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Unit 1: Entrepreneur and
Entrepreneurship
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Definitions & Concepts
A good entrepreneur is one
who is capable of inspiring confidence in people,
has the capability to motivate them to work with him/her
in fulfilling the economic goals set by him/her Entrepreneur is a French word, is derived from the word
Entreprendre
It means to undertake
the person who undertakes the risk of new enterprise
Richard Cantilon has coined the word a person who buys factory services at certain prices with
a view of selling its products at uncertain prices ==>Bearer of risk
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The rate of growth in an economy depends to a great
extent on the activities of entrepreneurs Joseph A. Schumpeter defines the entrepreneur in an
advanced economy is
an individual who introduces something new in the economy.
His function is to reform/ revolutionize the pattern of
production by exploiting an invention or an untried
technological possibility for producing a new commodity
The process of development is a deliberate and
continuous phenomenon which is actively promoted
by a change agent who provides economic leadership
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Adam Smith, Father of Economics
Did not use the word, Entrepreneur
Instead used employer, merchant, undertaker,
master
F.H. Knight:
Wrote an article Risk, Uncertainty, and Profit
Entrepreneur are a specialized group of people
who bears risk and deal with uncertainty
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Four Key elements of an Entrepreneur:
Innovation
Risk taking
Vision
Organizing Skill
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Traits and Characteristics
Imagination/Vision Old problems, new ways of thinking
Always questioning
Strong positive attitude
Willingness to try new things--and fail
great decision maker
the Q-CAT System: Q = Quick.
C = Committed
A = Analytical
T = Thoughtful.
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Traits and Characteristics
Entrepreneurs need a keen eye to understandeconomic, social, and scientific realities and thecapacity to understand evolutionary processes in thefuture.
They need to understand how institutions work, andindividuals react in order to introduce activities and
products that serve peoples need and that aresustainable economically and politically.
Entrepreneurs also need dedication and commitmentsand the capacity to overcome failure.
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Entrepreneur Scan
Knowledge Wanting
Capable of Being
Knowledge and Motivation
Experience
Capabilities Characteristics
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Knowledge
Market
Environment
People
Production
Finances
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Motivation
Internally driven
autonomy
achievementpower
--Externally driven
Unemployment
Gap in the market
Interest in subject
Certainty of clients
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Capabilities (depends upon Company life cycle)Early phase
Market orientation
Creativity
Flexibility
Mature phase
Manage
Motivate
Organizeplan
Financial and administration
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CharacteristicsAchievement
Autonomy
Power
AffiliationEffectiveness
Endurance
Taking risks
Thinking Styles
Pioneer
Salesperson
Manager
Expert
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Innovation
Build a better mousetrap, and the world will
beat a path to your door--- Ralph Waldo Emerson
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Innovation
An innovation starts as a concept that is refined anddeveloped before application. Innovations may be inspired by reality. The innovationprocess, which leads to useful technology, requires:
ResearchDevelopment (up-scaling, testing)ProductionMarketing
Use Experience with a product results in feedback and leadsto improved innovations.
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Innovation
Innovations respond to need and economic conditions.Inventors, investors, and researchers put effort into solvingburning problems, and that leads to innovations.
Labor shortages led to mechanized equipment.
Drought conditions led to improved irrigation. Energy crises led to higher efficiency cars.
Farmers cooperatives were established during periods ofexcessive low farm prices.
Environmental regulations trigger cleaner technologies. A tax on carbon will lead to improved stoves and power
plants, and hopefully better cars!!
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Invention vs. Innovation
Invention is the creation of new products or
processes through the development of new
knowledge or from new combinations of existing
knowledge Innovation is the initial commercialization of
invention by producing and selling a new product,
service, or process
Product innovation
Service innovation
Process innovation
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Incremental Innovation
Incremental innovation refers to simplechanges or adjustments in existing products,services, or processes
Continuousimprovement, what in Japaneseis called kaizen, is the process of relentlessly
trying to find ways to improve and enhance acompanys products and processes fromdesign through assembly, sales, and service
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Six Sigma is a rigorous and analytical
approach to quality and continuous
improvement with an objective to improve
profits through defect reduction, yield
improvement, improved consumer satisfaction,
and best-in-class performance
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10 Essential Elements that
Lead to Incremental Innovation1. Define quality and customer value
2. Develop a customer orientation
3. Focus on the companys business processes
4. Develop customer and supplier partnerships5. Take a preventive approach
6. Adopt an error-free attitude
7. Get the facts first
8. Encourage every manager and employee to participate
9. Create an atmosphere of total involvement
10. Strive for continuous improvement
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Breakthrough Innovation
A breakthrough innovation is an innovation
in a product, process, technology, or the cost
associated with it that represents a quantum
leap forward in one or more of those ways
Breakthrough approaches to innovation are
inherently more risky than incremental
innovation approaches
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Innovation and Entrepreneurship
Innovations are new ways to achieve tasks.
Types of innovations include:
Mechanicaltractors, cars.
Chemicalpesticides.
Biologicalseed varieties.
Managerialextra pay for work, overtime.
Institutionalwater users association, patents,banks, stock market.
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Fostering Innovative
EntrepreneurshipThree Approaches:
Internal Corporate Venturing
Cooperating to Produce Innovation
Acquiring innovative Capability
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Internal Corporate Venturing
CorporateEntrepreneurship can occur as either a
bottom-up process or as a top-down process
Autonomous strategic behavior is a bottom-up
process through which Product Champions pursuenew product ideas to commercialization
Product Champions are individuals who have an
entrepreneurial vision for a new product and seek
support for its commercialization
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Internal Corporate Venturing
Induced strategic behavior is a top-down
process in which the current strategy and
structure foster product innovations that are
closely associated with the current strategy
Requires a decision on which corporate
resources to deploy for new technology
development and which innovative ideas tobring to market
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Cooperating to Produce Innovation
Strategic alliances can help to foster innovation by
combining the knowledge and resources of two or
more partners
Firms must focus on building knowledge, identifyingcore competencies and developing strong human
resources to manage these projects
Firms can also give away their core competencies by
outsourcing to alliance partners rather than
developing their own capabilities over time
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Acquiring Innovative Capability
Many firms now use acquisitions of other
firms as a substitute for developing
innovations internally
This can reduce risk and lower costly R&D
investments
The drawback is that firms can eventually lose
their ability to generate innovations internally
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Importance of Entrepreneurship
Providing leadership for the industrial
development
Introducing innovative changes
Increasing productivity
Providing employment improving std of living
Promoting regional and national growth Promotes import/export (trade)
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helps develop community leaders
creates better ties between communities and
broader business world by promoting
wealth generation
job creation
community building for existing inner-city small
businesses and organizations interested in growth.
to facilitate access to new markets, capital,
and knowledge
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In short, entrepreneurs are engines of job
creation because they are committed to
growing as fast as the marketplace allows!
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Intrapreneurship
Intrapreneurship is the use of entrepreneurialtechniques within an corporation or
organization which allow employees to
become Intrapreneurs (or corporateentrepreneurs) within the firm.
The employee/intrapreneur can use their
creativity and innovative ideas to create fortheir employer new products, services or new
entire divisions for the firm with the full
backing of the firms resources.
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Exploit Your Companys Competitive
Advantages
Enlist Key Supporters at the Top
Recruit Allies in Other Departments
Look Beyond Quantifiable Metrics