Entrepreneurial Economy

ENTREPRENEURIAL ECONOMY

- Dr. V. THANIKACHALAM

INDIAN ECONOMY SINCE 1991

* A profound shift from a “managerial” to an “Entrepreneurial” Economy.

STATUS OF GOVERNMENT JOBS

• Decreasing (2% - 3%)• Jobs are off loaded to private entrepreneurs /

companies• Disinvestment in public sector companies

PRIVATE ENTERPRISES

• Highest growth potential• Innovation• Cost reduction• Geobal competition• Consumer Protection• Quality products

PROBLEMS

• Infrastructure deficiencies• Rising fuel cost• Cost of 1 Barrel of Crude oil costs $65 – 70$• It may increase to $100!• Power shortage• Corruption (never ending)

CONSUMER EXPECTATION

• Expects high quality products• Most economical cost• Excellent service after sales• Loyalty changes

SELF-EMPLOYMENT OF TECHNICAL GRADUATES

• Less than 2%• Not aware of potential opportunities• Dreams of government jobs• Dreams of security

INTRODUCTION TO ENTREPRENEURSHIP OF TECHNICAL GRADUATES

• Future for risk takers• Manufacturers of quality goods• Economical pricing still profit oriented

ENTREPRENEUR

• As one who starts his own, new and small business

ENTREPRENEURSHIP

• Applying management concepts• Management techniques• Standardizing the product• Designing process and tools• Training on the analysis of the work to be done• Setting standards• Upgrading the yield from resources• Creation of new markets and new customers

EXAMPLES OF ENTREPRENEURSHIP

• NIIT• Zodiac Clothes• Reliance Enterprise• Deemed universities of private entrepreneurs• Mc Donald’s • Hotel Saravanabhavan• Krishna Sweets etc.

MODERN UNIVERSITY

• Wilhelm van humboldt• The invention of a German diplomat and civil

servant• University of Berlin (1809)

OBJECTIVES

• To take intellectual and scientific leadership away from the French and give it to the Germans

• To capture the energies released by the French Revolution and turn them against the French themselves especially Napoleon

AMERICAN UNIVERSITIES (1900)

• Gained worldwide leadership in scholarship and research

PRIVATE AND METROPOLITAN UNIVERSITIES (INNOVATION)

• By new generation of American academic entrepreneurs

• Constituted major growth sector in American higher education

• For people in mid-career

STUDENTS

• Programmes beyond 5 pm• Widely diversified• Heterogeneous background• Shift in the status of the college degree from

“upper class” to “middle-class”.• They represent entrepreneurship

ENTREPRENEUR AS PER ENGLISH SPEAKERS

• New, Small business

UNTERNEHMER ENTREPRENEUR AS PER GERMAN SPEAKERS

• Power and Property

ENTREPRENEUR

• Is the person who both owns and runs a business

• Owner-manager

JP MORGAN

• Did not aim at ownership• Mobilize other people’s money for allocation to

areas of higher productivity and greater yield.

ENTREPRENEURS

• Not capitalists• Not investors• Take risks• Commitment of present resources to future

expectations• Uncertainty and risk• Employees

ENTREPRENEURS

• Shift resources from areas of low productivity and yield to areas of higher productivity and yield

• Risky way• May not succeed• Even of survival seem to be quite low

MODERATELY SUCCESSFUL

• Returns should be more than adequate to offset what ever risk there might be

RISK MANAGEMENT

• Optimizing resources in areas where the proper and profitable course is innovation

• Select the opportunities for innovation already exist

• Theoretically entrepreneurship should be the least risky

LOW-RISK ENTREPRENEURSHIP

• Not a fluke• Not a special dispensation of the gods• Not an accident• Not a mere chance

LOW-RISK ENTREPRENEURSHIP

• Well researched innovation• Constant innovation• Product planning to meet the high expectations of the users• Constantly updated• Success rate 80%• No violation of rules• Innovation based on economics and market structure• Purposeful innovation

PURPOSEFUL INNOVATION

• Innovation is the specific instrumentation of entrepreneurship

• It is the act that endows resources with a new capacity to create wealth

• Innovation creates resource

RESOURCE

• There is no such thing as a “resource” until man finds a use for something in nature and thus endows it with economic value

WEED

• Every plant is a weed if it is not of economic value.

ROCK

• Every mineral which is not of economic value is just rock

BAUXITE – A ROCK OR RESOURCE?

• The ore of aluminum• A resource

MINERAL OIL?

• A resource

MINERAL OIL AND BAUXITE

• Nuisances• Render the soil infertile• Resource when they are processed and used

PENCILLIN MOLD

• A pest, and not a resource• Pest is a exactly a bacterial killer• Alexander Fleming invented Pencillin• Pencillin mold become a valuable resource

PURCHASING POWER

• American farmers had virtually no purchasing power in the early 19th Century

• Could not buy farm machinery• Dozens of harvesting machines on the market• Farmers wanted them but could not pay for

them

CYRUS McCORMICK – HARVESTING MACHINE INVENTOR

• Invented installment buysing• Enabled the farmers to pay for a harvesting

machine out of their future earnings than out of past savings

• Now farmers have sudden purchasing power

INNOVATION

• Whatever changes the wealth – producing potential of already existing resources constitutes innovation

CONTAINER – AN INNOVATION

• A truck body off its wheels and on to a cargo vessel• Grow out of new perception of the cargo vessel• Materials – handling device• Rather than a ship• Time at the port as short as possible• Quadrupled the productivity of the ocean – going freighter• Saved shipping• Tremendous expansion of world trade

TEXTBOOK

• Invention of the great Czech educational reformer Johann Amos Comenius

• Designed and used the first Latin primers• Mid-seventeenth century

SOCIAL INNOVATIONS

• News paper• Insurance • Installment buying (hire purchase)• Changes the economy from supply – driven to

demand driven

HOSPITAL

• A social innovation of the enlightenment of the eighteenth century

• Greater impact on the health care

AUGUST BORSIG, GERMAN

• German system of factory organization• Devised the idea of the meister (Master)• Highly skilled and highly respected senior

worker• Runs the shop with considerable autonomy

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