Entrepreneurship New Venture Creation31module1712 110909070051 Phpapp01

7/29/2019 Entrepreneurship New Venture Creation31module1712 110909070051 Phpapp01

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Entrepreneurship &New Venture

Creation-(3.1)

BU-MBA-Semister-3


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Entrepreneur

The term entrepreneur is derived from the

French word entreprendre which means to

undertake.

It means the person who undertakes the risk

of the new enterprise

In the 16th century the Frenchman who

organized and led military expeditions were

referred as Entrepreneurs


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According to Richard Cotillion

An entrepreneur is a person who buys factor services at certainprices with a view to selling its product at uncertain price (un-expected price)

According to International Labor Organization (ILO)

Entrepreneurs as those people who have the ability to see and

evaluate business opportunities, together with the necessaryresources to take advantage of them and to initiate appropriateaction to ensure success

According to Peter F.Drucker

An entrepreneur is one who always searches for change, responds toit and exploits it as an opportunity. Innovation is the specific tool ofentrepreneurs, that means by which they exploit change as anopportunity for a different business or service


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Nature/Characteristics ofEntrepreneur

Entrepreneur is a key

player in economic

progress

Entrepreneurs

introduce new things inthe economy

They are considered as

the business leader and

not as simple owner of

capital.

Importance of Entrepreneurs

The importance of any

entrepreneur is as

follows:-

Develop new markets

Discover new sources ofmaterials

Mobilize capital

resources

Introduce new

technologies

Create employment

ll b f l h ld h h


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Finally to become successful entrepreneur one should have the

following characteristics:-

Need to achieve (goals should achieve) Independence (start business their own) Risk bearing (ready to face uncertainty) Locus of control (governing and shaping the goals with high control) Determination (working sincerely on goal achieving) Positive self-concept (thinking positive and analyze anything by

SWOT analysis) Ability to find and explore opportunities (finding/grab

opportunities) Hope success (feeling success in each and every step they move no

failure)

Flexibility (measuring pros and cons of decision and tend to changeif situation demands) Analytical ability of mind (unaffected by personal likes and dislikes) Sense of efficacy (oriented always to goals no deviation or diversion

by external influence)


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Openness to feedback and learning from experience (ready to acceptfeedback)

Confronting uncertainty (they are always optimistic, they take odd as the

opportunity) Interpersonal skills (they like dealing with people at all levels) Need to influence others (they influence the others by their goals and their

procedures/convince others) Stress takers (ready to work for long hours with full energy)

Time orientation (they will stick on to the time, time is important) Innovators (they will introduce new products and services) Business communication skill (they must have good communication to lead

market) Telescopic ability (they will think every activity in microscope) Leadership (they will act as leaders to lead business)

Business planning (they will plan present and future course of action) Decision making (they have quick decision making ability) Ability to mobilize resources (they will mobilize 6-Ms: Man, Money,

Machinery, Market and Method) Self-confidence (they must have self-confidence about their goal

achievement)


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FUNCTIONSPrimary

FunctionsEntrepreneur Function Functions Important

for DevelopingCountries

Other Functions

1. planning 1. Idea generation 1. Management of

share resource

1. Diversification of

production2. Organizing 2. Determination of

objectives

2. Dealing with

public

2. Expansion of the

enterprise

3. Decision

making

3. Raising of funds 3. Acquiring and

assembly of the

factory

3. Maintaining

cordial employer

and employee

relations

4. managing 4. Procurement of raw

materials

4. engineering 4. Tackling labor

problem

5. innovation 5. Procurement of

machinery

5. New product 5. Coordination with

outside agencies

6. Risk

bearing

6. Market research 6. Parallel

opportunities

7.

Un-

certainty

bearing

7.

Determination of

form of enterprise

7.

marketing

8. Recruitment of

manpower

8. management

9. Implementation of

the project

9. Customer

relation

l f


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Role of Entrepreneur

1. Initiator A key man who imagine new opportunities, techniques,new products/services

2. innovator Brings overall change by innovation and creativity3. coordinator Coordinate social and economic values of society4.

leader act as a leader with outstanding leadership qualities5. Social worker He always works for the wellbeing of the society

6. Welfare agent He will encompass/cover all sectors and fields welfare7. employer He will act as employer by in taking some unemployed8. Development

agent

Contributes service for development the country and

building country economy


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Quality of a Successful Entrepreneur

Inner drive to succeed

( should have feeling towin in the heart)

Strong belief in

themselves

Search for new ideas

and innovation

Openness to change

Competitive by nature

Risk taker

Accepting of constructive

criticism and rejection

(ready to accepts

mistakes)

Time management

Vision and leadership

Ethics and morals

Discipline yourself

Highly motivated and

energetic

hi d i l ibili f


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Ethics and Social Responsibility of

Entrepreneurs

The word ethics isderived from Greek word

ethos which means

standard or ideals that

should prevailEntrepreneurship ethics

are the moral principles

which should govern the

entrepreneurshipactivities.

It also referred businessethics

Business ethics refers to

the application of ethics to

businessBusiness ethics is a

specialized study of moral

right or wrong. It

concentrates on moralstandards as they apply to

business policies,

institutions and behavior


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Principles of Entrepreneurs Ethics

An Entrepreneur will think of themselves as a

part of community not just profit makerAn Entrepreneur will treat the environment

as a silent stakeholder, a party to which they

are wholly accountableAn Entrepreneur will protect the privacy

rights of the suppliers, customers and

employeesAn Entrepreneur will deliver what they

promises, and promise what they can deliver

Mi i b E


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Misconceptions about Entrepreneurs

Entrepreneurs are born and Entrepreneurship

is Hereditary

Entrepreneurs are profit Hungry and

Exploit(hard work done by Labor)

Entrepreneurs are Dishonest(fraud &

cheating)

Entrepreneurs are favored by luck

Only Rich people can become entrepreneurs

Entrepreneurship is monopoly (a market inwhich there are many buyers but only one

seller )of certain communities

hi


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EntrepreneurshipThe Entrepreneurship was defined as , Entrepreneurship is

the attempt to create value through recognition of business

opportunity, the management of risk taking appropriate tothe opportunity and through the communicative andmanagement skills to mobilize human, financial and materialresources necessary to bring a project to successful

According to A.H.Cole, Entrepreneurship is the purposefulactivity of an individual or a group of associated individuals,undertaken to initiate, maintain or maximize wealth, profit byproduction or distribution of economic goods and services

Entrepreneurship = Entrepreneur + Enterprise

(Process) (Person) (Object)


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Nature/Characteristics of Entrepreneurship

Purposeful activityDecision makingAccepting challengesRisk takingBuilding organizationDynamic process (bring new opportunities)

Gap filling function (filling goods and services tosociety)

Skillful management Innovation

Mobilization of resources Economic Activity (creation and operation of an enterprise)


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DifferenceEntrepreneur Entrepreneurship

1. Refers to a person 1. Refers to a process2.

visualizer 2.

vision

3. creator 3. creation4. organizer 4. organization5. innovator 5. innovation6. technician 6. technology7. initiator 7. Initiative8. Decision maker 8. decision9. planner 9. planning10.leader 10.leadership11.motivator 11.motivation12.programmer 12.action13.Risk taker 13.Risk taking14.communicator 14.communication15.Administrator 15.administration

Factors Affecting Entrepreneuship


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Factors Affecting Entrepreneuship

Internal Factors

Entrepreneur

Oriented Factors

Production Related

Factors

Finance Related

Factors

Marketing Related

Factors1. Low Risk

Bearing

capacity

1. Location

Disadvantages

1. Lack of access

to non-

institutional

finance

1. Promotional

plans

2. Lowmotivation

2. High cost ofInputs

2. Excessivedependence

on financial

institutions

2. Expansion plans

3. Lack oftechnical

Knowledge

3. Poor capacityutilization

3. Inadequateworking

capital

3. New Productintroductions

4. Lack of

Training

4. Poor quality

controls

4. non

availability of

credit at right

time

4. Product

cancellations

5.Lack of proper

Estimation

5. Inadequate

inventory

5. Delay in

payment of

customers

5. Sales force

changes

6. Delay in loan

sanction

6. Pricing policies

7. Market

expansion to

new customers

l


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External Factors

Government polices & regulations

Shortage of power, water,transport and critical raw

materials

Business trends

Changes in population

Economic fortunes of customer Changes in buying habits

Competitive pressures and

conditions

Economic cycles

Changing demand patterns

Industry trends

Unions

Inflation

International events

Competitors

Rigid institutional formalities State of technology

E i l D i i P


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Entrepreneurial Decision Process

Entrepreneurship is the process of creating

something new with value by devoting thenecessary time and effort and assuming the risk

The new venture is formed through a very personal

human process

There are 3 steps in the entrepreneurial decision

process

The decision to leave a present career or lifestyle

The decision to form new venture

The decision that both external and internal factors

make new venture creation possible

Types of Start Up Firms by Entrepreneurs


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Types of Start Up Firms by Entrepreneurs

1.SalarySubstituteFirms

These are small firms that afford their owner or owners a level of

income similar to what they would earn in a conventional job (fixedincome)

Example:- Dry cleaners, saloons

2.Life stylefirms Lifestyle firms provide their owner or owners the opportunity topursue a particular lifestyle and earn a living while doingExample:- Tour Guides

3.EntrepreneurialFirms These firms create value towards the customersExample:- E-Bay, Google


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Scope of Entrepreneurship

Entrepreneurship Works in different ways in

different economic systems, such as

Capitalism

Socialism

Mixed Economy

S f E hi


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Scope of Entrepreneurship

Capitalism(Private) Socialism(Public) Mixed Economy(Private+

Public) A capitalist economy

represents free

enterprise, which

means freedom to save

and invest

Free competition

very less interference

from Government

Price of the

product/Service may be

determined on the

basis of the force of

demand and supply

A Socialism economy

represents free

service towards the

society development

No competition

Good Interference

from Government

Price of the

Product/Service may

be determined on

the basis of service

providers /sponsors

A Mixed economy

represent both services for

free of cost and sometimes

pay and use

Good Competition

They have to satisfy the

customer and Government

This is Stability in Nature

Price of the

Product/Service may be

determined by the

Government Sometimes


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Role of Entrepreneurship in Economic Development

Increase in National Income

Balanced Regional DevelopmentBringing Change in Structure of Business and

Society

New Products, New Services and New BusinessDispersal of Economic Power

Better Standards of Living

Creating Innovation

Production Evolution Process

d / i l i


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Product/Service Evolution Process

Before starting a product or service an

Entrepreneur should follow the evolution stepsin order to produce a product or provide a

service

1.Exploration2.Screening

3.Business Analysis

(risk/return/features/recommendations/creativity)

4.Development

5.Testing

6.Commercialization (full scale production )

P bl f E t hi


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Problems of Entrepreneurship

Wrong surveys

Lack of identification of projects Lack of infrastructure

Lack of quality control

Lack of market promotion Lack of technology

Lack of finance

Lack of consulting services


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Factors Favoring Entrepreneurship as a Career Options

High need for IndependenceTo satisfy the dream of having high financial

rewardsOpportunity to deal with all aspects of a businessAchievement orientation

Implantation of Ideas Insecurity of JobFamily BusinessRisk Taking

Government Economic Policy (Assistance fromGovernment)

Vision to Leave a Long Lasting Mark (Zeal toInnovate new product/Service)

Indian Entrepreneurs


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Indian Entrepreneurs

Dhirubhai AmbaniJRD Tata

Jamsetji TataAdi Godrej

Anil Ambani

Dr. K. Anji ReddyAzim PremjiBhai Mohan Singh

B.M. Munjal

Ekta KapoorGhanshyam Das Birla

Karsanbhai PatelKiran Mazumdar Shaw

K.P. Singh

Kumar Mangalam Birla

Lalit SuriM.S. Oberoi

Mukesh Ambani

Nandan NilekaniKasturbhai Lalbhai

S.L. Kirloskar

Naresh GoyalDr. Pratap Reddy

Rahul BajajRamalinga Raju

Ratan Tata

Raunaq SinghShiv NadarSubhash Chandra

Subroto Roy

Sunil MittalTulsi Tanti

Verghese KurienVijay Mallya

Mallika Srinivasan

Naina Lal Kidwai

Shahnaz HussainSulajja Firodia Motwani

Shobhana Bhartia

Aditya Vikram BirlaGulshan Kumar

Vaman Srinivas Kudva


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Creating Indian Entrepreneurs

A recent Mckinsey & Company-Nasscom reportestimates that India needs at least 8,000 new businessesto achieve its target of building a US$87 billion IT sectorby 2008.

Similarly, in the next 10 years, 110-130 million Indian

citizens will be searching for jobs, including 80-100million looking for their first jobs.

This does not include disguised unemployment of over50% among the 230 million employed in rural India.

Since traditional large employers- including thegovernment and the old economy player-may find itdifficult to sustain this level of employment in future, it isentrepreneurs who will create these new jobs andopportunities.


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Todays knowledge based economy is fertile

ground for entrepreneurs, in India.It is rightly believed that India has an

extraordinary talent pool with virtually

limitless potential to become entrepreneurs.

Therefore, it is important to get committed

to creating the right environment to develop

successful entrepreneurs.

To achieve this, India must focus on Four

areas as follows.


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The Four Areas

1. Create the Right Environment

for Success

2. Ensure that Entrepreneurs have

access to the Right Skill

3. Ensure that Entrepreneurs have

access to Smart Capital

4. Enable Networking andExchange


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The Future of Entrepreneurship Both the Central Government and various State Governments

are taking increased interest in promoting the growth of

entrepreneurship. Individuals are being encouraged to form new businesses andare being provided such government support as taxincentives, buildings, roads, and a communication system tofacilitate this creation process.

The encouragement by the central and state governmentsshould continue in future as more lawmakers are realizingthat new enterprises create jobs and increase the economicoutput of the region.

Every state government should develop its own innovative

industrial strategies for fostering entrepreneurial activity andtimely development of the technology of the area.

The states should have their own state-sponsored venturefunds, where a percentage of the funds has to invested in theventures in the states.


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Societys support ofentrepreneurship should alsocontinue.

This support is critical in providingboth motivation and public support.

A major factor in the developmentof this societal approval is themedia.

The media should play a powerfuland constructive role by reportingon the general entrepreneurialspirit in the country highlightingspecific success cases of this spiritin operation.

Entrepreneurship New Venture Creation31module1712 110909070051 Phpapp01

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