Dr P Alekhya

Entrepreneurship

-----Dr P Alekhya

Dr P Alekhya, Associate Professor, MBA, CMRCET

Course Outcomes of Entrepreneurship

• Identify the Qualities, requirements, Risk & Ethical issues tobecome an Entrepreneur.

• Analyze and develop the conceptualization of corporateEntrepreneurship.

• Explore different possibilities to start an Enterprise for youngEntrepreneurs.

• Outline challenging benchmarks for formulation ofEntrepreneurship.

• Evaluate the application of Strategic action for growingventures.


Unit-I

Entrepreneurial Mind set Entrepreneur• Definition• Characteristics of an Entrepreneur Entrepreneurship Understanding Entrepreneurial Mindset The Revolution Impact of entrepreneurship The Evolution of Entrepreneurship Functions of Entrepreneurship• Importance of Entrepreneurs• Factors Influencing Entrepreneurship• Qualities of Entrepreneurship Types of Entrepreneurs Approaches to Entrepreneurship Role of Entrepreneurship in Economic Development Twenty first century trends in entrepreneurship


DEFINITION,NATURE AND CHARACTERISTICS

OF AN ENTREPRENEUR

• HISTORY:

The word ‘entrepreneur' is derived from the French word

‘entreprendre’which means ‘to undertake’. In the early 16th

century the French men who organised and led military

expeditions were referred to as ‘entrepreneur'. After 1700,the

term was applied to other types of adventures, mainly civil

engineering like constructions of roads etc.


Entrepreneurship – Meaning and Concept

• German word ‘uternehmen’ referring to individuals who

undertakes an ‘endeavor’.

• Hence, anyone who exhibits the characteristics of self-

development, creativity, self-decision making and risk

taking.

• According to oxford dictionary Entrepreneur is ‘one who

organizes and manages enterprise involving high risk’.

But researches indicates that entrepreneurs need not

necessarily be high risk takers, however, they reduce risk

and increase likelihood of success.


Entrepreneur – Different Perspective-Nature

• An Economist defines an entrepreneur as one

who brings resources, labour, material and other

assets in to combinations that make their value

greater than before and also one who introduces

changes, innovations and a new order.

• A Psychologist defines an entrepreneur as a person

who is typically driven by a psychological force,

which create a desire to obtain or attain

something.

• As per sociologist a person whose actions would

determine social status & contribute to societal

dev.

• As per Management expert a person who has a

vision and generates action plan to achieve it.Dr P Alekhya, Associate Professor, MBA, CMRCET

Concept - Changing Definition

Richard Cantillon (1755)

• Entrepreneur is a person bearing risk.

• First person to recognize the role of entrepreneur in

economy as a economic function than social function.

• Stated farmer as a entrepreneur, who promises to pay

fixed sum of money to landowner, with out assurance of

the profit he will drive.

• Function of entrepreneur and not his personality


2. Jean Baptiste Say (1800)

• An Agent combining all factors of production.

• Special personal qualities

• Unlike, Cantillon, Say did not emphasize

uncertainty in his definition.

• Analyzed central function of the entrepreneur

independent of any other social framework


3. Frank Knight (1921)

• Recipient of pure profits. Pure profit is bearing the

cost of uncertainty.

• Discusses uncertainty and risk.

• Involves primary and secondary part :

Primary problem or function is deciding what

to do and how to do

Doing things and actual execution of activity,

becomes in real sense a secondary part.


4. Max Weber (1930)

• Innovator with unusual will and energy, charity of vision

and ability to act.

5. Joseph Schumpter (1934) • Ability to identify new opportunities

• Bearer of the mechanism of change the economy

6. Kirzner (1973)• Contributes to movement toward equilibrium by

pursuing opportunities.

• Understanding human actions as active and creative

rather than passive, automatic & mechanical.


7. Bygrave and Hofer (1991)

As a process involves all functions, activities and actions

associated with the perceiving of opportunities and the

creation of organizations to pursue them.

8. Recent Trends• Societal and environmental issues

• As per Global Entrepreneurship Monitor (2005) more mgt

qualified and young achievers likely to be into

entrepreneurship in comparison to 1998 findings.

• EDP , Institutes, financing, CVF, separate discipline,

institutes, profession

• Quality, Service, IT as resource, sustainable, strategist,

moderate risk, collaborative relationship


The Concept of Entrepreneurship

Entrepreneur Entrepreneurship Enterprise

Person Process of action Object


CHARACTERISTICS OF AN

ENTREPRENEUR

1. Calculated Risk-taker

2. Innovator

3. Organiser

4. Creative

5. Achievement Motivated

6. Technically Competent

7. Self-confident

8. Socially Responsible

9. Optimistic

10. Equipped with Capability to drive


11. Blessed with Mental Ability

12. Human Relations Ability

13. Communication Ability

14. Decision-Making

15. Business Planning

16. A venture Capitalist

17. Visionary

18. Entrepreneur make significant differences

19. Ability to Spot and Exploit Opportunities

20. Courage to Face Adversities

21. Leadership---An essential trait of the entrepreneur


Nature of Entrepreneurship

Innovation the essence of entrepreneurship

Economic Activity

Creation of Value

Risk bearing

Dynamic Process

Special Skills and Leadership

Human Relations


MANAGER VERSUS LEADER

Manager Characteristics

• Administers

• A copy

• Maintain

• Focus and systems and structure

• Relies on control

• Short-range view

• Asks how and when

• Eye on the bottomline

• Imitates

• Accepts the status quo

• Classic good soldier

• Does things right

Leader Characteristics

• Innovates

• An original

• Develops

• Focuses on people

• Inspires trust

• Long-range perspective

• Asks what and why

• Eye on the horizon

• Originates

• Challenges the status quo

• Own person

• Does the right thingDr P Alekhya, Associate Professor, MBA, CMRCET

WORKING PROFILE OF ENTREPRENEUR

Characteristics

• Self-confidence

• Drive

• Task-result oriented

• Risk-taker

• Mental Ability

• Leadership

Traits• Confidence, Independence,

Optimism, Individuality.

• Responsibility,Vigour, Initiative, persistence, Ambition.

• Need for achievement, Profit-oriented, Energy.

• Risk taking ability, Likes challenges.

• Overall intelligence(IQ),Creative thinking, Analytical thinking ability.

• Leadership behaviour, Gets alongwith others, Responsive to situations, Criticism.


• Human Relations Ability

• Originality

•Communication Ability

• Emotional stability, Healthy personal

relations, Sociability, Tactfulness,

Consideration.

•Innovative, Creative, Resourceful,

knowledge.

•Perceptive, Foresight, Future oriented.


Understanding Entrepreneurial Mind-set

Perseverance

Flexibility

High Internal locus of control

Learning and iteration

Curiosity

Optimism


The Revolution Impact of Entrepreneurship

Entrepreneurship: A Mind-set

Small-Business

Owners: A distinction

Challenging the

Unknown


The Evolution of Entrepreneurship

• EARLY PERIOD

• MIDDLE AGES

• 17th CENTURY

• 18th CENTURY

• 19th CENTURY

• 20th CENTURY

• 21stCENTURY


Functions of Entrepreneurship

Planning of the Project

Management

To Face Risks

Distribution of Rewards

Sale of Products

Scale of Production

Joint stock Organisation


Importance of Entrepreneurs

Formation of Capital

Balanced Regional Development

Generates Employment

Improvement of per capita Income

Improvement of standard of living

National Self-reliance

Planning Production

Backward and Forward linkages

Dispersal by economic Power


Factors Influencing entrepreneurship

Psychological Factors

• Need for Achievement

• Personal Motives

• Recognition

• Need of Authority

Cultural Factors

• Culture

• Religious Belief

• Minority groups

• Spirit of CapitalismDr P Alekhya, Associate Professor, MBA, CMRCET


Social Factors• Legitimacy of Entrepreneurship

• Social Marginality

• Family, Role Models and Association with similar type of Individuals

• Caste System

• Occupation

• Education and Technical Qualifications

• Social status

• Social Responsibility


Economic Factors• Infrastructural Facilities

• Financial Resources

• Availability of material and Know-How

• Labour Conditions

• Market

• Support System

• Government policy

Personality Factors

• Personality

• Independence

• Compulsion



Qualities of EntrepreneurshipDisciplined

Confidence

Open Minded

Self Starter

Competitive

Creativity

Determination

Strong People Skills

Strong work ethic

Passion


Role of Entrepreneurship

Promotes Capital Formation

Creates Large-Scale Employment opportunities

Promotes Balanced Regional Development

Reduces Concentration of Economic Power

Wealth Creation and Distribution

Increasing Gross National Product and per Capita Income

Improvement in the standard of living

Promotes Country’s Export trade

Induces Backward and Forward Linkages

Facilitates Overall Development


TYPES OF ENTREPRENEUR

1.According to the Use of Technology

i. Technical entrepreneur: The strength of a technical

entrepreneur is in his skill in production techniques. He

concentrates more on production than on marketing.

i. Non-technical entrepreneur: Unlike technical entrepreneur,

non-technical entrepreneur is not concerned with the

technical aspect of the product rather he spends more time in

developing alternative strategies of the marketing and

distribution to promote his business.



2. According to the Type of Business

i. Business entrepreneur: Business entrepreneurs are those

entrepreneurs who conceive the idea of a new product or

service and then translate their ideas into reality.

ii. Trading entrepreneur: As the very name indicates trading

entrepreneur is concerned with trading activities and not

manufacturing.

iii. Industrial entrepreneur: As the very name indicates, an

industrial entrepreneur is one who sets up an industrial unit.

iv. Agricultural entrepreneur: Agricultural entrepreneur is the

one who is engaged in the agricultural activities.



3. According to Capital ownership

i. Private entrepreneur: When an individual or a group of individuals set up an enterprise, arrange finance, bear the risk and adopt the latest techniques in the business with the intention to earn profits, he or the group is called as private entrepreneur/entrepreneurs.

ii. State entrepreneur: As the name indicates, state entrepreneur means the trading or industrial venture undertaken by the state or the government itself.

iii. Joint entrepreneur: Joint entrepreneur means the combination of private entrepreneur and state entrepreneur who join hands.



4. According to Scale

i. Large scale industry entrepreneur

ii. Medium scale industry entrepreneur

iii. Small scale industry entrepreneur

iv. Tiny industry entrepreneur



5. According to Gender and Age

i. Man entrepreneur

ii. Woman entrepreneur

iii. Young entrepreneur

iv. Old entrepreneur

v. Middle-aged entrepreneur



6. According to Motivation

i. Pure entrepreneur: Pure entrepreneur is one who may or

may not possess an aptitude for entrepreneurship but is

tempted by the monetary rewards or profits to be earned

from the business venture.

ii. Induced entrepreneur: Induced entrepreneur is attracted by

the various incentives, subsidies and facilities offered by the

government.



7. Classification Given by Danhof

i. Innovating entrepreneur: Innovative entrepreneurs are generally aggressive and possess the art of cleverly putting the attractive possibilities into practice.

ii. Imitative entrepreneurs: Imitative entrepreneurs are characterised by readiness to adopt successful innovations inaugurated by successful innovating entrepreneurs.

iii. Fabian entrepreneur: Fabian entrepreneurs are cautions and skeptical in experimenting change in their enterprises. Such entrepreneurs are shy, lazy and lethargic.

iv. Drone entrepreneur: Drone entrepreneurs are characterisedby a refusal to adopt opportunities to make changes in production formulae even at the cost of severly reduced returns.



8. According to Area

i. Urban entrepreneur

ii. Rural entrepreneur



8. Based on Behavioral scientist

i. Solo Operators

ii. Active Partners

iii. Inventors

iv. Challengers

v. Buyers

vi. Life Timers


Approaches To Entrepreneurship

• Environmental School of Thought

• Financial/Capital School of Thought

• Displacement School of Thought

• (i) Political Displacement

• (ii) Cultural Displacement

• (iii) Economic Displacement

Macro View

• Entrepreneurial trait school of Thought

• Venture Opportunity School of Thought

• Strategic Formulation School of Thought

• (i) Unique Markets

• (ii) Unique People

• (iii) Unique Products

• (iV) Unique Resources

Micro View


An Integrative Model of Entrepreneurial Inputs and Outcomes

Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship:

An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31.Dr P Alekhya, Associate Professor, MBA, CMRCET

Twenty First Centaury Trends in Entrepreneurship

Venture Financing

Corporate Entrepreneurship

Social Entrepreneurship

Entrepreneurial Cognition

Women Entrepreneurship

Family Business

Entrepreneurial Education


INTRAPRENEUR

The term ‘intrapreneur’ was coined in the United States of

America in the late seventies.

Gifford Pinchot defined intrapreneurs as the persons who resigned

from their well paid executive positions to launch their own

ventures. Gifford devised the way by which such executives

could be retained in the industry and their entrepreneurial urge

was also satisfied by their bosses.

So a system was devised whereby such executives would operate as

entrepreneurs with full independence and autonomy

but with

in the organisation.


Difference between entrepreneur and

intrapreneur1. An entrepreneur is an independence person who starts his

venture and bears full risk of his failure and enjoys the fruit of

his success whereas intrapreneur is partially independent and

is sponsored by the corporation in which he is working. He is

also not liable to bear the losses in case of his failure.

2. An entrepreneur raises the finance from various sources and

also guarantees their return whereas an intrapreneur does not

own responsibility to raise the capital or to return it.

3. An entrepreneur has no relation with any organisation

whereas an intrapreneur operates within the organisation

where he is working.


FUNCTIONS OF AN ENTREPRENEUR

There has been a great deal of confusion and contradiction in

literature on the functions of an entrepreneur.

FUNCTIONS

1. Innovations: J.Schumpeter has made substantial contribution

to the literature of entrepreneurship. The process of

innovations may be in the form of:

a) Introduction of a new product.

b) Use of new methods of production.

c) Opening of a new market.

d) The conquest of new source of supply of raw material.

e) A new form of organisation.


2. Risk-taking: Richard cantillon states that entrepreneur is an

agent who buys means of production at certain prices and sells

them at uncertain prices.

The entrepreneur performs the function of reducing uncertainty in

his plan of investment and expansion of the enterprise.

J.b. Say also stresses risk-taking as the specific function of an

entrepreneur.

3. Decision Maker: Entrepreneur as a decision maker describes

the following functions of an entrepreneur.

a) The determination of objectives of an enterprise and the

change of those objectives as conditions required or made

advantageous,

b) The development of an organisation including efficient

relations with subordinates and all employees,


c) Securing adequate financial resources,the relations with

existing and potential

Investors,

d) The acquisition of efficient technological equipment and

the revision of it as new machinery appears,

e)The development of a market for the products and the

devising of new products to meet or anticipate consumer’s

demand,

f) The maintenance of good relations with public authorities

and with society at large.


4. Organisation and Management: Marshall recognised organisation

and management of the enterprise as the important functions of an

entrepreneur.

When the organisation grows bigger, the entrepreneur effectively

delegates authority and finds responsibility at various levels of

management. The network of decision making becomes more

complex.

The functions of organisation and management includes:

a) Planning of an enterprise,

b) Co-ordination, administration and control,

c) Routine type of supervision.


DISTINCTION BETWEEN AN

ENTREPRENEUR AND A MANAGER

ENTREPRENEURS

1. Status: An entrepreneur is the

owner of his enterprise. He

makes his own investment and

owns his business.

2. Target: The main target of an

entrepreneur is to start his

venture by setting up as a sole-

trader or firm or a company.

MANAGERS

1. Status: A manager is just an

employee in the enterprise which

is owned and run by

entrepreneur.

2. Target: The main goal or

motive of a manager is give his

services to an enterprise set up by

someone else i.e. an

entrepreneur.


ENTREPRENEURS

3. Decision making: All of the

policies and strategic decisions, like

those comprising of expansion

diversification, take-over etc are

taken by the entrepreneur.

4.Rectification of wrong

decisions: The wrong decisions

taken by the entrepreneur may not

be rectificable and may result in

losses or even closure of the unit.

MANAGERS

3. Decision making: While all

those managerial, operational

decisions which would have

impact on the short-and medium-

term results are taken by the

managers.

4. Rectification of wrong

decisions: Whereas the wrong

decisions taken by the managers

can be amended and rectified by

the entrepreneur.


ENTREPRENEURS

5. Innovations: An entrepreneur

innovates and exploits his

innovation commercially.

6. Risk bearing: An

entrepreneur being the owner of

his unit undertakes all risks and

uncertainty of running his

enterprise.

7. Skills: The skill expected from

an entrepreneur is in the form of

creativity, innovation, desire for

high achievement, intuition etc.

MANAGERS

5. Innovations: A manager is

merely an officer or an executive

who is appointed for the promotion

of the unit.

6. Risk bearing: A manager

doesn’t bear any risk because he is

paid fixed salary.

7. Skills: Whereas manger depends

on public dealing abilities and

conceptual abilities.


ENTREPRENEURS8. Qualification: An entrepreneur

doesn’t need to have distinct degree

from a reputed university.

9. Rewards: The reward of an

entrepreneur is the profit earned by

him.

MANAGERS

8. Qualification: On the other

hand, a manager now a days need

to possess degree in the stream of

management theory and practice.

9. Rewards: A manager gets his

monthly salary as his reward for the

services rendered by him.


TIPS TO BECOME A SUCCESSFUL

ENTREPRENEUR

1. Acquire sufficient and all-round knowledge about an enterprise you intend

to start.

2. Be conservative in calculating income and lavish in calculating expenditure.

3. Don’t expect quick and easy returns from your venture.

4. Be prepared for delegation of work when needed.

5. Take moderate risks; neither too high nor too low.

6. Plan systematically and march ahead step by step according to the plan to

achieve your goal.

7. Time management is necessary to maximum utilisation of your resources.

8. Collect maximum information about your competitor on continuous basis.

9. Don’t avoid or run away from problems.

10. Take the help of experts and experienced persons or rntrepreneur,when in

doubt.


Conclusion

An entrepreneur performs various type of

functions. Growth of his enterprise depends

upon the way, he performs various functions

like innovation, risk-taking, decision-making,

organisation and management.


Chapter-2

The Entrepreneurial Mind-Set in Individuals



Chapter Objectives

1. To describe the entrepreneurial mind-set.

2. To present the major sources of information useful in profiling the entrepreneurial mind-set

3. To identify and discuss the most commonly cited characteristics found in successful entrepreneurs

4. To discuss the “dark side” of entrepreneurship

5. To identify and describe the different types of risk entrepreneurs face as well as the major causes of stress for these individuals and the ways they can handle stress

6. To examine entrepreneurial motivation


The Entrepreneurial Mindset

• Entrepreneurial Mindset

– Describes the most common characteristics associated with successful entrepreneurs as well as the elements associated with the “dark side” of entrepreneurship.

• Who Are Entrepreneurs?

– Independent individuals, intensely committed and determined to persevere, who work very hard.

– They are confident optimists who strive for integrity.

– They burn with the competitive desire to excel


Sources of Research on Entrepreneurs

The Entrepreneurial

Mindset

Speeches, Seminars and Presentations

Direct Observation

Research and Popular

Publications


Sources of Research on Entrepreneurs (cont’d)

• Publications

– Technical and professional journals

– Textbooks on entrepreneurship

– Books about entrepreneurship

– Biographies or autobiographies of entrepreneurs

– Compendiums about entrepreneurs

– News periodicals

– Venture periodicals

– Newsletters

– Proceedings of conferences

– The Internet

• Direct Observation of Practicing Entrepreneurs– Interviews

– Surveys

– Case studies

• Speeches, Seminars, and Presentations by Practicing Entrepreneurs


Common Characteristics of Entrepreneurs

• Commitment, determination, and perseverance

• Drive to achieve

• Opportunity orientation

• Initiative and responsibility

• Persistent problem solving

• Seeking feedback

• Internal locus of control

• Tolerance for ambiguity

• Calculated risk taking

• Tolerance for failure

• High energy level

• Creativity and Innovativeness

• Vision

• Self-confidence and optimism

• Independence

• Team building

Framework of the Entrepreneurial Personality

Entrepreneurial Personality

Internal Locus of Control

High Need for Achievement

Moderate Risk Taking Propensity



The Entrepreneurial Journey

• Entrepreneurs

– Create ventures much as an artist creates a painting.

– Are formed by the lived experience of venture creation.

• Experiential Nature of Creating a Sustainable Enterprise

– Emergence of the opportunity

– Emergence of the venture

– End emergence of the entrepreneur


Outline of the Entrepreneurial Organization

Imagination

FlexibilityAcceptance

of Risks


The Dark Side of Entrepreneurship

• The Entrepreneur’s Confrontation with Risk

– Financial risk versus profit (return) motive varies in entrepreneurs’ desire for wealth.

– Career risk—loss of employment security

– Family and social risk—competing commitments of work and family

– Psychic risk—psychological impact of failure on the well-being of entrepreneurs

Figure2.1 Typology of Entrepreneurial Styles



Stress and the Entrepreneur

• Entrepreneurial Stress

– The extent to which entrepreneurs’ work demands and expectations exceed their abilities to perform as venture initiators, they are likely to experience stress.

• Causes of Entrepreneurial Stress

– Loneliness

– Immersion in business

– People problems

– Need to achieve


Entrepreneurs: Type A Personalities

• Chronic and severe sense of time urgency.

• Constant involvement in multiple projects subject to deadlines.

• Neglect of all aspects of life except work.

• A tendency to take on excessive responsibility, combined with the feeling that “Only I am capable of taking care of this matter.”

• Explosiveness of speech and a tendency to speak faster than most people.


Dealing with Stress

• Networking

• Getting away from it all

• Communicating with employees

• Finding satisfaction outside the company

• Delegating

• Exercising Rigorously

The Entrepreneurial Ego

• Self-Destructive Characteristics

– Overbearing need for control

– Sense of distrust

– Overriding desire for success

– Unrealistic optimism

• Entrepreneurial Motivation

– The quest for new-venture creation as well as the willingness to sustain that venture.

• Personal characteristics, personal environment, business environment, personal goal set (expectations), and the existence of a viable business idea.


Definitions of Motivation

• According to Fred Luthans, Motivation is a process that startswith a physiological or psycological deficiency or need thatactivates behaviour or a drive that is aimed at a goal orincentive.

• Stephen P. Robbins(2010) defines motivation as “the

willingness to exert high levels of effort toward organiationalgoals, conditioned by the effort and ability to satisfy someindividual need.”


Nature of Motivation

Motivation is internal to man

A single motive can cause different behaviours

Different motives may result in single

behaviours

Motives come and goDr P Alekhya, Associate Professor, MBA, CMRCET

The 6 C’s That motivate the Entrepreneurs

Change

Challenge

Creativity

Control

Curiosity

Cash



Figure2.2 A Model of Entrepreneurial Motivation

• Theories of Motivation.

( A ) Maslow Need Hierarchy Theory:

Based on human needs.

Strong needs of an individual dominates the other needs.

The second need does not arise till the first need is satisfied i.e. needs have a definite sequence of domination


PhysiologicalNeeds

--------------Water,

Air,ShelterClothing

1

Safety Needs

-------------Job

Security,PersonalSecurity,Future

Security

2

Social Needs

------------

Love AffectionWarmth

Friendship

3

Esteemor egoNeeds

-------------

Self Respect

Self ConfidenceRecognition

Prestige

4

SelfActivation

Needs--------------

Self Development

Personal Achievement

5


( B ) McClelland’s Three Need Model:Includes: -

• Need for achievement:

Drive to excel, advance and grow.

Desire to achieve something with own efforts.

• Need for Power:

Drive to influence others and situations.

Desire to influence and dominate others through use of

authority.Dr P Alekhya, Associate Professor, MBA, CMRCET

Need for Affiliation:

Drive for friendly and close interpersonal

relationships.

Desire to establish and maintain friendly

relationship with others.

People possess the above needs in varying degrees

and these needs may be simultaneously acting on an

individual. In case of entrepreneurs the need for

achievement is more dominating.Dr P Alekhya, Associate Professor, MBA, CMRCET

Corporate Entrepreneurial Mindset

Corporate Entrepreneurship:

Traits of corporate Entrepreneur

1. Credible Communicator

2. Skilled Negotiator

3. Accountable Business Owner

4. Entrepreneurial Leader

5. Savvy Relationship Manager


The Entrepreneurial Mindset in Organizations

• Factors in the emergence of the entrepreneurial economy:

– The rapid evolution of knowledge and technology promoted high-tech entrepreneurial start-ups.

– Demographic trends adding fuel to the proliferation of newly developing ventures.

– The venture capital market became an effective funding mechanism.

– American industry began to learn how to manage entrepreneurship.Dr P Alekhya, Associate

Professor, MBA, CMRCET

Reengineering Corporate Thinking

• Steps that will help innovative people to develop an entrepreneurial mindset:

1. Set explicit goals.

2. Create a system of feedback and positive reinforcement.

3. Emphasize individual responsibility.

4. Give rewards based on results.

5. Do not punish failures.Dr P Alekhya, Associate Professor, MBA, CMRCET

Encouraging an Intrapreneurial Environment

• Steps to help restructure corporate thinking and encourage an intrapreneurial environment:

1. Early identification of potential intrapreneurs

2. Top management sponsorship of intrapreneurial projects

3. Creation of both diversity and order in strategic activities

4. Promotion of intrapreneurship through experimentation

5. Development of collaboration between intrapreneurial participants and the organization


The Corporate Entrepreneurship Process

Corporate Entrepreneurship

Corporate Venturing

InnovationStrategic Renewal


The Nature of Corporate Entrepreneurship

• Defining The Concept

– Corporate Entrepreneurship

• Activities that receive organizational sanction and resource commitments for the purpose of innovative results.

– A process whereby an individual or a group of individuals, in association with an existing organization, creates a new organization or instigates renewal or innovation within the organization.

– A process that can facilitate firms’ efforts to innovate constantly and cope effectively with the competitive realities that companies encounter when competing in international markets.


Defining Corporate Entrepreneurship


The Need for Corporate Entrepreneuring

• Rapid growth in the number of new and sophisticated competitors

• Sense of distrust in the traditional methods of corporate management

• An exodus of some of the best and brightest people from corporations to become small business entrepreneurs

• International competition

• Downsizing of major corporations

• An overall desire to improve efficiency and productivity


Table3.2 Sources of and Solutions to Obstacles in Corporate

Venturing

Traditional Management Practices

Adverse Effects

Recommended Actions

Enforce standard procedures to avoid mistakes

Innovative solutions blocked, funds misspent

Make ground rules specific to each situation

Manage resources for efficiency and ROI

Competitive lead lost, low market penetration

Focus effort on critical issues (e.g., market share)

Control against plan Facts ignored that should replace assumptions

Change plan to reflect new learning

Plan for the long term Nonviable goals locked in, high failure costs

Envision a goal, then set interim milestones, reassess after each

Manage functionally Entrepreneur failure and/or venture failure

Support entrepreneur with managerial and multidiscipline skills

Avoid moves that risk the base business

Missed opportunities Take small steps, build out from strengths

Protect the base business at all costs

Venturing dumped when base business is threatened

Make venturing mainstream, take affordable risks

Judge new steps from prior experience

Wrong decisions about competition and markets

Use learning strategies, test assumptions

Compensate uniformly Low motivation and inefficient operations

Balance risk and reward, employ special compensation

Promote compatible individuals Loss of innovators Accommodate “boat rockers”

and “doers”


Successful Innovative Companies

• Factors in large corporations that are successful innovators:

– Atmosphere and vision

– Orientation to the market

– Small, flat organizations

– Multiple approaches

– Interactive learning

– SkunkworksDr P Alekhya, Associate Professor, MBA, CMRCET

Conceptualizing Corporate Entrepreneurship Strategy

• Corporate Entrepreneurship Strategy

– A vision-directed, organization-wide reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.

– It requires the creation of congruence between the entrepreneurial vision of the organization’s leaders and the entrepreneurial actions of those throughout the organization.


Model of the Corporate Entrepreneurship Strategy Process

• Corporate entrepreneurship strategy is manifested through the presence of three elements:

– An entrepreneurial strategic vision

– A proentrepreneurship organizational architecture

– Entrepreneurial processes and behavior as exhibited across the organizational hierarchy.


Model of the Corporate Entrepreneurship Strategy Process

(cont’d)• Linkages in the model:

1. Individual entrepreneurial cognitions of the organization’s members

2. External environmental conditions that invite entrepreneurial activity

3. Top management’s entrepreneurial strategic vision for the firm

4. Organizational architectures that encourage entrepreneurial processes and behavior

5. The entrepreneurial processes that are reflected in entrepreneurial behavior

6. Organizational outcomes resulting from entrepreneurial actions.


An Integrative Model of Corporate Entrepreneurship Strategy

Source: Duane Ireland, Jeffery G. Covin, and Donald F. Kuratko, “Conceptualizing Corporate

Entrepreneurship Strategy,” Entrepreneurship Theory and Practice 33, no. 1


Conceptualizing a Corporate Entrepreneurial Strategy (cont’d)

• Critical steps of a corporate entrepreneurial strategy:

– Developing the vision

– Encouraging innovation

– Structuring for an intrapreneurial climate

– Developing individual managers for corporate entrepreneurship

– Developing venture teams. Dr P Alekhya, Associate Professor, MBA, CMRCET

1. Shared Vision


2.Types of Innovation

• Radical Innovation

– The launching of inaugural breakthroughs.

– These innovations take experimentation and determined vision, which are not necessarily managed but must be recognized and nurtured.

• Incremental Innovation

– The systematic evolution of a product or service into newer or larger markets.

– Many times the incremental innovation will take over after a radical innovation introduces a breakthrough.


3.Structuring for a Corporate Entrepreneurial Environment

• Reestablishing the drive to innovate:– Invest heavily in entrepreneurial activities that allow new ideas to

flourish in an innovative environment.

– Provide nurturing and information-sharing activities.

– Employee perception of an innovative environment is critical.

• Corporate Venturing– Institutionalizing the process of embracing the goal of growth through

development of innovative products, processes, and technologies with an emphasis on long-term prosperity.


Intrapreneurial Development: Joint Function of Individual and Organizational Factors


4. Developing Individual Managers for Corporate Entrepreneurship

Elements of developing Individual Managers :

– Management support

– Autonomy/work discretion

– Rewards/reinforcement

– Time availability

– Internal organizational boundaries


Sustaining Corporate Entrepreneurship

• Sustained Corporate Entrepreneurship Model

– Based on theoretical foundations from previous strategy and entrepreneurship research.

– Considers the comparisons made at the individual and organizational level on organizational outcomes, both perceived and real, that influence the continuation of the entrepreneurial activity.

– Transformational trigger

• Something external or internal to the company that initiates the need for strategic adaptation or change.Dr P Alekhya, Associate

Professor, MBA, CMRCET

Developing Innovative (I) Teams

• Innovative (I) Team

– A semi-autonomous self-directing, self-managing, high-performing group of two or more people who formally create and share the ownership of a new organization.

– The leader is called a “product champion” or an “corporate entrepreneur.”

• Collective Entrepreneurship

– Individual skills are integrated into a group; this collective capacity to innovate becomes something greater than the sum of its parts.


A Model of Sustained Corporate Entrepreneurship


Corporate Entrepreneurship at IBM

• Emerging Business Opportunity (EBO) Program’s Key Rules:

– Think big . . . really big.

– Bring in the A-team.

– Start small.

– Establish unique measurement techniques.


Learning Objectives

1)Identify, evaluate and select business opportunity.

2) Describe the process of creativity.

3) Explain the types of innovations.


ENTREPRENEURSHIP AND INNOVATION

Christ University, BangaloreDr P Alekhya, Associate Professor, MBA, CMRCET

Agenda

• The creative process• Idea germination, Preparation, Incubation,Illumination and Verification• Are Entrepreneurs Born or Made? Myths of Entrepreneurship• Search for Business ideas Selection of Product/ServiceProduct innovation• Product planning and development strategy• New product development• Services Industries-Human side of an enterprise

2Dr P Alekhya, Associate Professor, MBA, CMRCET

Sources for Ideas

• Following are some of the sources for ideas:• Good understanding of economics and the economy• Changing needs of the people in a locality/ society• Emerging trends in the society (Example- Migration of

people from rural areas to urban centers, preference for fast food among youth)

• Extensive travelling and a wide range of reading


• Every problem is an opportunity for a creative person• Creativity is a major tool for the survival of an entrepreneur• It not only gives one the edge for recognizing needs, generating business and marketing

ideas, but it also helps in solving problems• The person who faces a problem and finds a novel solution or is able to quickly convert the

problem into an opportunity that has ready solutions, will be a survivor in a field where others, less flexible and less creative, will be left behind

• This is particularly true as small businesses are considered to be more flexible and pro-active than large, bureaucratic organizations and thus, can react better and faster to changing circumstances

Creativity


1. Every problem holds an opportunity2. Problems are not excuses for giving up3. Every problem has more than one

solution4. Think sideways5. Creativity is fun- you get more ideas in

an uncritical atmosphere

Rules for Creativity


• Refer Page 33 of David H. Holt Text”Entrepreneurship- New Venture Creation” for the Diagram and more notes on “The Creative Process”

1. Idea Germination: The seeding stage of a new idea- Recognition• The germination process is a seeding process. It is not like planting seed as a farmer does to

grow corn, but more like the natural seeding that occurs when pollinated flower seeds, scattered by the wind, find fertile ground to take root.

• Exactly how an idea is germinated is a mystery; it is not something that can be examined under a microscope. However, most creative ideas can be traced to an individual’s interest in or curiosity about a specific problem or area of study

The Creative Process


2. Preparation: Conscious search for knowledge- Rationalization• Once a seed of curiosity has taken form as a focused idea, creative people embark on a

conscious search for answers. If it is a problem they are trying to solve, then they begin an intellectual journey, seeking information about the problem and how others have tried to resolve it

• If it is an idea for a new product or service, the business equivalent is market research• Inventors will set up laboratory experiments, designers will begin engineering new product

ideas, and marketers will study consumer buying habits• Any individual with an idea will consequently think about it, concentrating his or her

energies on rational extensions of the idea and how it might become a reality

,

3



4

3. Incubation: Subconscious assimilation of information- Fantasizing• Individuals sometimes concentrate intensely

on an idea, but, more often, they simply allow ideas time to grow without intentional effort

• The idea, once seeded and given substance through preparation, is put on a back burner, the subconscious mind is allowed time to assimilate information



5Christ University, Bangalore

• Incubation is a stage of “mulling it over” while the subconscious intellect assumes control of the creative process

• The subconscious mind is allowed to wander and to pursue fantasies, and it is therefore open to unusual information and knowledge that we cannot assimilate in a conscious state

• This subconscious process has been called the art of synectics, a word coined by W.J.J. Gordon in 1961



Christ University, Bangalore 6

• Synectics, means a joining together of different and often unrelated ideas

• Therefore, when a person has consciously worked to resolve a problem without success, allowing it to incubate in the subconscious will often lead to a resolution




4. Illumination: Recognition of idea as being feasible-Realization• Illumination occurs when the idea resurfaces as a

realistic creation• Reaching the illumination stage separates

daydreamers and tinkerers from creative people who find a way to transmute(transform) value


5. Verification: Application or test to prove idea has value- Validation• An idea once illuminated in the mind of an

individual still has little meaning until verified as realistic and useful

• Verification is the development stage of refining knowledge into application

• This is often tedious and requires perseverance by an individual committed to finding a way to “harvest” the practical results of his or her

creation• During this stage, many ideas fall by the

wayside as they prove to be impossible or to have little value



The chain of entrepreneurshipCreativity & innovation are the first stages of successful entrepreneurial initiatives

Creativity

Innovation

EntrepreneurshipThinking New

ThingsDoing New

ThingsCreating value in the marketplace


Opportunity Identification-The search for New Ideas


• Every time something happens, positive or negative, I ask myself, WHERE is the OPPORTUNITY here?

• How do you spot an opportunity?Keep your eyes open all of the time

Business is all about selling

a product or service


Business Idea and Opportunity

• A business idea starts with an opportunity.

• A business opportunity exists when there is

demand for goods and services to meet the

needs and wants of community.

• Changes in the environment create

opportunities; cultural, social, legal,

economy, political,& technology (C-SLEPT).


Illustrations – Environment changes

• Good economic condition

– ↑ demand luxury cars, homes

• Increase number of working couples

– ↑ demand maids, babysitter

• Introduction of ICT

– ↑ demand computers, repairs,

knowledge, spare parts


Sources of Innovative Ideas• Peter Drucker, one of the greatest management

thinkers from the last century, defined in his book“Innovation and Entrpreneurship” (1986) 7Classes of“Opportunities”. He named these the “sources ofInnovation”.

The Unexpected

Incongruities

Process Needs

Industry and Market Structure

Demographics

Changes in perception

New Knowledge Dr P Alekhya, Associate Professor, MBA, CMRCET

Entrepreneurial Imagination and Creativity

The role of creative Thinking

Components of creativity:

1. Fluency

2. Flexibility

3. Originality

4. Elaboration

5. Sensitivity to problems

6. Ability to redefine problems


Indicators of Creativity• Coming up with numerous ideas and solutions when faced

• Looking for new ways of doing things

• Demonstrating original thinking. Thinking in a creative and unconventional way.

• Being quick to adopt innovations and approve innovations.

• Appreciating others ideas

• Translating creative ideas into workable solutions

• Showing enough flexibility and willingness to revise one’s

earlier views.• Two important aspects of creativity exist: Process and people. The

process is goal oriented. It is designed to attain a solution to a problem. The people are the resources that determine the solution. The process remain the same, but the approach that the people use will vary.


“the ability to produce work that is novel (i.e. original and unexpected), high in

quality and appropriate (i.e useful, meet expectations)

What is CREATIVITY??


Knowledge Accumulation

Process of Creativity

Incubation

Ideas

Evaluation & Implementation

• Compile all info/data.

• Via reading, investigation

• Try get rid of problems.

• Generate creative ideas.

• Slowly formulating solution.

• Transform idea into reality, then into business activities.


Brainstorming

Methods to Generate Creative Ideas

Forced Analogy

Do ItMind

Mapping


3.3Business Innovation


“the process by which entrepreneurs convert

opportunities into marketable ideas.”

What is INNOVATION??


•A new product or service

•Enhancement of an existing product

•A new market for an existing product

•A new application for an existing product

•A source of grants or awards

•Better arrangements with suppliers

•Better promotion & advertising

•Greater efficiency of ordering

•New contact sources

BusinessIdea


Forms on Innovation

• Product Innovation: the changes in the things (product or

services) that an organization offers. E.g. new design of car, new

generation of aircraft A380.

• Process Innovation: the changes in the ways in which

product/services are created and delivered. E.g. JIT

Manufacturing.

• Position Innovation: the changes in context in which

products/services are introduced. E.g. Johnson & Johnson product

not only for babies, but also for adult.

• Paradigm Innovation: the changes in underlying mental

models which frame what the organization does. E.g. shift to low-

cost- airlines, online insurance.


Innovation

Process by which entrepreneurs convert

opportunities into marketable ideas. It is the

means by which they become catalysts for

change.

Defi

nit

ion

Creativity

The generation of ideas that result in the

improved efficiency or effectiveness of a system.

Are they the same???

Ideas that improveEfficiency/effectiveness

of a system

Turning ideas intoMarketable

Goods / Services

3.1 Business Opportunity

3.2 Business idea

3.3 What is Innovation?

3.4 Strategies to Encourage Creativity & Innovation


Types on Innovation• Invention: the creation of a new product, service, or process, often

one that is novel or untried.

Eg:Write brothers(Airplane)Edison(Bulb),grahem Bell(Telephone)

• Extension: the expansion of a product, service, or process already

in existence. Ray Kroc-Mc Donalds, Mark Zukerberg-Facebook

• Duplication: the replication of an already existing product, service,

or process. Wal-Mart-Department stores, Pizza hut-Pizza Parlor

• Synthesis: the combination of existing concepts and factors into a

new formulation. Fred Smith-Fedex, Howard Schultz,starbucks


SATRIA

WAJA

GEN 2

PERDANA

WIRA

Example :

Creativity & Innovation in

PROTON

Source:Kretiviti & InnovasiKAKS 2007 –

Datin Prof.. Madya Norlela Nuruddin(MEDEC)Uitm,S.Alam

I have always been bored with just making money I have wanted to do things; I wanted to build things

Walt Disney

INNOVATION Experiences

Discuss in a group & present to the class

SAGA

ISWARA


TARGET INDUSTRIESWHERE

KNOWLEDGE IS APPLIED Aviation &

AerospaceAutomotive Medical &

Health Services

Oil & GasBiotech/

Bioprocess

Marine Engineering

Electrical & Electronics

ICTBuilding

Technology

Transport &Logistics

120 110 7530 40No of Techno

170295 5075 35No of Techno


Methods to Initiate Ventures

The pathways to new ventures for entrepreneurs1) Creating a new Venture

2) Acquiring an existing Venture

3) Obtaining a Franchise

Creating New Ventures:1. New-New Approach

2. New-Old Approach

3. Examination of the Financial Picture


Acquiring on Established Entrepreneurial Venture

1. Personal Preferences

2. Examination of Opportunities

Business brokers

Newspaper ads

Trade Sources

Professional Sources


Advantages of Acquiring an ongoing Venture

1. Less fear about successful future operation

2. Reduced time and effort

3. A good price

4. Evaluation of the selected venture

The business environment

Profits, sales and operating ratios

The business assets


Franchising –The Hybrid

Advantages of Franchising

1.Training and guidance

2.Brand name appeal

3.A Proven track record

4.Financial Assistance

Disadvantages of Franchising

1.Franchise Fees

2.Franchisor Control

3.Unfulfilled promisesDr P Alekhya, Associate Professor, MBA, CMRCET

3.1 Business Opportunity

3.2 Business Idea

3.3 What is Innovation?

3.4 Strategies to Encourage Creativity

and Innovation

Conclusion


Chapter-4

Legal Challenges for Entrepreneurial Ventures


7–146


7–147

Chapter Objectives

1. To introduce the importance of legal issues to entrepreneurs

2. To examine patent protection, including definitions and preparation

3. To review copyrights and their relevance to entrepreneurs

4. To study trademarks and their impact on new ventures

5. To examine the legal forms of organization—sole proprietorship, partnership, and corporation

6. To illustrate the advantages and disadvantages of each of these three legal forms


7–148

Chapter Objectives (cont’d)

7. To explain the nature of the limited partnership and limited liability partnerships (LLPs)

8. To examine how an S corporation works

9. To define the additional classifications of corporations, including limited liability companies (LLCs)

10. To present the major segments of the bankruptcy law that apply to entrepreneurs


7–149

Legal Challenges for the Entrepreneurial Venture

Growth and Continuity of the

Venture

Legal Concepts

Inception of the Venture

The Ongoing Venture


7–150

Major Legal Concepts and Entrepreneurial Ventures

• I. Inception of an Entrepreneurial Venture– A. Laws governing intellectual property

• 1. Patents

• 2. Copyrights

• 3. Trademarks

– B. Forms of business organization

• 1. Sole proprietorship

• 2. Partnership

• 3. Corporation

• 4. Franchise

– C. Tax considerations

– D. Capital formation

– E. Liability questions


7–151


• II. Ongoing Venture: Business Development and Transactions– A. Personnel Law

• 1. Hiring and firing policies

• 2. Equal Employment Opportunity Commission

• 3. Collective bargaining

– B. Contract Law

• 1. Legal contracts

• 2. Sales contracts

• 3. Leases


7–152


• III. Growth and Continuity of an Entrepreneurial Venture– A. Tax considerations

• 1. Federal, state, and local

• 2. Payroll

• 3. Incentives

– B. Governmental regulations

• 1. Zoning (property)

• 2. Administrative agencies (regulatory)

• 3. Consumer law

– C. Continuity of ownership rights

• 1. Property laws and ownership

• 2. Wills, trusts, and ownership

• 3. Bankruptcy


7–153

Intellectual Property Protection: Patents

• Patent– Provides the owner with exclusive rights to hold, transfer, and license

the production and sale of the product or process as an intellectualproperty right.

– The patent system in india is governed by the patents act, 1970 andthe patent rules 1972,effective from april 20,1972.subsequently thepatents act 1970 is ammended effective from Jan 1 1995 and the rules,1972 is amended effective from june 2 1999.

– Design patents last for 14 years; all others last for 20 years.

– The objective of patent is to provide temporary monopoly on his orher innovation and thus to encourage the creation and disclosure ofnew ideas and innovations in the marketplace.

• What Items Qualify for Patent Protection?

– Processes, machines, products, plants, compositions of elements(chemical compounds), and improvements on already existing items.


7–154

Securing a Patent

• Rule 1:Pursue patents that are broad, arecommercially significant, and offer astrong position.

• Rule 2:Prepare a patent plan in detail.

• Rule 3:Have your actions relate to your original

patent plan.

• Rule 4:Establish an infringement budget.

• Rule 5:Evaluate the patent plan strategically.(3 Yrs)


7–155

Intellectual Property Protection: Patents

• Patent Application

1. Specification: the text of a patent and may include any accompanying illustrations.

a. An introduction explaining why the invention will be useful.

b. A description of prior art considered similar to the invention.

c. A summary of the essence of the technology/invention, its differences from prior art and requisite features.

d. A description of the invention, including anything remotely relevant, reference to variations, and number bounds.


7–156

Figure7.1 The Patent Process: From Application to Allowance and Issue

Source: United States Patent Office, 2005.

Continued on following slide


7–157

Figure7.1 The Patent Process: From Application to Allowance and Issue (cont’d)


Continued on following slide


7–158

Figure7.1 The Patent Process: From Application to Allowance and Issue (cont’d)



7–159

Intellectual Property Protection: Copyrights

• Copyright(1956)– Provides exclusive rights to creative individuals for the protection of

their literary or artistic productions.

– This expression can take many forms, including books, periodicals, dramatic or musical compositions, art, motion pictures, lectures, sound recordings and computer program

– Duration: life of the author plus 70 years.

• The copyright owner has the rights to:

– Reproduce the work

– Prepare derivative works based on it

– Distribute copies of the work by sale or otherwise

– Perform the work publicly

– Display the work publicly

– Sell or transfer individual rights


7–160

Intellectual Property Protection: Copyrights

• Copyright Protection

– The material must be in a tangible form so it can be communicated or reproduced.

– It also must be the author’s own work and thus the product of his or her skill or judgment.

– Formal registration of a copyright is with the Copyright Office of the Library of Congress.


7–161

Copyrights (cont’d)

• Fair Use Doctrine

– Reproduction of a copyright work for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research is not an infringement of copyright.

• Protected Ideas?

– The Copyright Act specifically excludes copyright protection for any “idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied.”


7–162

Intellectual Property Protection: Trademarks

• Trademark

– A distinctive name, mark, symbol, or motto identified with a company’s product(s) and registered at the Patent and Trademark Office

• Advantages of Trademark Registration

– Nationwide constructive notice of the owner’s right to use the mark

– Bureau of Customs protection against importers using the mark

– Incontestability of the mark after five years


7–163

Intellectual Property Protection: Trademarks

• Trademark Duration

– Current registrations are good for 10 years with the possibility for continuous renewal every 10 years.

– A trademark may be invalidated in four specific ways:

• Cancellation proceedings

• Cleaning-out procedure(with in six years)

• Abandonment(non Usage of two consecutive years)

• Generic meaning


7–164

Trademarks (cont’d)

• Avoiding the Trademark Pitfalls

– Rule 1: Never select a corporate name or a mark without first doing a trademark search.

– Rule 2: If your attorney says you have a potential problem with a mark, trust his or her judgment.

– Rule 3: Seek a coined or a fanciful name or mark before you settle for a descriptive or a highly suggestive one.

– Rule 4: Whenever marketing or other considerations dictate the use of a name or a mark that is highly suggestive of the product, select a distinctive logotype for the descriptive or suggestive words.

– Rule 5: Avoid abbreviations and acronyms wherever possible, and when no alternative is acceptable, select a distinctive logotype in which the abbreviation or acronym appears.


7–165

Trade Secrets

• Trade Secret

– Business processes and information that cannot be patented, copyrighted, or trademarked but makes an individual company unique and has value to a competitor could be a trade secret.

• Information Is Considered a Trade Secret:

– If it is not known by the competition.

– If the business would lose its advantage if the competition were to obtain it.

– If the owner has taken reasonable steps to protect the secret from disclosure.


7–166

Trade Secrets

• Examples of Trade Secrets:

– Customer lists

– Strategic plans

– Research and development

– Pricing information

– Marketing techniques

– Production techniques


7–167

Trademark Protection on the Internet

• Cyberlaw

– The emerging body of law governing cyberspace.

• Domain Names (Internet Addresses)

– The principles of trademark law apply to domain names (Cybersquatters).

– Unauthorized use of another’s mark in a domain name may constitute trademark infringement.

Formulation of the Entrepreneurial Plan

The challenges of new venture start-ups

Start Ups in India The reasons that entrepreneurs start new ventures are

numerous. One study reported seven components of new-venture motivation:

The need for approval

The need for Independence

The need for personal development

Welfare considerations

Perception of wealth

Tax reduction and indirect benefits

Following role models.Dr P Alekhya, Associate Professor, MBA, CMRCET

7–168

Pitfalls in selecting New Ventures

1. Lack of Objective Evaluation

2. No real insight into the market

3. Inadequate understanding of technical requirements

4. Poor financial understanding

5. Lack of venture uniqueness

6. Ignorance of legal issues


7–169

Critical Factors for new venture development

1) The relative uniqueness of venture

2) The relative investment size at stat-ups

3) The expected growth of sales or profits as the venture moves through its start –up phase

4) The availability of products during the prestart-up and start-up phases

5) The availability of customers during the prestart-up and start-up phases


7–170

The Evaluation Process

1. Profile Analysis

2. Feasibility criteria Approach

3. Comprehension Feasibility Approach

A. Technical Feasibility

B. Marketability

General economic trends

Market data

Pricing Data

Competitive dataDr P Alekhya, Associate Professor, MBA, CMRCET

7–171

• Social entrepreneurship is the use of the techniques that start up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues.


• Vinoba Bhave, the founder of India’s Land Gift Movement

• Robert Owen, the founder of cooperative movement

• Florence Nightingale, founder of first nursing school and developer of modern nursing practices might be included in this category.


• Employment Development

• Innovation / New Goods and Services

• Equity Promotion


A social entrepreneur is somebody who takes up a pressing social problem and meets it with an innovative or path breaking solution


• Ambitious

• Mission driven

• Strategic

• Resourceful

• Results orientedDr P Alekhya, Associate Professor, MBA, CMRCET

• Funding

• Strategy and Long-Term Focus

• Remaining True to the Mission

• Lack of skilled man force

• Social and Cultural Effect


is recognized as one of the pioneering social entrepreneurs of our time. Drayton founded “Ashoka: Innovators for the Public” in 1980, which takes a multi-faceted approach to finding and supporting social entrepreneurs globally

founded Grameen Bank 1983. In 2006, Yunus was awarded the Nobel Prize for creating the Grameen Bank to empower villagers with the funding to pull themselves out of poverty

He had a privileged upbringing in India, in contrast to many Indians who live off of less than US $1 a day. He founded Barefoot College in 1972, a solar-powered college for the poor. Dr P Alekhya, Associate Professor, MBA, CMRCET

• Social Entrepreneurship holds the key for future development in India. Inthe days to come, social entrepreneurs will play a crucial role in theadvancement of social changes. The best thing about socialentrepreneurship is that success is not mentioned by financial gains, butby the number of people these enterprises are able to reach and create apositive impact. In the coming days, social entrepreneurship and Socialbusinesses will be in the mainstream substantially, which will hopefullyimpact the society positively


Dr P Alekhya

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