8/7/2019 MBA 4 sem 20071

1/70

16th CenturyAppeared in French Language.Referred as- who organized & lead Military expedition.

17 CenturyUsed to refer the economic activity.

18th CenturyRichard Cantillon described as someone who undertakes a

business venture with no guarantee of profits.

19th Century

Entrepreneurship: Century which include actions and specialskills were required for entrepreneurs.

8/7/2019 MBA 4 sem 20071

2/70

Person who make a significant difference

Creative & InnovativeSpot & Exploit opportunities.

Find resources & competencies required to exploit

opportunities

Good Team builders & Networker.

Determined in the face of adversity & competition

Manage change & risk

An Entrepreneur is a person who organizes and manages abusiness undertaking, assuming the risk for the sake of profit.

8/7/2019 MBA 4 sem 20071

3/70

Creativity

Problem solving skills

Decision taking ability

Selling & Marketing their ideas

Find resources required to exploit

opportunities

8/7/2019 MBA 4 sem 20071

4/70

COMMON ELEMENTS OF ENTREPRENEURSHIP

Creativity and Innovation

Resource Gathering & the founding of an economic

organization

Chance for gain under risk & uncertainty

ENTREPRENEURSHIP

Creation of an innovative economic organisation for thepurpose of gain or growth under conditions of risk anduncertainty

8/7/2019 MBA 4 sem 20071

5/70

Entrepreneur Entrepreneurship Enterprise

Person Process of Action Object

Entrepreneurship is the process of creating value by pullingtogether a unique package of resources to exploit anopportunity"

8/7/2019 MBA 4 sem 20071

6/70

8/7/2019 MBA 4 sem 20071

7/70

CreativityGetting Ideas

InnovationImplementing

Ideas

EntrepreneurshipHuman & Organizational

Processes

By

Distinction between Creativity, Innovation &

Entrepreneurship

8/7/2019 MBA 4 sem 20071

8/70

IDENTIFY THE ENTREPRENEUR

State their:

Business & Qualities

(apart from Leadership)

Think out of box

Keeping in mind, the concept of

Entrepreneurship

8/7/2019 MBA 4 sem 20071

9/70

8/7/2019 MBA 4 sem 20071

10/70

Subhash Chandra's

Dhirubhai AmbaniK.P. SinghSubroto Roy

Kiran Mazumdar Shaw

Sabeer bhatia Mukesh Ambani

Shahnaz Hussain

Sarath Babu

8/7/2019 MBA 4 sem 20071

11/70

ENTREPRENEUR CHARACTERISTICS

Drive

Leader

Competitive

Innovative skills

Vision

Motivation

Self-confidence

Results orientated

Risk taker

8/7/2019 MBA 4 sem 20071

12/70

8/7/2019 MBA 4 sem 20071

13/70

Capacity and willingness to assume risk

Willingness to hard work

Vision and foresightedness

Creative and imaginative thinking

Innovative and willingness to change

ENTREPRENEUR FEATURES

8/7/2019 MBA 4 sem 20071

14/70

8/7/2019 MBA 4 sem 20071

15/70

66% of66% of entrepreneursentrepreneurs claim they were inspiredclaim they were inspiredby innate (intrinsic)by innate (intrinsic) desire,desire,

notnot educationeducation oror trainingtraining

8/7/2019 MBA 4 sem 20071

16/70

20-35- The agegroup showing thehighest rate of

entrepreneurialactivity.

Surprisingly,36-64 age group haslower rate

8/7/2019 MBA 4 sem 20071

17/70

39 average age of U.S. born entrepreneurs whenthey founded their companies

8/7/2019 MBA 4 sem 20071

18/70

50% of50% of allall U.S.U.S. businessesbusinesses areare home basedhome based

8/7/2019 MBA 4 sem 20071

19/70

8/7/2019 MBA 4 sem 20071

20/70

8% of8% of AmericanAmerican entrepreneurs added employeesentrepreneurs added employees

overover the pastthe past yearyear

8/7/2019 MBA 4 sem 20071

21/70

8%

of home businesses haverevenues of $500,000or more

35%have revenues of $125,000or more

8/7/2019 MBA 4 sem 20071

22/70

TYPES OF ENTREPRENEUR

INNOVATIVEEntrepreneur

ADOPTIVEEntrepreneur

FABIANEntrepreneur

DRONEEntrepreneur

8/7/2019 MBA 4 sem 20071

23/70

INNOVATIVE ENTREPRENEUR

Sense the opportunities for

Introduction of New Ideas,

New Technology of production

Opening of New Markets.

Launches new products,discovers new markets,establishes new methodsof production andrestructures the enterprise.

Can work only whendefinite level of progresshas been previously

accomplished.

They focus on revolutionand development.

8/7/2019 MBA 4 sem 20071

24/70

ADOPTIVE ENTREPRENEUR

Instead of Innovating, Imitate

Technology

Methods innovated by others

Imitate the existing entrepreneur & setup their enterprise inthe same manner

Adopt victorious innovations launched by theinnovative entrepreneurs.

Duplicate the technology and techniques innovatedby others.

Suitable for underdeveloped countries.

8/7/2019 MBA 4 sem 20071

25/70

FABIAN ENTREPRENEUR

Adopt new technology when-

Realize that failure to adopt will lead to loss or collapse of

the enterprise

Always cautious. They neither introduce new changes noradopt new methods invented by others. They are lazy. Theyfollow old customs, old method of production, techniques.

They are not adaptable to the changing environment

Show by great caution and disbelief inexperimenting any change in the organization.

They imitate only in situations where it becomesnecessary to do so.

8/7/2019 MBA 4 sem 20071

26/70

DRONE ENTREPRENEUR

Refuse to adopt changes-

They are laggards.

Continue to operate in their tradition way & resist changes.

They are Conservative or Orthodox in outlook.who never allow any change in their production & style offunctioning. They never explore anything. They are alsocalled Laggards. They are pushed out of market whenproduct loses its marketability

Drone Entrepreneurs suffer losses, as they refuse tomake any modifications in the existing productionmethods.

8/7/2019 MBA 4 sem 20071

27/70

Mid-80s, Gifford Pinchot coined the term "Intrapreneur" todescribe employees of large corporations hired to think and

act as entrepreneurs.

Intrapreneurs, by definition, symbolizes the samecharacteristics as the ENTREPRENEUR.

These characteristics might include conviction, passion,

and drive. If the company is supportive, the Intrapreneursucceeds.

Intrapreneur should ask for permission before attempting

to create a desired future in practice

INTRAPRENEUR

8/7/2019 MBA 4 sem 20071

28/70

Intrapreneur works overtime helping to run someone else's

business, for the company's future.

Person within a large corporation who takes direct

responsibility for turning an idea into a profitable finished

product

Anyone who behaves with entrepreneurial spirit within a

large organization

INTRAPRENEUR

8/7/2019 MBA 4 sem 20071

29/70

Intrapreneurship refers to employee initiatives in

organizations to undertake something new, without being

asked to do so.Intrapreneurship involves using entrepreneurial behaviour

within an organisation and a different but overlapping skills

set is required

INTRAPRENEURSHIP

8/7/2019 MBA 4 sem 20071

30/70

8/7/2019 MBA 4 sem 20071

31/70

.

COMPANYENTREPRENEU

RINTRAPRENEUR

IDEA Mr. KumarMangalam Birla

Mr. Sanjeev Aga

STARTV Mr. Richard Li Mr. Peter Mukherjea

Star

Entertainment under Sameer Nair as the CEO

TATARatan Naval Tata

Chairman

R Gopalakrishnan,Ishaat Hussain,

Kishor Chaukar &Arunkumar Gandhi

VODAFONE John Bond

Vittorio Colao (CEO)John Buchanan

(Deputy Chairman)Andy Halford

8/7/2019 MBA 4 sem 20071

32/70

ENTREPRENEUR

Person Organizer Risk Taker

Innovator Good Planner Leader Decision-Maker Visualizer Administrator Initiator

ENTREPRENEURSHIP

Process Organized form of Initiative Risk-taking activity

Process of Innovation Planning for successful

performance Crux of Leadership Decision making activity

Vision Administration Taking Initiative

8/7/2019 MBA 4 sem 20071

33/70

ENTREPRENEUR INTRAPRENEUR

Entrepreneur is employer Intrapreneur is employee

Independent in operation Depends on the organization toimplement his ideas

Bears all the risk involved inEnterprise

Does not bear all the risk

Exhibits higher need forachievement.

May not have high needachievement

Profit is the rewardAttractive salary, promotion &incentives are the reward

May not have formalqualification

Should have some professionalor technical qualification.

Do not have any boundary for

operations.

He has to operate within the

organisational policies

8/7/2019 MBA 4 sem 20071

34/70

ENTREPRENUERS & ECONOMIC DEVELOPMENT

OPTIMUM UTILISATION OF RESOURCES

GENERATION OF EMPLOYMENT

IMPROVEMENT IN STANDARD OF LIVING OF PEOPLE

NEW/ IMPROVED GOODS & SERVICES

HELP AGRI SECTOR

PROMOTE INTERNATIONAL TRADE

HELP COMMUNITY AT LARGE

8/7/2019 MBA 4 sem 20071

35/70

The Tata Group has donated a Rs 220 crores ($50

million) to the prestigious Harvard Business

School (HBS) to build an academic and a residential

building on the institutes campus in Boston.

New building will be called the Tata Hall and used

for the institutes executive education programmes.

Amount is the largest from an international donor in

Harvards 102-year-old existence.

Employees 396,517 (2009-10)

EXAMPLE

8/7/2019 MBA 4 sem 20071

36/70

ENTREPRENEURIAL CULTURE

Entrepreneurial culture implies a set of

VALUES (Principles, ethics, ideals, morals),

NORMS (Standard, rule)TRAITS (Character, personality, behavior, individuality,

persona, qualities)

that are conducive to the growth of entrepreneurship.

8/7/2019 MBA 4 sem 20071

37/70

Entrepreneurs often start their business because they wantto do things in their own way, and creating theentrepreneurial culture is their opportunity to see thateveryone does it their own way.

The entrepreneurs communicate what they believe isimportant for the organization to be doing.

This communication can be face to face, or can take place

in meetings, employee news letters, or in other writtenforms.

ENTREPRENEURIAL CULTURE

8/7/2019 MBA 4 sem 20071

38/70

Entrepreneurial culture is different from the culture of

traditional large organizations.

It is future oriented and emphasizes new ideas, creativity, risk

taking, and opportunity identification.

People feel empowered to manage their own jobs and time.

Everyone can make a contribution to the firms success, and

the common worker is a hero.

Communication is frequently horizontal and bottom up- while

the worker servers the customer , the manager servers the

worker.

ENTREPRENEURIAL CULTURE

8/7/2019 MBA 4 sem 20071

39/70

Dimension Traditional Org Entrepreneurial Org

Strategy Conservative Evolving, Futuristic

Productivity

Short-term Focus,Profitability

Short & long term,

Multiple Criteria

Risk PunishedEmphasize &Rewarded

Opportunity Absent Integral

Leadership Top-DownCulture ofempowerment

Power Hoarded Given away

Failure Costly Taken as a Lesson

Decision Making Centralized Decentralized

Structured Hierarchical Organic

Creativity Tolerated Prized & Worshiped

8/7/2019 MBA 4 sem 20071

40/70

8/7/2019 MBA 4 sem 20071

41/70

Create jobs through the formation of new business ventures.

Utilize available manpower and resources that might have

remain idle and put them into productive use.

Create wealth, independence and status.

Stimulates growth in sectors with increase in D & S.

Increases productivity by means of innovation.

Facilitate and increase the need for technology.

8/7/2019 MBA 4 sem 20071

42/70

An entrepreneurial team consists of two or more personswho have an interest, both financial and otherwise, in andcommitment to the ventures future and success; whose workis interdependent in the pursuit of common goals and venturesuccess; who are accountable to the entrepreneurial team

and for the venture; who are considered to be at theexecutive level with executive responsibility in the earlyphases of the venture, including funding and pre-start up.

ENTREPRENEURIAL TEAM

Entrepreneurial team - A group of experienced people from

different areas of business who join to form a managerialteam with the skills to develop, make and market a newproduct.

8/7/2019 MBA 4 sem 20071

43/70

It means a group of people working together to pursue acommon goal. They have a stake in the venture. Theywant it to be successful and share its success as wellas failure.

The choice of organizational structure, legal form ofbusiness and entrepreneurial team depends on verycomplex conditions

These conditions are separated into two parts:

one related to human aspect and the other is legalorganizational form

ENTREPRENEURIAL TEAM

8/7/2019 MBA 4 sem 20071

44/70

A solid team attracts venture capital

Team can mitigate the pressures

To take the venture beyond founders abilities

Their skills can complement and give edge to the venture

Why team is important?

8/7/2019 MBA 4 sem 20071

45/70

Identify the requirement of your venture

Search for skilled human resource

Chalk out their responsibilities clearly

Make them aware of the goal they have to accomplish

Instill the sense of belongingness and team mentality

Identify and maintain an awareness of environmental

influences, demands and changes

HOW TO FORM A TEAM?

8/7/2019 MBA 4 sem 20071

46/70

ET DEPENDS ON 4 COGNITIVE STYLES

Initiation Style- Concerned with possibilities, pattern & ideas

Feeling Style- Focused on people & values.

Thinking Style- Interest in cause & affect relationship

Sensation- Concerned with activities.

8/7/2019 MBA 4 sem 20071

47/70

Entrepreneur is one who perceives the opportunities toinnovate, i.e. to carry out new combinations or enterprise.In his views, the concept of new combination leading toinnovation covers the following 5 cases

The introduction of new goods, that is the one with whichconsumers are not yet familiar, of a new quality.

Introduction of new method of productionOpening of new market

Conquest of new source of supply of raw materialCarrying out of new organization

ECONOMIC THEORY

8/7/2019 MBA 4 sem 20071

48/70

Entrepreneurship is likely to get a boost in a particular

social culture

Society's values, religious beliefs, customs, influence the

behaviour of individuals in a society

Entrepreneur is a role performer according to the role

expectation by the society

SOCIOLOGICAL THEORY

8/7/2019 MBA 4 sem 20071

49/70

Entrepreneurship gets a boost when society has sufficientsupply of individuals with necessary psychologicalcharacteristics

Psychological characteristics include need for highachievement, a vision or foresight, ability to face opposition

Characteristics are formed during the individuals

upbringing which stress on standards of excellence, selfreliance and low father dominance

PSYCHOLOGICAL THEORY

8/7/2019 MBA 4 sem 20071

50/70

MOTIVATION THEORY

Motivation theory by McClelland (Acquired Needs theory)

According to McClelland, a person has three types of needsat any given time, which are:

Need for achievement (get success with ones own efforts)Need for power (to dominate, influence others)Need for affiliation (maintain friendly relations with others)

Need for achievement is the highest for entrepreneurs

8/7/2019 MBA 4 sem 20071

51/70

8/7/2019 MBA 4 sem 20071

52/70

EntrepreneurshipEntrepreneurship

Advantages

You areyour own

boss

Enjoy theprofits

from youefforts

Sense ofpride in

yourbusiness

Flexibilityin your

workschedule

8/7/2019 MBA 4 sem 20071

53/70

EntrepreneurshipEntrepreneurship

Some Disadvantages

Will need toput in long

hours

Needmoney to

start

Have tokeep up

withgovernment

rules andregulations

May have tomark harddecisions(hiring,

firing, etc.)

May losemoney

8/7/2019 MBA 4 sem 20071

54/70

Project is a temporary endeavor undertaken toproduce a unique product or service

Temporary Unique

PROJECT

Temporary Definitive beginning and end

Unique New undertaking, unfamiliar ground

CHARACTERISTICS

8/7/2019 MBA 4 sem 20071

55/70

Project management is the discipline of planning,organizing and managing resources to bring about thesuccessful completion of specific project goals andobjectives.

Project Management is the application of skills,knowledge, tools and techniques to meet the needs andexpectations for a project.

The purpose of project management is prediction andprevention, NOT recognition and reaction

PROJECT MANAGEMENT

8/7/2019 MBA 4 sem 20071

56/70

To ensure projects are delivered on time.

To ensure projects are delivered within schedule

commitment.

Continuous improvement in project process.

Implement project communication & Deliver Quality

solutions.

Reduced error.

Improve Effectiveness.

Appropriate Risk Management and Internal controls.

OBJECTIVE OF PROJECT MANAGEMENT

8/7/2019 MBA 4 sem 20071

57/70

SCOPESCOPE

TIMETIME

COSTCOST

TRIPLECONTRAINT

QUALITY

8/7/2019 MBA 4 sem 20071

58/70

INTERNAL FACTORS

Cost

Experience

Financial strength

Functional departments

EXTERNAL FACTORS

Demand of consumers

Competition

Suppliers

HOW TO CHOOSE A PROJECT

8/7/2019 MBA 4 sem 20071

59/70

8/7/2019 MBA 4 sem 20071

60/70

Aim to objectively and rationally uncover the

STRENGTHS

WEAKNESSES

THREATS

FEASIBILITY STUDY

TWO criteria to judge feasibility

are cost required and value to be attained

8/7/2019 MBA 4 sem 20071

61/70

It provides the knowledge, conviction and specific

operational insights into the viability of a project, in terms of

market, financial, technical and other perspectives.

Provides the basis for developing the concept into a

business plan and subsequent start-up.

Feasibility study document acts as a reference for support

agencies, grant aiding authorities, potential partners,

business associates and lending institutions, as a basis for

generating interest and commitment for the proposed

business

FEASIBILITY STUDY INCLUDES

8/7/2019 MBA 4 sem 20071

62/70

8/7/2019 MBA 4 sem 20071

63/70

TECHNICAL ANALYSIS

Product

Manufacturing Process

Plant size and production schedule

Machinery (major, and auxiliary as transport, materials)

Plant location

Plant Layout

StructuresRaw Materials

Utilities

8/7/2019 MBA 4 sem 20071

64/70

Involving market analysis of market conditions which

affect product, price, promotion, place (distribution) and

packaging.

It also examines market trends relative to past, present,

and future supply and demand issues regarding the

product/service, including a review of industry trends, targetmarkets, competitors, and other industry players.

MARKET ANALYSIS

8/7/2019 MBA 4 sem 20071

65/70

Present and expected marketing practices of competitors,

Proposed marketing program (4Ps) for the project,

Explanation for any material deviations, covering

a. Terms of sale (cash, 30 days, etc)

b. Channels of distribution, regional location of sales

outlets, and transportation and warehousing

c. Promotions

d. Packaging

MARKETING ANALYSIS

8/7/2019 MBA 4 sem 20071

66/70

FINANCIAL ANALYSIS

With emphasis placed on the provision of financial

statements, so that the project can be evaluated in terms

of various of commercial profitability and the magnitude of

finance required

8/7/2019 MBA 4 sem 20071

67/70

1. Sources of financing for the project

a. Sources selected, for both long term and short-termfinancing

b. Alternative sources considered and factors used in

determining the selected sources2. Amount and terms of financing for each sourceselected

a. Type of financing (capital stock, loan, etc)b. Currency of financing

c. Amountd. Security (as guarantee)e. Repayment periodf. Interest or dividend rate

FINANCIAL ANALYSIS

8/7/2019 MBA 4 sem 20071

68/70

3. Status of the financing from each sourcea. Actual releases already made- amounts and datesb. Applications already approved, but correspondingfunds not yet released - assurance of release of funds,and expected date

4. Financing of contingencies and seasonal peaks inworking capitala. Contingencies- provision made for the financing ofcontingencies, as overruns in construction costs or delayin start of normal operations

b. Seasonal peaks in working capital- provisions madefor the financing of seasonal increases in working capital

FINANCIAL ANALYSIS

8/7/2019 MBA 4 sem 20071

69/70

Income tax rates

Tarriff rates

Tax exemptions to be enjoyed by the project

Foreign exchange rate

General price levels

FINANCIAL ANALYSIS

Major assumptions used

8/7/2019 MBA 4 sem 20071

70/70

FINANCIAL ANALYSIS

Projected Financial Statements consists of

a. Projected income statement

b. Projected cash flow statement

c. Projected balance sheet

a. Break-even point1. Profit break-even point- volume and selling price2. Cash break-even point- volume and selling price3. Debt service sales volume

b. Capital, recovery and earnings.1. Cash pay off period2. Rate of returns