Entrepreneurship Management

- Prof. J.C. Saboo

What do you mean by…Entrepreneur (oxford dictionary): Person who undertakes an enterprise with chances of profit or loss.Enterprise (oxford dictionary): Bold UndertakingEntrepreneur-New Encyclopedia Britannica: An individual who bears the risk of operating business in the face of uncertainty about the future conditions.Common Meaning: one who starts his own, new and small business

Entrepreneurship: It is a philosophy or process through which an entrepreneur seeks innovation and employment.

Entrepreneur Entrepreneurship EnterprisePerson Process or Philosophy Object

Entre – enter Pre – before Neur – Nerve Centre

Entrepreneurship can be described as a creative and innovative response to the environment.

Entrepreneurship Theories1600: French verb- Entreprendre – to undertake1700: Person bearing Risks of Profit in a fixed price contract (Risk)1725: Richard Cantillon – Person bearing risks is different from Capital Supplier (Risk)1803: J. B. Say – Shifts economic resources out of an area of lower into an area of higher productivity & greater yields (Value Addition)1934: Joseph Schumpeter – Innovator and develops untried technology (Productivity & Innovation)

Entrepreneurship Theories…1961: David McClelland – highly motivated, energetic, moderate risk taker (Need for achievement)1964: Peter Drucker – Searches for change, responds to it & exploits as opportunity (Opportunity Focused)1980: Karl Vesper – Behaviour Perceptions- Economists, Psychologists, Businessmen, Politicians (Environment)1983: Gifford Pinchot- Intrapreneur1985: Robert Hisrich - Creating something different with value, devoting time & effort, assuming risks (FPS); results-rewards and satisfaction (Leadership & Vision)How do you define an entrepreneur in

the 21st Century?

Entrepreneurship“Is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence”

The Nature and Development of Entrepreneurship

Entrepreneur stems from French Verb Entreprendre

means between – taker or go between

New Definition involves four aspects:The creation processThe devotion of time and effortsThe assumption of risksRewards of independence, satisfaction, money.

To an IndividualSelf EmploymentEmployment for near & dearProlonged career for next generationsFreedom to use own ideas - Innovation and creativityUnlimited income / higher retained incomeIndependenceSatisfaction

To the NationProvides larger employmentResults in wider distribution of wealthMobilizes local resources, skills and savingsAccelerates the pace of economic developmentStimulates innovation & efficiency

Factors favouring Entrepreneurship

Growth of education- science, technology & managementDeveloped infrastructure facilitiesFinancial assistanceTraining facilitiesProtective and promotional policiesGlobalization

Think of numerous other factors?

What makes a Successful Entrepreneur?

The urge for achievementDetermination to winWin-Win PersonalityWillingness to take moderate risksAbility to identify & explore opportunitiesAnalytical ability to take strategic decisions

PerseveranceFlexibilityCapacity to plan and organizePreparedness to undergo physical and emotional stressPositive self conceptFuture orientation: VisionEthics and Values :Mission

Who can be an Entrepreneur?Who can take moderate risksWho has ability to work hard Who can capitalize on opportunitiesWho has some financial strengthWho feels the need for achievementWho has desire for responsibilityWho has perception of probability of successWho gets stimulation by feedbackWho possess skills in organizingWho can be male or femaleWho may not have previous experience

Characteristics of an Entrepreneur

Mental abilityClear objectivesBusiness secrecyH.R. abilityCommunication abilityTechnical knowledgeAchievement-orientedPerseveranceEthical

MotivatorSelf-confidentLong term involvementHigh energy levelProblem solverInitiatorGoal setterRisk taker

Key elements of entrepreneurInnovation Vision Ethics & ValuesOrganizing SkillsRisk takingNeed for Achievement

Study the Profile of a Successful Entrepreneur and identify six key elements in order of priority

Entrepreneur’s Background and Characteristics

Family environmentEducationAge Physical attributesMarital statusWorking historyFamily contactsProfessional contactsPersonal valuesLifestyle

Analyze your PersonalityFeelings about ControlFeelings about IndependenceWillingness to take Risks

What is a job competency?It is knowledge, skills and attitudeKnowledge – collection and retention of information.Skills are ability to do something well (hard and soft skills)Motives are reasons for doing something(need)Traits – characteristics way in, which a person responds.Attitude reflects the way of thinking and acting(Self and others determine the attitude)

Performance emerges from the combination of knowledge, skills and attitude

Initiative– Taking actions that go beyond job requirements or

demands of the situation.– Doing things on own before being asked for or being

forced by the events.– Taking actions to start the business and expand into new

areas, products and services.Seeing & acting on opportunities – Looking for and taking actions to seize opportunities– Seeing and acting on opportunities for business

development or for personal growth.– Seeing unusual opportunities– Seizing opportunities, need, procuring and mobilizing

necessary resources.

Persistence– Taking repeated actions to overcome obstacles that

get in the way of achieving goals– Taking actions in the face of obstacles.– Ensuring all efforts to solve a problem or barrier.

Information seeking– Taking action s on own to help reach objectives.– Personally undertaking a research or analysis to find

out answers to some problem.– Seeking information to clarify what is needed.– Using networks to obtain information.

Concern for high quality of work– Doing things that meet or beat existing

standard of excellence.– Stating a desire to produce work of high

quality– Comparing work favorably to that of others.– Making all out efforts to ensure the quality of

product or services.

Work commitment to contract– Placing highest priority for getting a job

completed.– Taking all the effort to complete a job.– Accepting responsibilities for failures.– Expressing utmost concern for the customers– Readiness to work at any level to get work

done.

Efficiency Orientation– Constantly looking for ways to do things faster or with

fewer resources or at a lesser cost.– Using business tools to increase personal or

professional efficiency.– Expressing concern for assessing cost versus reward

of some improvements, changes or action. Systematic Planning– Developing and using logical steps to reach goals.– Breaking a large task into several sub tasks.– Developing plans after duly anticipating obstacles.– Evaluating alternatives on merits and demerits.

Problem Solving– Identifying and applying new ideas to reach the goals.– Identifying the root cause of the problem.– Developing strategies in the light of objectives,

resources, and constraints.– Generating new ideas or innovative solutions.

Self Confidence – Having a strong belief in own abilities.– Sticking with own judgment in the face of opposition

or early lack of success.– Doing something for which chances of success are

not very fair.

Persuasion– Persuading others successfully– Selling someone an idea, product or service.– Making someone agree to provide resources– Convincing with confidence, competence and respect.

Use of Influence Strategies– Using a variety of strategies to influence others

successfully – Developing professional and business contacts.– Using influential people to get own things done.– Carefully limiting the information to be given to others– Using others authority and resources, but remaining

ethical

Assertiveness– Confronting problems and issues with other directly – Speaking politely but firmly.– Telling others clearly what they have to do – Reprimanding those who fail to perform as expected

however close they may be. Monitoring– Ensuring smooth progress of project or work.– Personally supervising all aspects of the work to its

completion.– Developing a system of supervision and monitoring.

Concern for other’s welfare– Having a concern and taking actions to

improve other’s welfare.– Responding positively to employees specific

needs.– Having a concern for the welfare of

employees, their families and society at large.

Elements• Promoters’ /

shareholder’s values• Mission / objectives• Management Structure• Internal Power

relationship• Physical assets &

facilities• Co. image/ brand

equity• Human resources• Financial capabilities• Technological

capabilities• Marketing capabilities

General Aspect• Political• Socio-cultural• Technological• Legal• Economic

Competitive Aspect• Potential New

Entrant• Buyers

Bargaining Power• Suppliers

Bargaining Power• Substitute

Products

Business Environment &

Entrepreneurship

EnvironmentPolitical: System, Stability, LeadershipSocio-cultural: Culture, Community, Values, Ethics, AttitudeTechnological: Education, Absorption, Competition, InnovationLegal: Regulatory framework, Consumer protection, Concern for environment, Labour lawsEconomic: GDP, GNP, Resources, Fiscal, Non-fiscal policies, Incentives and Subsidies

Dimensions of Environment

SPECTACLES – Social, Political, Economic, Cultural, Technological, Aesthetic, Customer, Legal, Environmental and SectoralPEETS – Political, Economic, Ecological, Technological and Socio-demographicalSLEPT – Social, Legal, Economical, Political and Technological

Factors Influencing Entrepreneurship

Individual

EconomicEnvironment

Socio-culturalfactors

Support Systems

Political Environment

LegalEnvironment

TechnologicalEnvironment

Porter’s Model in the Competitive Environment

BCG Matrix

Political & Governmental Environment

Global• Trade Barriers• Trade Agreements• Tariffs & Duties• Political Risks

National• Taxation• Regulations• Protections (Patents)• Govt. spending

State Govt.

• Taxation• State Laws• Licensing /Approvals• Incentives

Local Issues

• Taxations• Zoning• Cost of Living• Lifestyle

Environmental Analysis

Scanning to detect change (identify key elements and their characteristics)Monitoring to track development (that affect the survival and profitability of the new business)Forecasting to project the future (such as level of prices, inflation, interest rates, availability of funds, market share, market growth, etc.Assessing to interpret data (what does it all mean to the entrepreneur?)

Entrepreneurship and Economic Development

Entrepreneur’s set up EnterprisesEntrepreneurs combines resources, put their time and efforts and produce goods or servicesWhat they contribute – productivity, output, value addition, income and employmentEntrepreneurship is a “Low Cost Strategy”. Entrepreneurs perform the crucial role themselvesThe spirit of Entrepreneurship – Drive, achieving higher goals, creativity, innovative attitude.A dynamic society emerges and the spirit spreads like a chain reaction.

The Invention ProcessMarket Need

Technology observation

Need Analysis

Parameter Identification

Creative Synthesis

Realization

Invention, which meets the need

Product Evolution ProcessFundamentals

of Science

Recognized Social Need

Beginning of Technological Innovation

Invention / Innovation

Planning

Financing

Manufacturing

Marketing

Concept Testing

Development Phase

Commercial Phase

Technology

Modeling

Product Testing

The Evolution ProcessIntersection of Knowledge and a recognized social needInitiation of technological innovationIterative SynthesisDevelopment PhaseIndustrial Phase

The Product Planning and Development Process

Idea Stage – Idea – EvaluateConcept Stage – Lab Development – Evaluate Product Development Stage - Pilot Production – EvaluationTest Marketing Stage- Semi Commercial Production EvaluationCommercial Stage – Introduction

Growth Maturity Decline

CommercializationRole of GovernmentRole of Corporate – IntrapreneurshipRole of Individuals – Entrepreneurship

Development of Technology– Utilization of materials– Exploitation & transformation of energy– Understanding and application of Scientific

PrinciplesThe Role of Government– Promotional– Neutral– Regulatory

The Role of Smaller firmT- High, M-High – Large skilled resources, financial backing. Act as a Supplier or Sub –ContractorT- High, M-Low - Specialist firm, access to low cost researchT-Low, M-High – Linkage with well-established channelsT-Low, M- Low – Well Suited to small firmLow Tech – High Volume Financial AbilityHigh Tech – Low VolumeStrategic AbilityEmerging Options – Franchisee; Sub-contractor

Entrepreneurship and Management StudentsEnterprises in protected economy can be mismanaged.Enterprises in competitive environment are essentially to be managed.A Management Graduate is a person trained to manage an enterprise. Naturally, he will deliver the best results.A Management Graduate should not be just a Job Seeker. He can and should take the role of Job Provider.Experience even from HBS confirm that more Management Graduates take Entrepreneurial Role (after some experience) and their income is higher than their colleagues who are in job.

“An Entrepreneur has to be a Manager.But a Manager need not be an Entrepreneur”

Entrepreneurial Decision Process

Pull Factors– Perception of

Advantages– Spotting an

Opportunity– Government Policies– Motivation from

Biographies or Success Stories

– Influenced by Culture, Community, Family Background, Teachers, Peers, etc.

Push Factors– Job

Dissatisfaction– Relocation– Lay-off– Retirement– Boredom

Comparison of Entrepreneurs, Intrapreneurs and Traditional Managers

Traditional Managers

Entrepreneurs Intrapreneurs

Primary motives Perks and promotion

Self-employment, satisfaction and money

Creative freedom and recognition

Time Orientation Short-term – meeting quotas and budgets; weekly, monthly, quarterly and the annual planning horizon

Short-term –business establishment; Long-term – growth of business

Tend to follow the middle path

Traditional Managers

Entrepreneurs Intrapreneurs

Activity Delegates and supervises

Direct involvement Direct involvement , not merely delegation

Risk Careful Moderate risk taker

Moderate risk taker

Monetary Risk Nil High Nil

Status Concerned about status

unconcern about status

unconcerned about traditional status

Failure and mistakes

Tries to avoid mistakes and surprises

Deals with mistakes and failures

Attempts to hide risky projects from view until ready

Traditional Managers

Entrepreneurs Intrapreneurs

Decisions Like to take their own but unable to disagree with top

Follows dream with decisions

Able to get others to agree to help achieve their dreams

Who serves Others Self and customers

Self, customers, and sponsors

Family history Family members worked for large organizations

Entrepreneurial small-business, professional

Entrepreneurial small-business, professional

Relationship with others

Hierarchy as basic relationship

Transactions and deal-making as basic relationship

Transactions within hierarchy

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