Unit 2 -

ENTERPRENEURSHIP
DEVELOPMENT
Presented By- Akshay Shah
Department of Mechanical Engineering
Indus University
Factors Affecting Entrepreneurship Growth
• Economic Factors
• Non- Economic Factors
Factors Affecting Entrepreneurial Growth
Economic Factors
1. Capital:
• Capital is one of the most important factors of production for the establishment of
an enterprise.
• Increase in capital investment in viable projects results in increase in profits which
help in accelerating the process of capital formation. Entrepreneurship activity too
gets a boost with the easy availability of funds for investment.
• Availability of capital facilitates for the entrepreneur to bring together the land of
one, machine of another and raw material of yet another to combine them to
produce goods. Capital is therefore, regarded as lubricant to the process of
production.
• France and Russia exemplify how the lack of capital for industrial pursuits impeded
the process of entrepreneurship and an adequate supply of capital promoted it.
Factors Affecting Entrepreneurial Growth
Economic Factors
2. Labor
• Easy availability of right type of workers also effect entrepreneurship. The quality
rather than quantity of labor influences the emergence and growth of
entrepreneurship. The problem of labor immobility can be solved by providing
infrastructural facilities including efficient transportation.
• The quality rather quantity of labor is another factor which influences the
emergence of entrepreneurship. Most less developed countries are labor rich
nations owing to a dense and even increasing population. But entrepreneurship is
encouraged if there is a mobile and flexible labor force. And, the potential
advantages of low-cost labor are regulated by the deleterious effects of labor
immobility. The considerations of economic and emotional security inhibit labor
mobility. Entrepreneurs, therefore, often find difficulty to secure sufficient labor.
Factors Affecting Entrepreneurial Growth
Economic Factors
• 3. Raw Materials
• The necessity of raw materials hardly needs any emphasis for establishing any industrial
activity and its influence in the emergence of entrepreneurship. In the absence of raw
materials, neither any enterprise can be established nor can an entrepreneur be
emerged
• It is one of the basic ingredients required for production. Shortage of raw material can
adversely affect entrepreneurial environment. Without adequate supply of raw materials
no industry can function properly and emergence of entrepreneurship to is adversely
affected.
• In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favourable these
conditions are, the more likely is the raw material to have its influence of
entrepreneurial emergence.
Factors Affecting Entrepreneurial Growth
Economic Factors
• 4. Market
• The role and importance of market and marketing is very important for the growth of
entrepreneurship. In modern competitive world no entrepreneur can think of surviving
in the absence of latest knowledge about market and various marketing techniques.
• The fact remains that the potential of the market constitutes the major determinant of
probable rewards from entrepreneurial function. Frankly speaking, if the proof of
pudding lies in eating, the proof of all production lies in consumption, i.e., marketing.
• The size and composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the disadvantage of a
competitive market can be cancelled to some extent by improvement in transportation
system facilitating the movement of raw material and finished goods, and increasing the
demand for producer goods.
Factors Affecting Entrepreneurial Growth
Economic Factors
5. Infrastructure
• Expansion of entrepreneurship presupposes properly developed communication and
transportation facilities. It not only helps to enlarge the market, but expand the
horizons of business too.
• Take for instance, the establishment of post and telegraph system and construction
of roads and highways in India. It helped considerable entrepreneurial activities
which took place in the 1850s.
• Apart from the above factors, institutions like trade/ business associations, business
schools, libraries, etc. also make valuable contribution towards promoting and
sustaining entrepreneurship’ in the economy.
• You can gather all the information you want from these bodies. They also act as a
forum for communication and joint action.
Factors Affecting Entrepreneurial Growth
Non - Economic Factors
1. Education
• Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of education
has a significant role to play in inculcating entrepreneurial values.
• In India, the system of education prior to the 20th century was based on religion. In this rigid
system, critical and questioning attitudes towards society were discouraged. The caste system
and the resultant occupational structure were reinforced by such education. It promoted the
idea that business is not a respectable occupation. Later, when the British came to our country,
they introduced an education system, just to produce clerks and accountants for the East India
Company, The base of such a system, as you can well see, is very anti-entrepreneurial.
• Our educational methods have not changed much even today. The emphasis is till on preparing
students for standard jobs, rather than marking them capable enough to stand on their feet.
Factors Affecting Entrepreneurial Growth
Non - Economic Factors
2. Attitude of the Society
• A related aspect to these is the attitude of the society towards entrepreneurship.
Certain societies encourage innovations and novelties, and thus approve
entrepreneurs’ actions and rewards like profits. Certain others do not tolerate
changes and in such circumstances, entrepreneurship cannot take root and grow.
• Similarly, some societies have an inherent dislike for any money-making activity. It
is said, that in Russia, in the nineteenth century, the upper classes did not like
entrepreneurs. For them, cultivating the land meant a good life. They believed that
rand belongs to God and the produce of the land was nothing but god’s blessing.
Russian folk-tales, proverbs and songs during this period carried the message that
making wealth through business was not right.
Factors Affecting Entrepreneurial Growth
Non - Economic Factors
3. Cultural Value
• Motives impel men to action. Entrepreneurial growth requires proper motives
like profit-making, acquisition of prestige and attainment of social status.
Ambitious and talented men would take risks and innovate if these motives
are strong. The strength of these motives depends upon the culture of the
society. If the culture is economically or monetarily oriented,
entrepreneurship would be applauded and praised; wealth accumulation as a
way of life would be appreciated. In the less developed countries, people are
not economically motivated. Monetary incentives have relatively less
attraction. People have ample opportunities of attaining social distinction by
non-economic pursuits. Men with organizational abilities are, therefore, not
dragged into business. They use their talents for noneconomic end.
EDP Programmes
• As the term itself denotes, EDP is a programme meant to develop
entrepreneurial abilities among the people. In other words, it refers
to inculcation, development, and polishing of entrepreneurial skills
into a person needed to establish and successfully run his / her
enterprise. Thus, the concept of entrepreneurship development
programme involves equipping a person with the required skills and
knowledge needed for starting and running the enterprise.
Objective of EDP Programmes
a. Develop and strengthen the entrepreneurial quality, i.e. motivation
or need for achievement.
b. Analyse environmental set up relating to small industry and small
business.
c. Select the product.
d. Formulate proposal for the product.
e. Understand the process and procedure involved in setting up a small
enterprise.
Entrepreneurial Training Programme
• Entrepreneurial Training Programme offer a comprehensive combination of courses to help young
entrepreneurs develop their business ideas and self-confidence.
• These training courses are available to start-up ventures or those who want to expand their businesses.
• The Entrepreneurial Training Programme offers great resources to help you develop a solid business and
learn what it takes to build a thriving business.
• Put your business idea to the test
• Build a business plan that will attract investment
• Explore real-world possibilities
• Reduce costly trial and error and increase your chances of success
• Get answers to your tough questions from our experienced facilitators and instructors
• Use case studies, activities and readings to learn how others like you succeeded
• Utilize weekly feedback to make your plan work
• Learn how to alter your plan early on to increase your chance of success
Traits of an Entrepreneurs
• 1. Economic and dynamic activity:
• Entrepreneurship is an economic activity because it involves the creation and
operation of an enterprise with a view to creating value or wealth by ensuring
optimum utilisation of scarce resources. Since this value creation activity is
performed continuously in the midst of uncertain business environment,
therefore, entrepreneurship is regarded as a dynamic force.
• 2. Related to innovation:
• Entrepreneurship involves a continuous search for new ideas. Entrepreneurship
compels an individual to continuously evaluate the existing modes of business
operations so that more efficient and effective systems can be evolved and
adopted. In other words, entrepreneurship is a continuous effort for synergy
(optimization of performance) in organizations.
Traits of an Entrepreneurs
• 3. Profit potential:
• “Profit potential is the likely level of return or compensation to the entrepreneur for taking
on the risk of developing an idea into an actual business venture.” Without profit potential,
the efforts of entrepreneurs would remain only an abstract and a theoretical leisure activity.
• 4. Risk bearing:
• The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the
creation and implementation of new ideas. New ideas are always tentative and their results
may not be instantaneous and positive.
• An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period
(time gap between the conception and implementation of an idea and its results), an
entrepreneur has to assume risk. If an entrepreneur does not have the willingness to
assume risk, entrepreneurship would never succeed.
Entrepreneurs vs Intrapreneurs/Managers
• Entrepreneurs are people that notice opportunities and take the initiative to mobilize
resources to make new goods and services.
• Intrapreneurs also notice opportunities and take initiative to mobilize resources,
however they work in large companies and contribute to the innovation of the firm.
• Intrapreneurs often become entrepreneurs.
• Learning organizations encourage intrapreneurship.
• Organizations want to form:
• Product Champions: people who take ownership of a product from concept to
market.
• Skunkworks: a group of intrapreneurs kept separate from the rest of the organization.
• New Venture Division: allows a division to act as its own smaller company.
• Rewards for Innovation: link innovation by workers to valued rewards.
Entrepreneurship Motivation
Indian Entrepreneur Coaches
• Vivek Bindra
• Rajiv Talreja
Entrepreneurial Motivation
• Entrepreneurial motivation is the process of transforming an ordinary
individual to a powerful businessman, who can create opportunities
and helps in maximizing wealth and economic development.
• It is defined as various factors stimulate desires and activates
enthusiasm in entrepreneurs which make them attain a particular
goal.
• Entrepreneurship is the process of identifying strengths and
opportunities which help in the realization of one’s dreams for
designing, developing and running a new business by facing threats
and risks effectively.
Entrepreneurial Motivation
• Motive can influence to become strong and powerful entrepreneurs,
these motives may come from various factors as follows.
• Internal factors
• External factors
Entrepreneurial Motivation
Internal factors
1. Need for self-actualization
• It is explained by Maslow and it
is the top level need refers to
the desire for self-fulfillment.
• Need for freedom and self-
fulfilment makes the individuals
or employees of the
organization make them b e c o
mepowerfulleadersor
entrepreneurs
Entrepreneurial Motivation
Internal factors
2. Optimism
• Individuals having positive
mindset get motivated by
finding opportunities during
critical situations also.
• Positive attitude and perception
motivate an individual to work
out for the best even during
unfavorable and tough
situations also.
Entrepreneurial Motivation
Internal factors
3. Positive attitude
• The positive attitude is the most
important factor which
• motivates the individuals to become
successful entrepreneurs.
• Habituating positive attitude can lead
an individual to develop
• constructive thinking; it motivates
them to become powerful
• entrepreneurs, finally, the positive
attitude can prove that how
• valuable they are.
Entrepreneurial Motivation
Internal factors
4. Self-motivation
• Most of the successful and
powerful entrepreneurs are self-
motivated; here they fulfill the
desired objectives by motivating
themselves.
• Though many individuals have
ideas but they cannot put those
for business development;
however selfmotivated people
can take decisions to implement
ideas.
Entrepreneurial Motivation
Internal factors
6. Commitment
• Commitment towards a goal
can make to achieve success.
• It motivates entrepreneurs by
inspiring and developing
emotional attachment towards
an objective.
Entrepreneurial Motivation
Internal factors
7. Education
• Education is the most important factor it motivates a person to
innovate and create new products, this result in establishing an
organization or a new business venture.
• The knowledge acquired during the course of time and innate skill
highly motivates a person to become a successful entrepreneur.
Entrepreneurial Motivation
Internal factors
8. Background
• Family background, occupational background and a person’s own
experience in a job motivates him/her to become an entrepreneur.
• Having entrepreneurial background acts as a clear path to becoming a
successful and powerful entrepreneur.
Entrepreneurial Motivation
Internal factors
9. Financial background
• Finance is the scarce resource which
motivates and enables a person to become
an entrepreneur.
• Money can make many things it is the major
thing in deciding one’s status and
development, strong financial background
facilitates to start a business.
Entrepreneurial Motivation
External factors
1. Influence
• Finance is the scarce resource which
motivates and enables a person to
become an entrepreneur.
• Money can make many things it is
the major thing in deciding one’s
status and development, strong
financial background facilitates to
start a business.
Entrepreneurial Motivation
External factors
2. Product’s Demand
• Higher demand for a particular product motivate entrepreneurs to
produce innovative and value added products, here product’s demand
motivates the individuals to become entrepreneurs.
• The hope of success makes them produce innovative products or
substitute products, some entrepreneurs fulfil the market demand by
producing complementary goods also.
• So the increase in products demand highly motivates to become
entrepreneurs.
Entrepreneurial Motivation
External factors
3. Availability of Resources
• Resource availability motivates at a high extent to become
entrepreneurs, availability of land, labor, money, machinery, and
materials make individual to start a new business.
• Though there is creativity, intelligence, commitment and enthusiasm in
the individuals, but the unavailability of resources becomes an obstacle
for new entrants or entrepreneurs.
Entrepreneurial Motivation
External factors
4. Government Policies
• Subsidies and benefits given by the government motivate entrepreneurs
to produce new products or motivates individual to become
entrepreneurs.
• Government policies show higher influence on establishing new firms
and it leads to economic development.
• In the case of small scale industries, rural people are encouraged by the
various training programs, financial support, and subsidies; it is one of
the main reasons for the establishment of new firms and arrival of new
entrants.
Entrepreneurial Motivation
External factors
5. Information Availability
• Market k n o wl ed g e an d i n f o rmat i o n motivate individuals to enter
into the markets and to become entrepreneurs.
• If there is abundant information then it automatically creates interest in
the minds o f e n t h u s i a s t i c p e o p l e t o b e c o m e entrepreneurs.
• Availability of information facilitates research and producing innovative
and value added products, and it creates a scope to become
entrepreneurs.
Entrepreneurial Motivation
External factors
6. Technological Advancement
• Technological advancement acts as a path to transform ideas into
products, feasibility in production and expected success rate highly
motivates to become entrepreneurs.
• It reduces errors and cost of production and maximizes success rate, this
is the reason why people are interested in becoming entrepreneurs with
the increase in technology.
 Theories Of Motivation
1. Maslow’s Need Hierarchy Theory
2. Mclelland’s Acquired Need Theroy
Maslow's Need Hierarcy
 Maslows Theory
(i) Basic Physiological Needs: The physiological needs relate to the survival and maintenance of
human life. These needs include such things as food, clothing, air, water and other necessaries of
life which are biological in nature. These needs are primary needs.

(ii) Safety and Security Needs: After satisfying the physiological needs, people want the assurance of
maintaining a given economic level. They want job security, personal bodily security, security of source
of income, provision for old age, insurance against risks, etc.

(iii) Social Needs: Man is a social being. He is, therefore, interested in conversation, sociability,
exchange of feelings and grievances, companionship, recognition, belongingness, etc.

(iv) Esteem and Status Needs: These needs embrace such things as self-confidence, independence,
achievement, competence, knowledge and success. These needs boost the ego of individual. They are
also known as egoistic needs. They are concerned with prestige and status of the individual.

(v) Self-Fulfillment Needs: The final step under the need priority model is the need for self-fulfillment
or the need to fulfill what a person considers to be his mission in life. It involves realizing one's
potentialities for continued self-development and for being creative in the broadest sense of the word.
Maslows Theory
A study by Boris Blai supported this by showing that managers and professionals
in U.S.A. highly value self-realization, while service and manual workers value
job security most highly. Further, a survey of 200 factory workers in India
reported that they give top priority to job security, earnings and personal benefits
- all lower order needs. Studies have also revealed that those needs, which are
thought to be most important like social needs, egoistic needs and self-
realization, are also thought to be the best satisfiers. One study on two thousand
and eight hundred managers in eleven countries reported that security,
belongingness, esteem and self-realization needs are progressively less satisfied
according to the pattern of the needs priority model.
 Appraisal of Need Hierarchy Model
• The need priority model may not be applied at all times in all places. Surveys in
continental European countries and Japan have shown that the model does not
apply very well to their managers. Their degrees of satisfaction of needed does
not vary according to the need priority model. For example, workers in Spain and
Belgium felt that their esteem needs are better satisfied than their security and
social needs. Apparently, cultural differences are an important cause of these
differences. Thus, need hierarchy may not follow the sequence postulated by
Maslow. Even if safety need is not satisfied, the egoistic or social need may
emerge.
• Proposition that one need is satisfied at one time is also of doubtful validity. The
phenomenon of multiple motivations is of great practical importance in
understanding the behaviour of man. Man's behaviour at any time is mostly
guided by multiplicity of motives
McClelland's Acquired Needs Theory
Each person tends to develop certain motivational drives as a result
of his cognitive pattern and the environment in which he lives.
David McClelland gave a model of motivation which is based on
three types of needs, namely, achievement, power and affiliation.
They are as follows:
(i) Need for achievement (n-Ach): a drive to excel, advance and
grow;
(ii) Need for power (n-Pow): A drive to influencing others and
situations ; and
(iii) Need for affiliation (n-Aff): A drive for friendly and close
interpersonal relationships.
McClelland's Acquired Needs Theory
People with high need for achievement are characterised by the following:

(i) They set moderate, realistic and attainable goals for them.

(ii) Prefer to situations in which they can find solutions for solving personal
responsibility.

(iii) They need concrete feedback on how well they are doing.

(iv) They have need for achievement for attaining personal accomplishment.

(v) They look for challenging tasks.

Entrepreneurship Competencies
ENTREPRENEURSHIP COMPETENCIES
• Entrepreneurial Competencies
• Th e t erm ‘ c o mp et en c e’ re f e r s t o a
composite of knowledge, skills and a host of
psychosocial attributes in a person that mark
his/her effectiveness for a task.
• The phrase ‘composite’ is crucial. For
example, the competence “ability to
communicate vision” is much more than
proficiency in writing/ speaking skills. And an
entrepreneur is an enterprising individual
who builds capital through risk and initiative.
ENTREPRENEURSHIP COMPETENCIES
• Initiative: Acting out of choice rather than compulsion, taking the lead
rather than waiting for others to start.
• Risk Mitigation: the taking of actions that reduce the probability of a risk
occurring or reduce the potential impact if the risk were to occur.
• Sees and Acts on Opportunities: A mindset where one is trained to look
for business opportunities from everyday experiences
• Resilience: the ability to cope with stresses and disturbances such that
one remains well, recovers or even thrives in the face of adversity
• Persistence: A ‘never say die’ attitude, not giving up easily, striving
continuously until success is achieved.
ENTREPRENEURSHIP COMPETENCIES
• Opportunity Recognition: the capacity to perceive changed conditions or
overlooked possibilities in the environment that represent potential sources
of profit or return to a venture
• Information seeking: Knowing and knowing who knows, consulting experts,
reading relevant material and an overall openness to ideas and information.
• Concern for High Quality of Work: Attention to details and observance of
established standards and norms.
• Commitment to Work Contract: Taking personal pains to complete a task as
scheduled.
• Efficiency Orientation: Concern for conservation of time, money and effort.
ENTREPRENEURSHIP COMPETENCIES
• Systematic Planning: Breaking up the complex whole into parts, close
examination of the parts and inferring about the whole; e.g. simultaneously
attending to production, marketing and financial aspects (parts) of the
overall business strategy (the whole).
• Problem-solving: Observing the symptoms, diagnosing and curing.
• Self-confidence: Not being afraid of the risks associated with business and
relying on one’s capabilities to successfully manage these.
• Assertiveness: Conveying emphatically one’s vision and convincing others of
its value.
ENTREPRENEURSHIP COMPETENCIES
Assignment 2
Q 1. Explain the factors affecting entrepreneurship growth.
Q 2. Explain the traits of an Entrepreneur.
Q 3. Explain motivation for Entrepreneurship. Explain in detail internal
and External factors.
Q 4. What are entrepreneurship competencies ? Explain in brief.
Communicate directly to customer by an
entrepreneur
1. Cold Calling
2. Social Media
3. Website
4. Application
5. Campaigns
6. Email/Message
7. FeedBack System
Best way to communicate
• A phone call
• Text Sms / Whats app
• Video Call
• One on One meeting

1. One on one
2. Video Call
3. Phone Call
4. SMS/Whats App