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© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
MAR015-6
Entrepreneurship and Small Business
Management
Lecture 2Entrepreneurial Characteristics
Bedfordshire Business School
University of Bedfordshire
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Entrepreneurship: A Definition
The pursuit of opportunity beyond the resources currently
controlled.
Howard Stevenson (1985) “The Heart of Entrepreneurship”
Harvard Business Review, March-April
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
The Entrepreneur as an individual
“The individual entrepreneur is a person who perceives opportunity, finds the pursuit of opportunity desirable in the context of his or her life situation, and believes that success is possible, and these three elements distinguish the individual entrepreneur from the vast majority of the population.”
Stevenson (as cited in B&D 2nd ed.(1996))
“Entrepreneurship is behaviour rather than personality trait. The entrepreneur always searches for change, responds to it , and exploits it as an opportunity”.
Drucker(1985)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
New Venture CreationFounders
Lead Entrepreneur
Founding Team
Relevant Experience
Education
OpportunityIdea v Opportunity
Now v Later
Risk v Reward
Assessing Fit
Identifying Gaps
BUSINESS PLAN
Acquiring ResourcesFinance / Deal Structure
Recruiting
Utilisation v Ownership
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Different Stages of Enterprise Building
REALIZATION OFOPPORTUNITY
CONSOLIDATION OFRESOURCES
IMPLEMENTATION ANDCREATION OF VENTURE
RUNNING OF AN ENTER-PRISE SUCCESSFULLY
When the entrepreneur scan the environmentand select the product.
After finalization of the product, the entrepreneur needs to consolidate the resources like finance, land,building, machineries, raw materials and otherinfrastructure.
As this stage all the resources are put together andthe entrepreneur starts an enterprise.
The entrepreneur manages the enterprise by looking after production, marketing and administration of the unit.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Entrepreneurial Functions
Accounts & Record Keeping
Money Management
Selling
Marketing Management
Costing & Pricing
Production
Establishmentof the Unit
Procurement of Finance, LandBuilding & Machinery
Applying for Loans
Business PlanPreparation
Resource Mobilisation
Market Survey &Feasibility Study
Selection of Product
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Entrepreneurial Skills
High Capacity to:Tolerate uncertainty
Build a team
Provide leadership
Deal with failure
Seek and use feedback
Persist at problem solving
Take a long-term view
Not look back (except to learn)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Entrepreneurial Characteristics• Sees and acts on opportunity• Initiative• Persistence• Information seeking• Systematic planning• Concern for quality and innovation• Goal Setting• Influencing and networking• Risk taking• Problem-solving• Self-confidence
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Sees and Acts on Opportunities
• Sees and acts on new or unusual business opportunities.
• Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Initiatives
• Does things before being asked or forced to by events.
• Takes action that goes beyond job requirements or the demands of the situation.
• Acts to extend the business into new areas, products or services.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Persistence
• Takes repeated actions to meet a challenge or overcome an obstacle.
• Switches to an alternative strategy to reach a goal.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Information Seeking
• Takes action on own to get information to help achieve objectives or clarify problems.
• Personally seeks information about clients, suppliers, competitors.
• Uses personal and business contacts or information network to obtain useful information.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Systematic Planning
• Develops and uses logical, step-by-step plans to reach goals.
• Plans by breaking a large task down into sub-tasks.
• Keeps financial records and uses them to make business decisions.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Concern for Quality, Innovation and Efficiency
• Looks for or finds ways to do things better, faster or cheaper.
• Acts to do things that meet or extend standards of excellence or improve on past performance.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Goal Setting
• Articulates long range vision and goals.• Continuously sets and revises short range
objectives.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Persuasion
• Uses deliberate strategies to influence or persuade others.
• Uses business and personal contacts or agents to accomplish objectives.
• Asserts strong confidence in one’s own companys’ or organizations’ products or services.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Persuasion and Influencing Strategies
• Uses deliberate strategies to influence or persuade others.
• Uses business and personal contacts or agents to accomplish objectives.
• Asserts strong confidence in one’s own products or services.
• Uses a variety or strategies to influence or persuade others to accomplish own objectives.
• Acts to develop business contracts.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Commitment to Work Contract
• Places the highest priority on getting a job completed.
• Accepts full responsibility for problems in completing a job.
• Makes a personal sacrifice or expends extraordinary effort to complete a job.
• Pitches in with workers or work in their place to get a job done.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Risk Taking
• States a preference for situations involving a challenge or moderate risk.
• Deliberately calculates risks.• Takes action to reduce risks or control
outcomes.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Problem-Solving
• Generates new and potentially unique ideas or innovative solutions to reach goals.
• Switches to an alternative strategy to reach a goal.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Self-Confidence
• Has a strong belief in one’s own abilities.• Sticks with own judgements in the face of
opposition or early lack of success.• Expresses confidence in one’s own ability to
complete a difficult task or meet a challenge.
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Six Dimensions of Entrepreneurship
• Strategic Orientation
• Commitment to Opportunity
• Commitment of Resources
• Control of Resources
• Management Structure
• Reward Philosophy (Stevenson,
2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Strategic Orientation
Entrepreneurial
- Diminishing opportunity streams
- Rapid changes in - technology, consumer economics, social values, and political roles
Administrative
- The social contract
- Performance criteria
- Planning systems and cycles (Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Commitment to OpportunityEntrepreneurial
- Action orientation
- Short decision windows
- Risk management
- Limited decision constituencies
Administrative
- Negotiation of strategy
- Management of fit
- Risk reduction
- Multiple decision constituencies(Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Commitment of ResourcesEntrepreneurial
- Lack of predictable resource needs
- Lack of long-term control
- Social needs
- International demands
Administrative
- Personal risk reduction
- Incentive compensation
- Managerial turnover
- Capital allocation & formal planning systems (Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Control of ResourcesEntrepreneurial
- Increased resource specialization
- Risk of obsolescence
- Increased flexibility
Administrative
- Power, status and financial rewards
- Co-ordination
- Efficiency
- Inertia and cost of change
- Industry structures(Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Management Structure
Entrepreneurial
- Need for coordination of key resources
- Flexibility
- Challenge to owner’s control
- Employees’ desire for independence
Administrative
- Need for clearly defined authority and control
- Organizational culture
- Reward systems(Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Reward Philosophy
Entrepreneurial
- Individual expectations
- Investor demands
- Competition
Administrative
- Social norms
- Impacted information
- Demands of public shareholders(Stevenson, 2000)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Commitment and Determination
• Tenacity and decisiveness• Able to commit/decommit quickly• Discipline• Persistence in solving problems• Willingness to undertake personal sacrifice• Total immersion
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Leadership
• Self-starter• High standards but not perfectionist• Team builder and hero maker; inspire others • Treat others as you want to be treated• Sharing of wealth• Integrity and reliability; builder of trust• Not a lone wolf• Superior learner and teacher• Patience and urgency
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Opportunity Obsession
• Having intimate knowledge of customers’ needs• Market driven• Obsessed with value creation and enhancement
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Tolerance of Risk, Ambiguity and Uncertainty
• Calculated risk taker• Risk minimiser• Risk sharer• Manages paradoxes and contradictions• Tolerance of stress and conflict• Ability to resolve problems and integrate
solutions
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Creativity, Self-Reliance and Adaptability• Non-conventional, open-minded• Lateral thinker• Restlessness with status quo• Ability to adapt and change• Creative problem solver• Ability to learn quickly• Lack of fear of failure• Ability to conceptualize and ‘sweat details’
(helicopter mind)
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Motivation to Excel
• Goal and results orientation• High but realistic goals• Drive to achieve and grow• Low need for status and power• Interpersonally supporting (vs. competitive)• Aware of weaknesses and strengths• Having perspective and sense of humour
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
Social learning (cont.)• …and behaviours that are non-entrepreneurial by
definition (NB relationship to de Vries)– Invulnerability– Being macho– Dominating– Impulsive– Outer control– Perfectionist– Know-it-all– Counter dependency
Unnecessary risk takingIrrational battling to prove oneselfNot listening to advisersRefusal to analyseRefusal of personal responsibilityParalysis, missing opportunityTurning people & teams off; de-motivating
© 2008 – 09 M. A. Roomi, University of Bedfordshire, UK
From tiny acorns,
mighty oaks do grow….