MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2

Course Name: Management and Entrepreneurship. Semester: V

Course Code: 22IE562 L-P-C: 3-0-2

Unit 2
Entrepreneur – I. meaning of entrepreneur, II. characteristics of entrepreneurs, III. classification
and types of entrepreneurs, IV. various stages in entrepreneurial process, V. role of entrepreneurs
in economic development, VI. entrepreneurship in India and barriers to entrepreneurship. VII.
Identification of business opportunities, market feasibility study, technical feasibility study,
financial feasibility study and social feasibility study.

I. Meaning of entrepreneur/ Definition

ENTREPRENEUR An entrepreneur is someone who initiates, organizes, and manages a small
business, taking on its risks and rewards. They excel at identifying new opportunities, recognizing
unmet market needs, and often display a pro-risk attitude. Entrepreneurs manage resources—
human, financial, and material—to exploit business opportunities and oversee the enterprise's
launch and growth.
The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to
undertake’. This refers to those who “undertake” the risk of new enterprises. An enterprise
is created by an entrepreneur. The process of creation is called “entrepreneurship”.
DEFINITION OF ENTREPRENEUR
According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily motivated by
profit but regard it as a standard for measuring achievement or success.
According to Richard Cantillon - An entrepreneur is a person who pays a certain price for a product to resell it at
an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting
the risk of enterprise.
Entrepreneurship can be defined as the propensity of mind to take calculated risks with confidence to achieve a
pre-determined business or industrial objective. That points out the risk-taking ability coupled with decision
making.
II. Characteristics of Entrepreneurs
1. Vision: The ability to see the bigger picture and set a clear direction for the business.
2. Knowledge: Recognizing every situation as an opportunity and focusing on goals.
3. Desire to Succeed: Staying focused on results without getting sidetracked.
4. Independence: Making their own decisions and shaping their destiny.
5. Optimism: Believing in positive outcomes and the possibility of their ideas.
6. Value Addition: Innovating and adding new elements to the business.
7. Leadership: Taking initiative, fostering team understanding, and learning.
8. Hard Work: Demonstrating discipline, confidence, and dedication.
9. Control Over Fate: Maintaining a positive mindset even in challenges.
10. Risk-Taking Ability: Willing to take calculated risks and thoroughly research concepts.
11. Motivation: Enthusiastic, future-oriented, and willing to invest resources for profit.
12. Creativity and Persuasiveness: Recognizing opportunities, being persistent, and persuasive.
13. Economic and Dynamic Activity: Creating value by optimizing resources in uncertain environments.

III. Classification and types of entrepreneurs:

Classifications of Entrepreneurs
1. Entrepreneurs according to the type of business.
a) Business Entrepreneur: These entrepreneurs have an idea for a new product or service and start a
business to bring it to life. They may establish either a large company or a small business, like a printing
press or bakery.

Praveen kumar C, Assistant Professor, Dept. of E EE, SSIT 1

 MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2
b) Trading Entrepreneur: Trading entrepreneurs focus on selling products rather than manufacturing. They
find potential markets, increase demand, and create interest among buyers. They operate in both local and
international markets.
c) Industrial Entrepreneur: These entrepreneurs are manufacturers who identify customer needs and create
products to meet those needs. They start industrial units to produce new products.
d) Corporate Entrepreneur: Corporate entrepreneurs manage and organize businesses that are legally
registered as separate entities, like companies or trusts. They use their innovation skills to run these
corporate bodies.
e) Agricultural Entrepreneur: These entrepreneurs work in agriculture, growing and selling crops or
agricultural products. They use technology and modern techniques to improve agricultural production.

2. Entrepreneurs and Stages of Development:

a) First-Generation Entrepreneur: They are innovators who start industrial units, using different
technologies to make marketable products or services.
b) Modern Entrepreneur: They start businesses that align with current market trends and customer
demands.
c) Classical Entrepreneur: They focus on fulfilling customer needs and maintaining a stable business for
profit without necessarily aiming for growth.
3. Based on Gender:
a) Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are called ‘men
entrepreneurs.
b) Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women having
a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of employment
generated in the enterprises to women.
4. Based on the Size of Enterprise:
a) Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called ‘small-
scale entrepreneur.
b) Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery above Rs 1.00crore but below Rs 5.00
crore is called ‘medium-scale entrepreneur.
c) Large-Scale entrepreneur:
The entrepreneur who has made investment in plant and machinery more than Rs 5.00 crore is called
‘large-scale entrepreneur.

Types of Entrepreneurs
1. Innovating Entrepreneurs: They introduce new products, create new production methods, find new
markets, and reorganize their businesses. They thrive in environments where people are open to change
and development.
2. Imitative Entrepreneurs: They adopt successful innovations from others rather than creating new ideas
themselves. Imitative entrepreneurs are useful in underdeveloped areas as they replicate successful
techniques and technologies from developed regions.
3. Fabian Entrepreneurs: They are very cautious and hesitant about changes. They only adopt new ideas
when they are sure that not doing so would harm their business.
4. Drone Entrepreneurs: They resist any changes, even if it means losing profits. They prefer to stick to
their existing production methods, even if others around them are advancing.

Praveen kumar C, Assistant Professor, Dept. of E EE, SSIT 2

 MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2
IV. Various stages in entrepreneurial process
Stages of entrepreneurial process
1. Identification of opportunity
2. Evaluation of opportunity
3. Preparation of business plan
4. Determination & organizing the resources
5. Management of enterprise.

Identification of opportunity
Consumers & business association, members of distribution system, independent technical organizations
consult entry etc. government organizations & R&D centers also provide new ideas
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
1. Description of product
2. Agreement of opportunity
3. Assessment of the entrepreneur
4. Resources needed
5. Amount & sources of capital
6. Profit expected
Development of a business plan
1. Title of project, table of contents & executive lumserasy
2. Description of business & industry.
3. Technology plan
4. Financial plan
5. Organization plan
6. Production & operation plan
7. Marketing & distribution plan
8. Summary
Management of enterprise
After resources are acquired, the entrepreneur must use them to implement the business plan
• Increased administrative expenses
• Some tines it could result in heated arguments

V. Role of entrepreneurs in economic development

Entrepreneur plays a vital role in economic development. Entrepreneurs serve as the catalysts in the
process of industrialization and economic growth. Technical progress alone cannot lead to economic
development, unless technological breakthroughs are put to economic use by entrepreneurs.
Some of the roles of entrepreneurs are: -
• Capital Formation
• Improvement in Per Capita Income
• Generation of Employment
• Balanced Regional Development
• Improvement in Living Standards
• Economic Independence
• Backward and Forward Linkages
• Inspire Others towards Entrepreneurship
• Create Knowledge Spillovers
• Augment the Number of Enterprises
• Provide Diversity in Firms
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 MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2
• Organizing of Society’s Productive Resources
• Production of New Articles
• Development of New Production Technique and a Few Others.

VI. Entrepreneurship in India and barriers to entrepreneurship.

Entrepreneurship in India is rapidly growing, driven by a young, tech-savvy population and increasing
access to technology and capital. The government has launched various initiatives like Startup India,
Make in India, and Digital India to promote innovation and support startups. The Indian entrepreneurial
ecosystem benefits from a diverse market, low-cost skilled labor, and growing digital penetration.

Key sectors include information technology, e-commerce, fintech, health tech, edtech, and renewable
energy. While challenges like bureaucratic hurdles, infrastructure gaps, and access to funding in rural
areas persist, Indian entrepreneurs are increasingly addressing these through innovative solutions. With
global recognition of Indian startups like Flipkart, BYJU'S, and Zomato, entrepreneurship is becoming a
vital engine of India's economic growth.
Barriers in entrepreneurship
Following are the different types of barriers that come across the path of entrepreneurship:
1. Financial barriers:
This is one of the most prominent barriers in the life of an entrepreneur. Such barriers are quite common.
Availability of funds is of great significance. If a delay happens in gathering enough funds, then it may
further delay the commencement of an enterprise. Also, various business operations need a persistent flow
of funds.
2. Personal barriers:
Personal barriers are caused because of the emotional and psychological blocks of an entrepreneur. Let us
have a look at the various types of personal barriers:
• Lack of motivation and encouragement: When an idea does not turn out to be fruitful, these
entrepreneurs give up quite easily. Even a minor failure is enough to demotivate them.
• Inability to depend on and trust others: These entrepreneurs often find it difficult to trust others while
hiring their expert services. They waste much of their time deciding upon the best service provider and
then, too, cannot put their trust completely.
• Lack of patience: If an entrepreneur loses interest because of any hurdle or obstacle, then he does not
have enough patience and perseverance to carry on with the entrepreneurship. Even the initial losses are
enough to discourage them and shut their enterprises.
• Lack of confidence: These entrepreneurs never have enough confidence. They never trust in themselves.
They are somehow convinced that they will never be able to come up with a successful business idea. They
are always bothered about their inability to attract enough funding. Hence, they almost give up on their
dream of being self-employed and thus do not carry on with entrepreneurship.
• Lack of vision: There should never be any limitation to what you can achieve. Some entrepreneurs, after
making short progress, lose their vision and show no more interest in expanding the business.
• Sense of embarrassment/pride: Such entrepreneurs are way too proud or embarrassed to ask for help
from someone.
3. Environmental barriers:
• Machinery: Machines are extremely significant to carry out multiple operations. However, machinery
does come costly. Also, technology keeps changing quite rapidly, and hence, machines tend to get obsolete
quite often. Thus an entrepreneur needs to replace them. This process is quite difficult for the entire
organization.
• Raw material: The situation can get quite distressful if there is no raw material available during the peak
season of the work. This further increases the price of limited raw materials available because of an
increased level of competition.
• Land and building: For an enterprise, it is necessary that proper acquisition of land is made. Then, the
construction of buildings will also have to be done. However, all these can be quite expensive. When the
Praveen kumar C, Assistant Professor, Dept. of E EE, SSIT 4
 MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2
land is rented, the fixed cost becomes a cause of worry for the entrepreneur. He needs to keep paying the
rents whether he is making any profit out of business or not.
• Infrastructure support: There have to be proper roads, adequacy of power, drainage facilities, water, and
other such infrastructural supports. But because of red-tapism and increased corruption, things tend to be
quite complicated.
• Labour: For successful entrepreneurship, there has to be the availability of skilled labor, quality and
quantity labor, and committed and loyal employees. Lack of any of these can lead to severe disruptions in
the working procedure of the enterprise.
4. Political barriers:
When there are not enough government concessions, and incentives offered, things start getting difficult
for the entrepreneurs. Also, there has to be a proper socio-economic setting to make things happen the way
they need to. A politician should also focus on making a society economically developed. Only then will
things smoothen up for the entrepreneurs.
5. Societal barriers:
• Caste and religious affiliations often act as hurdles in the way of a business.
• Financial stability and family backgrounds also have to be kept in mind. These, too, can impact the
operations and development of an enterprise.
• Socio-cultural norms and values often act as barriers for modern-day budding entrepreneurs. These age-
old norms hamper the smooth development and progress of business enterprises.
• Degree of disapproval and approval of entrepreneurial behavior.

VII. Identification of business opportunities, market feasibility study, technical feasibility

study, financial feasibility study and social feasibility study.
Business opportunities can be obtained from various manazines, trade journals, financial institutions,
government, commercial organizations, friends, relatives, competitors etc. Choosing of best business
opportunity from the information collected requires ingenuity, 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.

• Market feasibility study.

• Technical feasibility study.
• Financial feasibility study and
• Social feasibility study.
1. Market feasibility study Feasibility study is a detailed work of collection of data analysis and concludes the
feasibility of that operation. 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.

2.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.
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 MANAGEMENT & ENTREPRENEURSHIP (22IE562) MODULE – 2
• Availability of raw materials: The study of availability of raw materials, sosurces 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.
• 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.

3. Financial feasibility study

Total Capital Cost:
• Includes fixed capital, working capital, and interest.
Sources of Capital:
• Study main sources (e.g., equity, loans) and associated interest burdens.
Subsidiary Sources:
• Identify and analyze additional funding options.
Future Financial Needs:
• Estimate requirements for future growth and a minimum of three months' working capital.
Break-Even Analysis (BEA):
• Determine the production/sales level for a no-loss/no-profit scenario.
Cash and Fund Flow Estimation:
• Forecast cash inflows and outflows to ensure liquidity.
Return on Investment (ROI):
• Calculate expected returns for investors/shareholders.
Proposed Balance Sheet:
• Draft liabilities, assets, depreciation, interest, and profit projections.
Cost of Labor and Technology:
• Estimate employee costs and acquire technology if needed from R&D institutions.

4. 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.

Praveen kumar C, Assistant Professor, Dept. of E EE, SSIT 6