trading, hospitality, consumer goods, ware housing, entertainment industry, etc.
During the early years, the business community was involved in trade and commerce. The
following points are noteworthy with respect to the entrepreneurship in the past.
• Manufacture and supply of a product was based on demand. The trader used to book
orders from required people and get them from the produce.

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• All family members were involved in business right from planning to manufacturing and
finally selling the products.
• The skill of any enterprise was inherited from ancestors.
• The trade activity was dependent on caste system

The last 50-60 years has seen tremendous growth of industries and services, especially in areas
like, banking, automobiles, software development, petrochemicals, cement, steel,
communication, etc. Before 1940s, the Indian business was dominated by British companies,
except for some well established companies like Tata steel, Birla group, Wadias.
Some of the noteworthy talented Entrepreneurs of India are, G.D. Birla, J.R.D.Tata, Aditya Birla,
Azim Premji, Narayana Murthy, to name a few.

8 Explain the barriers to entrepreneurship.

ANS: The barriers to entrepreneurship are:
1. Lack of viable concept. An entrepreneur lacking in creativity may not be able to come up
with a good idea and an implementable plan
2. Lack of market knowledge. Mostly the market situation is volatile and an entrepreneur
who has not done detailed study and analysis of the market situation is likely to fail.
3. Lack of technical skills. An entrepreneur should possess adequate technical knowledge
and skills. He should also hire skilled technicians. Lack of required technical skills is a
sure recipe to disaster and failure of the enterprise.
4. Lack of seed capital. This is very important factor to start an enterprise. If seed capital
cannot be pumped in from own sources, then an entrepreneur depends on financiers,
banks or creditors. Payment of interest and EMI on borrowed capital takes up a big chunk
of the revenue and will surely lead to delayed breakeven. If seed capital is not available,
then the enterprise cannot even start.
5. Lack of business knowhow. Business knowledge and acumen go hand in hand. If an
entrepreneur is only technically skilled but does not know how to run a business, the
enterprise is bound to failure. An entrepreneur is not only expected to be tech savvy, but
should also possess managerial and business skills pertaining to administration, HR,
finance, production, sales and marketing. Lack of business knowhow leads to failure.
6. Complacency-lack of motivation. One of the most important characteristics of a
successful entrepreneur is motivation, along with determination and commitment.
Complacency and lack of motivation leads to failure of an enterprise.
7. Social stigma. Although this is not a big issue now a days, earlier it was considered in
general (in the society) that an entrepreneur has chosen to do that only because he or she
has been unsuccessful in picking up a handsome salaried or government job.
8. Time pressures, distractions. An entrepreneur has to be on his/her toes all the time.
There are neither fixed working hours nor fixed income. Distractions around him/her
often lead an entrepreneur away from the job on hand and businesses suffer. Whatever
happens around an entrepreneur should concentrate on tasks at hand with full
commitment, otherwise the enterprise is doomed to failure.

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9. Legal Constraints and regulations. Overcoming legal constraints and following various
regulations is a big challenge for entrepreneur
10. Monopoly and Protectionism. It will be very difficult or even impossible for an
entrepreneur to break into a business which has been monopolized by someone else and
IPR/patents exist.
11. Inhibitions due to patents. IPR and patents inhibit the growth of entrepreneurship.

9. Write a note on Identification of Business Opportunities.

ANS: An opportunity can be defined as an attractive and excellent project idea which an
entrepreneur searches for and accepts such idea as a basis for his investment decision. A
good business opportunity must be capable of being converted into feasible project. Two
major characteristics of business opportunity are: good and wide market scope and an
attractive, acceptable and reliable return on investment.
Business opportunities can be obtained from various magazines, trade journals, financial
institutions, government, commercial organizations, friends, relatives, competitors etc.
Choosing of best business opportunity from the information collected requires in genuity,
skill and foresight of entrepreneur. An entrepreneur has to identify and select the most
rewarding opportunity from the available ones. For this one has to evaluate the following
areas and understand the gap between demand and supply.
➢ Study of government rules and regulations regarding the different business Opportunities.
➢ Extensive and in depth study of promising investment opportunity.
➢ SWOT analysis of the business opportunities.
➢ Market feasibility study.
➢ Technical feasibility study.
➢ Financial feasibility study and
➢ Social feasibility study.

10. Write a note on Sources of business ideas.

ANS: Sources of business ideas are:
• Unfulfilled demand: An Unfulfilled demand will open doors to new products
• Own idea: One own creative idea can result in a business opportunity.
• Social and economic trends: Social and economic trends necessitate demand for
new products.
• Magazines/Journals/ Research publications: Magazines/ Journals/ Research
publications form a major role of ideas.
• Government: Government also identifies and proposes ideas and give support for
business opportunities.
• Emerging new technology and scientific know how: commercial exploitation of
indigenous and imported technologies and know-how is another source of
opportunities.
• Charges in consumer needs: the needs of consumers charge giving rise to
requirement of new business opportunities.

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• Trade fairs/Exhibitions: Trade fairs and technical exhibitions also offer wide
scope for business opportunities.
• Banks and government agencies: Commercial banks and government agencies
encourage entrepreneurs by providing business opportunities, ideas subsidies,
loan etc.

11. Write a note on Feasibility study.

ANS: Feasibility study is a detailed work of collection of data analysis and concludes the
feasibility of that operation.
Different feasibility studies are:
➢ Market feasibility study
➢ Technical Feasibility Study
➢ Financial Feasibility Study
➢ Social Feasibility Study

Market feasibility study

Market feasibility study involves the study and analysis of the following aspects. Market
feasibility study will assess whether the product has good market. This needs to study
the following:
➢ Nature of market: The nature of market in terms of monopolistic or perfect
competition is to be studied.
➢ Cost of production: It is essential to study and control cost of production. Cost of
production decides the selling price.
➢ Selling price and profit: Selling price plays a vital role in profit. In price sensitive
goods like cosmetics, one should be careful in fixing the price.
➢ Demand: Present demand and demand forecast are prepared and studied. This will
decide the facility planning.
➢ Market share: Estimated market share is to be made. Comparison is made with
share of similar products.
➢ Target market: Study is made with regard to the target market and market
segmentation.

Technical Feasibility Study

In technical feasibility study, the following points are studied.
➢ Location of the project: The data regarding the location of project is very
important. It may be located in rural, urban or semi-urban areas.
➢ Construction of factory, building and its size: The construction details, the
nature/type of building and its size for the project are to be analyzed.
➢ Availability of raw materials: The study of availability of raw materials, sources
of supply, alternate sources, its quality and specifications cost etc., are to be studied.
➢ Selection of machinery: The selection of machinery required to produced the
intended product is to be carried out. The specifications are capacity, cost sources of
supply, technology evaluation of various makes of the machine. Their good and bad
etc., are studied.

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➢ Utilities: The details about availability of utilities like water, gas electricity, petrol,
diesel etc. are to be studied.
➢ Production capacity: Establishment off production capacity and utilization of
production capacity are analysed.
➢ Staff requirement: Study and analysis of requirement of workers, technical staff
and officers etc. is to be made.
➢ Technical viability: The technical viability of the opportunity is to be studied.

Financial Feasibility Study

Financial feasibility is the most important aspect of a business opportunity. Some of the
aspects involved in financial feasibility study are:
➢ Total capital cost of project: It is very essential to study the total cost of project.
This includes fixed capital, working capital and interest factor.
➢ Sources of capital: The study of main sources of capital is to be made. If capital is
borrowed, interest burden is to be studied in detail.
➢ Subsidiary sources for additional finance: After study of main sources of capital,
subsidiary sources of capital are to be identified and studied.
➢ Financial for future development of business: Financial requirement for future
development of business are to be studied. Working capital requirement for at least
three months running of enterprise are to be estimated.
➢ Break Even Analysis (BEA): BEA is to be carried out to see at what level of
production/sales will make the organization no loss/no profit situation. BEA is very
useful to identify the level of production that makes profit.
➢ Estimation of cash and fund flow: It is very essential to make a study of estimation
of cash and fund flow in the business.
➢ Return on investment (ROI): ROI is to be calculated to see the amount of return on
investment for the investors/share holders and how much they get.
➢ Proposed balance sheet: Proposed balance sheet is made showing liabilities and
assets, depreciation, interest burden, profits expected etc.
➢ Cost of labor and technology: The cost of employees is to be estimated and
studied. If technology is not available then it has to be purchased from any R & D
institution or by way of foreign collaboration.

Social Feasibility Study

Social feasibility study is important in the social environment.
➢ Location: The location is in such a place that it should not have objection from the
neighbors.
➢ Social problem: The enterprise should not create any nuisance to the public.
➢ Pollution: There should not have any sort of noise or other pollution objectionable
society. Suitable measures are to be taken for controlling pollution.
➢ Other problem: Any other problems related to the society and people are to be
studied.

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