Entrepreneurship Management

Module 1

Entrepreneurial Perspective
 Contents
 Definition and Evolution of the Concept of Entrepreneurship;

 Definition and Concept of Entrepreneur,

 Concept of Enterprise;

 Entrepreneurship - Functions, Needs and Importance;

 Entrepreneurial Traits,

 Characteristics and Skills;

 Role of entrepreneurship in economic Development;

 Introduction to various forms of business organization (sole proprietorship, partnership,

corporations, Limited Liability Company);

 Introduction of Start-up and types of Start-ups,

 Start-up Ecosystem in India

 Entrepreneurship

The process of creating, developing, and managing a new business

venture with the aim of generating profits or creating value.

The propensity of the mind to take calculated risks with confidence

to achieve a pre-determined business or industrial objective.

It started with the emergence of trade and bartering in ancient
civilizations, where individuals recognized opportunities to create
value and meet people's needs.

Traditionally, entrepreneurship is categorized into four main

types: small businesses, scalable startups, large companies and
social entrepreneurs.

It is a creation and innovative response to the environment and an

ability to recognize, initiate and exploit an economic opportunity .
Entrepreneurship is at the heart of every thriving economy. It is more

than just starting a business.

It is about recognizing opportunities, taking risks, and driving

innovation.

At its core, entrepreneurship is the spark that ignites change and growth,

shaping industries and societies in the process.

Entrepreneurship is the ability to foresee or ascertain the various

opportunities related with investment and then to evaluate these various

opportunities and forming enterprise, the purpose of which is to give the

maximum contribution in the national’s growth.

When we combine these activities performed by entrepreneurs the

resultant is known as entrepreneurship.

Evolution of the Concept of Entrepreneurship
Evolution of entrepreneurship over different periods of history:

1) In the earliest period, merchants like Marco Polo traded goods between
capitalists and received a share of the profits.

2) In the Middle Ages, the entrepreneurs used to control construction

projects like churches. Priests often served as entrepreneurs.

3) In the 17th century, contracts between entrepreneurs and those who

commissioned work specified how risks and profits would be shared.

4) Important inventors like Thomas Edison and Eli Whitney drove

industrialization as entrepreneurs in the 18th century.
 Key Industrial Revolution Stages

from an Entrepreneurial Perspective

1.0: Mechanization & The Factory System
(Late 18th–19th Century)
Context: Shift from domestic/cottage systems (home-based) to
centralized factories.

Entrepreneurial Shift: Entrepreneurs became factory owners

("captains of industry"), investing in steam power, water, and
early machinery (e.g., spinning jenny) to replace manual labor.

Focus: Increasing production scale, improving iron production,

and developing transportation (canals, railways).
2.0: Mass Production & Electrification
(Late 19th–Early 20th Century)
Context: The "Technological Revolution" using assembly lines
and electricity.

Entrepreneurial Shift: Focus shifted to efficiency,

standardization, and speed. Entrepreneurs like Henry Ford
capitalized on mass production techniques.

Focus: Assembly lines, petroleum, steel, telecommunications

(telegraph, radio), and the internal combustion engine.
3.0: Digital Revolution & Automation (1960s–2000s)
Context: Introduction of computers, PLCs (Programmable
Logic Controllers), and IT to the factory floor.

Entrepreneurial Shift: Entrepreneurs moved toward

automating processes to reduce human labor further,
focusing on speed and precision in manufacturing.

Focus: Software, advanced electronics, and, by the end of

the 20th century, the early stages of internet integration in
business.
4.0: Cyber-Physical Systems & AI
(21st Century–Present)
Context: The era of Industry 4.0, involving AI, the Internet of
Things (IoT), and smart factories.

Entrepreneurial Shift: Entrepreneurs are now data-driven

innovators, managing "smart" systems where machines
communicate, analyze, and learn (machine learning) without
human intervention.

Focus: Big data, 3D printing, cloud computing, and AI,

allowing for rapid customization and decentralized production.
 Medieval Age

 During the Harappan civilizations around 2700 BC, there was an

internal and external trade culture.

 increase in trade occurred during the era of Mughal rule. The Arab
mainland, western colonial counties and African countries were the
major parties involved in the trade.

 However, a significant entrepreneurial change occurred when the East

India Company started its business from the Bay of Bengal and later
occupied parts of Bengal.
 Modern and pre-independence

The first cotton textile mill was revolutionized in 1854 by an

Indian entrepreneur, Kawasji Dover.

Jamshedji Tata founded the company Tata Group in the year

1868.

1874 Cotton Mill by JRD Tata, TISCO by Dorabji Tata, 1932

Tata Airlines, Tata Steel Plant, and more were high-rate
businesses in India.
 Post-independence

India adopted the economic structure line of the Soviet Union. It

gave a major push to the New Industrial Policy of 1956. This
policy liberalized the bar and standards set by the British
government.

The major transformation of entrepreneurship in India began

with the ‘Economic Policy Reform’ in 1991. The policy was
further expanded in 2022.
 Entrepreneur

An entrepreneur is an individual who takes on financial risks to

start and grow a business, using innovative ideas and strategies to

capitalize on market opportunities.

An entrepreneur is an individual who creates a new business,

bearing most of the risks and enjoying most of the rewards.

 An entrepreneur is an economic change agent with knowledge, skills,
initiative, drive and spirit of innovation to achieve goals.

 He identifies and seizes opportunity for economic benefits.

 He is a risk bearer, an organizer and an innovator.

According to Economists:

An entrepreneur is the one who brings resources, labour, material and other
assets onto combination to produce a socially viable product, and one who
introduces changes, innovation and new order.

According to Management:
A person with a vision and action plan to achieve it is an entrepreneur.
 Intrapreneurs
 Intrapreneurs are the executives who develop commercially viable ideas, new
divisions, new subsidiaries, new products or new business within existing and
established business.

 Employees of an organisation who have entrepreneurial talent are recognised &

trained and motivated and rewarded to use their abilities and initiatives and do
something on their own for the organisation .

 Intraprenurship implies that entrepreneurial activities are explicitly supported

within established organizations, provided with organisational resources and
accomplished by company employees.
Both entrepreneurs and intrapreneurs are the innovators and both

perform the function of management.

But entrepreneurs set up their own business and give shape to the

ideas of intrapreneurs.
 Concept of Enterprise
An enterprise is a large-scale organization engaged in commercial
activities, often involving a complex network of operations,
departments, and divisions.

Examples of enterprise organizations include multinational

corporations, large financial institutions, global retailers, and
government agencies with extensive operations and a
significant workforce. Some well-known examples are Ford,
Amazon, Apple, Walmart etc.
 Attribute Entrepreneur Entrepreneurship

Definition An individual who takes business risks. The process or activity of taking business
risks.

Focus On opportunities and decision-making. A broader range of activities including

idea generation, planning, and execution.

Risk Takes personal and financial risks. The entire structure that enables and
supports risk-taking

Practical Analogy The captain of the ship. The voyage or journey itself.

Role in Ecosystem A key player, making decisions and taking The setting or framework within which
action. entrepreneurs operate.

Independence Can exist without entrepreneurship but Can’t exist without an entrepreneur.
may not be as effective.

Day-to-Day Focuses on management, leadership, and Encompasses everything from idea

problem-solving. generation to business scaling.
 Distinguished Entrepreneurs of India
Cowasjee Nanabhal Davar - The Inspiration to Invest

Sir Jamset Nusserwanji Tata - The Father of India’s Industrial Revolution

V. O. Chidambaram Pillai - The Steamships That Cried Freedom

Rai Bhadur - Mohan Singh Oberoi - The Brown Sahib’s Opportunity

Dr. Verghese Kurien - Father Of the Unlikely Entrepreneur

Aditya Vikram -Y-Birla :- The First Mogul of Globalization

Dhirubhai Ambani - The Saga Of The New India.

N.R. Narayana Murthy - Messiah of the New Middle Class.

 Functions of Entrepreneurs

1. Entrepreneurial Functions

2. Promotional Functions

3. Managerial Functions

4. Commercial Functions

 Entrepreneurial Functions
1. Innovation: update organization by upgrading technology and
trends. It includes activities like:

• Introducing new production methods.

• Finding new sources and substitutes of raw materials.

• Upgrading the distribution system.

• Exploring new products, services and new markets.

Example: E-bikes and E-cars are great examples of innovation in

the transportation sector.
2. Risk-taking:

Risk is choosing one among various alternatives, the result of which is

unpredictable.

Risk bearing is the pre-requisite function of an entrepreneur. However,

he tries to mitigate the risk to become successful.

This is because they can only earn huge profits by bearing greater risk.

Example: Drew Houston, who owns Dropbox, took a massive risk by

not selling his business to Apple. However, things turned out in his
favour, and Dropbox became a billionaire company.
3. Organization Building and Management:

Bringing together different factors of production

Allocating resources to bring down costs and loses

Taking all decisions related to business

Example: Hiring people, organizing the factor of production,

sourcing finance etc.

4. Decision-making: Another function of an entrepreneur is taking
decisions for the organization. The major ones include:

• Formulating organizational aims and objectives.

• Make strategies to make the organization profitable.

• Optimum distribution of work across enterprises.

• Arranging and managing the finance resources.

• Crucial decisions about the production to distribution of products.

Example: Decisions regarding Mergers, Acquisitions, Expansion and

Contraction of the business.
 Promotional Functions

1. Investigation of an Idea: An entrepreneur investigates the market

needs and wants and then discovers a unique business idea. He not
only finds one such idea but several ideas.

 Conducts research, investigates and evaluates all the information.

Example: Ola and Uber are amazing examples of this

entrepreneurial function.
2. Detailed Investigation:

Forecast the business idea’s future potential and growth

possibilities.

The idea having potential to turn into a viable business venture.

Evaluates idea considering various factors, and estimates the total

demand for a new product or service

Example: Before launching any product, the board conduct a

detailed market survey
3. Assembling Resources:

Assemble the required resources to implement the selected idea once

he/she is sure about the practicality and profitability of the proposition.

 Infrastructure or office space, human resources, key vendors or

partners, working capital etc.

 In the manufacturing business – requirements are selecting the

factory site, sourcing plant and machinery, hiring staff, finding the
right suppliers etc.

Example: Recruitment and Material sourcing are prevalent examples

of this function.
4. Financing the proposition:

 First, the requirements of finances are estimated.

 An entrepreneur ensures short- and long-term finance sufficiency.

 He/she defines the capital structure of the organization.

 Also, identifies the sources from where the funds are to be raised and
utilized.

Example: The decision of the entrepreneur to raise funds by diluting

ownership (Shares) or borrowing funds (Debentures).
 Managerial Functions
1. Planning

An entrepreneur documents a business idea in the form of a business plan

It allows for details of each element of the business such as business objectives,
product or service description, operations, marketing, finance, accounting,
growth plan etc.

Business Model Canvas

Example: Recently, Reliance separated its financial segment. Ambani did so to

achieve the aim of becoming India’s largest NBFC.
2. Organizing:

Setting specific and attainable goals and objectives to be achieved

by different departments and by each employee.

• Arranging, directing, guiding, coordinating and controlling the key

business activities

Example: NIKE has a unique organizational structure. It operates

in a flat organizational structure. The departments have the liberty
to work independently while maintaining quality and consistency.
3. Directing:

 An entrepreneur is a leader who leads their enterprise towards success.

 He directs his team and guides them to achieve the preset

organizational goals.

 Also, he communicates his vision, mission and long-term goals with

his team.

 Besides, he allocates the duties and responsibilities with a clearly

defined reporting relationship.

Example: Assigning roles and responsibilities considering the

employee’s skills.
4. Staffing:

Besides recruitment, the entrepreneurs perform the following activities:

• Manpower Planning

• Recruitment & Selection

• Training

• Promotion & Transfer

• Rewards and Appraisal

Example: Layoffs in the corporate world are making headlines lately. It

is a part of human resource planning in enterprises.
5. Controlling: Here, entrepreneurs practice control over the organization. He

ensures that the implementation of plans is as per the plan or not. In case of

deviations, the entrepreneur identifies and fixes them. It involves activities like:

• Establishing Standards

• Measuring & Comparing Performance

• Finding Variations & Taking Corrective Actions

Example: Comparing the quantity produced with the targets set in the

production plan.
 Entrepreneurship – Need & Importance
❖Entrepreneurship need refers to the reasons why a society or economy
requires entrepreneurs to function and thrive.

❖Entrepreneurship importance refers to specific benefits and positive

impacts that arise from entrepreneurial activities.

The need is underlying reason for wanting entrepreneurship while the

importance outlines the positive outcomes it delivers.
 Entrepreneurship – Needs & Importance
1. Economic Need:
✓ Capital formation by mobilising idle resources (e.g. Men, Money,
Material)
✓ Large scale employment
✓ Balanced regional development
✓ Redistribution of wealth
✓ Backward & forward linkage
✓ Promotes country’s export trade
✓ Rural entrepreneurship
✓ Women entrepreneurship
Entrepreneurship – Needs & Importance
2. Psychological Need :

✓ Need for achievement

✓ Develops confidence

✓ Gets motivation

3. Social need:

✓ Unemployment is reduced,

✓ Social status of country improves.

 Entrepreneurial Traits

Traits: Innate personality qualities/aspects like optimism, risk

taking propensity, self confidence, drive to innovate, etc.

Skills: Abilities that can be developed through training and

experience like communication, leadership, marketing strategies,
financial analysis, etc.

Characteristics: broader set of attributes including both traits and

learned abilities like vision, adaptability, strong work ethic,
capacity to build the networks, etc.
Role of entrepreneurship in economic Development

Creating jobs, Creating wealth,

Increasing income, Regional development

Fostering innovation, Export trade

Providing economic Self-reliance

independence,
 Start-up Ecosystem in India
 Launched by the Government of India on January 16, 2016.

Journey so far..
Start Ups 1,57,000
Patented Start Ups 4882
Start Ups with Women Director 8454

Current Leading Industry IT Services

 India's startup ecosystem has rapidly grown over the past two decades, becoming
the third-largest globally with over 100 unicorns.
 The number is expected to have 2.4 lakh startups in 2030.
 India is expected to grow approximately 280 unicorns by 2030.
 Start up India
Direct Benefits:
Ease of Doing Business
Access to Funding
Tax Benefits
Skill Development and Training
Market Access
Networking Opportunities
Indirect Benefits:
Money Flow in the Market
Infrastructural Development
Indirect Employment
Increase in Related Services
 Benefits for DPIIT-Recognized Startups
Department for Promotion of Industry and Internal Trade (DPIIT):

 Intellectual Property Rights (IPR)

 Relaxation in Public Procurements Norms

 Self-Certification under Labour & Environment laws

 Fund of Funds for Startups (FFS)

 Credit Guarantee Scheme for Startups (CGSS)

 Startup India Seed Fund Scheme (SISFS)

 Faster Exit for Startups Angel tax exemption under Section (56)(2)(viib)
 Intellectual Property Rights (IPR)
 To promote awareness and adoption of IPRs by startups and facilitate them in protecting
and commercialising the IPRs, Startup India provides access to high-quality intellectual
property services and resources, including:

Fast-tracking of startup patent applications.

Panel of facilitators to assist in IP applications.

Central Government bears the entire fees of the facilitators for any number of patents,
trademark or designs, and startups only bear the cost of the statutory fees payable.

Rebate on filing of application-Startups are provided with an 80% rebate in filing of

patents
 Relaxation In Public Procurement Norms
Government of India has authorised its ministries, departments and public
sector undertakings to relax norms in all public procurements.

Startups are entitled to avail exemption on:

 Prior Turnover

 Prior Experience

 Earnest Money Deposit

DPIIT-recognised startups can now get listed as sellers on the Government of

India’s largest e-procurement portal: Government e Marketplace.
 Self-Certification Under Labour & Environment Laws

 Startups are allowed to self-certify their compliance under 9 Labour and 3

Environment Laws for a period of 3 to 5 years from the date of
incorporation.
 In respect of 3 Environment laws, units operating under 36 white category
industries (as published on the website of Central Pollution Control Board)
do not require clearance under 3 Environment related Acts for 3 years.
White Category industries are those considered to have minimal or
negligible pollution potential.
 To reduce the regulatory burden on startups, thereby allowing them to
focus on their core business and keep compliance costs low.
 Faster Exit For Startups

Ministry of Corporate Affairs has notified Startups

as ‘fast track firms’ enabling them to wind up
operations within 90 days viz-a-viz 180 days for
other companies.
 Income Tax Exemption For 3 Years
 The recognised startups that are granted an Inter-Ministerial Board
Certificate are exempted from Income Tax for a period of 3 consecutive
years out of 10 years since incorporation.

 Startups incorporated on or after 1st April 2016 but before 1st April 2023
can apply for income tax exemption under Section 80IAC of the Income
Tax Act.

 The Finance Bill 2023 extended the period of incorporation of the eligible
startup by one more year, that is, up to 31st March 2024 for providing tax
incentive.
 Exemption- section 56(2)(viib) of the Income Tax Act
 A DPIIT-recognised startup is eligible for exemption from the provisions of
section 56(2)(viib) of the Income Tax Act. The Startup has to file a duly
signed declaration in Form 2 to DPIIT to claim the exemption from the
provisions of Section 56(2)(viib) of the Income Tax Act.

 Section 56(2)(viib) of the Income Tax Act levies tax on the company that
has issued equity shares for more than their fair market value. For example,
if the company has issued 10,000 shares for Rs 100 each, the fair market
value is determined at Rs 10 per share.
 Carrying Forward and Setting Off of Losses

The Finance Bill 2023 has proposed a change that will have a
significant impact on the Indian startup ecosystem. The amendment to
Section 79 of the Income Tax Act, 1961, proposes to extend the period
for eligible startups to carry forward and set off losses incurred in the
first 10 years viz-a-viz 7 years of their incorporation. This change
comes as a much-needed respite for startups who often face financial
challenges in their initial years of operation.
 Fund of Funds For Startups (FFS)

To provide equity funding support for development and growth of

innovation driven enterprises, the government has set aside a corpus
fund of INR 10,000 crores managed by SIDBI.

Alternative Investment Funds (AIFs) are registered with SEBI & FFS
shall invest at least twice the contribution out of FFS, in Startups as
defined by Government of India under Startup India.
 Startup India Seed Fund Scheme (SISFS)

 Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of

Commerce and Industry has initiated Startup India Seed Fund Scheme
(SISFS) with an outlay of INR 945 Crore on 16th January 2021.

 Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance
to startups for proof of concept, prototype development, product trials, market
entry and commercialization. This would enable these startups to graduate to
a level where they will be able to raise investments from angel investors or
venture capitalists or seek loans from commercial banks or financial
institutions. The target of the scheme is to disburse the Seed Fund to 3600
startups through 300 incubators across India.
 Credit Guarantee Scheme for Startups (CGSS)
 The Department for Promotion of Industry and Internal Trade (DPIIT),
Ministry of Commerce and Industry has notified the establishment of
the Credit Guarantee Scheme for Startups (CGSS) for providing credit
guarantees to loans extended by Scheduled Commercial Banks, Non-
Banking Financial Companies and Securities and Exchange Board of
India (SEBI) registered Alternative Investment Funds (AIFs).
 The credit guarantee cover under the scheme would be transaction based
and umbrella based. The exposure to individual cases would be capped
at INR 10 crore per case or the actual outstanding credit amount,
whichever is less.
 Startup India Portal
Startup India provides probono (for the public good) services,
knowledge modules, details on government schemes, idea bank,
active programs for all startups and startup aspirants to help them
scale faster, better, and stronger. Unlock access to a host of
opportunities and benefits through Startup India website
([Link]) to navigate your way through the
competitive startup world.
 Shark Tank India Web series by Sony Liv TV channel
Shark Tank India is an Indian Hindi-language business reality television series that airs on Sony
LIV and Sony Entertainment Television.

The unique entrepreneurial reality show where dreams are pitched, ideas are analyzed, and the
future of aspiring entrepreneurs is determined. It provides a platform for budding entrepreneurs
to showcase their innovative ideas to a panel of industry titans, offering a rare opportunity for
mentorship, investment, and growth.

The show unveils the hard work, perseverance, and determination that goes into establishing a
business from scratch. The show has become a beacon of hope for those who are undecided
about embarking on the entrepreneurial journey.

It proves that with passion, creativity, and strategic thinking, dreams can indeed come true.