of 63
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
1/63
Entrepreneurship
A N BhattacharyaProfessor & Chair,Marketing Leadership Program,
School ofInspired Leadership,Gurgaon
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
2/63
Definitions
Entrepreneurship is the process of creating something new with value by
devoting the necessary time and effort, assuming the accompanyingfinancial, psychic, and social risks, and receiving the resulting rewards of
monetary and personal satisfaction of independence.Robert Hisrich
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
3/63
Entrepreneurship vs Intrapreneurship
Intrapreneurship is entrepreneurship by employees inexisting organisations
Antoncic and Hirsh, 2003
Entrepreneurship is an act of initiative, drive,commitment, diligence, perseverance, organized effort,
and achievement outlook, to undertake some specific
functions of performing productive activities and the
capacity to bear and associated with the investment.
Economic Policy Paper on Entrepreneurship Development
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
4/63
India is ninth in the Global Entrepreneurship Monitor (GEM) survey of
entrepreneurial countries
It is highest among 28 countries in Necessity based entrepreneurship,
while 5th from the lowest in opportunity based entrepreneurship.
Entrepreneurship in India is basically necessity based. Number of
individuals taking entrepreneurship as a career choice is much lower as
compared to forced entrepreneurs
Some Facts About India.
38.8% of the Indian labour force is illiterate, 24.9% of the labour force
has had schooling up to the primary level and the balance 36.3% has had
schooling up to the middle and higher level.
About 80% of the workforce in rural and urban areas does not possess
any identifiable marketable skills.
No Indian University in the top100 universities of the world.
US- 37, UK-17 and China-5 Universities in top 100 universities of the world
IIT- Delhi: 154th position. IIT-B: 174th, IIT-K: 242nd, Delhi University: 274
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
5/63
ENTREPRENEURS VS MANAGERS
High
Inventor Entrepreneur
Promoter Manager,administrator
Low
Creativityand
Innovation
General management skills, business know-how, networksHighLow
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
6/63
ENTREPRENEURIAL CAREER CHOICE: DETERMINANT FACTORS
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
7/63
WHAT IS ENTREPRENEURSHIP?
Economists tend to agree that entrepreneurs, associated with innovation, are
the driving forces of economical development
Psychologists, sociologists and anthropologists underline the entrepreneurs
personal characteristics ofcreativity, risk-taking, need for achievement, internal
locus of control
Operations management specialists see entrepreneurs as good distributors and
coordinators of resources
Finance specialists define entrepreneurs as people able to evaluate and calculate
financial risks
Management specialists think that entrepreneurs develop visions to organize
their activities and excel at organizing people and using resources
Marketing specialists define entrepreneurs as people who identify opportunities,
differentiate themselves and adopt customer-oriented thinking.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
8/63
What are the qualities of an entrepreneur?
Capacity to assume
Dedication to work
Shrewdness and wide
knowledge
Motivating attribute
Vision and foresight
Imagination, initiative
Innovation and rational
judgment
Flexibility and sociability
Personal responsibility
Mobility and drive
Creative thinking Strong need for achievement
Capacity to marshal resource
Independence
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
9/63
Functions of entrepreneur
Organization:
An organizer mentally first of all decides certain things like what, how, and
how much to produce. He estimates the demand for the commodity and
initiates the production. He decides the location of the industry, scale of
production and estimates the availability of raw materials, labor, capital etc.
Then he co-ordinates the other factors like land, labor and capital in proper
proportion, so that he can minimize the cost of production and reap more
and more profit by producing more and more quantity at a cheaper price.
He supervises the entire production activity. After production is over, he
finds proper market for his product and sells them.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
10/63
Functions of entrepreneur.contd.
Risk bearing:
An entrepreneur not only organizes the entire production process but also
undertakes risks and uncertainties. An organizer starts production with an
anticipation of demand for his product. But when he actually brings the
product to market, there may or may not be demand for his product. This
is a non-insurable risk he has to undertake. Thus a brave organizer has to
shoulder certain insurable and non-insurable risks also.
Innovation:
An entrepreneur must be an innovator to survive in the market and to
retain the same position for his product. Innovation means introducing
new changes in production or technology or market for the product. Profitas a reward for innovation is not a stable one. It appears, disappears and
reappears. Only the imaginative skillful few will remain in the industry for
ever.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
11/63
Role of entrepreneur
An innovator who combines technical innovations and
financial finesses.
Important role in producing competitive products, processes,
and services.
Generation of new employments. Local and regional economic development.
Improved allocation of resources and transfer of technologies.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
12/63
Who is manager?
A manager is someone whose primary activities are a part of the
management process. In particular, a manager is someone who plans and
makes decisions, organizes, leads, and controls human, financial, physical,
and information resources.
Managers in any organization are responsible for the performance of one
or more of their subordinates. Managers must mobilize people and
resources to accomplish tasks within their department and are also held
accountable for the results of their department. Further,
their goal is to help the organization achieve a high level of performance
through management. Management involves the process of planning,
organizing, leading, and controlling the use of resources.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
13/63
Roles of a Manager
Interpersonal Role:
Figurehead-performs activities like greeting visitors, give awards to employees
etc
Leader- Lead and motivate subordinates
Liaison- He is a link between organisation and outsiders.
Informational Role:
Monitoring- Collects information. Disseminator- Distributes information.
Spokesperson- Represents his unit/organisation while interaction with
outsiders.
Decisional Role:
Entrepreneur- Assumes risk in terms of results, due to dynamic factors ofbusiness.
Disturbance Handler- Tries to control forces that tend to disturb smooth
functioning of the organisation.
Resource Allocator- Allocates human, financial and physical resources according to
needs.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
14/63
Motive:
The main motive of an entrepreneur is to start a venture by setting up an
enterprise for his personal gratification.The main motive of a manager is to render his services in an enterprise already
set up by someone else.
Status:
An entrepreneur is the owner of the enterprise.
A manager is the servant in the enterprise owned by the entrepreneur.Risk-bearing:
An entrepreneur assumes all risks and uncertainty involved in running the
enterprise.
A manager as a servant does not bear any risk involved in the enterprise.
Objectives:Entrepreneurs objective is to innovate and create and he acts as a change agent.
A managers objective is to supervise and create routines. He implements the
entrepreneurs plans and ideas.
Difference between Entrepreneur and Manager
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
15/63
Rewards:
The rewards an entrepreneur gets for bearing risks involved in the enterprise is
profit which is highly uncertain.
A manager gets salary as rewards for the services rendered by him in the
enterprise. Salary of a manager is certain and fixed.
Fraudulent behavior:
An entrepreneur is not induced to involve in fraudulent behavior where as a
manger does.
A manager may cheat by not working hard because his income is not tied up tothe performance of the organization
Innovation:
Entrepreneur himself thinks over what and how to produce goods to meet the
changing demands of the customers. He acts as an innovative changeagent.
Manager simply executes the plans prepared by the entrepreneur. Thus, amanager simply translates the entrepreneurs ideas into practice.
Qualification:
An entrepreneur possesses qualities and qualifications like high achievement
motive, originality in thinking, risk-bearing ability and so on.
A manager possesses distinct qualifications in terms of sound knowledge inmanagement theory and practice.
Difference between Entrepreneur and Manager....contd.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
16/63
An entrepreneur could be a manager but a manager cannot be an
entrepreneur. An entrepreneur is intensely dedicated to develop
business through constant innovation. He may employ a manager in
order to perform some of his functions such as setting objectives,
policies, rules etc. A manager cannot replace an entrepreneur in spite of
performing the allotted duties because a manager has to work as per the
guidelines laid down by the entrepreneur.
On the downside, typical manager brings professionalism into working of
an organization. They bring fresh perspectives, ideas and approach to
trouble shooting which can be invaluable.
Difference between Entrepreneur and Manager....contd.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
17/63
CATEGORIES OF ENTREPRENEURS
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
18/63
Why People Become Entrepreneurs
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
19/63
Potential drawbacks of entrepreneurship
Uncertain income
Risk of losing entire invested capital
Long hours hard work
Low quality of life until business gets established
High levels of stress
Complete responsibility discouragement
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
20/63
THE ENVIRONMENT FOR ENTREPRENEURS:Factors Supporting & Expanding Opportunities for Entrepreneurs
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
21/63
CHARACTERISTICS OF ENTREPRENEURS
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
22/63
Observed characteristics of entrepreneurs:
The 10 Is model
Independence
Interest
Insight Ideas
Invention
Inspiration
Involvement
Instigation Insistence
I - will
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
23/63
Mapping the ten I characteristicsPlotting overall average scores for a sample of 20 successful
entrepreneurs. Indicated by
1 Independence
2 Interest
3 Insight
4 Ideas5 Invention
6 Inspiration
7 Involvement
8 Instigation
9 Insistence
10 I will
10
9
8
76
5
4
3
2
1
0
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
24/63
Teaching, Learning & Assessment (TLA) framework 1
Context & GroupFormation
Self Awareness
Idea/ConceptGeneration
Idea/Concept
Selection
ProjectManagement
Proposal
Business plan andpresentation
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
25/63
Businessplanning
IntellectualPropertyRights
Businessstrategy and
risk
Market and
competitoranalysis
Marketingstrategy
The managementteam
Operations and
commercialstrategy
Financialforecasting
The pitch
Teaching, Learning & Assessment (TLA) framework 2
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
26/63
Businesses as legal entities A classification
Unlimited liability
Sole traders/Propreitors
Partnerships (can also have Ltd. status)
Limited liability (Incorporated)
Private: Shares not traded in public. Have company name and suffix PvtLtd
Public: Shares traded in public have company name and suffix Ltd
Co-operative
Owned and controlled by members, incorporated under theCooperatives/Societies Act
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
27/63
What is a business plan?
A document that explains and justifies the business concept.
It attempts to answer three questions:
Where are we now? Where do we intend going?
How do we get there?
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
28/63
Three basic objectives of business plans
To identify the nature and the context of the business
opportunity why does the opportunity exist?
To present the approach the entrepreneur will take to exploit
the opportunity
To recognise the factors that will determine whether the
venture will be successful
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
29/63
Role of business planning in business success
1. It enables the entrepreneur to understand an opportunity
and what it will take to exploit
2. It provides a framework for managing the business in the
future
3. It will help recruit partners and management team
4. It should be capable of attracting new capital to the venture
5. It can refocus and rejuvenate a business after start up
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
30/63
Typical requirements of business plans :1
To clearly identify product, service and unique selling point(USP)
Justify its competitive advantage through patent search dataand competitor analysis
Determine market attractiveness i.e. size and potential growththrough identification of potential customers, market trends
Determine route to commercialisation including technicaldevelopment, patenting, licensing and marketing
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
31/63
Typical requirements of business plans: 2
Justify potential income and expenditure for products, IPR,
licenses, human resources, patenting, equipment and running
costs
Demonstrate credibility of management team
Demonstrate financial rewards and loan requirements for
potential investors
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
32/63
Making a Business Plan
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
33/63
"In preparing for battle I have always found that plansare useless, but planning is indispensable."
-Dwight Eisenhower
Those who fail to plan, plan to fail.
-George Hewell
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
34/63
The Basic Steps of a Business Plan
Executive Summary
Company Overview
Market Environment
Marketing and Sales Strategy
Operations
Financial Plan
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
35/63
What does your Business Plan say...
Discuss a particular market opportunity.
Examine the markets that you will compete in, and explain
who your customers will be.
Describe the products or services that your company will
provide.
Your competition, and how you will defend against it.
The operation that you will put in place in your company.
The management team that will implement the plan.
The size and profitability of your company.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
36/63
Executive Summary
The written version of the 60 second pitch.
Many people who read your plan, will only read your
Executive Summary...
...and then they mayread your financials.
NOT an introduction, but a short version of the wholeplan.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
37/63
Company Overview Explanation of history, structure, and organization
of your company.
Strategic direction
Mission statement. Goals and objectives.
Values and vision.
People
Relevant skills and expertise of management team. Directors.
Relationships with experts in the field.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
38/63
Market Environment All factors of the market that are outside your direct control:
Market structure
Market trends Competition
Opportunities/Threats
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
39/63
Marketing and Sales Strategy Products or services offered.
Follow-on products.
Intellectual property or other defendable positions.
Market research. Marketing plan.
Product strategy.
Brand strategy.
Distribution strategy.
Pricing strategy.
Promotion.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
40/63
Operations Practical details required to meet the plan.
Facilities.
Manufacturing or out-sourcing. Personnel.
Varies widely depending on type of business.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
41/63
Financial Plan Three key reports, in a five-year plan:
Income statement.
Balance sheet.
Statement of cash flows.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
42/63
Entrepreneurial Goals & Choice of Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
43/63
Entrepreneurial motivations, goals, expectationsand capabilities vary across individuals
Likewise, opportunities also vary in their
characteristics and critical success factors
Opportunities are to be screened for both
viability and fit with the entrepreneurs before
they are pursued
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
44/63
Entrepreneurial Strategy
HeuristicsHeuristics
Heuristics
Venture
Characteristics
*Typology of
Ventures
Entrepreneurial Fit*Personal goals
*Entrepreneurial
Capacity
Strategy to Exploit
*Research & Analysis*Process
*Resources
*Growth
Iterative
Contributed by:K. Kumar, Faculty & Chair Person NSRCEL -IIM B, India
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
45/63
Types of New Ventures
Revolutionary ventures
Niche ventures
Ventures that are propagators ofnew technology orinnovations
Hustle ventures
Speculative (deal) ventures
Revolutionary Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
46/63
Revolutionary Ventures
A revolutionary idea, innovation or concept A new process or manufacturing technique
Can shake up/create a matured/new industry
Characteristics
Large investments spread over time with uncertain outcomes
Building organizational capabilities and sustainability
Requires a lot of creativity and exceptional managerial capabilities to
execute
Suits those who want to win or lose on a grand scale
New entrepreneurs can attempt but should be clear about their role in
the future growth of the venture
Entrepreneurs should have extraordinary organizing capabilities
Critical Success Factors
Entrepreneurial Fit
Niche Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
47/63
Niche Ventures
Need not be a radical concept or idea Serve segments with a unique need not served by mainstream
offerings
Characteristics
Existence of a niche that can be economically serviced Simple and easy to use product or service
Modest managerial and leadership skills
Critical Success Factors
Ideal for entrepreneurs with insightful knowledge of the larger market
and the niche in particular
Suits entrepreneurs with moderate growth/wealth ambitions and
limited resources
Entrepreneurial Fit
Propagatory Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
48/63
Propagatory Ventures
Propagate an emerging technology or a product
Characteristics
Superior execution speed and efficiency
Nimbleness rather than a great strategy
Investment and Managerial capacity to attempt market dominance
Critical Success Factors
Ideal for entrepreneurs with proven superior capability to execute
Suits entrepreneurs with competence in deal making and fundraising to support growth
Entrepreneurs should want be excited by high growth
Entrepreneurial Fit
Hustle Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
49/63
Hustle Ventures
Extraordinary ability to execute
Meticulous selection and grooming of resources
Vision and values of the organization
Critical Success Factors
Suits entrepreneurs with limited resources and modest growth ambitions Fits those who value professional satisfaction and do not seek high growth
Ideal for entrepreneurs who seek a lifestyle business and satisfactory cash
flow as against high growth and wealth creation
Entrepreneurial Fit
Does not need an innovative approach
No avenues to build proprietary assets
Low capital requirements
Limited exit options
Characteristics
Speculative Ventures
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
50/63
Speculative Ventures
Risk Taking Ability Insight and Timing Speculative Instinct
Critical Success Factors
Suits those who want quick profits Those who are willing to take commensurate risks
Those who have the financial strength and staying power to go through
the deal
Entrepreneurial Fit
An opportunity to buy low and sell high Financial risks depend on the terms of the deal No staged commitments- fully exposed once the deal is made
Characteristics
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
51/63
Acquiring Resources
Acquiring resources for a new venture is a
task of enlisting stakeholders
Customers Financiers
Employees
Suppliers
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
52/63
What Are the Challenges?
Uncertainty surrounding the venture
Downside risk perceived by the stakeholder
(resource provider)
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
53/63
Desirable Attributes in Stakeholders
Well diversified
Experienced and specialized
Has excess capacity
Demonstrated risk seeking disposition
Customers Financiers Employees Suppliers
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
54/63
Sources of Finance
Own funds
Outside equity
Debt
Internal generation
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
55/63
Marketing Plan
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
56/63
SWOT Analysis
A basic marketing plan begins with SWOT
analysis about your company and the SWOT
should be :
A summary of the key elements in your business
Brief, concise and interesting, without being too
abbreviated
Focused on the real issues facing your company
Action-oriented, so that positive proposals can be
envisaged
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
57/63
Strengths- You can bank upon these.
Weaknesses- Definitely need to becorrected
Opportunities- Help you in settingthe target where you want to reach.
Threats- Make necessarycontingency plan to combat threatswhich would automatically becomea part of the marketing plan.
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
58/63
Marketing Research
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
59/63
Marketing Research
Analyse Complexity of Buying Behaviour
CULTURALBELIEFS &
VALUES, LIFE
STYLES
SOCIOLOGICAL
SOCIAL CLASS,STRUCTURE
FAMILY/GROUP
INFLUENCE,LIFE
CYCLE, OPINION
LEADERSHIP
ECONOMICPRICE, DELIVERY,
PAYMENT TERMS,
SALES SERVICE
INDIVIDUAL PSYCHOLOGICAL FACTORSCOGNITION, LEARNING PROCESSES,
INTERPERSONAL RESPONSE, ATTITUDES
MOTIVATION, PERSONALITY THEORIES
BUYING PROPOSITION PRODUCT OR SERVICE
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
60/63
Marketing Strategy to be Based on
WHO MAKES THE BUYING DECISIONS
DECIDER
INFLUENCER
BUYER
USER
U d t di C Ch t i ti
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
61/63
Understanding Consumer Characteristics
CHARACTERISTICS Innovators
2-3%
EarlyAdopters
12-15%
EarlyMajority
33%
LateMajority
34%
Laggards
12-15%
PERSONAL
Social,
Income, Occupation,
Education,
Housing,
Family Influence,
Time orientation
PSYCHOLOGICAL
Nature of needs,Perceptions,
Self-concept,Aspiration Groups,Reference Groups
h i i i i
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
62/63
Changing Priorities
Stage Priorities Major Purchases
Fledging : Teens & early 20s Self,Socialising, Education Appearance Products,Clothing, Automobiles,Recreation, Hobbies, Travel
Courting :20s Self & Other, Pairbonding,Career
Furniture & Furnishing,Entertainment, Savings
Nest Building:20s &early 30s Babies & Career Home, Garden,,Baby Careproducts, insurnce
Full Nest 30-50s Children, Career, Midlife crisis Children Food, clothing,education, transportation, lifecounseling
Empty Nest 50-70 Self & others, relaxation Furniture, Entertainment,Travel, Hobbies, LuxuryAutomobiles, Investments
Sole survivor 70-90 Self, health,loneliness Health care , Diet, Security,Comfort, TV, Books, Longdistance telephone services
h l f il ?
8/2/2019 Entrepreneurship-AIMA Hughes PPT 1
63/63
Why some Plans fail ?
Lack of a real plan (particularly regarding goals & objectives)
Inadequate situational analysis There is no point in deciding
where you want to go if you do not know where you are?
and where you have been?
Lack of Goal Clarity and Unrealistic Goals This generallyhappens due to lack of understanding of the situation.
Unexpected competitive moves, product deficiencies, Delay in
Getting Finance, and acts of God.