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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