UNIT-1

PROJECT MANAGEMENT & ENTREPRENEURSHIP (KHU702)

Introduction everyone is aware of the term ‘entrepreneurship’ which refers to a

process by which individuals launch and manage their business and industrial
enterprises. Entrepreneurs are the ones who risk and invest their own capital
into the business and industrial-ventures. The word ‘entrepreneur’ immediately
conjures up images of business tycoons like L.N. Mittal or Bill Gates. While
these rich, famous and successful individuals can be inspirational for some,
most of us would find it difficult to associate our own lives, personalities or
abilities with them. But the fact is that virtually everybody is entrepreneurial in
some part of his or her life. Entrepreneurial in terms of self-development (an
athlete constantly practicing to improve his/ her performance and stamina), in
terms of self-decision making (a man deciding not to marry and devoting the
rest of his life in the service of God), in terms of creativity (a housewife using
waste material for making a piece of art), risk-taking (a teenage boy trying
bungee jumping)

Meaning of Entrepreneurship

Entrepreneurship is the process of creating something new, with value, by

devoting the necessary time and effort, assuming the accompanying financial,
psychic, and social risks, and receiving the resulting rewards of monetary and
personal satisfaction and independence.

According to George Bernard Shaw, “The people who get on in this world are
the people who get up and look for the circumstances they want, and, if they
can’t find them, they make them.” It seems George Bernard Shaw was talking
about entrepreneurs, because this is what entrepreneurs do; they create their
own future. The entrepreneur understands possible futures and creates the future
of his or her choice.

Entrepreneurship is the tendency of a person to organize the business of his own

and to run it profitably, using all the qualities of leadership, decisions making
and managerial calibre etc. The term “entrepreneur” is often used
interchangeably with “entrepreneurship”. Entrepreneurship is a role played by
or the task performed by the entrepreneur. The central task of the entrepreneur is
to take moderate risk and invest money to earn profits by exploiting an
opportunity. For this he must possess far-sightedness to perceive an opportunity
so that he can exploit it well in time. Although an entrepreneur has to perform
diverse functions yet he must manifest many qualities in himself to be a good
entrepreneur.

Importance of Entrepreneurship

1. Creates wealth for nation and for individuals as well: All individuals who
search business opportunities usually create wealth by entering into
entrepreneurship. The wealth created by the same play a considerable role in the
development of nation. The business as well as the entrepreneur contributes in
some or other way to the economy, may be in the form of products or services
or boosting the GDP rates or tax contributions. Their ideas, thoughts, and
inventions are also a great help to the nation.

2. Provides employment to huge mass of people: People often hold a view that
all those who do not get employed anywhere jump into entrepreneurship, a real
contrast to this is that 76% of establishments of new business in the year 2003
were due to an aspiration to chase openings. This emphasizes the fact that
entrepreneurship is not at all an encumbrance to an economy. What more is that
approximately 34 million of fresh employment opportunities were created by
entrepreneurs from the period of 1980? This data makes it clear that
entrepreneurship heads nation towards better opportunities, which is a
significant input to an economy.

3. Contributed towards research and development system: Almost 2-3% of all

innovations are due to the entrepreneurs. Without the boom of inventions the
world would have been a much dry place to live in. Inventions provide an easier
way of getting things done through better and standardized technology.

4. It is a challenging opportunity for the people: Although entrepreneurship is a

challenging task but in most of the cases the rewards it gives are much more
than what one anticipates. It does not only reward an entrepreneur at financial
levels but also on individual level. It provides self-satisfaction to the
entrepreneur.
5. Entrepreneurship provides self-sufficiency: The entrepreneur not only
become self-sufficient but also provides great standards of living to its
employees. It provides opportunity to a number of people working in the
organization. The basic factors which become a cause of happiness may be
liberty, monetary rewards, and the feeling of contentment that one gets after
doing the job. Therefore the contribution of entrepreneurs makes the economy
an improved place to live in.

6. Sky-scraping heights of apparent prospect: The individual gets maximum

scope for growth and opportunity if he enters into entrepreneurship. He not only
earns, the right term would be he learns while he earns. This is a real motivating
factor for any entrepreneur as the knowledge and skills he develops while
owning his enterprise are his assets for life time which usually, lacks when a
person is under employment. The individual goes through a grooming process
when he becomes an entrepreneur. In this way it not only benefits him but also
the economy as a whole.

Characteristics of an Entrepreneur

Entrepreneurs possess the following vital characteristics: 1. An especially

skilful person: The entrepreneur is recognized as a person having a special skill
and at the same time a person providing others for motivation. He may be either
a single individual or an individual in a group. Whatever he may be, he
possesses that special skill which is not generally found in common man.

2. An innovator: He is rightly known as an innovator who engages himself to

innovate new varieties of products, explores new market horizons, and
introduces new techniques of production and methods of reconstruction of
industries. According to Schumpeter, the main characteristic of an entrepreneur
is to innovate something. Through such innovation, the execution and effective
use of a creative idea are ensured. Its success brings for commercial
achievement and new horizon of economy emerges.

3. Providing completeness to the factors of production: An entrepreneur

procures necessary resources from various sources for the purpose of production
and by utilizing them he provides completeness to the factors of production.
Moreover, he endeavours to make contact with various markets for his products.
He is a risk-taker and functions as a coordinator.

4. Decision-making person: The entrepreneur is such a person who is endowed

with a power to make a proper decision as regards the establishment of a
business, its management, and procurement of different factors, methods of
distribution and coordination of various scarce resources. Since he has a strong
power of decision-making, he can take decisions on various maters rapidly. His
achievement largely depends on the ability of his decision-making.

5. A man of creative personality: As the term implies, he is known as an

employer who makes optimum utilization of economic resources and thus
carries on productive activities. He has a quality of creating something new and
as such he is a person of creative personality. For this, he is known as a creative
innovator. He creates new ideas, nurtures them in the light of his own
experience, knowledge and intellect. Through all such activities, his creative
personality and mentality are exposed.

6. A basic plan-maker: An entrepreneur is the owner, employer, producer,

market-creator, decision-maker, risk-taker, coordinator, and user of market
information, creative individual and innovator. For this, he is regarded as a
pioneer of economic development.

7. A pioneer of economic development: An entrepreneur is the owner,

employer, producer, market-creator, decision-maker, risk-taker, coordinator, and
user of market information, creative individual and innovator.

8. Dynamic leader: He provides proper motivation to his workers by means of

leadership so that the workers can give their best efforts to the interest of the
organisation.

9. Creator of wealth: The entrepreneur uses various resources for running his
products or services are produced. Hence, the entrepreneur creates his personal
wealth and at the same time he helps to increase social wealth, because new
wealth is created due to increase in demand for product or services. As such,
creation of wealth is one of the basic features of an entrepreneur.

10. Self-confident and ambitious: In the opinion of John Hornaday, one of the
important features of an entrepreneur is that he should be self-confident as well
as ambitious. Self-confident is regarded as one of the remarkable characteristic
features for his success. This self-confidence leads him to face any situation
boldly. Self-confidence relates to harmonize between word and work. Similarly,
he should always have in himself, high ambition.

Factors Influencing Entrepreneurship

Following are the various factors that influence entrepreneurship:

1. Educational: There is a need to have drastic changes in educational pattern to

make it more relevant to the needs of the time, economic, social and political
environment. More and more young minds should be trained to create avenues
for self-employment. Designing a suitable programme of entrepreneurial
education and introduction of entrepreneurship, as a subject for study even at
the school level to make the young minds realize the importance of
entrepreneurship are the need of the hour.

2. Legal: The law must protect the weak till the time they need it. Entrepreneurs
in small sectors have limited resources and cannot compete with large-scale
manufactures. Reservation of certain items of products for exclusive production
in small sector is one such legal measure to protect the interests for small-scale
entrepreneurs.

3. Infrastructure: Land and factory sheds at concessional rates, adequate supply

of power, water, coal and other sources of energy, transport facilities,
availability of wagons, supply of raw materials and other physical facilities
should be provided by the Government to facilitate setting up of new enterprise.

4. Institutional: Entrepreneurs need advice on the lines of manufacture, which

may be suitable, sources of raw materials, finance and other facilities like
technical know-how, tools and equipments, etc. The entrepreneurs also need to
know about the opportunities and threats to their business, government policies,
developments in international economic scene, technological changes, etc.
Institutions have to be established to keep the entrepreneurs informed about all
these matters of their interest and also to enable them to present their problems
before the authorities in the government.

5. Financial: The needs for fixed and working capital should be adequately
needed; if the new enterprises are to serve and grow. The lack of financial
resources deters potential entrepreneurs to start new ventures. The problems
become more acute in the capital short developing countries where the business
and industry how to put up with underdeveloped capital market. The
governments, in these countries should see that the capital market is developed
with newer and innovative capital market instruments and strong financial
institutions.

6. Procedural: The bureaucratic procedure of government offices, industries

departments and financial institutions is a great hindrance to the growth of new
enterprises. The entrepreneurs have to run to different jobs; and complete a
number of offices in government for different jobs; and complete a number of
formalities prescribe) by several laws, rules and regulations. It would be better
for the potential and existing entrepreneur, if the number of procedural and legal
restrictions of the entrepreneurs is reduced and an administrative mechanism is
developed to look after all the needs and requirement the entrepreneurs.

7. Communicational: The information gap pushes many entrepreneurial

ventures towards extinction. Unless an entrepreneur known about the market
potentials, competition in the market, technological and other developments, the
entrepreneurs is not likely to succeed in the venture. The government
departments, organizations of entrepreneurs, financial institutions and business
consultants have a role to play in this regard. It is very important for an
entrepreneur to succeed.

8. Information technology and communication: Modern technology such as

Information Technology has entered every walk of human life. Faster mode of
communication through email, networking, web technologies have
revolutionized the industrial scene with the fast and up to date information at
different levels of management, the management processes also have gone
considerable changes in decision making and implementation.

9. Rapid Changes: IT and communication revolution, the networking within the

industry and outside the industry has increased many fold. The exchange of
information and availability of resources is bringing changes in the industry
faster than ever before in the history.

10. Large size: There is considerable increase in automation and introduction of

computerized production and process controls in industries. The demand for the
goods and the geographical reach is bringing large size industries as well as
services. The size gets advantage of economies of scale in manufacturing
marketing.

Types of Entrepreneurship

By simple definition – all active owner-managers are entrepreneurs. They can

be classified into following categories:

Classification on the Basis of Ownership

Entrepreneurship can be classified on the basis of ownership as follows:

Founders or “Pure Entrepreneurs”: As the term suggests, they are those

individuals who are the Founders or “Pure Entrepreneurs”: founders of the
business. They are the ones who conceptualize a business plan and then put in
efforts to make the plan a success. For example, Dhirubhai Ambani of the
Reliance Group.

Second-generation operators of family-owned businesses: They are the

individuals who have inherited the business from their fathers and forefathers.
Like Mukesh Ambani and Anil Ambani sons of Dhirubhai Ambani of the
Reliance Group now split into two: Reliance – Reliance Industries Limited and
Reliance – Anil Dhirubhai Ambani Group.

Franchisees: Franchisee has been derived from a French word which means
free. It is a method of doing business wherein the parent owner (the franchiser)
licenses his trademarks and tried and proven methods of doing business to a
franchisee in exchange for a recurring payment. Here, the franchisee has not
conceptualized the business but has invested his money and time in the
business.

Classification based on the Type of Business Industrial Entrepreneur:

Industrial entrepreneur is an entrepreneur who is into manufacturing of a

product. He identifies the needs and wants of customers and accordingly
manufactures products to satisfy these needs and wants. It would include all the
entrepreneurs essentially into manufacturing.
Trading Entrepreneurs: Trading entrepreneur is one who undertakes trading
activities (buying and selling of goods and services) and is not concerned with
the manufacturing of products. He identifies potential markets, stimulates
demands and generates interests among buyers to purchase a product. Corporate
Entrepreneur: Corporate entrepreneur is a person who demonstrates his
innovative skill in organizing and managing a corporate undertaking (which is
registered under some statute or act that gives it a separate legal entity).

Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs

who undertake business related to agricultural activities. Like farm equipments,
fertilizers and other inputs of agriculture. They provide supportive products that
can increase the agricultural production through biotechnologies, mechanization
and improvement in agricultural yield.

Entrepreneurial Models

First, though, what exactly is corporate entrepreneurship? We define the term as

the process by which teams within an established company conceive, foster,
launch and manage a new business that is distinct from the parent company but
leverages the parent’s assets, market position, capabilities or other resources. It
differs from corporate venture capital, which predominantly pursues financial
investments in external companies. Although it often involves external partners
and capabilities (including acquisitions), it engages significant resources of the
established company, and internal teams typically manage projects. It’s also
different from spinouts, which are generally constructed as stand-alone
enterprises that do not require continuous leveraging of current business
activities to realize their potential.

The Opportunist Model All companies begin as opportunists. Without any

designated organizational ownership or resources, corporate entrepreneurship
proceeds (if it does at all) based on the efforts and serendipity of intrepid
“project champions” – people who toil against the odds, creating new
businesses often in spite of the corporation. The opportunist model works well
only in trusting corporate cultures that are open to experimentation and have
diverse social networks behind the official hierarchy (in other words, places
where multiple executives can say “yes”). Without this type of environment,
good ideas can easily fall through organizational cracks or receive insufficient
funding. Consequently, the opportunist approach is undependable for many
companies. When organizations get serious about organic growth, executives
realize they need more than a diffused, ad hoc approach. As a result of its past
success with minimally invasive surgical procedures, Zimmer has instituted
more formalized development practices for bringing new businesses to market.
As such, the company has begun to evolve beyond the opportunist model.

The Enabler Model The basic premise of the enabler model is that employees
across an organization will be willing to develop new concepts if they are given
adequate support. Dedicating resources and processes (but without any formal
organizational ownership) enables teams to pursue opportunities on Notes their
own in so far as they fit the organization’s strategic frame. In the most evolved
versions of the enabler model, companies provide the following: clear criteria
for selecting which opportunities to pursue, application guidelines for funding,
decision-making transparency, both recruitment and retention of
entrepreneurially minded employees and, perhaps above all, active support from
senior management.

The Advocate Model What about cases in which funding isn’t really the issue?
In the advocate model, a company assigns organizational ownership for the
creation of new businesses while intentionally providing only modest budgets to
the core group. Advocate organizations act as evangelists and innovation
experts, facilitating corporate entrepreneurship in conjunction with business
units.

The Producer Model A few companies such as IBM, Motorola and Cargill
pursue corporate entrepreneurship by establishing and supporting formal
organizations with significant dedicated funds or active influence over
business-unit funding. As with the enabler and advocate models, an objective is
to encourage latent entrepreneurs. But the producer model also aims to protect
emerging projects from turf battles, encourage cross-unit collaboration, build
potentially disruptive businesses and create pathways for executives to pursue
careers outside their business units.

Entrepreneurial Process
At its simplest what entrepreneurs do, can be viewed as a six-stage procedure:
1.They see opportunities where others don’t.

2. They have a ‘vision’, a clear understanding of the concept and of what

they’re trying to do.

3. They persuade others of their vision, they can communicate the concept
effectively.

4. They gather resources to make their vision become a reality (money, people,
and things).

5. They organize these resources to create a new venture, product or market

(leadership, teams).

6. They constantly change/adapt themselves according to the changing demands

of the market.

Intrapreneurship

The term ‘intrapreneur’ emerged in during the seventies. Several senior

executives of big corporations left their jobs to start their own small businesses
because the top bosses in these corporations were not receptive to innovative
ideas. These executives-turned-entrepreneurs achieved phenomenal success in
their new ventures; posing a threat to the corporations they had left. These types
of entrepreneurs came to be known as ‘intrapreneurs’

Characteristics of Intrapreneurs

Following are the characteristics of intrapreneurs:

1. Intrapreneurs bridge the gap between inventors and managers. They take new
ideas and turn them into profitable realities.

2. They have a vision and the courage to realize it.

3. They can imagine what business prospects will follow from the way
customers respond to their innovations.

4. They have the ability to plan necessary steps for actualization of the idea.
5. They have high need for achievement and they take moderate calculated
risks.

6. They are dedicated to their work that they shut out other concerns, including
their family life.

Difference between entrepreneur & intrapreneur

BASIS FOR
ENTREPRENEUR INTRAPRENEUR
COMPARISON

Meaning Entrepreneur refers to a Intrapreneur refers to an

person who set up his own employee of the organization
business with a new idea or who is in charge of
concept. undertaking innovations in
product, service, process etc.

Approach Intuitive Restorative

Resources Uses own resources. Use resources provided by the

company.

Capital Raised by him. Financed by the company.

Enterprise Newly established An existing one

Dependency Independent Dependent

Risk Borne by the entrepreneur Taken by the company.

himself.

Works for Creating a leading position Change and renew the existing
in the market. organizational system and
culture.

Entrepreneurship Development Programmes:

Meaning:
As the term itself denotes, EDP is a programme meant to develop
entrepreneurial abilities among the people. In other words, it refers to
inculcation, development, and polishing of entrepreneurial skills into a person
needed to establish and successfully run his / her enterprise. Thus, the concept
of entrepreneurship development programme involves equipping a person with
the required skills and knowledge needed for starting and running the enterprise.

Need for EDPs:
That, entrepreneurs possess certain competencies or traits. These competencies
or traits are the underlying characteristics of the entrepreneurs which result in
superior performance and which distinguish successful entrepreneurs from the
unsuccessful ones.
A well-known behavioural scientist David C. McClelland (1961) at Harvard
University made an interesting investigation-cum-experiment into why certain
societies displayed great creative powers at particular periods of their history?
What was the cause of these creative bursts of energy? He found that ‘the need
for achievement (n’ ach factor)’ was the answer to this question. It was the need
for achievement that motivates people to work hard. According to him, money-
making was incidental. It was only a measure of achievement, not its
motivation.

Objectives of EDP:
The major objectives of the Entrepreneurship Development Programmes
(EDPs) are to:
a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.

b. Analyse environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small

enterprise.