A Mini Project Report on the topic ‘ENTREPRENEURSHIP’

BY

RAKSHITHA M B
1CR18MBA36

Submitted to
Department of Management Studies & Research
CMR INSTITUTE OF TECHNOLOGY, BENGALURU

In partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under Guidance of

Mr M Sandeep Kumar
Assistant Professor
Department of Management Studies
CMR Institute of Technology
BENGALURU

Department of Management Studies and Research

CMR Institute of Technology

#132, AECS Layout, IT Park Road, Bangalore - 560037
Batch - 2018-2020

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 ENTREPRENEURSHIP
Entrepreneurship is the process of designing, launching and running a new business,
which is often initially a small business. The people who create these businesses are
called entrepreneurs.

Entrepreneurship has been described as the "capacity and willingness to develop,

organize and manage a business venture along with any of its risks to make a profit”.
While definitions of entrepreneurship typically focus on the launching and running of
businesses, due to the high risks involved in launching a start-up, a significant proportion
of start-up businesses have to close due to "lack of funding, bad business decisions, an
economic crisis, lack of market demand, or a combination of all of these."

A broader definition of the term is sometimes used, especially in the field of economics.
In this usage, an Entrepreneur is an entity which has the ability to find and act upon
opportunities to translate inventions or technologies into products and services: "The
entrepreneur is able to recognize the commercial potential of the invention and organize
the capital, talent, and other resources that turn an invention into a commercially viable
innovation”. In this sense, the term "Entrepreneurship" also captures innovative activities
on the part of established firms, in addition to similar activities on the part of new
businesses.

ELEMENTS
Entrepreneurship is act of being an entrepreneur, or "the owner or manager of a business
enterprise who, by risk and initiative, attempts to make profits". Entrepreneurs act as
managers and oversee the launch and growth of an enterprise. Entrepreneurship is the
process by which either an individual or a team identifies a business opportunity and
acquires and deploys the necessary resources required for its exploitation. Early-19th-
century French economist Jean-Baptiste Say provided a broad definition of
entrepreneurship, saying that it "shifts economic resources out of an area of lower and
into an area of higher productivity and greater yield". Entrepreneurs create something
new, something different—they change or transmute values. Regardless of the firm size,
big or small, they can partake in entrepreneurship opportunities. The opportunity to
become an entrepreneur requires four criteria. First, there must be opportunities or

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situations to recombine resources to generate profit. Second, entrepreneurship requires
differences between people, such as preferential access to certain individuals or the
ability to recognize information about opportunities. Third, taking on risk is a necessity.
Fourth, the entrepreneurial process requires the organization of people and resources.[8]

The entrepreneur is a factor in and the study of entrepreneurship reaches back to the work
of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries. However,
entrepreneurship was largely ignored theoretically until the late 19th and early 20th
centuries and empirically until a profound resurgence in business and economics since
the late 1970s. In the 20th century, the understanding of entrepreneurship owes much to
the work of economist Joseph Schumpeter in the 1930s and other Austrian economists
such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. According to
Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or
invention into a successful innovation. Entrepreneurship employs what Schumpeter
called "the gale of creative destruction" to replace in whole or in part inferior innovations
across markets and industries, simultaneously creating new products including new
business models. In this way, creative destruction is largely responsible for the dynamism
of industries and long-run economic growth. The supposition that entrepreneurship leads
to economic growth is an interpretation of the residual in endogenous growth theory and
as such is hotly debated in academic economics. An alternative description posited by
Israel Kirzner suggests that the majority of innovations may be much more incremental
improvements such as the replacement of paper with plastic in the making of drinking
straws.

The exploitation of entrepreneurial opportunities may include

 Developing a business plan

 Hiring the human resources
 Acquiring financial and material resources
 Providing leadership
 Being responsible for both the venture's success or failure
 Risk aversion

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Economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the
economy as "creative destruction" – launching innovations that simultaneously destroy
old industries while ushering in new industries and approaches. For Schumpeter, the
changes and "dynamic disequilibrium brought on by the innovating entrepreneur [were]
the norm of a healthy economy". While entrepreneurship is often associated with new,
small, for-profit start-ups, entrepreneurial behavior can be seen in small-, medium- and
large-sized firms, new and established firms and in for-profit and not-for-profit
organizations.

Entrepreneurship may operate within an entrepreneurship ecosystem which often

includes:

 Government programs and services that promote entrepreneurship and support

entrepreneurs and start-ups
 Non-governmental organizations such as small-business associations and
organizations that offer advice and mentoring to entrepreneurs (e.g. through
entrepreneurship centers or websites)
 Small-business advocacy organizations that lobby governments for increased support
for entrepreneurship programs and more small business-friendly laws and regulations
 Entrepreneurship resources and facilities (e.g. business incubators and seed
accelerators)
 Entrepreneurship education and training programs offered by schools, colleges and
universities
 Financing (e.g. bank loans, venture capital financing, angel investing and government
and private foundation grants)

In the 2000s, usage of the term "entrepreneurship" expanded to include how and why
some individuals (or teams) identify opportunities, evaluate them as viable, and then
decide to exploit them. The term has also been used to discuss how people might use
these opportunities to develop new products or services, launch new firms or industries,
and create wealth. The entrepreneurial process is uncertain because opportunities can
only be identified after they have been exploited.

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Entrepreneurs exhibit positive biases towards finding new possibilities and seeing unmet
market needs, and a tendency towards risk-taking that makes them more likely to
exploit business opportunities.

HISTORY

"Entrepreneur" is a loanword from French. The word first appeared in the French
dictionary entitled Dictionnaire Universel de Commerce compiled by Jacques des
Bruslons and published in 1723. Especially in Britain, the term "adventurer" was often
used to denote the same meaning. The study of entrepreneurship reaches back to the work
in the late 17th and early 18th centuries of Irish-French economist Richard Cantillon,
which was foundational to classical economics. Cantillon defined the term first in
his Essai sur la Nature du Commerce en Général, or Essay on the Nature of Trade in
General, a book William Stanley Jevons considered the "cradle of political
economy". Cantillon defined the term as a person who pays a certain price for a product
and resells it at an uncertain price, "making decisions about obtaining and using the
resources while consequently admitting the risk of enterprise". Cantillon considered the
entrepreneur to be a risk taker who deliberately allocates resources to exploit
opportunities to maximize the financial return. Cantillon emphasized the willingness of
the entrepreneur to assume the risk and to deal with uncertainty, thus he drew attention to
the function of the entrepreneur and distinguished between the function of the
entrepreneur and the owner who provided the money.

Jean-Baptiste Say also identified entrepreneurs as a driver for economic development,

emphasizing their role as one of the collecting factors of production allocating resources
from less to fields that are more productive. Both Say and Cantillon belonged to French
school of thought and known as the physiocrats.

Dating back to the time of the medieval guilds in Germany, a craftsperson required
special permission to operate as an entrepreneur, the small proof of competence, which
restricted training of apprentices to craftspeople who held a Meister certificate. This
institution was introduced in 1908 after a period of so-called freedom of trade
(Gewerbefreiheit, introduced in 1871) in the German Reich. However, proof of
competence was not required to start a business. In 1935 and in 1953, greater proof of

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competence was reintroduced (Großer Befähigungsnachweis Kuhlenbeck), which
required craftspeople to obtain a Meister apprentice-training certificate before being
permitted to set up a new business.

RELATIONSHIP BETWEEN SMALL BUSINESS AND

ENTREPRENEURSHIP
The term "entrepreneur" is often conflated with the term "small business" or used
interchangeably with this term. While most entrepreneurial ventures start out as a small
business, not all small businesses are entrepreneurial in the strict sense of the term. Many
small businesses are sole proprietor operations consisting solely of the owner—or they
have a small number of employees—and many of these small businesses offer an existing
product, process or service and they do not aim at growth. In contrast, entrepreneurial
ventures offer an innovative product, process or service and the entrepreneur typically
aims to scale up the company by adding employees, seeking international sales and so on,
a process which is financed by venture capital and angel investments. In this way, the
term "entrepreneur" may be more closely associated with the term "startup". Successful
entrepreneurs have the ability to lead a business in a positive direction by proper
planning, to adapt to changing environments and understand their own strengths and
weakness.

TYPES OF ENTREPRENEURS

Ethnic
The term "ethnic entrepreneurship" refers to self-employed business owners who belong
to racial or ethnic minority groups in the United States and Europe. A long tradition of
academic research explores the experiences and strategies of ethnic entrepreneurs as they
strive to integrate economically into mainstream U.S. or European society. Classic cases
include Jewish merchants and tradespeople in large U.S. cities in the 19th and early 20th
centuries as well as Chinese and Japanese small business owners (restaurants, farmers,
shop owners) on the West Coast. In the 2010s, ethnic entrepreneurship has been studied
in the case of Cuban business owners in Miami, Indian motel owners of the U.S. and
Chinese business owners in Chinatowns across the United States. While entrepreneurship

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offers these groups many opportunities for economic advancement, self-employment and
business ownership in the United States remain unevenly distributed along racial/ethnic
lines.

Institutional

The American-born British economist Edith Penrose has highlighted the collective nature
of entrepreneurship. She mentions that in modern organizations, human resources need to
be combined to better capture and create business opportunities. The sociologist Paul
DiMaggio (1988:14) has expanded this view to say that "new institutions arise when
organized actors with sufficient resources [institutional entrepreneurs] see in them an
opportunity to realize interests that they value highly". The notion has been widely
applied.

Cultural[edit]

According to Christopher Rea and Nicolai Volland, cultural entrepreneurship is

"practices of individual and collective agency characterized by mobility between cultural
professions and modes of cultural production", which refers to creative industry activities
and sectors. In their book The Business of Culture (2015), Rea and Volland identify three
types of cultural entrepreneur: "cultural personalities", defined as "individuals who build
their own personal brand of creativity as a cultural authority and leverage it to create and
sustain various cultural enterprises"; "tycoons", defined as "entrepreneurs who build
substantial clout in the cultural sphere by forging synergies between their industrial,
cultural, political, and philanthropic interests"; and "collective enterprises", organizations
which may engage in cultural production for profit or not-for-profit purposes.

Feminist

A feminist entrepreneur is an individual who applies feminist values and approaches

through entrepreneurship, with the goal of improving the quality of life and well-being of
girls and women. Many are doing so by creating "for women, by women" enterprises.
Feminist entrepreneurs are motivated to enter commercial markets by desire to create
wealth and social change, based on the ethics of cooperation, equality and mutual respect.

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Social

Student organizers from the Green Club at Newcomb College Institute formed a social
entrepreneurship organization in 2010.

Main article: Social entrepreneurship

Social entrepreneurship is the use of the by start up companies and other entrepreneurs to
develop, fund and implement solutions to social, cultural, or environmental issues. This
concept may be applied to a variety of organizations with different sizes, aims, and
beliefs. For-profit entrepreneurs typically measure performance using business metrics
like profit, revenues and increases in stock prices, but social entrepreneurs are either non-
profits or blend for-profit goals with generating a positive "return to society" and
therefore must use different metrics. Social entrepreneurship typically attempts to further
broad social, cultural, and environmental goals often associated with the voluntary
sector in areas such as poverty alleviation, health care and community development.

Nascent

A nascent entrepreneur is someone in the process of establishing a business venture. In

this observation, the nascent entrepreneur can be seen as pursuing an opportunity, i.e. a
possibility to introduce new services or products, serve new markets, or develop more
efficient production methods in a profitable manner. But before such a venture is actually
established, the opportunity is just a venture idea. In other words, the pursued opportunity
is perceptual in nature, propped by the nascent entrepreneur's personal beliefs about the
feasibility of the venturing outcomes the nascent entrepreneur seeks to achieve.

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Project-based
Project entrepreneurs are individuals who are engaged in the repeated assembly or
creation of temporary organizations. These are organizations that have limited lifespans
which are devoted to producing a singular objective or goal and get disbanded rapidly
when the project ends. Industries where project-based enterprises are widespread
include: sound recording, film production, software development, television
production, new media and construction. What makes project-entrepreneurs distinctive
from a theoretical standpoint is that they have to "rewire" these temporary ventures and
modify them to suit the needs of new project opportunities that emerge.

Millennial
The term "millennial entrepreneur" refers to a business owner who is affiliated with the
generation that was brought up using digital technology and mass media—the products
of Baby Boomers, those people born during the 1980s and early 1990s. Also known
as Generation Y, these business owners are well equipped with knowledge of new
technology and new business models and have a strong grasp of its business applications.
There have been many breakthrough businesses that have come from millennial
entrepreneurs such as Mark Zuckerberg, who created Facebook. Despite the expectation
of millennial success, there have been recent studies that have proven this to not be the
case.

STRATEGIES

Strategies that entrepreneurs may use include:

 Innovation of new products, services or processes

 Continuous process improvement (CPI)
 Exploration of new business models
 Use of technology
 Use of business intelligence
 Use of economical strategic
 Development of future products and services
 Optimized talent management

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ENTREPRENEURSHIP TRAINING AND EDUCATION

Michelacci and Schivardi are a pair of researchers who believe that identifying and
comparing the relationships between an entrepreneur's earnings and education level
would determine the rate and level of success. Their study focused on two education
levels, college degree and post-graduate degree. While Michelacci and Schivardi do not
specifically determine characteristics or traits for successful entrepreneurs, they do
believe that there is a direct relationship between education and success, noting that
having a college knowledge does contribute to advancement in the workforce.

Michelacci and Schivardi state there has been a rise in the number of self-employed
people with a baccalaureate degree. However, their findings also show that those who are
self-employed and possess a graduate degree has remained consistent throughout time at
about 33 percent. They briefly mention those famous entrepreneurs like Steve
Jobs and Mark Zuckerberg who were college dropouts, but they call these cases all but
exceptional as it is a pattern that many entrepreneurs view formal education as costly,
mainly because of the time that needs to be spent on it. Michelacci and Schivardi believe
that in order for an individual to reach the full success they need to have education
beyond high school. Their research shows that the higher the education level the greater
the success. The reason is that college gives people additional skills that can be used
within their business and to operate on a higher level than someone who only "runs" it.

PREDICTORS OF SUCCESS

Factors that may predict entrepreneurial success include the following:

Methods

 Establishing strategies for the firm, including growth and survival strategies
 Maintaining the human resources (recruiting and retaining talented employees and
executives)
 Ensuring the availability of required materials (e.g. raw resources used in
manufacturing, computer chips, etc.)
 Ensuring that the firm has one or more unique competitive advantages

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Market

 Business-to-business (B2B) or business-to-consumer (B2C) models can be used

 High growth market
 Target customers or markets that are untapped or missed by other

Industry

 Growing industry
 High technology impact on the industry
 High capital intensity
 Small average incumbent firm size

Team

 Large, gender-diverse and racially diverse team with a range of talents, rather than an
individual entrepreneur
 Graduate degrees
 Management experience prior to start-up
 Work experience in the start-up industry
 Employed full-time prior to new venture as opposed to unemployed

Company

 Written business plan

 Focus on a unified, connected product line or service line
 Competition based on a dimension other than price (e.g. quality or service)
 Early, frequent intense and well-targeted marketing
 Tight financial controls
 Sufficient start-up and growth capital
 Corporation model, not sole proprietorship

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Status

 Wealth can enable an entrepreneur to cover start-up costs and deal with cash
flow challenges
 Dominant race, ethnicity or gender in a socially stratified culture

CONCLUSION

To be successful in sustainable business practices often requires entrepreneurship and

innovation. This chapter provides an overview of entrepreneurship and innovation as it
relates to sustainable business. The discussion is most relevant to sustainable businesses
focused on offering new products and services in response to societal concerns. The
importance of entrepreneurship and innovation also applies to companies that change
how they produce products and services. The latter companies can use innovative
practices and entrepreneurship to establish their brand name and to be market leaders in
doing things that create shared value for society and their companies and also, over time,
contribute to changes in practices in their industry.

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