MS6

• Business


  An entity in commerce and trade, usually having a profit motive
• Some businesses may also engage in the same activity, but with no intentions of earning profit
• The entities (the people who conceptualized the firm) are independent of the business
• Entrepreneur


  One who combines the primary factors of production (land, labor and capital) in order to produce goods and services
• Merely selling products or merchandise does not make you an entrepreneur
• Entrepreneurs


  Innovators who contribute to the development of goods and services
• The process of establishing and running a business

  1. Identifying the type of business

  2. Getting the initial capitalization

  3. Selecting a location

  4. Direct operations and management of the business

  5. Earning profit and incurring losses
• Types of entrepreneurs


  • Builder
  • Opportunist
  • Innovator
  • Specialist
• Opportunistic entrepreneur


  has the ability to pick out financial opportunities, get in at the right time, stay on board during the time of growth, and exit when a business hits its peak
• Innovator entrepreneur


  Rare individuals that come up with a great idea or product that no one has thought of before, who work on what they love and find business opportunities through that
• Specialist entrepreneur


  Analytical and risk-averse, have a strong skill set in a specific area obtained through education or apprenticeship, build out their business through networking and referrals, resulting in slower growth than a builder
• Types of entrepreneurships

  • Small-business
  • Scalable startup
  • Large-company
  • Social entrepreneurship
• Small-business entrepreneurship


  The idea of opening a business without turning it into a large conglomerate or opening many chains
• Scalable startup entrepreneurship


  Companies that start with a unique idea that can build to a large scale, often requiring investors and large amounts of capital to grow their idea and reach multiple markets
• Large-company entrepreneurship


  A new business division created within an existing company, where the existing company may be well placed to branch out into other sectors or become involved in new technology
• Social entrepreneurship


  The goal is to create a benefit to society and humankind, focused on helping communities or the environment through their products and services, not driven by profits
• Characteristics of entrepreneurs

  • Versatile
  • Flexible
  • Money savvy
  • Resilient
  • Focused
  • Business smart
  • Communicator
• Underdeveloped regions are less conducive to the emergence of innovative entrepreneurs due to paucity of funds, lack of skilled labor and non-existence of minimum social and economic overheads
• In underdeveloped regions, entrepreneurs may not be "innovators" but "imitators" who copy innovations introduced by entrepreneurs in developed regions
• Imitative entrepreneurs constitute the main spring of development of underdeveloped regions
• Small-scale entrepreneurship plays an important role in achieving balanced regional development in India
• Importance of entrepreneurship in economic development

  • Promotes capital formation
  • Creates large-scale employment opportunities
  • Promotes balanced regional development
  • Reduces concentration of economic power
  • Facilitates wealth creation and distribution
  • Increases gross national product and per capita income
  • Improves standard of living
  • Promotes country's export trade
  • Induces backward and forward linkages
  • Facilitates overall development
• Import substitution


  Earning huge amount of foreign exchange from export in order to combat the import dues requirement
• Export promotion


  Ensuring economic independence and development
• Entrepreneurs


  • Like to work in an environment of change and try to maximize profits by innovation
  • When an enterprise is established in accordance with the changing technology, it induces backward and forward linkages which stimulate the process of economic development in the country
• Entrepreneurs

  • Act as catalytic agent for change which results in chain reaction
  • Multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area
• Innovation

  Entrepreneurs bring economic development through innovation
• Entrepreneurs


  • Create new businesses which result in new employment and a cascading effect or virtuous circle in the economy
  • Stimulate related businesses or sectors that support the new venture, adding to further economic development
• Entrepreneurs


  • Break away from tradition and indirectly support freedom by reducing dependence on obsolete systems and technologies
  • Improve quality of life, greater morale and economic freedom
• Entrepreneurship


  • Creates jobs that facilitate personal development
  • Entrepreneurs can tackle social problems with innovative and disruptive ideas
• Entrepreneurship serves as a catalyst of economic development
• Business cycle


  The diffusion of fluctuations in aggregate economic activities all over the economy and not just on a single industry economy of any given country

  
• Phases of a business cycle

  • Expansion
  • Peak
  • Recession
  • Depression
  • Trough
  • Recovery

  
• Expansion


  Increase in positive economic indicators such as employment, income, output, wages, profits, demand, and supply of goods and services
• Peak


  The maximum limit of growth is attained, economic indicators do not grow further and are at their highest, prices are at their peak
• Recession


  Demand for goods and services starts declining rapidly and steadily, producers do not notice the decrease in demand instantly and go on producing, creating a situation of excess supply in the market, prices tend to fall
• Depression


  The economy's growth rate becomes negative, there is further decline until the prices of factors, as well as the demand and supply of goods and services, contract to reach their lowest point
• Trough


  The negative saturation point for an economy, there is extensive depletion of national income and expenditure
• Recovery


  The economy begins to recover from the negative growth rate, demand starts to pick up due to low prices and supply begins to increase, the population develops a positive attitude towards investment and employment and production starts increasing
• Unemployment


  Officially defined as all those who are 15 years old and during the reference period, are without work, currently available for work, and seeking work