Entrepreneurship

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Entrepreneurship Management

• - Prof. J.C. Saboo

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What do you mean by

• Entrepreneur (oxford dictionary) Person who
  undertakes an enterprise with chances of profit
  or loss.
• Enterprise (oxford dictionary) Bold Undertaking
• Entrepreneur-New Encyclopedia Britannica An
  individual who bears the risk of operating
  business in the face of uncertainty about the
  future conditions.
• Common Meaning one who starts his own, new and
  small business

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• Entrepreneurship It is a philosophy or process
  through which an entrepreneur seeks innovation
  and employment.
• Entrepreneur Entrepreneurship Enterprise
• Person Process or Philosophy Object
• Entre enter Pre before Neur Nerve
  Centre

Entrepreneurship can be described as a creative
and innovative response to the environment.
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Entrepreneurship Theories

• 1600 French verb- Entreprendre to undertake
• 1700 Person bearing Risks of Profit in a fixed
  price contract (Risk)
• 1725 Richard Cantillon Person bearing risks is
  different from Capital Supplier (Risk)
• 1803 J. B. Say Shifts economic resources out
  of an area of lower into an area of higher
  productivity greater yields (Value Addition)
• 1934 Joseph Schumpeter Innovator and develops
  untried technology (Productivity Innovation)

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Entrepreneurship Theories

• 1961 David McClelland highly motivated,
  energetic, moderate risk taker (Need for
  achievement)
• 1964 Peter Drucker Searches for change,
  responds to it exploits as opportunity
  (Opportunity Focused)
• 1980 Karl Vesper Behaviour Perceptions-
  Economists, Psychologists, Businessmen,
  Politicians (Environment)
• 1983 Gifford Pinchot- Intrapreneur
• 1985 Robert Hisrich - Creating something
  different with value, devoting time effort,
  assuming risks (FPS) results-rewards and
  satisfaction (Leadership Vision)

How do you define an entrepreneur in the 21st
Century?
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Entrepreneurship

• Is the process of creating something different
  with value by devoting the necessary time and
  effort, assuming the accompanying financial,
  psychic, social risks and receiving the resulting
  rewards of monetary and personal satisfaction and
  independence

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The Nature and Development of Entrepreneurship

• Entrepreneur stems from
• French Verb Entreprendre
• means between taker or go between
• New Definition involves four aspects
• The creation process
• The devotion of time and efforts
• The assumption of risks
• Rewards of independence, satisfaction, money.

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Advantages of Entrepreneurship
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To an Individual

• Self Employment
• Employment for near dear
• Prolonged career for next generations
• Freedom to use own ideas - Innovation and
  creativity
• Unlimited income / higher retained income
• Independence
• Satisfaction

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To the Nation

• Provides larger employment
• Results in wider distribution of wealth
• Mobilizes local resources, skills and savings
• Accelerates the pace of economic development
• Stimulates innovation efficiency

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Factors favouring Entrepreneurship

• Growth of education- science, technology
  management
• Developed infrastructure facilities
• Financial assistance
• Training facilities
• Protective and promotional policies
• Globalization

Think of numerous other factors?
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What makes a Successful Entrepreneur?

• The urge for achievement
• Determination to win
• Win-Win Personality
• Willingness to take moderate risks
• Ability to identify explore opportunities
• Analytical ability to take strategic decisions

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• Perseverance
• Flexibility
• Capacity to plan and organize
• Preparedness to undergo physical and emotional
  stress
• Positive self concept
• Future orientation Vision
• Ethics and Values Mission

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Who can be an Entrepreneur?

• Who can take moderate risks
• Who has ability to work hard
• Who can capitalize on opportunities
• Who has some financial strength
• Who feels the need for achievement
• Who has desire for responsibility
• Who has perception of probability of success
• Who gets stimulation by feedback
• Who possess skills in organizing
• Who can be male or female
• Who may not have previous experience

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Characteristics of an Entrepreneur

• Mental ability
• Clear objectives
• Business secrecy
• H.R. ability
• Communication ability
• Technical knowledge
• Achievement-oriented
• Perseverance
• Ethical

• Motivator
• Self-confident
• Long term involvement
• High energy level
• Problem solver
• Initiator
• Goal setter
• Risk taker

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Key elements of entrepreneur

• Innovation
• Vision
• Ethics Values
• Organizing Skills
• Risk taking
• Need for Achievement

Study the Profile of a Successful Entrepreneur
and identify six key elements in order of
priority
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Entrepreneurs Background and Characteristics

• Family environment
• Education
• Age
• Physical attributes
• Marital status
• Working history
• Family contacts
• Professional contacts
• Personal values
• Lifestyle

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Analyze your Personality

• Feelings about Control
• Feelings about Independence
• Willingness to take Risks

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What is a job competency?

• It is knowledge, skills and attitude
• Knowledge collection and retention of
  information.
• Skills are ability to do something well
  (hard and soft skills)
• Motives are reasons for doing something
• (need)
• Traits characteristics way in, which a person
  responds.
• Attitude reflects the way of thinking and acting
• (Self and others determine the attitude)

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• Performance emerges from the combination of
  knowledge, skills and attitude

Competency enables to perform better than others.
Competency is related to superior performance
Competency gets reflected in the job.
Competency is developed.
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• Initiative
• Taking actions that go beyond job requirements or
  demands of the situation.
• Doing things on own before being asked for or
  being forced by the events.
• Taking actions to start the business and expand
  into new areas, products and services.
• Seeing acting on opportunities
• Looking for and taking actions to seize
  opportunities
• Seeing and acting on opportunities for business
  development or for personal growth.
• Seeing unusual opportunities
• Seizing opportunities, need, procuring and
  mobilizing necessary resources.

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• Persistence
• Taking repeated actions to overcome obstacles
  that get in the way of achieving goals
• Taking actions in the face of obstacles.
• Ensuring all efforts to solve a problem or
  barrier.
• Information seeking
• Taking action s on own to help reach objectives.
• Personally undertaking a research or analysis to
  find out answers to some problem.
• Seeking information to clarify what is needed.
• Using networks to obtain information.

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• Concern for high quality of work
• Doing things that meet or beat existing standard
  of excellence.
• Stating a desire to produce work of high quality
• Comparing work favorably to that of others.
• Making all out efforts to ensure the quality of
  product or services.

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• Work commitment to contract
• Placing highest priority for getting a job
  completed.
• Taking all the effort to complete a job.
• Accepting responsibilities for failures.
• Expressing utmost concern for the customers
• Readiness to work at any level to get work done.

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• Efficiency Orientation
• Constantly looking for ways to do things faster
  or with fewer resources or at a lesser cost.
• Using business tools to increase personal or
  professional efficiency.
• Expressing concern for assessing cost versus
  reward of some improvements, changes or action.
• Systematic Planning
• Developing and using logical steps to reach
  goals.
• Breaking a large task into several sub tasks.
• Developing plans after duly anticipating
  obstacles.
• Evaluating alternatives on merits and demerits.

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• Problem Solving
• Identifying and applying new ideas to reach the
  goals.
• Identifying the root cause of the problem.
• Developing strategies in the light of objectives,
  resources, and constraints.
• Generating new ideas or innovative solutions.
• Self Confidence
• Having a strong belief in own abilities.
• Sticking with own judgment in the face of
  opposition or early lack of success.
• Doing something for which chances of success are
  not very fair.

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• Persuasion
• Persuading others successfully
• Selling someone an idea, product or service.
• Making someone agree to provide resources
• Convincing with confidence, competence and
  respect.
• Use of Influence Strategies
• Using a variety of strategies to influence others
  successfully
• Developing professional and business contacts.
• Using influential people to get own things done.
• Carefully limiting the information to be given to
  others
• Using others authority and resources, but
  remaining ethical

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• Assertiveness
• Confronting problems and issues with other
  directly
• Speaking politely but firmly.
• Telling others clearly what they have to do
• Reprimanding those who fail to perform as
  expected however close they may be.
• Monitoring
• Ensuring smooth progress of project or work.
• Personally supervising all aspects of the work to
  its completion.
• Developing a system of supervision and monitoring.

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• Concern for others welfare
• Having a concern and taking actions to improve
  others welfare.
• Responding positively to employees specific
  needs.
• Having a concern for the welfare of employees,
  their families and society at large.

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• General Aspect
• Political
• Socio-cultural
• Technological
• Legal
• Economic

Business Environment Entrepreneurship

• Elements
• Promoters / shareholders values
• Mission / objectives
• Management Structure
• Internal Power relationship
• Physical assets facilities
• Co. image/ brand equity
• Human resources
• Financial capabilities
• Technological capabilities
• Marketing capabilities

• Competitive Aspect
• Potential New Entrant
• Buyers Bargaining Power
• Suppliers Bargaining Power
• Substitute Products

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Environment

• Political System, Stability, Leadership
• Socio-cultural Culture, Community, Values,
  Ethics, Attitude
• Technological Education, Absorption,
  Competition, Innovation
• Legal Regulatory framework, Consumer protection,
  Concern for environment, Labour laws
• Economic GDP, GNP, Resources, Fiscal, Non-fiscal
  policies, Incentives and Subsidies

Remember SLEPT to memorize
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Dimensions of Environment

• SPECTACLES Social, Political, Economic,
  Cultural, Technological, Aesthetic, Customer,
  Legal, Environmental and Sectoral
• PEETS Political, Economic, Ecological,
  Technological and Socio-demographical
• SLEPT Social, Legal, Economical, Political and
  Technological

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Factors Influencing Entrepreneurship
Individual
Economic Environment
Socio-cultural factors
Entrepreneurship
Support Systems
Political Environment
Legal Environment
Technological Environment
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Porters Model in the Competitive Environment
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BCG Matrix
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Political Governmental Environment

• Global
• Trade Barriers
• Trade Agreements
• Tariffs Duties
• Political Risks

• National
• Taxation
• Regulations
• Protections (Patents)
• Govt. spending

• State Govt.
• Taxation
• State Laws
• Licensing /Approvals
• Incentives

• Local Issues
• Taxations
• Zoning
• Cost of Living
• Lifestyle

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Environmental Analysis

• Scanning to detect change (identify key elements
  and their characteristics)
• Monitoring to track development (that affect the
  survival and profitability of the new business)
• Forecasting to project the future (such as level
  of prices, inflation, interest rates,
  availability of funds, market share, market
  growth, etc.
• Assessing to interpret data (what does it all
  mean to the entrepreneur?)

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Entrepreneurship and Economic Development

• Entrepreneurs set up Enterprises
• Entrepreneurs combines resources, put their time
  and efforts and produce goods or services
• What they contribute productivity, output,
  value addition, income and employment
• Entrepreneurship is a Low Cost Strategy.
  Entrepreneurs perform the crucial role themselves
• The spirit of Entrepreneurship Drive, achieving
  higher goals, creativity, innovative attitude.
• A dynamic society emerges and the spirit spreads
  like a chain reaction.

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The Invention Process
Market Need
Technology observation
Need Analysis
Parameter Identification
Creative Synthesis
Realization
Invention, which meets the need
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Product Evolution Process
Fundamentals of Science
Development Phase
Commercial Phase
Recognized Social Need
Technology
Planning
Concept Testing
Financing
Modeling
Beginning of Technological Innovation
Manufacturing
Product Testing
Marketing
Invention / Innovation
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The Evolution Process

• Intersection of Knowledge and a recognized social
  need
• Initiation of technological innovation
• Iterative Synthesis
• Development Phase
• Industrial Phase

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The Product Planning and Development Process

• Idea Stage Idea Evaluate
• Concept Stage Lab Development Evaluate
• Product Development Stage - Pilot Production
  Evaluation
• Test Marketing Stage- Semi Commercial Production
  Evaluation
• Commercial Stage Introduction
• Growth
• Maturity
• Decline

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Commercialization

• Role of Government
• Role of Corporate Intrapreneurship
• Role of Individuals Entrepreneurship

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• Development of Technology
• Utilization of materials
• Exploitation transformation of energy
• Understanding and application of Scientific
  Principles
• The Role of Government
• Promotional
• Neutral
• Regulatory

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The Role of Smaller firm

• T- High, M-High Large skilled resources,
  financial backing. Act as a Supplier or Sub
  Contractor
• T- High, M-Low - Specialist firm, access to low
  cost research
• T-Low, M-High Linkage with well-established
  channels
• T-Low, M- Low Well Suited to small firm
• Low Tech High Volume Financial Ability
• High Tech Low Volume Strategic Ability
• Emerging Options Franchisee Sub-contractor

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Entrepreneurship and Management Students

• Enterprises in protected economy can be
  mismanaged.
• Enterprises in competitive environment are
  essentially to be managed.
• A Management Graduate is a person trained to
  manage an enterprise. Naturally, he will deliver
  the best results.
• A Management Graduate should not be just a Job
  Seeker. He can and should take the role of Job
  Provider.
• Experience even from HBS confirm that more
  Management Graduates take Entrepreneurial Role
  (after some experience) and their income is
  higher than their colleagues who are in job.

An Entrepreneur has to be a Manager. But a
Manager need not be an Entrepreneur
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Entrepreneurial Decision Process

• Pull Factors
• Perception of Advantages
• Spotting an Opportunity
• Government Policies
• Motivation from Biographies or Success Stories
• Influenced by Culture, Community, Family
  Background, Teachers, Peers, etc.

• Push Factors
• Job Dissatisfaction
• Relocation
• Lay-off
• Retirement
• Boredom

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Comparison of Entrepreneurs, Intrapreneurs and
Traditional Managers
Traditional Managers Entrepreneurs Intrapreneurs
Primary motives Perks and promotion Self-employment, satisfaction and money Creative freedom and recognition
Time Orientation Short-term meeting quotas and budgets weekly, monthly, quarterly and the annual planning horizon Short-term business establishment Long-term growth of business Tend to follow the middle path
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Traditional Managers Entrepreneurs Intrapreneurs
Activity Delegates and supervises Direct involvement Direct involvement , not merely delegation
Risk Careful Moderate risk taker Moderate risk taker
Monetary Risk Nil High Nil
Status Concerned about status unconcern about status unconcerned about traditional status
Failure and mistakes Tries to avoid mistakes and surprises Deals with mistakes and failures Attempts to hide risky projects from view until ready
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Traditional Managers Entrepreneurs Intrapreneurs
Decisions Like to take their own but unable to disagree with top Follows dream with decisions Able to get others to agree to help achieve their dreams
Who serves Others Self and customers Self, customers, and sponsors
Family history Family members worked for large organizations Entrepreneurial small-business, professional Entrepreneurial small-business, professional
Relationship with others Hierarchy as basic relationship Transactions and deal-making as basic relationship Transactions within hierarchy