Post on 26-Jan-2017
Entrepreneurship Management
- Prof. J.C. Saboo
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 EnterprisePerson 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 Theories1600: 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- Intrapreneur1985: 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 processThe devotion of time and effortsThe assumption of risksRewards of independence, satisfaction, money.
To an IndividualSelf EmploymentEmployment for near & dearProlonged career for next generationsFreedom to use own ideas - Innovation and creativityUnlimited income / higher retained incomeIndependenceSatisfaction
To the NationProvides larger employmentResults in wider distribution of wealthMobilizes local resources, skills and savingsAccelerates the pace of economic developmentStimulates innovation & efficiency
Factors favouring Entrepreneurship
Growth of education- science, technology & managementDeveloped infrastructure facilitiesFinancial assistanceTraining facilitiesProtective and promotional policiesGlobalization
Think of numerous other factors?
What makes a Successful Entrepreneur?
The urge for achievementDetermination to winWin-Win PersonalityWillingness to take moderate risksAbility to identify & explore opportunitiesAnalytical ability to take strategic decisions
PerseveranceFlexibilityCapacity to plan and organizePreparedness to undergo physical and emotional stressPositive self conceptFuture orientation: VisionEthics and Values :Mission
Who can be an Entrepreneur?Who can take moderate risksWho has ability to work hard Who can capitalize on opportunitiesWho has some financial strengthWho feels the need for achievementWho has desire for responsibilityWho has perception of probability of successWho gets stimulation by feedbackWho possess skills in organizingWho can be male or femaleWho may not have previous experience
Characteristics of an Entrepreneur
Mental abilityClear objectivesBusiness secrecyH.R. abilityCommunication abilityTechnical knowledgeAchievement-orientedPerseveranceEthical
MotivatorSelf-confidentLong term involvementHigh energy levelProblem solverInitiatorGoal setterRisk taker
Key elements of entrepreneurInnovation Vision Ethics & ValuesOrganizing SkillsRisk takingNeed 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 PersonalityFeelings about ControlFeelings about IndependenceWillingness to take Risks
What is a job competency?It is knowledge, skills and attitudeKnowledge – 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
EnvironmentPolitical: 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 SectoralPEETS – Political, Economic, Ecological, Technological and Socio-demographicalSLEPT – Social, Legal, Economical, Political and Technological
Factors Influencing Entrepreneurship
Individual
EconomicEnvironment
Socio-culturalfactors
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 EnterprisesEntrepreneurs combines resources, put their time and efforts and produce goods or servicesWhat they contribute – productivity, output, value addition, income and employmentEntrepreneurship is a “Low Cost Strategy”. Entrepreneurs perform the crucial role themselvesThe spirit of Entrepreneurship – Drive, achieving higher goals, creativity, innovative attitude.A dynamic society emerges and the spirit spreads like a chain reaction.
The Invention ProcessMarket Need
Technology observation
Need Analysis
Parameter Identification
Creative Synthesis
Realization
Invention, which meets the need
Product Evolution ProcessFundamentals
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 ProcessIntersection of Knowledge and a recognized social needInitiation of technological innovationIterative SynthesisDevelopment PhaseIndustrial 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
CommercializationRole of GovernmentRole of Corporate – IntrapreneurshipRole of Individuals – Entrepreneurship
Development of Technology– Utilization of materials– Exploitation & transformation of energy– Understanding and application of Scientific
PrinciplesThe 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 –ContractorT- High, M-Low - Specialist firm, access to low cost researchT-Low, M-High – Linkage with well-established channelsT-Low, M- Low – Well Suited to small firmLow Tech – High Volume Financial AbilityHigh Tech – Low VolumeStrategic AbilityEmerging 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 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
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