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Answer in detail
Explain in detail the functions of an entrepreneur.
An entrepreneur basically performs three important functions. These functions are:
i. Organising Function
ii. Bearing risks and uncertainty
iii. Innovative function
i. Organising - An entrepreneur aligns the activities in a certain order. That is, he designs the roles and directs the people towards accomplishment of organisational goals. Also, under this function, human efforts (labour), along with the resources (land and capital), are brought together and co-ordinated. Besides this, it also includes making payment to the factors of production, supervising the activities of the factors of production; and making decisions about what to produce, how to produce etc.
ii. Bearing risks and uncertainty - An entrepreneur performs the function of bearing the risks in the business. Every business is subject to variety of risks, such as the risk of failure of the business, risk of loss due to uncertain events etc. Some of these risks are insurable, while some are non-insurable. The insurable risks include the risk of death, risk of burglary, risk of fire etc. On the other hand, risks arising out of a change in government policies, changes in the demand for a product etc. are a part of the non-insurable risks.
iii. Innovative functions - An entrepreneur, in addition to performing the organising and risk bearing functions, also undertakes activities related to innovation. He is an innovator in the sense that he introduces a new combination of the means of production. This combination of the means of production can be done by introducing new products, new techniques, a new market, new sources of raw materials etc.
Concept: Factors of Production - Organisation
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