Post on 27-Feb-2023
ENTREPRENEURSHIP - AT CROSS ROADS
* Dr.C.Thilakam** S. Peter Emil Jebakumar
Abstract
Entrepreneurship is generally regarded as a force
of change, innovation and development in modern economies.
Entrepreneurs bring new and better products to markets, restore
allocative efficiency through arbitrage and reinvest their
profits. We develop a subjectivist theory of entrepreneurship that
focuses on individuals, their knowledge, resources and skills, and
the processes of discovery and creativity, which constitute the
heart of entrepreneurship. First, we establish the fundamental
importance of subjectivity in entrepreneurial discovery and
creativity that lead to economic change and to influencing
organizational learning. It also indicates that personal and often
conflicting perceptions of risks and opportunities, regardless of
their realism, constitute important drivers of entrepreneurial
action. For entrepreneurs the results may increase awareness of
their own role, problematize risks and opportunities, and also
suggest new and creative ways for developing the venture. More
specifically the results can be used as an analytical template in
the evaluation of, e.g. financial and technological risks. . The
paper also contributes the challenges of an entrepreneur who is
risk taker and explains the various explain about the risk taken
by him. It also includes the key risk factors to minimize for
startup success.
Keywords: Action, behavior, entrepreneur, technology,
entrepreneurship, creativity, embeddedness, risk, challenges.
*Professor & Head Department of commerce, Manonmaniam SundaranarUniversity, Tirunelveli. ** M.phil Full time scholar Department of commerce, ManonmaniamSundaranar University, Tirunelveli.
ENTREPRENEURSHIP- AT CROSS ROADS
* Dr.C.Thilakam
** S. Peter Emil Jebakumar
INTRODUCTION
Entrepreneurship is a process of identifying and starting a
business venture, sourcing and organizing the required resources
and taking both the risks and rewards associated with the
venture. Entrepreneurship" may result in new organizations or
revitalize mature organizations in response to a perceived
business opportunity. A new business started by an entrepreneur
is referred to as a startup company. In recent years, the term
has been extended to include social and political forms of
entrepreneurial activity.
Entrepreneurship within a firm or large organization has
been referred to as intra-premiership and may include corporate
ventures where large entities spin off subsidiary organizations.
ENTREPRENEURSHIP
The capacity and willingness to develop, organize
and manage a business venture along with any of
its risks in order to make a profit. The most obvious example of
entrepreneurship is the starting of new businesses.
In economics, entrepreneurship combined with land, labor,
natural resources and capital can produce profit. Entrepreneurial
spirit is characterized by innovation and risk-taking, and is an
essential part of a nation's ability to succeed in an ever
changing and increasingly competitive global marketplace.
DEFINITION:
Peter Drucker: An entrepreneur searches for change, responds
to it and exploits opportunities. Innovation is a specific tool
of an entrepreneur hence an effective entrepreneur converts a
source into a resource.
TRAITS OF AN ENTREPRENEUR
An entrepreneur frequently has to wear many hats. He has to
perceive opportunity, plan, organize resources, and oversee
production, marketing, and liaison with officials. Most
importantly he has to innovate and bear risk. The main functions
of an entrepreneur are as fo
Innovation:
Innovation is one of the most important functions of an
entrepreneur according to Schumpeter. An entrepreneur uses
information, knowledge and intuition to come up with new
products, new methods of reducing costs of a product, improvement
in design or function of a product, discovering new markets or
new ways of organization of industry. Through innovation, an
entrepreneur converts a material into a resource or combines
existing resources into new and more productive configurations.
It is the creativity of an entrepreneur that results in invention
[creation of new knowledge] and innovation [application of
knowledge to create new products,
services or processes.] Systematic innovation means monitoring
the following for innovative
Opportunity:
The unexpected success or failure or any unexpected outside
event, (e.g. when the IT bubble burst the ITES sector
started growing.)
Innovation based on process need [e.g. plate based cameras,
film based cameras, digital cameras]
Changes in industry and market structure [e.g. video
cassette VCD, DVD, Blue ray disc]
Demographics changes (e.g. increasing number of working
women and nuclear families in most metropolitan cities)
New knowledge (e.g. Pentium chip)
Risk and uncertainty bearing:
According to Hozelist an entrepreneur performs the
function of risk and uncertainty bearing. Every decision
pertaining to development of new products, adapting new
technologies, opening up new markets involves risk. Decision-
making in an environment of uncertainty requires anticipation of
risk. Profit is said to be the reward for anticipating and taking
such risks. However it is pertinent to mention that the
entrepreneur is not a gambler, he only takes calculated
risks. An entrepreneur develops the art of decision-making
under conditions of uncertainty as a matter of survival.
Organization building:
An entrepreneur has to organize men, material and other
resources. He has to perform the functions of planning, co-
ordination and control. He has to use his leadership qualities to
build a team, generate resources and solve problems. With his
organizational skills an entrepreneur builds an enterprise from
scratch, nurtures it and makes it grow. His vision sows the seeds
for a sound and vibrant organization and synergies are built in
the enterprise. According to Kilby in a developing country even
the imitator entrepreneurs are very important and the
entrepreneurial role encompasses the following:
Perception of market opportunities
Gaining command over scarce resources
Purchasing inputs
Marketing the products
Dealing with bureaucrats
Managing human relations within the firm
Managing customer and supplier relations
Managing finance
Managing production
Acquiring and overseeing assembly of the factory
Industrial engineering
Upgrading process and product
Introducing new production techniques and products
Opportunities for the entrepreneurs in various type of services/
industries
There is certainly no formula to become a successful
entrepreneur. Some may succeed and make good profits, others sink
along the way. Which are the most lucrative sectors for
entrepreneurs? Here's a list of 20 good opportunities
entrepreneurs can look at...
Tourism
Tourism is a booming industry in India. With the number of
domestic and international tourists rising every year, this is
one hot sector entrepreneurs must focus on. India with its
diverse culture and rich heritage has a lot to offer to foreign
tourists. Beaches, hill stations, heritage sites, wildlife and
rural life, India has everything tourists are looking for.
But this sector is not well organized. India lacks trained
professionals in the tourism and hospitality sectors. Any
business in this sector will thrive in the long run as the demand
contuses to grow every year. Foreign tourist arrivals during
January-March were 15.63 lacs with a growth rate of 12.8 percent,
compared to 13.86 lacs during the first three months last year.
Automobile
India is now a hot spot for automobiles and auto-components.
A cost-effective hub for auto components sourcing for global auto
makers, the automotive sector is potential sector for
entrepreneurs. The automobile industry recorded a 26 per cent
growth in domestic sales in 2009-10. The strong sales have made
India the second fastest growing market after China. India being
one of the world's largest manufacturers of small cars with a
strong engineering base and expertise, there are many segments
that entrepreneurs can focus on in India's automobile and auto
components sector.
Textiles
India is famous for its textiles. Each state has its unique
style in terms of apparels. India can grow as a preferred
location for manufacturing textiles taking into account the huge
demand for garments. Places like Tirupur and Ludhiana are now
export hubs for textiles. A better understanding of the markets
and customers' needs can boost growth in this sector.
Social ventures
Many entrepreneurs are taking up social entrepreneurship.
Helping the less privileged get into employment and make a viable
business is quite a challenge. There are many who have succeeded
in setting up social ventures. With a growing young population in
rural areas who have the drive and enthusiasm to work,
entrepreneurs can focus on this segment.
Software
India's software and services exports are likely to rise
with export revenue growth projected at 13 to 18 percent to hit
about $68.02 billion by 2011-2012.With one of the largest pool of
software engineers, Indian entrepreneurs can set higher targets
in hardware and software development.
The information technology enabled services have contributed
substantially to the economy. With more companies outsourcing
contracts to India, business to business solutions and services
would be required. Entrepreneurs can cash in on the rise in
demand for these services with innovative and cost effective
solutions.
Engineering goods
India continues to be one of the fastest growing exporters
of engineering goods, growing at a rate of 30.1 per cent. The
government has set a target of $110 billion by 2014 for total
engineering exports. Entrepreneurs must capitalize on the booming
demand for products from the engineering industry.
Franchising
India is well connected with the world. Hence, franchising
with leading brands who wants to spread across the country could
also offer ample opportunities for young entrepreneurs. With many
small towns developing at a fast pace in India, the franchising
model is bound to succeed.
Education and Training
There is a good demand for education and online tutorial
services. With good facilities at competitive rates, India can
attract more students from abroad. Unique teaching methods,
educational portals and tools can be used effectively to make the
sector useful and interesting.
Food Processing
India's mainstay is agriculture. Entrepreneurs can explore
many options in the food grain cultivation and marketing
segments. Inefficient management, lack of infrastructure, proper
storage facilities leads to huge losses of food grains and fresh
produce in India.
Entrepreneurs can add value with proper management and marketing
initiatives. The processed food market opens a great potential
for entrepreneurs be it fast food, packaged food or organic food.
Fresh fruits and vegetables too have a good demand abroad. A good
network of food processing units can help potential exporters
build a good business.
Corporate demands
There will be a good demand for formal attire with more
companies opening their offices in India. People who can meet
this demand in a cost effective way can make a good business.
With corporate gifting getting very popular, this is also a
unique business to explore.
Ayurveda and traditional medicine
India is well known for its herbal and ayurvedic products.
With increasing awareness about the ill-effects allopathic
medicines, there will be a huge demand for cosmetics, natural
medicines and remedies.
Organic farming
Organic farming has been in India since a long time. The
importance of organic farming will grow at a fast pace,
especially with many foreigners preferring only organic products.
Entrepreneurs can focus on business opportunities in this sector.
There are many small-time farmers who have adopted organic
farming but the demand is still unmet, offering many
opportunities for those who can promote organic farming on a
large scale.
Media
The media industry has huge opportunities to offer young
entrepreneurs. With the huge growth of this segment, any business
in this field will help entrepreneurs reap huge benefits.
Television, advertising, print and digital media have seen a boom
in business.
Digitization, regionalization, competition, innovation, process,
marketing and distribution will drive the growth of India's media
and entertainment sector, according to Ficci.
Packaging
With China invading the markets with cheap plastic goods and
packaging materials, there is a good opportunity to develop good
packaging materials to meet domestic and foreign demand. There is
a huge demand various sectors like agriculture, automotive,
consumer goods, healthcare infrastructure and packaging sectors
for plastics.
Floriculture
India's floriculture segment is small and unorganized. There
is a lot to be done in this lucrative sector. The global trade in
floriculture products is worth $9.4 billion. With a 8 per cent
growth, it is expected to grow to $16 billion by 2010. India's
share in world trade is just 0.18 per cent. This is a huge market
to be tapped considering the rising demand for fresh flowers.
More awareness and better farming and infrastructure can boost
exports.
Toys
Another evergreen industry is toy manufacturing. India has
potential to manufacture cost effective and safe toys for the
world. With Chinese toys being pulled up for toxins, the market
for safe and good quality toys beckons Indian entrepreneurs.
Recycling business
E-waste will rise to alarming proportions in the developing
world within a decade, with computer waste in India alone to grow
by 500 per cent from 2007 levels by 2020, according to a UN
study. This sector opens a viable business opportunity for
entrepreneurs in terms of e-waste management and disposal.
CHALLANGES OF AN ENTREPRENEUR:
A risk- taker is one who is not afraid to go out, deviate
and be different. With the current economic crisis that blatantly
stares at us, many entrepreneurs are at the “playing- safe” mode,
meaning it is difficult and uncalled for right now to take risks
in any undertaking. Of course, who would not want to be
successful without having to take the risk of failure? In any
undertaking, there is always a 50/50 chance. The 50 percent can
be for the success of the endeavor and obviously, 50 percent for
the failure. Admittedly, the latter is feared the most by
thriving entrepreneurs.
The first risk that an entrepreneur faces is the market
risk. You should know your market thoroughly and discover their
need and desires. You should even anticipate their every move. In
this way you can position your promotional strategies and
advertising to attract their needs and weaknesses. Some
entrepreneurs are afraid to take the risk in bringing out and
introducing a new product. An entrepreneur with great
entrepreneur skills applies the latest and the best entrepreneur
strategies that can stir-up the market and avoid the risks of
being disliked and rejected.
The second risk is the credibility risk. If there is a new
and outstanding product from the Body Shop, for sure, many people
will buy because of the name of the company that sells it.
Credibility is an important factor in any business undertaking.
Thriving entrepreneurs have to keep in mind though that being new
is not at all a threat. If only best entrepreneur strategies are
used with a combination of entrepreneur skills, then nothing will
go wrong with the business. The driving motivation to succeed and
excel is also very important. However, it is a given fact that
not all entrepreneurs have the best entrepreneur strategies and
excellent entrepreneur skills. You do not have to be totally
perfect! Most entrepreneur stories will tell you that the most
successful business persons did not go to formal training schools
in entrepreneurship. Learning comes from the act of doing.
The third risk is the investor risk. Putting up a company
requires a great amount of capital. Liquidity and a vast pool of
resources is very important to the success of the business. The
entrepreneur should be smart enough with some tinge of gut-feel
in knowing and choosing the right and most reliable investors to
boost financial backing and maintain liquidity. The fourth risk
is taking a consultant and an expert in the field. Although they
are already experts and masters, most entrepreneurs still
consider it as a risk. Their in-laid plans may not work and you
have already paid them in full! In seeking expert advice, an
entrepreneur with terrific entrepreneur skills can determine the
soundness of the advice.
ENTREPRENEURS THINKING MUST BE LIKE THAT TO GET SUCCESS:
Apart from their use of effectual reasoning, here are some
other factors that believe makes entrepreneurs entrepreneurial
and identify the mindset that helps explain how they think:
• Entrepreneurs think by actions: The entrepreneurial mindset
craves action, so much so that they twist the age old maxim to
read “Ready, Fire, Aim.” Action for the entrepreneur tests their
hypotheses and so provides them with special market intelligence
regardless of the outcome. They are more interested in
establishing a ‘proof of concept’ via active iterations and
pivots than they are in developing the perfect theoretical plan.
• Entrepreneurs think in possibilities: Entrepreneurial
thinking is not constrained by the reality of the present.
Entrepreneurs see the reality of possibilities that are not yet
evident to others. As HBS professor Howard Stevenson explains:
“Entrepreneurs pursue opportunities without regard to resources
currently controlled.” Entrepreneurs don’t need all the resources
in place before pursuing an opportunity … just the important
ones.
• Entrepreneurs can think in ambiguity: For the vast majority
of people, ambiguity means confusion, disorganization and
debilitation. Not so for the entrepreneur who can still function
effectively and move forward decisively in the world of
conflicting views, uncertain outcomes, and unresolved issues that
exists as they craft and hone their opportunity from the evolving
mass of possibilities. The Lemonade entrepreneurial principle
actually embraces surprises that arise from this uncertainty and
will adjust goals on the fly rather than be held by previous
ones.
• Entrepreneurial thinking embraces risk: While many money
makers implement risk avoidance strategies to create wealth, the
entrepreneur knows that opportunities are more likely to exist
for them by embracing and managing risk rather than simply
avoiding it. It is in these risky areas that the established
players avoid, that contains the gold nugget opportunities.
Entrepreneurs have developed a whole host of risk management
treatments to help them in this regard like lean startups,
customer development process, beta launches, iterations and
pivots, affordable loss experimentation, ‘under the radar’
launches, embedded entrepreneurship, and beachhead strategies.
The Affordable Loss Principle drives entrepreneurial action based
on the acceptable downside, more than it does on the
attractiveness of the predicted upside.
• Entrepreneurs think in patterns: Entrepreneurs are always
looking for cause and effect patterns in the world around them.
Patterns help the entrepreneur to not only understand the world
they live in but it also helps them predict the future and to see
opportunities that most people miss. These patterns may be the
ability to see the logical extension of a change or the creative-
disruptive force of something new or the cross pollination
ability of an innovation into new fields. Entrepreneurs also know
how to apply the concepts and patterns from existing worlds to
explain innovations in worlds as yet unseen.
• Entrepreneurs think incessantly: There is no off button in
the entrepreneur’s mind. They are incessantly curious,
opportunistic, and optimistic. They train their minds to problem-
solve every issue that crosses their path. Every person they meet
is a potential resource, in every problem they encounter they
seek a solution and in every change they look for the new
opportunity potential.
• Entrepreneurs think internally: Rather than let others and
external factors determine the value of outcomes, the
entrepreneur uses their internal locus of control to direct their
destiny, to work for their achievements, to delay gratification,
and to plan with an eye for long-term benefits. Entrepreneurs
never think of themselves as victims. Everything they do has a
personal development focus, even when doing unappreciated work
for others.
• Entrepreneurs think of value-add: Rather than singularly
employ a ‘business-savvy’ focus of extracting benefit by
exploiting a market/customer weakness, entrepreneurs focus
primarily on creating new value for others (by increased benefit
or reduced cost) and then finding a way of securing a slice of
that increased value for themselves.
• Entrepreneurs think of making meaning: Entrepreneurs have an
inherent desire to make a difference and to make their world a
better place. So, for the entrepreneur, making money becomes a
means to that end and not an end in itself.
TEN KEY RISK FACTORS TO MINIMIZE FOR STARTUP SUCCESS:
List of key risk drivers that every entrepreneur
and every investor should evaluate and minimize in starting a
business:
Team experience and depth risk. Here I’m talking about both the
experience and track record of the founders in starting a
business, as well as their experience and knowledge of the
business domain. Like most professionals, when I get a business
plan, I flip first to the founders section to see if it is a
balanced team who has been there and done that.
Market and opportunity risk. There is always less risk with a
well-defined problem in a large and growing market. All the
people in China are a large and growing market, but all the
people with cancer is much more well-defined. It’s hard to make
money in a shrinking market, or with a solution that is “nice to
have” versus painfully needed.
Competitive risk. Think seriously about the number and clout of
your competitors. Having none is a red flag (may mean no market),
but having more than a couple of large ones may mean this is a
crowded space. Even in an open space, you need intellectual
property, like patents, to keep potential competitors from
overrunning you.
Financial risk. Very few businesses can be started without money.
You as the founder will be expected to put your own “skin in the
game.” The business plan should be realistic about how much cash
will be required to break-even, and how big the return will be
for investors in the first five-year timeframe.
Market entry strategy risk. The selection of an inappropriate
pricing, marketing, or distribution strategy is a large potential
risk. For example, many new social websites proclaim that they
will offer a free service, and live on ad revenues (not likely in
the first year without a huge marketing investment).
Political and economic risk. Sometimes founders are just in the
wrong place at the wrong time. Recessions are a tough time to
sell luxury goods. Under-developed countries may have a strong
need for your product, but are often unstable and dangerous. Four
specifics include tax rates, tariffs, expropriation of assets,
and repatriation of profits.
Technology risk. New technologies, especially those characterized
as “paradigm shifts” or “disruptive” may have long and costly
acceptance cycles, or may run into unpredictable performance or
manufacturing problems. Medical technologies have costly legal
testing requirements, approval processes, and insurance
validation.
Businesses with high attrition rate risk. Certain business
sectors have historical high failure rates and are routinely
avoided by investors and many founders. These include food
service, retail, consulting, work at home, and telemarketing. On
the Internet, I would add new social networking sites, and new
matchmaking sites.
Operational risk. Some businesses require huge support or
administrative infrastructures. For example, vehicle fuel
improvements require service stations and maintenance shops
nationwide, before they are viable. Even small operations can
have breakdowns of specialized equipment and complex support
processes.
Environmental risk. A nuclear reactor built on an earthquake
fault line is a huge risk. Evaluate your business and location
for sensitivity to floods, hurricanes, and catastrophic pollution
problems, like an oil spill in the Gulf of Mexico.
Conclusion
In the modern world people can no longer
expect large enterprises to guarantee them jobs for life.
Individuals are increasingly expected to seek out their own
opportunities, actively create value and behave ethically, rather
than faithfully follow rules and routines set by others. In
particular, today's young people need to learn to be
enterprising, both when working for others and when setting up
their own businesses. Being enterprising involves taking
responsibility for decision making, becoming increasingly self
reliant, pioneering, adventurous, daring, dynamic, progressive,
opportunist, ambitious and holding your values, as well as being
able to initiate ideas and see them through into action. While
many new businesses start as a one-man show, successful
entrepreneurship is characterized by quick and stable growth.
This means hiring other people to do specialized jobs. For this
reason, entrepreneurship requires extensive organization and
delegation of tasks. It is important for entrepreneurs to pay
close attention to everything that goes on in their companies,
but if they want their companies to succeed, they must learn to
hire the right people for the right jobs and let them do their
jobs with minimal interference from management.
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