ENTREPRENEURSHIP MANAGEMENT

WHAT DO YOU MEAN BY…

Entrepreneur (oxford dictionary): Person who undertakes an enterprise with chances of profit or loss.Enterprise (oxford dictionary): Bold UndertakingEntrepreneur-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

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.

ENTREPRENEURSHIP THEORIES

1600: French verb- Entreprendre – to undertake1700: 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)

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?

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”

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.

TO AN INDIVIDUALSelf 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

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

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?

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

Perseverance

Flexibility

Capacity to plan and organize

Preparedness to undergo physical and emotional stress

Positive self concept

Future orientation: Vision

Ethics and Values :Mission

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

CHARACTERISTICS OF AN ENTREPRENEURMental 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

KEY ELEMENTS OF ENTREPRENEURInnovation

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

ENTREPRENEUR’S BACKGROUND AND CHARACTERISTICS

Family environmentEducationAge Physical attributesMarital statusWorking historyFamily contactsProfessional contactsPersonal valuesLifestyle

ANALYZE YOUR PERSONALITY

Feelings about Control

Feelings about Independence

Willingness to take Risks

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)

Performance emerges from the combination of knowledge, skills and attitude

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.

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.

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.

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.

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.

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.

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

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.

Concern for other’s welfare

• Having a concern and taking actions to improve other’s welfare.

• Responding positively to employees specific needs.• Having a concern for the welfare of employees, their families

and society at large.

Elements

• Promoters’ / shareholder’s values

• Mission / objectives

• Management Structure

• Internal Power relationship

• Physical assets & facilities

• Co. image/ brand equity

• Human resources

• Financial capabilities

•Technological capabilities

•Marketing capabilities

General Aspect

• Political

• Socio-cultural

• Technological

• Legal

• Economic

Competitive Aspect

• Potential New Entrant

• Buyers Bargaining Power

• Suppliers Bargaining Power

• Substitute Products

Business Environment &

Entrepreneurship

Entrepreneurship

ENVIRONMENT

Political: System, Stability, LeadershipSocio-cultural: Culture, Community, Values, Ethics, AttitudeTechnological: Education, Absorption, Competition, InnovationLegal: Regulatory framework, Consumer protection, Concern for environment, Labour lawsEconomic: GDP, GNP, Resources, Fiscal, Non-fiscal policies, Incentives and Subsidies

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

FACTORS INFLUENCING ENTREPRENEURSHIP

Individual

Economic

EnvironmentSocio-cultural

factors

Support Systems

Political Environment

LegalEnvironment

TechnologicalEnvironment

PORTER’S MODEL IN THE COMPETITIVE ENVIRONMENT

BCG MATRIX

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

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?)

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Entrepreneur’s 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.

THE INVENTION PROCESS

Market Need

Technology observation

Need Analysis

Parameter Identification

Creative Synthesis

Realization

Invention, which meets the need

PRODUCT EVOLUTION PROCESS

Fundamentals of Science

Recognized Social Need

Beginning of Technological

Innovation

Invention / Innovation

Planning

Financing

Manufacturing

Marketing

Concept Testing

Development Phase

Commercial Phase

Technology

Modeling

Product Testing

THE EVOLUTION PROCESS

Intersection of Knowledge and a recognized social need

Initiation of technological innovation

Iterative Synthesis

Development Phase

Industrial Phase

THE PRODUCT PLANNING AND DEVELOPMENT PROCESS

Idea Stage – Idea – EvaluateConcept Stage – Lab Development – Evaluate Product Development Stage - Pilot Production – EvaluationTest Marketing Stage- Semi Commercial Production EvaluationCommercial Stage – Introduction

Growth Maturity Decline

COMMERCIALIZATION

Role of Government

Role of Corporate – Intrapreneurship

Role of Individuals – Entrepreneurship

Development of Technology

• Utilization of materials• Exploitation & transformation of energy• Understanding and application of Scientific Principles

The Role of Government

• Promotional• Neutral• Regulatory

THE ROLE OF SMALLER FIRMT- 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

ENTREPRENEURSHIP AND MANAGEMENT STUDENTSEnterprises 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”

ENTREPRENEURIAL DECISION PROCESSPull 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

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

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

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