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ECONOMIC APPLICATIONS NOTES. By www.icsehelpline101.wordpress.com. Entrepreneur. By www.icsehelpline101.wordpress.com. Meaning and Definition. Introduction. Functions of an Entrepreneur. Role of an Entrepreneur in Economic Development.
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ECONOMIC APPLICATIONS NOTES By www.icsehelpline101.wordpress.com
Entrepreneur By www.icsehelpline101.wordpress.com
Meaning and Definition Introduction Functions of an Entrepreneur Role of an Entrepreneur in Economic Development Difference between an Entrepreneur and an Organizer Difference between an Entrepreneur and a Laborer Conclusion Quiz By www.icsehelpline101.wordpress.com
What is an entrepreneurship? Meaning & Definition Entrepreneurship is the process of creating something new of value by devoting (giving) the necessary time and effort. By accepting and acknowledging the necessary financial, psychological, and social risks, and finally receiving the resulting rewards, be it monetary and personal satisfaction and freedom to do what you want. ~ Robert D. Hisrich, M. Peters & D.A. Shepherd What/who is an entrepreneur? He or she is an individual who actively forms or leads their own business and nurtures it for growth and prosperity. ~ UiTM Entrepreneurship Study Group OR A person who creates and manages change by the recognition of opportunities (needs, wants, opportunities, problems, and challenges) and develops people and manages resources and thus, creates a venture (profitable business). ~ Eston Kimani, MIT By www.icsehelpline101.wordpress.com
Introduction What is the need for an entrepreneur? In order for the firm or organization to carry out its tasks in a planned manner, a person who is willing to take responsibility for the firm’s decisions and risks is needed. What does an entrepreneur do? An entrepreneur basically manages the whole firm and organizes the production, takes important decisions regarding production, hires/purchases factors of production, and bears the risks and uncertainties involved therein. What does it require to become an entrepreneur? Not just anybody can become an entrepreneur. A person should have the leadership qualities, desire to innovate, and the willingness to take risks in order to become a successful entrepreneur. By www.icsehelpline101.wordpress.com
Functions What type of functions does an entrepreneur perform? • According to some economists, the functions of an entrepreneur are classified into five broad categories : • Risk Bearing - Involves uncertainties related to production, investments, and profits. • Organizational - Involves bringing together factors of production and organizing them. In the proper combination. • Innovative - Involves choosing and introducing profitable innovations and applying them to earn more profits. • Managerial - Involves rewarding the factors of production with acknowledgement of their relative contribution to the production process. • Decision Making - Involves making decisions regarding selection of the commodity to be produced, selection of design and quality of the product, selection of location of the factory/base, scale of production, and techniques of production. By www.icsehelpline101.wordpress.com
How does an entrepreneur help in the economic development of a country? Role of an Entrepreneur in Economic Development • The economic development of a country is determined by the number and quality of its entrepreneurs. Thus entrepreneurs play a definitive role in the economic development of a country in the following ways: • Increasing the per capita output and income of the people of the country. • Initiating and creating change in the structure of business and society. • Generation of innovation that leads to the creation of new product and service. • Improvisation and modification on existing product to better suit market and customers’ needs. • Creation of self employment and to cut back the dependency of potential employment of new workers in government sectors. • Streamline of the private sector and encourage the inclusion of new technology that is less labor dependent. • Increase in the national output which in turn lead to greater and stronger economic growth. • Laying the seed bed for creating new entrepreneur in various new technologies such as Bio Technology, Bio Technology Medicine, Nano Technology , New Material Technology etc. By www.icsehelpline101.wordpress.com
Difference b/w An Entrepreneur and An Organizer The organizer begins manufacture of goods in expectation of compensation but is not obligatory that he may always get gain. Occasionally the organizer has to abide some defeat also. Whereas, the work of embarking on jeopardy is termed as “enterprise”. Before machines came into existence, manufacture was accepted on a small scale and in the cottage industries. There was no disparity amidst organization and enterprise for the reason that the work of organizing and risk taking was executed by the same person. However, with the materialization of large scale industries the joint stock companies have detached the organization and the enterprise. In JSC, investors are careful regarding profit and loss. Hence the enterprise is related to the investors. The actual work of organization and administration is approved by the paid managers or directors. Thus organizers and entrepreneurs are dissociate in modern productive system such as JSCs. Here the charge of organization and administration and the task of risk abiding are embarked on by various persons. Whereas in small scale industries, the entrepreneur himself is the organizer. In such a situation, where operations of organization and enterprise are performed by the same man, there is no disparity amidst them. By www.icsehelpline101.wordpress.com
Difference b/w An Entrepreneur and A Laborer Entrepreneur Laborer • An entrepreneur hopes to get profit. • An entrepreneur has to bear all the risks of business and his income is not certain and fixed. • An entrepreneur has to perform all jobs concerning with the business. • Laborers get wages for the tasks they perform. • Laborers have nothing to do with the risks involved in the business. They will be sure to get wages. • Laborers are supposed to perform activities allotted to them. By www.icsehelpline101.wordpress.com
Conclusion All in all, we may say that other factors of production have a role as important as that of an entrepreneur. However, we fail to consider the fact that without an entrepreneur to take the initiative and decide on the starting of a company and its production process, land, capital, and labor would not be required. Thus, we can see now, what a big role the entrepreneur plays in the setting up of a company, no matter how big or small. This is why it is rightly said that entrepreneurship is an indispensable factor of production. You may also realize why it is important for us to learn at least a bit about something so relevant in our daily lives. By www.icsehelpline101.wordpress.com
Quiz Time! By www.icsehelpline101.wordpress.com
In simple terms, what is an entrepreneurship? The act of working under a firm and being paid a salary. The act of creating something new, of value, and accepting the risks involved therein. By www.icsehelpline101.wordpress.com
What is the need for an entrepreneur? To look after other factors of production and make sure that they are used appropriately. To organize a company and manage it while accepting the risks involved. By www.icsehelpline101.wordpress.com
True or False: An entrepreneur is an Indispensable factor Of production. True False By www.icsehelpline101.wordpress.com
Name two main functions of an entrepreneur. Managerial Labor Work Supervising Setting Up Firm Decision Making Risk Bearing Organizational Producing Goods
What qualities are required in an Entrepreneur? Willingness to bear risks Good communication skills Leadership Willingness to Innovate Leadership Willing to travel Social Nature Readiness to take risks By www.icsehelpline101.wordpress.com
True or False: In small scale industries, the entrepreneur and the organizer are not the same person. True False By www.icsehelpline101.wordpress.com
In the modern productive system, are entrepreneurs and organizers the one and the same person? Yes No By www.icsehelpline101.wordpress.com
Why is an entrepreneur important for the economic development of a country? To increase national output To create self-employment To help people start new companies To create awareness about the production of goods To increase per capita income To decrease national output To streamline the public industry To increase use of new technology
What does the entrepreneur do in the ‘innovative function’? Invents new factors of production Makes projects and plans for the company Introduces profitable innovations Implements new setup plans By www.icsehelpline101.wordpress.com
True or False An entrepreneur always earns profit. True False By www.icsehelpline101.wordpress.com
Can just anybody become a successful entrepreneur? Why, or why not? Yes No By www.icsehelpline101.wordpress.com
Can a company function without an entrepreneur? No Yes By www.icsehelpline101.wordpress.com
Give one difference between and entrepreneur and a laborer. Entrepreneur has to bear risks. Laborer does not have to bear risks. Entrepreneur earns wages. Laborer does not earn wages. Entrepreneur gets profit. Laborer earns wages. Entrepreneur works under supervision. Laborer manages the firm. By www.icsehelpline101.wordpress.com
