This innovation can be in the field of new products, new production methods/technology, new business models, exciting and new promotion tactics, exploring new markets, etc. One of the other important functions of entrepreneurs is to continuously innovate. The owner/entrepreneurs have to bear all the risk. Unlike some of the other management functions, risk bearing cannot be delegated to the manager. Profit is their reward for bearing the risks. In exchange for all these risks, the entrepreneurs enjoy the profits earned by the firm. There are other risks such as theft, accidents, etc. Or more innovative means of production may be developed. So there is a risk that the product may become obsolete. These days we make technological advancements every day. Then there are technological risks as well. Entrepreneurs have to bear these financial risks. And in turn, the entrepreneur may face some financial losses. These will all affect the demand and supply of the product. The consumer taste may change, there can be new entrants in the market, taxes may increase, etc. So the business plans of the entrepreneur should be able to adapt to the changes. So in dynamic economic model things can change very fast. The entrepreneurs bear the risks of failure in exchange for the profits of the company. This is perhaps the most important function of entrepreneurs. So the entrepreneur must get the greatest yield for the lowest cost from these factors of production. The aim is to generate higher productivity from these factors. He must coordinate the factors of production and utilize them in the right proportions. The entrepreneur has to build up his business dynamically. Finally, he must obtain the different factors of productions to get the ball rolling. Then he develops the project ideas and decides on the scale of the business. Firstly the entrepreneur spots business opportunities in the economy he can exploit. This is the first function of the entrepreneur, to actually start a business. Browse more Topics under Theory Of Production And Cost Let us take a look at some functions of the entrepreneur. The entrepreneurs focus on the risk bearing and initiating production. The managers take care of the routine day to day decisions. So we now have a different set of functions for the managers and the entrepreneurs. So we often see a separation between ownership and management. However, these are the days of specialization. Simply put the entrepreneur is the owner of the business. He is the risk bearer and in consideration of this the profit maker as well. He organizes, manages and controls the affairs of the firm. The entrepreneur is the one that initiates the process of production by mobilizing the other factors of production. 3 Solved Question for You Factors of Production – Entrepreneurs
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