entrepreneurs not made but born comment types of entrepreneurs

 Q. “Entrepreneurs are not made but born.” Comment on it. Explain different types of Entrepreneurs.

Ans. Entrepreneurs are the persons who takes the risk of new enterprise. It is general perception that entrepreneurs are not made but born. This statement suggests that entrepreneurial quality are inborn. It implies that business family background is considered necessary for the success of an entrepreneur. It also implies that some of the qualities are inborn or hereditary. Thus, entrepreneurs are not made but born.

However some people are of the opinion that entrepreneurs are made not born. They believe that people with adequate knowledge, skill and experience may also become successful entrepreneur. Most of the qualities can be acquired by constant effort and practice. 

In conclusion, entrepreneurs have a combination of inborn and acquired skills and abilities.

Different types of Entrepreneurs: Entrepreneurs can be of classified various basis. Some of important types of entrepreneurs are being explained here:

A. BASED ON THE TYPES OF BUSINESS: An Entrepreneur is found in every type of business. On this basis they can be of following types.

1. Industrial Entrepreneur: Industrial entrepreneurs are essentially considered as manufacturers. He  imdentifies the needs and wants of the customer and manufacturers product according to their need and expectation. He is generally a producer-oriented man. He is found in any Industrial unit such as electronic industry, textile units, machine tool and the like.

2. Trading Entrepreneur: Trading entrepreneur is one who undertakes trading activities (buying and selling of goods and services). He is not engaged in manufacturing. These entrepreneurs identify market opportunities and stimulate demand for their product. Trading may be national and international.

3. Corporate Entrepreneur: A Corporate undertaking is a form of business enterprise which is registered under some state or act which gives it a separate legal entity. A corporate enterpreneur is one who promotes corporation. He is a person who demonstrate his innovative skill in organising and managing a corporate undertaking.

4. Agricultural Entrepreneur: Agricultural entrepreneurs are those who undertake business related agricultural activities. For example, farm equipments, fertilizers and other agricultural inputs. They provide supportive products that can increase the agricultural production through biotechnology and improvement in agricultural yield. In a way, they are engaged in allied agricultural activities.

B. BASED ON THE USE OF TECHNOLOGY: Technology is becoming an important part of every business irrespective of its size and nature. The entrepreneur on the basis of technology usage can be:

1. Technical Entrepreneur: A technical entrepreneur is generally compared to ‘Craftsman’. He mainly concentrates more on production area than marketing. He demonstrates his innovative capabilities in the matter of production of goods and services. Their main asset is technical expertise. Due to his expertise, he develops new and improved quality of goods and attempt to succeed in their business.

2. Non-Technical Entrepreneur: Non-technical entrepreneurs are those who are not concerned with the technical aspects of the product in which they deal. They do not target or concentrate to change the production technique but to increase the demand for the product by alternative course of actions.

3. Professional Entrepreneur: Professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established. He sells out his running business and then starts a new venture with the sale proceeds of the old one. They are considered to be dynamic and keep on conceiving new ideas to develop alternative projects.

C. BASED ON THE MOTIVATION:

1. Pure Entrepreneur: A pure entrepreneur is one who undertakes any activity to satisfy his ego. He is motivated to achieve or prove his excellence. He undertakes an entrepreneurial activity for his personal satisfaction in work or status. He is generally a status conscious person.

2. Induced Entrepreneur: He is the entrepreneur who prepares his sound project and wants to start business but needs support in some forms or other. Most of the induced entrepreneurs enter into business due to financial, technical and several other facilities provided to them by the state agencies to promote entrepreneurship. He is the person who is induced to take the entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture.

3. Motivated Entrepreneurs: This is a special class of entrepreneurs. They are motivated by the desire for self-fulfullment. They come into existence because of the possibility of making and marketing some new product for the use of consumers. Their level of motivation becomes more high when their idea provides them a satisfactory amount of profit.

4. Spontaneous Entrepreneur: These are the entrepreneur which has the basic qualities of entrepreneur in him. They are such types of persons who have qualities like boldness, confidence, determination, initiatives etc. They commence their business due to their confidence and talent. They need not to be induced by any other due to their strong conviction.

D. BASED ON OWNERSHIP / CLASSIFICATION ON THE BASIS OF OWNERSHIP: Ownership means the legal entitlement of the business. On this basis, the entrepreneur may be of following types:

1. Founders Entrepreneurs: The word founder itself explains the meaning of this category. They are those individuals who are founder of the business. They are those who conceptualise a business plan and put all their efforts to make the plan successful.

2. Family owned business or second generation operator: They are those entrepreneurs who have inherited the business from their fathers or forefathers. Like Mukesh Ambani and Anil Ambani, sons of Dheerubhai Ambani of Reliance Group.

3. Franchises: ‘Franchises’ has been derived from a French word which means free. It is a technique of doing business where in the patent owner (The Franchiser) licenses his trademark, tried, tested and proven method of doing business to a franchisee in exchange for a recurring payment. Here the franchisee has not conceptulised the business but has invested his money and time in the business. These days, this concept is gaining more and more popularity.

4. Owner Manager: When a person buys a business from the founder and then invests his time and resources in it he is called owner manager. 

E. CLASSIFICATION ON THE BASIS OF STAGE OF DEVELOPMENT: Every business grows with the passage of time. It goes through various stages in its life. On this basis, entrepreneur can be: 

1. First generation Entrepreneur: A first generation entrepreneur is one who starts an individual unit by means of an innovative skill. He is essentially an innovator combining different technologies to produce a marketable product or service.

2. Modern Entrepreneur: A modern entrepreneur is one who undertakes business to satisfy the contemporary demand of the market. He is one who undertakes those ventures which suit the current market needs.

3. Classical Entrepreneur: A classical entrepreneur is called starve type entrepreneur. He aims to maximise the economic return at a level consistent with the survival of the firm with or without the element of growth. 

F. CLASSIFICATION ON THE BASIS OF GROWTH: In Industrial world, the industrial units on this basis are categorized as units with high growth, medium growth and low growth industries, similarly entrepreneurs are classified as under:

1. Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up a high growth industry. These entrepreneur choose such type of industry which has substantial growth prospects.

2. Super Growth Entrepreneur: These are those entrepreneurs who have shown extraordinary growth in the performance of their venture. The growth or performance is measured on the basis of various parameters like liquidity, solvency, profitability. 

In addition, every economy has witnessed by the presence of large number of entrepreneurs. They are also found in social, and cultural activities. They are found among different sectors of society i.e. farmers, artisans, workers, etc. In a study of American Agriculture, Dannof has classified entrepreneurs in the following categories:

1. Innovating Entrepreneur: An entrepreneur who is able to foresee potentiality viable and profitable opportunities through innovation is considered to be an innovative entrepreneur. He is highly motivated and talented and, innovation is his key function. These types of persons are generally aggressive in experimentation and cleverly put possibilities into practice. Peter Drucker also stated that an innovating entrepreneur is one who always searches for change, responds to it and exploit it as an opportunity. Innovating entrepreneurs are very commonly found in developed countries. 

2. Imitative Adoptive Entrepreneur: Imitative entrepreneur adapts a successful adoption. They are risk aversive so they do not try any new idea. They do not innovate anything but imitative techniques and technologies adopted by others. That means an imitative entrepreneur is one who is ready to adopt the successful innovations already inaugurated by innovative entrepreneur. They simply follow the innovators after carefully observing their success and extent of attractiveness of society towards innovation. 

Imitative entrepreneurs are most suitable for the underdeveloped nations because in these nations, people prefer to imitate the technology, knowledge and skill already available in the more advance countries. These entrepreneurs also play an important role in the developing countries also. For example, Indian entrepreneurs are adopting Germany in various lines of products such as automobiles, electronics and infrastructure.

3. Fabian Entrepreneur: These entrepreneurs neither fall in innovative category nor in adoptive one. These are very cautious people. They have neither the will to introduce new changes nor the desire to adopt new methods of productions. They are considered as shy and lazy. They follow the footsteps of their predecessors. They are ready to imitate only when it becomes perfectly clear that failure to do so would result in heavy loss to them. They are dominated more by customs, religion, traditions and past practices and are not ready to take risk at all.

4. Drone Entrepreneur: Drone entrepreneurship is characterised by a refusal to adopt and use opportunities to make changes in production. They blindly follow the traditional methods of production even when there is loss to him. They are not prepared to introduce any change in his method of production, which is already in place. They are conventional in the sense that they stick to conventional products and ideas. Reasons of this attitude could be several. Such as lack of funds, lack of understanding of new development in their field of production etc. They are laggards because they continue in their traditional way and in the long run their product loses its marketability or their business becomes uneconomical so they are pushed out of the market.

Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.

 Q. Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.

Ans. MEANING OF ENTREPRENEUR: The word ‘Entrepreneur’ is derived from the French word ‘entreprendre’ which means to undertake. Thus, entrepreneur is the person who undertakes the risk of new enterprise. 

The meaning of the term entrepreneur varies from person to person and from period to period. To a layman, an entrepreneur is a person who starts his own budiness or industry and organises different factors of production and marketing processes for the purpose of earning profits. It has also different meaning from different area of subject. To an economist, an entrepreneur is a person who combines the different factors of production for enhancing his values and initiates changes. To a psychologists, he is a person who ventures in the dark and deep area of uncertainty and unknown opportunities and explores new possibilities. To a businessman, he is a person who peruses his capabilities aggressively and explores new opportunities amidst changing environment. In many countries, the entrepreneur is often associated with a person who starts his own new and small business. Business may be manufacturing, transport, trade and other self employed vocations in the service sector. 

DEFINITION OF AN ENTREPRENEUR: An entrepreneur is someone who utilises land & labour, invests in capital and resources and aims at producing goods or delivering services. 

1) Richard Cantillon was the first person to use the term entrepreneur to refer to economic activities. He defined an entrepreneur as– “An entrepreneur is the agent who buys factors of production at a certain price in order to combine these into a product with a view to sell it at uncertain prices.” 

2) According to F.H. Knight, “Entrepreneurs are a specialised group of persons who bear risk and deal with uncertainty.” 

CHARACTERISTICS OF AN ENTREPRENEUR: Some common characteristics of the entrepreneur can be commitment, leadership, risk bearing, motivator, confident etc. The important features are as follows:

1) Calculated Risk Taker: Every business situation involves the possibility of profit or loss. An entrepreneur always goes for a calculated risk taker. He accepts the risk as a challenge. He acoids the low risk situation due to absence of challenge but ar the same time he does not involve himself in highly risky situation as he knows the chances of failure. He maintains the balance between two situations and goes for achievable/affordable challenges. He prefers to take realistic risk because he wants to succeed. So, an entrepreneurs are not risk taker rather they are risk eliminators. They work in such a way that obstacles that come in the way of their project can be removed. 

2) Desire for Responsibility: This is a fundamental characteristic of an entrepreneur who feels deep sense of personal responsibility for the results of the project he starts. He prefers to control over the resource, which he uses for achieving self determined goals. 

3) High level of Energy: or Hard working: Entrepreneur is more energetic than the ordinary man. Hard work and long working hours are common feature of an entrepreneur. They are inspired by inner urge and by the motivational stories of great achievers. The young intelligent and creative entrepreneur like to work 12 hours or more a day just to avoid having to work 8 hours a day for some one else. 

4) Innovator: An innovative entrepreneur sees the opportunity for introducing a new technique or a new product or a new market. He explores new market and organises the enterprise. He exploits the invention commercially and thus produces new and better goods which give him profit and satisfaction. 

5) Creative: Creativity is a special ability to find new ideas implementing such changes in an acceptable way. Further successful innovation depends upon the creativity. It is one of the most important requirements of an entrepreneur to be creative. 

6) Commitment and Determination: Entrepreneurs generally have high level of energy due to which they are committed to the successful execution of their plan. They are devoted to their business with a deep sense of determination for success. Both commitment and determination is generally seen in their action. 

7) Future orientation (Vision): Entrepreneur looks beyond the present and concerns himself with considering what can be done in the future rather than brooding on what was done in the past. They do not like to sit back. They stay focused on the future. They work with a vision for growth, committed to constructive change. 

8) Self confidence and Optimistic: Entrepreneurs direct their abilities towards the accomplishment of goals with ups and down in the strength. They have to face many ups and down in the business. But they believe in themselves and handle the situation confidently. They work with a positive approach and optimistic attitude. Entrepreneurs not only maintain their confidence and optimism, but they also raise the level of their team members also. 

9) Organiser: An entrepreneur knows now to bring together the right people for accomplishing a task. He effectively and efficiently combines jobs and people and transforms his vision-into reality.

10) Integrity and Reliability: Entrepreneurs do not like to be controlled by others. They prefer to work independently specially for themselves. They like to take initiative for solving the problem. They always own the responsibility for the outcome of the project with which they are associated.

11) Socially Responsible: Entrepreneur remains fully aware abut his responsibility towards society. He understands that fact the society also expects from him. He tries to do so by creating employment opportunities, by creating new product, innovative products, quality products, fair price and quality assurance etc. He does things in an effective and efficient way. Proper Utilisation of resources made by him, i.e. also considered as a contribution to society. So, the old concept of making profit for only himself is no more followed or accepted these days.

12) Flexibility: Entrepreneur keeps himself updated regarding changes in the environment. He is capable of adapting himself to the varying demands of business and customers. He clearly understands that rigidity (inability to change) may lead to failure in today fast changing global economy.

13) Technically Competent: Technological change is the prime mover in the process of economic growth. Inventions and innovation have led the process of development in the world. The success of an enterprise largely depends upon the adoption of the present prevailing technology. Entrepreneurs are technically competent these days. They generally have a reasonable level of technical knowledge. They keep themselves updated in the changing pattern of production, suited to their requirement. 

14) Communication Ability: Communication plays an important role in the success of an enterprises. Entrepreneurs these days possess the quality of good communication. They are well equipped with the importance of communication and the use of latest technology in the process of communication.

15) Tolerance for Ambiguity: Entrepreneur tend to have a high tolerance for ambiguity, especially in the face of uncertainty and unknown outcomes. They handle the uncertainty with their will and skill by making bold decisions. They face the adversity bodly and bravely.

FUNCTIONS OF AN ENTREPRENEUR: Entrepreneur is a person who performs many useful functions. He undertakes a venture, assumes risks and earns profits. Some of his most important functions are as under: 

1) Assumption of Risk: Risk taking or uncertainty bearing implies assuming the responsibility for loss that may arise due to unforeseen contingencies of the future. A business risk also involves the risk due to possibility of change in the taste of consumers, technique of production, new invention etc. The entrepreneur has to bear these high degree of risks. He assumes all possible risks of the business. Thus, risk assumption and risk bearing is the most important function of an entrepreneur. He tries to reduce risk with his initiatives, knowledge and skills and good decisions. 

2) Business Decision: Entrepreneur has been stated as a decision maker also. He has to decide the nature and type of goods to be produced or services to be rendered in the society. He decides the specific industry into which he will work and get a reasonable return. He has to decide the best possible method of production. He makes suitable changes in the size of business, its location, technique of production and does everything that is needed for the maintenance and development of the business.

3) Managerial Functions: Entrepreneur has to perform a lot of managerial functions in his enterprise. There are different types of managerial functions that an entrepreneur has to perform and these are based on the size and activities of the enterprises. These functions include formulation of production plan, arrangement of finance, purchase of raw material. procurement of production facilities, organisation of sales, personnel management and so on. Further administrative functions of recruitment, selection, etc. This is considered to be very tough job. However, in a large establishment, these managerial functions can be delegated to the paid subordinates.

4. Functions of Innovation: According to Schumpeter, an entrepreneur is basically an innovator who introduces new combinations of means of production. It is the entrepreneur who conceives the idea for the improvement in the quality of product line. He considers the economic viability and technological feasibility of the total project. It is this function of the entrepreneur which injects the elements of dynamism into the economic system.

Thus, Generally, an entrepreneur performs many useful functions for the development of the society and it satisfies the needs of the various stakeholders in the enterprises.

Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.