Components of Business Environment Explained | Internal and External Environment

Q. Discuss the components of Business Environment in detail.

OR

What do you mean by internal and external environment of business ? How they affect the success of a business ? 

Ans. Business Environment is the sum total of internal and external factors within which the enterprise operates. These factors may have both positive and negative influence on the growth of entrepreneurship. The internal factors are within the control of business whereas the external factors like economic environment, political environment, socio-cultural environment, technological environment, international environment are beyond the control of business. Similarly, competition is external factor which significantly affects the business but is beyond the control of business. The success of business lies in understanding the environmental change and adapting its business policies.

Components of Business Environment: Various factors affecting the success of a business can be categorised in two areas viz, internal factors and external factors. These factors are as follows:

1. Internal Environmental factors: The internal business environment includes factors within the organization that impact the approach and success of an enterprise. Internal environment include five things as man, material, money, machinery, management available with the business. The components of internal environment are usually within the control of the business. Quality of human resources as component of internal environment is largely responsible for success or failure of business unit. Motivated, hardworking and talented workers generally produce better results than unmotivated, less talented employees. If employees of an organisation are skilful and committed towards the the organisation then it can take the business to the big heights. If workers are not satisfied then their efficiency will go down, they may even go on strike and it may badly affect the organisation. In a high performing work place, employees not only have talent but also they work well together.

2. External Environment Factors: External Environment refers to external aspects of the surroundings of the business enterprise which have influence on the functioning of the business. The external aspects of surroundings are beyond the control of the business. The success of a business enterprise depends to a great extent on its awareness about its surroundings, environment and adaptability to changes in the environment. 

External environment factors are as follows:

(A) Micro External Environmental Factors: Operating environment is also known as micro environment or competitive or task environment. These factors can be influenced or controlled by the firm. It consists of company’s immediate environment that affects the performance of the company. It includes suppliers, customers, market intermediaries, competitors and public. 

1. Suppliers: Every business enterprise requires a number of suppliers who supply raw materials and components to the company. If an entrepreneur has no good relation with their suppliers then it affects their enterprise in negative sense. If supplier does not provide raw material to the entrepreneur in time, he cannot produce the goods timely. This creates the negative impact on the outside parties towards an enterprise. So, for success of an enterprise, the entrepreneurs should maintain good relations with their suppliers.

2. Customers: The other micro environmental factor is the customers. For success of an enterprise, the entrepreneurs should maintain good relations with their customers. Success of a business organisation depends upon identifying customers, their needs, tastes, liking, etc. and by enhancing the level of customers’ satisfaction. Because of increase in competition, attracting and satisfying the customers, has become more challenging. For attracting new customer, companies conduct consumer research, design product as per needs and requirements of customer, spend heavily on advertisement, provide after sale services, etc. The task of customer satisfaction has become more challenging with increase in globalisation. With growing globalisation, various multinational corporations are entering into our markets and with the reduction in tarrif duties, more imported products are available in our markets. Hence, customers are becoming more global in their shopping, because they can choose from domestic products and foreign products. So, an entrepreneur special concentration on this area.

3. Market Intermediaries: Like suppliers marketing intermediaries also form an important components of the company’s overall value delivery system. Marketing intermediaries help the company to promote, sell and distribute its products to final buyers. Marketing intermediaries may be individuals or firms or agencies. They include: 

(i) Resellers: Resellers are wholesalers and retailers who buy and sell merchandise. They help the company to find the customers and make sales to them.

(ii) Physical Distribution Firms: They include, media firms, warehousing and transport agencies, shipping companies, purchase agents, etc. They help the company to stock and move goods from their point of origin to their destinations.

(iii) Marketing Services agencies: They include, media firms, advertising agencies, marketing research agencies, marketing consultancy firms, etc. They help the company to target and promote its products to the right markets.

(iv) Financial intermediaries: They include Bank credit and finance companies, Insurance companies and other financial service agencies that help in financial transaction or insure against the risk associated with the buying and selling of goods.

So, this is area which can decide the future of the business. An entrepreneur should keep in mind all these points, for successful running of a business.

4. Competitors: Competitors are those individuals and firms who sell similar goods and services in the same market. It is therefore, necessary to build an efficient system of marketing. No single competitive marketing strategy is best for all companies. Each entrepreneur should consider its own size and industry position compared to those of its competitors. Large firms with dominant position in the industry can use certain strategies that smaller firms cannot afford. Therefore, small firms can develop strategies, which give them better rates of return than large firms. The competitive environment consists of many things, which every businessman must take into consideration, while studying the marketing environment and for achieving success in the business.

5. Public: Public is any group that has actual or potential interest in the business. Broadly speaking, it includes the followings:

(i) Financial Public: It includes banks, investors, shareholders, etc. They influence the company’s ability to obtain funds.

(ii) Media Public: It includes newspapers, magazines, radios and television, etc. They carry news, features and editorial opinion about the company.

(iii) Government Public: It includes Government departments and agencies. Entrepreneur must often consult with lawyers and experts on the issues of product safety, truth in advertisement and other matters.

(iv) Internal Public: It includes managers, workers and other employees of the company. Large companies use newsletters and other means of information to inform and motivate their internal public. When employees good about their company, this positive attitude spills over to external public.

(v) Local Public: It includes neighbourhood residents and community organisations. Large companies generally appoint a community relation officer as P.R.O. to deal with the community. They attend meetings, answer questions and contribute for public cause.

So, it is clearly understandable that these factors can change the direction of the business. To achieve success, it becomes necessary for the entrepreneur to understand the importance of this factor and work accordingly.

(B) Macro Environment Factors: Macro Environment means general environment of business. It consists of demographic, economic, social, cultural, political, legal, technological and physical factors which influence marketing policies and operations. 

Macro Environment factors includes the following:

1. Economic Environment: By economic environment, we mean the purchasing power and desire to spend the income by the consumers, which results in effective demand, which in turn, influenced by economic conditions. Hence, economic conditions play a significant role in the success of the business. Economic environment refer to those factors which have impact on the working of business viz., economic system, economic policy, nature of economy, trade cycles, economic resources, level of income, distribution of income and wealth, statutory provisions, etc. Economic environment is very complex in nature. It is very dynamic. It keeps on changing with the change in government policies, change in political situations, etc. It contains the following: 

(i) Economic System: An economy system is a way in which an entrepreneur is organised to decide the following three basic questions of the economic organisation. 

● What product should be produced and in what quantities?

● How should the products be produced?

● For whom should the products be produced?

The economic system of a country may be as follows:

(a) Capitalism: Such economy is dominated by private sector. Here private sector has much important role in economic activities. It is also called open economy. e.g. economy of USA, UK.

(b) Socialism: Such economies are state owned economies. Government plays major role in economic development of such economies.

(c) Mixed Economy: In such economies, both public and private sector co-exist.

(ii) Economic Policies: Macro economic policy as determined and changed from time to time impacts business conditions more directly. The policy design can be a response to actual economic conditions or problems or to create a favoritable conditions in the near future. The basic objective of this policy is to stimulate or maintain growth, achieve economic stability, increase employment, stabilize balance of payments, correct regional imbalances and make the economy more competitive.

Important economic policies are: (a) Monetary policy (b) Fiscal policy (c) Export Import policy (d) Foreign Investment Policy (e) Industrial Policy (f) Industrial Licensing Policy. 

Besides these policies, Government has also framed legislation which regulates and controls the business. The main legislation regulating the business are as follows:

(a) Industrial Disputes Act, 1947

(b) Factories Act, 1948

(c) Industrial Development and Regulation Act, 1951

(d) Companies Act, 2013

(e) Consumer Protection Act, 1986

(f) Foreign Exchange Management, 1999

(g) Securities and Exchange Board of India Guidelines, 2000

(h) Competition Act, 2002

(iii) Economic Conditions: Economic environment exercises the most direct and immediate influence on entrepreneurship. Capital, labour, raw material and markets are the main economic factors. 

(a) Capital: Capital is one of the most important pre-requisites to establish an enterprise. Availability of capital facilitates the entrepreneur to bring together the labour of one, machine of another and raw material of another to combine them to produce goods. Capital is, therefore regarded as lubricant to the process of production. With an increase in capital investment, capital output ratio tends to increase. This results in increase to profits which ultimately goes to capital formation.

(b) Labour: The quality of Labour is another factor which affects the birth of entrepreneurship. Division of labour depends on the size of market leads to improvement in the productive capacities of labour due to an increase in the dexterity (skill) of labour. So, labour problem does not prevent entrepreneurship from emerging. 

(c) Raw Material: The necessity of raw materials hardly needs any emphasis for establishing any industrial activity and therefore its influence in the emergence of entrepreneurship. In the absence of raw materials neither any enterprise can be established nor can an entrepreneur emerge.

(d) Market: The size and composition of market both influence entrepreneurship in their own ways.

An entrepreneur must understand the type of economic system, various policies, Act, regulations of the government. All these factors are very important as they decide the success of a business. These may not be in the control of businessman, but he can be in safer zone by understanding them.

2. Political Environment: Political environment of the economy affects different units significantly. Political environment mainly includes the following:

(i) Political ideology of government 

(ii) Political stability in the country 

(iii) Relation of government with other countries 

(iv) Defence and military policy

(v) Welfare activities of government 

(vi) Centre state relationship

(vii) Thinking of opposition parties towards business 

Political ideology of government refers to the political thinking, approach and vision of the government towards various economic and  social activities of the country. Political ideology affects the business unit. It decides as to what type of business activities should the country have, what areas should be opened for private sector, what should be reserved for public sector. Laws and regulations covering all aspects of business are enacted by the government. 

In order to be a successful entrepreneur, it is expected to have a close look on the political environment of the country. This will always be helpful for him, as he will act according to the changing environment.

3. Socio-Cultural Environment: Business is an integral part of society and both influence each other. Social and cultural environment refers to influence and exercise by certain social and cultural factors which are beyond the control of business unit. Such environment includes:

(a) Attitude of people at work

(b) Family system

(c) Caste system

(d) Religion 

(e) Education

(f) Marriage

(g) Habits and preferences

(h) Languages

(i) Urbanisation

(j) Customs and traditions

(k) Value system

(l) Social responsibility of the business 

Social-Cultural environment influence the business in the long run. Our society is ever changing. New demands are created and old ones are lost. It is a essential for the success of business to prepare marketing plan according to the changing need of the society and thereby satisfy new social demands. Main aspects of social environment are: 

(a) Change an our lifestyle and social values e.g. changing role of women emphasises on quality of goods instead of quantity of goods, more preferences to recreational activities etc.

(b) Major social problem e.g. concern for pollution, need for safety in products, social responsible marketing etc.

(c) Growing consumerism is the symbol of increasing desires of the consumers. The growing consumerism is the result to two primary factors: (a) Increasing educational level of consumers (b) Scientific and technical progress. 

So, an enternepreneur is also expected to be aware about the changing social cultural environment. This will help him to achieve and maintain the success of his business.

4. Technological Environment: Technology represents the application of scientific knowledge for practical purpose. Information technology tools such as computers and mobile phones for processing, storage and transfer of data, internet communication have increased in recent years. An entrepreneur should consider the technological environment because changes in technology are uncontrollable.

The success of every business in future depends upon the factor that how efficiently they adopt the technological change. This area is the most crucial one and cannot be ignored at any cost.

5. National Environment: It includes geographical and ecological factors such as natural resources, weather and climatic conditions, port facilities to topographical factors such as soil, land forms, sea, rivers, rainfall, water pollution etc. Climatic and weather conditions affect the location of certain industries like textiles industry in maharashtra and gujarat. Similarly, geographical factors affect the location of certain industries, like iron and steel industries is located near raw material source in Bihar and Orissa. Sugar industry has been set up near to those areas where sugarcane is cultivated. Exports oriented industries are located near ports so that transportation cost can be minimized

Weather and climatic factors affect the demand pattern for clothing, building material, room heaters, air conditioner etc. Ecological (environmental) have also become significant in the study of business environment. Environment pollution in the form of air pollution, water pollution and noise pollution have caused disturbances in ecological balance. The entrepreneur must keep in mind geographical factors, pollution factors. In brief it includes:

(i) Climatic and weather conditions 

(ii) Availability of natural resources 

(iii) Topographical factors, physical features of a place

(iv) Pollution control 

(v) Location aspect

(vi) Port facilities 

Success of business is undoubtedly affected by these factors collectively. Ignorance of any of these factors may adversely affect the business unit. So an entrepreneurial project should be established after considering all these factors.

6. Demographic Environmental Factors: Demographic environment is the study of features of population viz. its size, its growth rate, age composition, sex composition, income level, education level, family size, family structure, etc. All these demograhic factors affect size of demand, taste, fashion, liking, preferences of consumer, etc. Demographic environment differs from country to country and from place to place within the same country. Important demographic factors are:

(i) Size of population and population growth

(ii) Age compososition

(iii) Sex composition 

(iv) Education level

(v) Family size and structure 

(vi) Economic satisfaction of population 

(vii) Urban-Rural population 

All the demograhic factors affect the success of every venture. Giving less weightage to these factors or ignoring these factors can lead to the failure of the business. So, demograhic factors always remain an area of concern of every entrepreneur.

7. International Environment: The international environment is particularly important for industries directly depending on import or export. The present era is of globalisation. At the company level, globalization means two things (a) the company commits itself heavily with several manufacturing locations around the world (b) it also means ability to compete in domestic markets with foreign competitors. It has been observed that major international development has its impact on domestic market. For example, due to globalisation, Indian electronic market has depressed, oil price hikes have increased the cost of production of certain industries like fertilizers, synthetic fibers, etc. If a enterprise has to survive in the open market, it has to modify its products according to different customers,  needs and tastes. They must acquaint themselves at the advanced means of transport and communication, foreign languages, currencies of different countries, legal provision, etc. 

If a business is prevailing in international market and acquaints itself with the changing environment, the success rate will be higher. They will earn more and more profit. So, they should consider these factor with right perspective.

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.