Question

Discuss three functions of an entrepreneur.

Answer 1

1. Risk-Bearing: The entrepreneur takes the ultimate financial risk for the business. Because future market demand is unpredictable, they invest money with no assurance of success. While employees receive fixed salary, the entrepreneur’s reward (profit) is uncertain and might result in significant losses if the business fails.
2. Innovation: This means introducing creative and novel improvements to the production system in order to increase efficiency. An entrepreneur is continuously working to introduce new products, use cost-effective production processes, enter untapped markets, or find cheaper raw material sources.
3. Organisation and Coordination: The entrepreneur is the main planner who brings together the disparate factors of production land, labour, and capital. They make strategic judgements on what to produce, how much to produce, and how to manage everyday operations to reduce waste.