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KLE LAW ACADEMY BELAGAVI
(Constituent Colleges: KLE Society’s Law College, Bengaluru, Gurusiddappa Kotambri Law College, Hubballi, S.A. Manvi Law College, Gadag, KLE Society’s B.V. Bellad Law College, Belagavi, KLE Law College, Chikodi, and KLE College of Law, Kalamboli, Navi Mumbai)
STUDY MATERIAL
for
ENTREPRENEURSHIP DEVELOPMENT
Prepared as per the syllabus prescribed by Karnataka State Law University (KSLU), Hubballi
Compiled by
Jayanth S. Kashyap, Asst. Prof.
Reviewed by
Deepali V.H., Asst. Prof.
K.L.E. Society's Law College, Bengaluru
This study material is intended to be used as supplementary material to the online classes and recorded video lectures. It is prepared for the sole purpose of guiding the students in preparation for their examinations. Utmost care has been taken to ensure the accuracy of the content. However, it is stressed that this material is not meant to be used as a replacement for textbooks or commentaries on the subject. This is a compilation and the authors take no credit for the originality of the content. Acknowledgement, wherever due, has been provided.
Entrepreneurship Development Study Material
Objectives of this Subject :
The course intends to elaborate on the Human Relations aspects of entrepreneurship. It also
highlights the legal requirements for establishment of new Units, licensing, clearance and other
legal compliances. The Entrepreneur development programs such as Kakinada Experiment are
highlighted & McClelland’s motivational aspects are highlighted.
Course contents Page
Numbers
UNIT – I
Entrepreneur – Meaning, Definition, Importance characteristics, Functions and types; Entrepreneurship – Meaning and Importance.
UNIT – II
Legal requirement for establishment of new Units, licensing, Clearance, certificate from agencies, SIDBI.
UNIT – III
Entrepreneurship Development Program – Meaning, objectives, phases in DP and operational Problems, Entrepreneurial Training Meaning, Importance and types.
UNIT – IV
Entrepreneurial Environments – Economic, Social, Cultural, Political and Legal Environment.
UNIT – I
Entrepreneurship
Synopsis of the unit:
The unit is an introduction to the concept of entrepreneurship, the subject Entrepreneurship
Development is introduced to the law integrated course with the objective of touching upon the
legal side of entrepreneurship as well as the management of a Business Enterprise by an
Individual. This Concept of Entrepreneurship deals with various sub topics like Meaning,
Definition, characteristics, Functions and Challenges faced by entrepreneurs. Each sub topic is a
life lesson for any Individual, by applying the philosophies if these topics one can induce himself
with leadership skills, management skills and gain the confidence of understanding of the subject
Entrepreneurship.
1.1 Concept of Entrepreneur
According to Cantillon “ an Entrepreneur is the agent who buys factors of production at certain
prices in order to combine them into a product with a view to selling it at an uncertain prices in
the future’’
Jayanth Sir Explanation: Here the author Cantillon was an Irish-French economist and author
of Essai sur la Nature du Commerce en Général (Essay on the Nature of Trade in General)
explains the concept of Entrepreneur as an agent, Agent is a person who acts as a mediator
between people and business and entrepreneur in general sense is nothing but an agent who
purchases the factors of production i.e. Land Capital, Labor, Equipment at a certain price and
using these factors of production he prepares a product or renders a service at an uncertain
price in the future, (Uncertain Price) please as a reader question yourself why is the word
uncertain used , Uncertain is anything uncontrollable in the future example nobody knew that
the World’s Demand for Masks and PPE Kits would increase because of COVID-19. Now this is
uncertain because everyone is using Masks, Sanitizers and PPE Kits, as and when the demand
grows for a particular product grows new entrepreneurs enter the Society.
Dear Students please understand the meaning of every word to look inside the author’s mind and
view point and understand the subject for knowledge sake and not for just marks. After
discussing the Concept and Definition of Entrepreneurship it is time to understand the meaning
of entrepreneur.
Meaning
An entrepreneur is a person who recognizes an opportunity, raises the resources required to
exploit that opportunity and assumes the risk associated with executing the plans. An
Entrepreneur therefore can also be termed as an individual or a group of people who tries to
create something new, who organizes production and undertakes risks involved in the
establishment and operation in the business enterprise.
ID COMPANY CLASSIC EXAMPLE OF ENTREPRENURSHIP
Teacher Explanation :Opportunities are everywhere around us , I shall quote an example of an
entrepreneur Mr. Mustafa and his friends who started ID Company , with selling the Dose and
Characteristics of Entrepreneurship
Characteristics of an Entrepreneur (Qualities of a successful) Entrepreneur).
Successful entrepreneur possesses a combination of traits that show both innovation and leadership qualities. Scholars from around the world have worked tirelessly to discover just what characteristics make a good entrepreneur; what exactly makes up a business founder's x-factor?
Great entrepreneurs have the following traits:
Ambition
A good entrepreneur is driven to make something of him. He knows what he wants, and he sets a course to get it. His motivation to achieve something can sometimes be overwhelming, and the urge to establish himself can be quite consuming. An entrepreneur's ambition is often the key ingredient that gets him off of his chair and puts him into action, turning his daydreams into reality_. Example : JIO by Reliance Digital is an Ambitious project which took down the other players in the market_
Enthusiasm
Often coming hand-in-hand with ambition, enthusiasm plays a great role in the entrepreneur's motivation. While ambition may be the key to the entrepreneur's ignition, enthusiasm is the gas. Every successful entrepreneur has a positive outlook giving him the energy to pursue his endeavors. Without enthusiasm, an entrepreneurial project will slowly wither into inactivity and failure. Example: BOUNCE is an App for local motor vehicle commute which faced problems life petrol theft, helmet theft and vehicles being damaged etc but the entrepreneur never gave up.
Creativity
When problems do arise, you can count on creativity to bail you out. Creativity is probably what led you to envision your company in the first place, and it'll be creativity that will help you realize the possible solutions to any hitches that might come your way. Successful entrepreneurs find inspiration throughout the entire process, and often discover ways to turn roadblocks into opportunities.
Example : No better example of that than Steve Jobs, the co-founder of Apple Computers, which came out with some of the most innovative products and inspired future innovations in computing and mobile technology.
Perseverance
The ability to withstand the troubles that come with starting a business. Beginning a new enterprise is an immensely difficult task, and as an entrepreneur, you'll have to stick through the storms and stress if you want your venture to be a success. It sometimes takes years for a good idea to start making you money, but when it does, you'll be glad you stood strong in the face of adversity.
Example: Walt Disney set up a small animation business and released several cartoon series, such as Laugh-O-Grams and Alice in Cartoon land. However, it did not last long, as they had to declare bankruptcy when the studio was not able to repay all its debts. He took this as his cue to move to Hollywood with his brother, and they set up the Disney Brothers’ Studio. They had a met a few snags at first, but it wasn’t until Walt created “Mickey Mouse” that everything took off.
Walt Disney with his legendary creation of Mickey Mouse
Initiation:
Given the Demand of the situation the entrepreneur takes initiatives to start an industry and take necessary steps accordingly. As the quote goes Well begun is half done, in the same manner to initiate a business, to start a project, to begin a product is a mindset that an entrepreneur commands.
Watch Dog
Entrepreneurs are watch dog i.e. they wait for the right business opportunities and take necessary accordingly.
Example: During Demonetization lot of people saw this as an business opportunity and launched an app to stand in queue in front of banks on behalf of others. Although it looks strange as an example but definitely a opportunity to explore. During COVID-19 Pandemic although lots of lives are in danger and everyone are in need of Sanitizers, Masks and PPE Kits. Today, more than 600 companies in India are certified to produce PPEs, whose global market worth is expected to be over $92.5 billion by 2025, up from $52.7 billion in 2019. 60 days since Lockdown, 56-fold growth: India now second largest PPE manufacturer in the world is an inspiring example.
Information Seeker
He is ready to learn from the experience of others and enriches his business information to help him reach the goal.
Example: Entrepreneurs working in the field of Stocks and Shares are always information seekers; they seek information from various sources to make profit. True entrepreneur is a
MUMBAI ‘S DABBA WALA
Dabawala was started in 1890 by one Mr. Mahadeo Havaji Bachche. He was once asked by a Parsi working in the Britisher’s rank, “Will you bring my tiffin from my home?” He simply answered “Yes, I will, no problem.” From that day onwards, he started to collect tiffins from homes and delivering them to the respective workplaces. In 1890, there was one dabbawala and one customer, and now, there are 5000 dabbawalas and 200,000 customers, which means, one dabbawala carries approximately 40 Tiffins. The maximum weight comes to 65-70kg; carrying that much weight in the crowded local trains is a lot of hard work. Why do they do it then? Work is worship. And, as far as qualification is concerned, you will see that the average literacy rate is 8th grade schooling; which means the dabbawalas are illiterate and yet they have managed to achieve a Six Sigma quality rating, which means only one wrong service in a 6 million deliveries. So please understand that in order to be efficient and produce great quality literacy isn’t the only criteria!
Proper Planner
Frames realistic business plans and follows them rigorously to achieve the objectives. Plan is not just an action to be made as a blueprint. It involves various experience , foresight of the future needs and a target.
Self Confident
Strong believer in his strengths and weaknesses. Future is uncertain, so is life, so is entrepreneurship, it is vast sea where, entrepreneurs sail the lone voyage overcoming the tempest to reach the destination of profit. In order to overcome difficulties an entrepreneur has to be extremely confident in his work, his ideas and path chosen.
Confidence and crazy passion towards his goals ELON MUSK is a classic example of Entrepreneurship.
Tesla Cars, SpaceX First ever private rocket making company , Solarcity, Boring Company and its tunnel ideas and lastly the dream to travel to mars and make it Habitable.
Assertiveness
Able to assert his issues, whatsoever these might be, in the interest of his enterprise.
Persuasion
Succeeds in persuading others to do what he wants.
Entrepreneurs may find it difficult to get resources. Intrapreneurs have their resources readily available to them.
- Entrepreneurs may lose everything when they fail. Intrapreneurs still have a paycheck to look forward to (at least for now) if they fail.
- Entrepreneurs know the business on a macro scale. Intrapreneurs are highly skilled and specialized.
Functions of an Entrepreneur
- I. Primary Function
- II. Other Functions
- III. Functions for developing countries
I. Primary Function
1. Planning:
In common planning is today’s projection for tomorrow’s activity. Planning pervades in all
aspects of business. An entrepreneur has to make decisions as to what is to be done, how it is to
be done, when it is to be done, where it is to be done, by whom it is to be done and so on. The
importance of planning lies in the fact that it ensures the smooth and effective completion of
running of a business enterprise. Absence of planning causes confusion which, in turn, affects
the smooth performance of job in an organization.
2. Organizing
The organizing function of an entrepreneur refers to bringing together the men, material,
machine, money, etc. to execute the plans. The entrepreneur assembles and organizes the
above mentioned different organs of an enterprise in such a way that these combined start
functioning as one, i.e., enterprise. Thus, organizing function of an entrepreneur ultimately
provides a mechanism for purposive, integrated and co-operative action by many people in
a joint and organized effort to implement a business plan.
Organizing is not only about bringing things together but also includes bringing things at
the right time and to put things into effective usage.
3. Decision Making
Entrepreneurship is a new initiative therefore; it has to decide multivariate issues that affect new ventures. Entrepreneurship has to decide upon equipment to be used quality, price and its variation, deficiency, capital structure, the feasibility of the project, organizational structure, philosophy of management, etc. that will guide, run and prosper the new venture or distinct attempt for entrepreneurship. We know that decision-making is a process and entrepreneurship to make n a success, goes through this process. Example is the Decision of Ambani group of companies to sell their shares in order to repay growing debt burden is a hard decision to make.
4. Management
Entrepreneurs perform several managerial roles to keep their venture functioning with success.
The roles are interpersonal roles that consist of a figurehead role, leadership role, and liaison role; informational roles that include recipient role, disseminator role, and the spokesperson role; decisional roles that consist of an entrepreneurial role, disturbance- handler role, resource allocator role, and the negotiator role.
The entrepreneur also does the associated managerial functions such as planning, organizing, leading and controlling.
Teacher Explanation: An entrepreneur has wide variety of roles to play in a single day. He has to be a good employer with his employee, Negotiator with his suppliers, Profit maker to the economy, giver to the society and follower of rules to the law and a honest taxpaying citizen to the Country.
5. Risk Bearing
Entrepreneurship takes the risk for the new venture. For innovative actions in the field of production technology for new products in a volatile market and new raw materials used in production. Moreover, it also takes the risk for theft, robbery, snatching market fall and hooliganism that may be involved with new entrepreneurship this is a major function of entrepreneurship in developing countries.
6. Uncertainty Bearing - Uncertainty Bearing is bearing of the uninsured risk that comes alongside the business, fall in trends of market or even rise in trends of the market, fluctuation of interest rates in trade credits.
II. Other Functions
- 2 Imitative
- 3 Fabian
- 4 Drone
B. Arthur Cole
- Empirical
- Rational
- Cognitive
C. On the basis of ownership
- Private
- Public
D. On the basis of scale of enterprise
- Small Scale
- Large Scale
A. Clarence Danhof. Classifaction
Aggressive / Innovative
- Innovators are the types of entrepreneurs who come up with completely new ideas and turn them into viable businesses_. Example: Amazon E Commerce website._
- In most cases, these entrepreneurs change the way people think about and do things. Such entrepreneurs tend to be extremely passionate and obsessive, deriving their motivation from the unique nature of their business idea.
- Innovative entrepreneurs also find new ways to market their products by choosing product differentiation strategies that make their company stand out from the crowd. And sometimes it is not just standing out from the crowd but actually creating a new crowd.
- To say that innovators like Steve Jobs, Larry Page of Google and Microsoft founder Bill Gates were obsessed with their business would be an understatement.
- Advantages of Being An Innovate Entrepreneur:
- Get all the glory for the success of the business (and take all the arrows)
- Create the rules
- Face minimal competition during the initial days
- Disadvantages of Being An Innovate Entrepreneur:
- You will need a lot of capital to bring a new idea to life
- Often face resistance from shareholders
