Entrepreneurship Management

-Prof. Rosie Murray

Entrepreneurship Management (Syllabus)

(A) Entrepreneurial Perspective: Concept of entrepreneur, entrepreneuship and enterprise, advantages, entrepreneur, entrepreneurship. 1. Nature and Development of entrepreneurship; gender issues in entrepreneurship. 2. The dynamic role of small business/ industry in economic development.

Entrepreneurship Management (Syllabus Contd)

3. Personality of an entrepreneur 4. Innovation and entrepreneurship The Entrepreneurial Environment: 1. Policy perspectives in India to promote entrepreneurship 2. Analysis of business opportunities in different sectors of economy at National and Global levels.

Entrepreneurship Management (Syllabus contd)

The Enterprise launching: 1. Product/ Project identification 2. Developing a project report/ business plan 3. Business financing including venture capital finance 4. Managing early growth of a business incubation program 5. New venture expansion- strategies and

Enrepreneurship Management
Text/ Reference books: 1. Entrepreneurship- Robert D. Hisrich/ Michael Peters 2. Beyond Entrepreneurship- James C. Collins/ William Lazier 3. Entrepreneurship Management- P. N. Singh/ J. C. Saboo 4. Dynamics of Entrepreneurial- Vasant Desai

What do you mean by

Entrepreneur
(oxford dictionary): Person who undertakes an enterprise with chances of profit or loss. Enterprise (oxford dictionary): Bold Undertaking Entrepreneur-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 Person Entrepreneurship Process or Philosophy Enterprise 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 undertake 1700: 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)

Joseph A. Schumpeter thus writes, The entrepreneur in an advanced economy is an individual who introduces something new in the economy- a method of production not yet tested by experience in the branch of manufacture concerned, a product with which consumers are not yet familiar, a new source of raw material or of new markets and the like.

Entrepreneurship Theories 1934: Joseph Schumpeter contd)

1934: Joseph Schumpeter contd)

In other words, he states, an entrepreneurs function is to, inform or revolutionise the pattern of production by exploiting an invention or more generally, an untried technological, possibility for producing a new community..

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 PerceptionsEconomists, 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 Theories According to Peter Drucker..

Three conditions have to be fulfilled to be an entrepreneur, namely: 1.Innovation at work. It requires knowledge and ingenuity. It makes great demands on diligence, persistence and commitment. 2.To succeed, innovation must build on the strength. 3.Innovation always has to be close to the market focused on the market, indeed market-driven.

Entrepreneurship Theories
According to Peter Drucker(contd) Accordingly the four source areas where efforts made:1.The unexpected= unexpected success failure event.( Eg. Issac Newton- event). 2.The incongruity: i.e difference between reality and reality as it is assumed to be. 3.Innovation opportunities in three enterprises, namely: Demographics

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 Individual
Self 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 Entrepreneur
Mental 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 entrepreneur

Innovation 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

Entrepreneurs Background and Characteristics

Family environment Education Age Physical attributes Marital status Working history Family contacts Professional contacts Personal values Lifestyle

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 others welfare

Having a concern and taking actions to improve others welfare. Responding positively to employees specific needs. Having a concern for the welfare of employees, their families and society at large.

General Aspect
Political Socio-cultural Technological Legal

Business Environment & Entrepreneurship Elements

Promoters / shareholders values

Economic

Mission / objectives
Management Structure

Entrepreneurship Competitive Aspect

Potential New Entrant Buyers Bargaining Power Suppliers Bargaining Power Substitute Products

Internal Power relationship Physical assets & facilities Co. image/ brand equity Human resources Financial capabilities Technological capabilities Marketing capabilities

Environment
Political: System, Stability, Leadership Socio-cultural: Culture, Community, Values,
Ethics, Attitude

Technological: Education, Absorption,

Competition, Innovation Legal: Regulatory framework, Consumer protection, Concern for environment, Labour laws Economic: GDP, GNP, Resources, Fiscal, Nonfiscal 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 Environment

Socio-cultural factors

Support Systems
Political Environment Legal Environment Technological Environment

Porters Model in the Competitive Environment

BCG Matrix

Political & Governmental Environment

Global
Trade

National
Taxation

Barriers Trade Agreements Tariffs & Duties Political Risks

Regulations Protections (Patents) Govt. spending

State Govt.
Taxation

Local Issues
Taxations

State Laws Licensing /Approvals Incentives

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

Entrepreneurs 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

Technology

Recognized Social Need

Development Phase Concept Testing

Commercial Phase Planning Financing Manufacturing Marketing

Beginning of Technological

Modeling Product Testing

Innovation

Invention / Innovation

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 Evaluate Concept Stage Lab Development Evaluate Product Development Stage - Pilot Production
Evaluation

Test Marketing Stage- Semi Commercial

Production Evaluation Commercial 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 firm

T- High, M-High Large skilled resources,
research

financial backing. Act as a Supplier or Sub Contractor

T- High, M-Low - Specialist firm, access to low cost 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 Students

Enterprises 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
Primary motives Perks and promotion
Time Orientation Short-term meeting quotas and budgets; weekly, monthly, quarterly and the annual planning horizon

Entrepreneurs
Self-employment, satisfaction and money
Short-term business establishment; Long-term growth of business

Intrapreneurs
Creative freedom and recognition
Tend to follow the middle path

Traditional Managers
Activity Delegates and supervises Careful Nil

Entrepreneurs

Intrapreneurs

Direct involvement Direct involvement , not merely delegation Moderate risk taker High Moderate risk taker Nil

Risk Monetary Risk

Status

Concerned about unconcern about status status

Tries to avoid mistakes and surprises Deals with mistakes and failures

unconcerned about traditional status

Attempts to hide risky projects from view until ready

Failure and mistakes

Traditional Managers
Decisions Like to take their own but unable to disagree with top Others Family members worked for large organizations Hierarchy as basic relationship

Entrepreneurs
Follows dream with decisions

Intrapreneurs
Able to get others to agree to help achieve their dreams Self, customers, and sponsors Entrepreneurial small-business, professional Transactions within hierarchy

Who serves Family history

Self and customers Entrepreneurial small-business, professional Transactions and deal-making as basic relationship

Relationship with others