Master Presentation [Compatibility Mode]

8/7/2019 Master Presentation [Compatibility Mode]

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Iqra UniversityFaculty of Management Sciences

Entrepreneurship

Session I

AttendanceIntroduction of the classQuizDiscussion on Course OutlineHome Assignment 1 {Summary of Socio-Survey of Pakistan}

an ma contacts o a stu entsBriefing on Master Business PlanGroups formationBreakLecture

Lecture

What is Entrepreneurship?

Entrepreneurship is the practice of starting new,

response to identified opportunities (obvious or obscure)


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Lecture

Characteristics of entrepreneurship

The entrepreneur has an enthusiastic vision, the driving force of an enterprise. The entrepreneur's vision is usually supported by an interlocked collection

of specific ideas not available to the marketplace. The overall blueprint to realize the vision is clear, however details may be

incomplete, flexible, and evolving. The entrepreneur promotes the vision with enthusiastic passion. With persistence and determination, the entrepreneur develops strategies

to change the vision into reality. The entrepreneur takes the initial responsibility to cause a vision to

become a success. Entrepreneurs take prudent risks. They assess costs, market/customer needs

and persuade others to join and help. An entrepreneur is usually a positive thinker and a decision maker. He is more of a Leader as compared to a Manager

Lecture

Small Businessesis one that is independantly owned and operated and not dominantin its field of operations.

Like, Small NGOs, retail outlets, boutiques, saloons, net cafes, gaming zones, .

remember that it should not be dominating player of its industry!

Criteria for SBM: (annually) - US Manufacturing: 250 or fewer employees Wholesaling 9.5 Milion to 22 Dollars in Sales Retailing: 2 7.5 Million

Service: 1.5 10 Million

Lecture

Characteristics:

Management is independent since managerusually owns the business

Capital is supplied by and ownership is held byan individual or a few individuals

Area of operations is primarily local, although the marketisn't necessarily local

Firm is small in comparison with the largest competitorsin its own industry


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Lecture

Advantages of going into Small Business

Independence Financial Opportunities Community Service Job Security Family Employment Challenge

Lecture

Disadvantages

Sales fluctuations Comeptition Increased responsibilities Financial loses Employee relations Laws and regulations Risk of failure

Lecture

Why Small Business Fail?

Business Failures can be defined as halt / seizure of operations Incompetence Ne lect Fraud Disaster (force majeur)


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Lecture

Some specific causes that lead to Business Failures

Inadequate Records

Expansion beyond resources Lack of information about customers Failre to diversify market Lack of marketing research Legal problems Nepotism (favouritism shown to relatives) Lack of technical competence Absentee management

Lecture 2

Home AssignmentQuizTerm Project (10 members in 1 group, 6 groups)

GroupsGroup 1Group 1 Group 2Group 2 Group 3Group 3 Group 4Group 4 Group 5Group 5 Group 6Group 6

aa ss


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Lecture 2

Discussion

Critical Obstacles to SB Sucecss

Discussion on Page 20

Lecture 2

Technological Revolution and SBM

- Computers, Notebooks, Software (what speed, space, technologicalobsolescence, right quantity, Software registration, MS Raids at offices

in Karachi, Insurance of your systems)

Some common sense questions when it comes to purchasing a software Does the program do what needs to be done Does the developer have a reputation for reliability Will this program run on the current computer Will this program run quickly enough on current computer / upgrading? Is the program easy to learn and use Is the documentation clear

Lecture 2

Technological Revolution and SBM

Fax, copier, printers, Scanners, PABC

Cell phonesInternet brought greatest revolution in small business management

category.Due to Price, greater accessibility, better service, increased convenience

etc


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Lecture 2

Family Business

Advantages of Family controlled firms

Long term orientation Greater independence of action Family culture as a source of pride Greater resilience in hard times Less bureaucratic and impersonal Financial benefits Knowing the business

Lecture 2

Faimly Business

Disadvantages of Family controlled firms

Less access to capital market may curtail growth Nepotism Spoiled kid syndrome Internecine strife (family disputes overflow into business) Paternalistic / autocratic rule Financial strain (disequilibrium between contribution and compensation) Succession dramas

Lecture 2

Business Plan Entrepreneurs Road Map for a successful enterprises.Contents (PAGE 176)

Executive Summary Vision, Mission. Identification of Market, start-up Capital. Description of Business (brief history of company where applicableinformation on overall industr , roduct or service descri tion (overview uni ue,qualities, value to consumers, Start-up Capital.)

Research and Analysis for Product Development / Competitors Analysis Marketing, Advertising and Promotion / Competitors Analysis Management and Critical Risk Analysis Critical Risk analysis Financial Forecasting Milestone Scheduling Appendix


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Lecture 3

Home AssignmentQuizSubmission of Individual Business Plan Idea

Presentation of Group 1

Recap of what we discussed in last session

Technololgical RevolutionFamily businessAd/Disadvantages of Family controlled firmsBusiness Plan

Lecture 3

Franchsing

What is Frachising?is a system of distribution that enables a supplier (the franchisor) to

service under certain mutually agreed on conditions.

Lecture 3

Franchsing

When a product is franchised, the franchisee receives the goods from thefranchisor and sells them through a wholesale or retail outlet.

When a service is franchised the franchisee receives a license for a tradename and the particular services to be sold.

Mc Donalds, Pizza Hut, KFC


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Lecture 3

Franchsing

Conversion Franchising

conversion of independent, on- oin businesses into franchise-systemmembers. Daewoo-Matiz > Chevrolet Aftab Associates > A C NielsonAftab Idea is to capitalize on the brand equity of a franchisor, usuallyfrom same product or service category. (access to additional customers,marketing assistance, brand name, improved business

Lecture 3

Franchsing

How a Small Business Franchise Works

f Obtain and maintain a standardized inventory ad/or equipment package

usually purchased from the franchisor Maintain a specified quality of performance Follow a specific operating procedures and promotional efforts of the

franchisor Pay a Franchise Fee as well as a percentage of gross revenue Engage in a continuing business relationship

Lecture 3

Franchsing

In turn the franchisor provides:

- Identifying symbols, Logos, designs and facilities Professional training Sale of raw material needed at a reduced price.


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Lecture 3

Franchsing

Advantages of Franchising Training and guidance are provided by the franchisor The franchise offers brand-name appeal Track record of other franchisees shows proof of success Financial assistance can be secured from the franchisor

Disadvantages of Franchising Franchise Fee The control of franchisor exercises (modalities of operations), Pizza Hut

global 20-min delivery promise Unfulfilled promises of some franchisors

Lecture 3

Franchsing

When it comes to opening up a Franchise

Identif o ortunities; et reliable information from reliable source Investigate franchisor, thoroughly Seek professional help from an Iqra University MBA / CPAs / CFAs

Lecture 3

Franchsing

Franchising your business the other side of franchising

Develo in a franchise business develo in o eratin s stems for ourown business. Policies, procedures, guidelines etc

Selling franchises servicing franchises learning more about running the franchised business to create long-term,

mutually profitable relations with the franchisees


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Lecture 4

Home AssignmentQuiz


FranchisingConversion FranchisingAd/Disad

Lecture 4

Start-up Concerns

- Types of Capital- Types of Debt

- ources o ap a- Types of Loans

Location- Factors in selecting location- Leasing vs buying option

Lecture 4

Start-up Concerns

Basic Types of Capital > Financing comes from 2 basic

cources a) Debt b) Owners Equity

Debt is further divided into a) Current or Short-term(12 months) b) Intermediate Term (1-10 years) c)Long-term (10 +).

Your trade credits also come under short-term loans.Credits from Suppliers, Credit to Wholesalers /Retailers etc


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Lecture 4

Start-up Concerns

What are the sources of capital? a Personal Savings b)

Friends and Relatives c) Informal investors(Business Angels) d) Internal Funds (RetainedEarnings) e) Trade Credit f) Banks (Concept of Lineof credit (but bank is never liable to extend always.

Revolving Credit Agreement in which bank is liable

Lecture 4

Start-up Concerns

Credit > maximum credit amount, but bank is neverliable to extend always. The one in which bank is

a e s evo v ng re greemen .

LOANS > a) straight Commercial Loans b) Term Loansc) Account Receivable loans d) Warehouse ReceiptLoans (pay back when the inventory is sold) e)Collateral Loans (against some security).

Lecture 4

Start-up Concerns

Some Other sources of capital > a) InsuranceCompanies b) Finance Companies e) Factors(they buy your A/c Receivables and take fullresponsibility)


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Lecture 4

Start-up ConcernsLOCATIONFactors in selecting the location >

a) Personal > where do you want to locateb) Economics > locate where money isc) Competition > comparatively less competition butgreater economicsd) Geographic > a boat repair shop should ideally benear the beach.E) Area Laws and Regulations > Music Shop athighly religious area.

Lecture 4

Start-up ConcernsLOCATIONImportant factors in selecting a manufacturing location

a) Nearness to marketsb) Nearness to suppliersc) Adequacy and cost of labor supplyd) Adequacy and cost of power supplye) State and local regulations and taxesf) Transportation services and cost

Lecture 4

Start-up Concerns

LEASING VERSUS BUYING

Advantages of Leasing > a) Initial outlay is less b)Maintenance cost of asset borne by the lessor

Advantages of Buying > a) Tax Depreciation b) Assetsthat you seem WILL BE required after some time, itwould be better to by than to lease.


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Lecture 5

Home AssignmentQuiz


Start-up concernsLocations (factord)Leasing vs Buying)

Lecture 5

Legal Concerns- What is a contract?- Aspects of contract- Home readin assi nment T es of

Warraty- Bankruptcy- Patents- Copyrights

- Trademarks

Lecture 5

What is a contract? is a legal agreement that can be enforced by the courts

if either party fails to abide by its provisions


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Lecture 5

Components of a Contract: Agreement an offer from someone must be accepted by the other. An

intent to contract must exist, just words are not sufficient. Office Rental,

House purchase etc Consideration something of Value the offeree gives to the offerer.(Money, barter, somethin of value)

Contractual Capacity parties must be able to contract. Minors (under18), Insanity and Intoxication.

Legality It should have Legality of Purpose, means a contract that is inviolation of law cannot be enforced. Contract to bribe, contract tomurder. Sometimes, depending upon intensity of situation, courts mayintervene.

Reality of Consent the agreement should state what actually wasagreed or meant by the parties involved. Fraud (deception with theintent of misleading another person), innocent misrepresentations ormistakes cannot be done.

Lecture 5

Home Reading Assignment > Page 269, Table 11.2. Types of Warranty , Quiz in next class.

Lecture 5

Agency Law A third party that acts as an intermediary between two ormore parties for representation. Agent is also bound by the contract a perits contents. Ideal example is of Advertising Agency.

Bankruptcy - occurs when a debtors financial obligations are greater thanhis assets.

Two types of Bankruptcy:

A) Voluntary > debtor himself files an application for bankruptcyB) Involuntary < when creditors file application for bankruptcy of debtor.


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Lecture 5

Patents, Copyrights and Trademarks

Patent > Patent is granted to an inventor for developing a product or aprocess; has two parts a) disclosure statement describing the inventionb) a set of claims covering the exact particulars to be protected. Pursuinga Patent can be expensive. Example 3M global strategy

Copyrights > Copyright protects authors of written material for the extent oftheir lives plus 50 years (American Law).

Fairness Doctrine > allows limited reproduction for criticism, comment,reporting, teaching, scholarship, or research without any infringement ofcopyright.

Trademarks > is a word, name, symbol, character, slogan, series of letters ornumbers, types of packaging or labeling, or even a combination of colorsthat identify the particular goods and service of a business anddistinguish them from competitors.

Lecture 6

Home AssignmentQuiz


ContractComponents of ContractPatents, Copyrights, Tradermarks

Lecture 6

Home AssignmentQuiz

Management

What is management?Four Functions of Management

Human Resource ManagementChallenge of managing HR (staff leaving, demanding etc_)Diversity in Work ForceProportion of men to womenLegalities of HR


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Lecture 6

Management

What is management?Management is the process of accomplishing tasks through people

Avoid Owner-Manager syndromeAll management revolves around a) People b) workManagement Activities can be divided into two> Doing and Thinking

Lecture 6

Management

Four Functions of Management > Planning, Organising, Leading,Controlling.

Planning> Process a) Be aware of opportunities b) Set Objectives c) Forecastenvironment d) Determine Alternative courses of action e) evaluatealternative courses of action f) Select and implement a course of actiong) formulate support plans h) budget the plan

Organizing> Who will do what? How? When? a) Job Definitions b)Departmentalization (Functional vs Product) c) Span of Control d)Delegation of Authority (Size, Cost, energy of Owner, Comeptition,Nature of Work, Trust in employees)

Lecture 6

Management

Directing> a) communicating b) Leading (art of influencing peopletowards organizational goals)

Authoritarion Leadership vs Participatory Leadership vs Laissez FaireLeadership (occasional information exchange)

Control > Establishing standards, comparing performance with standards,and correcting any deviations.

Concept of Overcontrolling > avoidHow to Control > a) Budget b) Break-even point analysis = Total Fixed

costs / Selling Price Variable cost


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Lecture 6

Human Resource Management

The Challenge of managing HR- People coming and leving- Demands

- Polictics- Job Poaching

Diversity in Work Foce

Proportion of men to women

Increasing inflation, soaring disposable incomes!

Lecture 6

Legalities of HR- Labour Laws- Labour Unions

StaffingInvolves recruiting and selecting. Whats the difference?Assessing Staffing Needs > Short-term and Long-term needs

How to Recruit > Press Ad, Present employee promotion, FormerEmployees, Commercial Employment agencies, educational institutionplacement services etc

Selection > interviews, tests, group discussions, stress tests, referencechecks.

Lecture 6

Indoctrination > is job orientation with staff, processes etc

Training> TNA, Choosing the most practical training methods (on-jobcoaching, role playing, Programmed Instructions (canned presentation,to suit each person learn at his own pace)

Performance Appraisal > 5 basic characteristicsa) is tied with the job and its performanceb) comprehensive, measuring all aspectsc) objectived) based on standards of desired performancee) to pinpoint strong points and shortcoming of a person


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Lecture 6

MBO > Management by Objective > 6 steps a) Identify Org Goals b)Examine current organizational structure c) Meet with personnel toestablish their objectives with their consent d ) Employees determinehow to attain their objectives e) Talk with the individual worker todetermine the types of assistance required by them f) Evaluate overallresults and begin cycle again.

Compensation > Wages vs Salary system .. Straight Salary vs IncentiveCompensation Benefits > Medical, Gratuity, Provident, LFA, Leaves,Bonus.

Critical Issues >Employee Morale > Job Satisfaction (Turnover, Productivity, Waste&Crap,

Service, Tardiness and Absenteeism, Accidents, Complaints &Grievances)

Lecture 7

Home AssignmentQuiz


ManagementHRMMBOPerformance AppraisalsLabor Laws

Lecture 7

Managing Growth in Small Business

TQM


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Lecture 7


Size of company >Advantages (flexibility, closeness with

market/consumers) Disadvantages (smaller size limits geographicexpansion, higher ordering cost burden small firms, smaller staff

greater tasks)

Lecture 7


The One-person-band syndrome > Owner / entrepreneur doingeverything, from planning to execution to all. But his abilities arelimited.

Time Management > (Assessment, Prioritization, Creating Procedures,Delegation)

Lecture 7


Community Obligations (donations, attendance in community

programmes)

on nu ng anagemen uca on en repreneurs cons an yneed to upgrade their education / knowledge

Formative Year Problems Table 14.1, page 354.


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Lecture 7


Key Elements of Growth

Control > Growth creates problems in command and control. Your controlsystem should answer yes to the trust that prevails amongst your

.Responsibility > growth is followed by greater responsibility for all.

Develop a sense of responsibility in the organization than simpledelegation.

Tolerance of failure > You need to develop tolerance to failure. 3 forms a)Moral Failure (violation of internal trust) b) Personal Failure (lack ofrequired skill or application) c) Uncontrollable failure (product flop,market non-responsive, faulty strategies).

Change > all aspects of management are subject to Change.Flexibility > most important asset, ability to assess and accumulate

resources are required in growth stage. Networking could be done forresource generation.

Lecture 7


The Transition from Entrepreneur to Manager > Problems > a) highly centralized Decision making b) Over

dependence on 1 or 2 individuals c) inadequate repertoire (range) ofmanagerial skills and training d) paternalistic atmosphere.

The ability to remain Entrepreneurial while adopting toAdministrative traits is what is the key here.

Lecture 7


The Challenge of Ethics in Small Business Table 14.3 Page 361

Code of Conduct > is a statement of ethical practices or guidelines anenterprises adheres to.

Social Responsibility >


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Lecture 8


TQM > continuous improvement of quality in all aspects of business.

Top management involvement Focus on customer needs Empower Employees generate new ideas Recognize employees Conquering Fear

Lecture 8

International Opportunities for Small Business

Why should you or consider to go international?

Lecture 8


Reasons: a) Increased Profit b) Unique Goods of Services c0 TechnologicalAdvantage d) Exclusive Market Information e) Owner-Manager Desires

f) Tax Benefits g) Economies of Scale

eac ve easons a compe i ive ressure ec ining omes ic emanc) Overcapacity d) Proximity to customers e) Counterattack foreigncompetition


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Lecture 8


When you go international there are lots of areas or challenges that you needto recognize and address

1. Cultural Challenge > Definition of Culture (is an integrated system oflearned behavioral patterns that help distinguish one country,

2. Language, Religion, Values, Manners and Customs, Material Elements(bikes in Asia and America), Education

Lecture 8


Before every efficient marketing effort, lies ResearchInternational Market Research > Secondary Research , Primary Research

Lecture 8


The option of Exporting > Most small businesses engage in this easily

In Exporting > a) International Product Adaptation b) Pricing (Cost plusand Marginal, only adding the difference and Market Differentiated

ricing ,

Intermediaries (clearing forwarding agents, banks, insurance agencies)


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Lecture 8

Class Discussion 1

Should we or shouldwe no en eavour obe an entrepreneur?

Lecture 9

Home AssignmentQuiz


Total Quality ManagementInternational Opportunities for Small BusinessesReasons for going internationalFactors to consider when going international

Lecture 9

Marketing Goods and Services

- Need to understand what is marketing

- Consumer Behaviour- Impact of price on Market Behaviour-- Market Research


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Lecture 9


Before we discuss what is Marketing, it is imperative to learn what aMARKET is

Why should an entrepreneur consider this concept of Marketing?

Lecture 9


What is Consumer Behaviour?

What do people look for when they make a purchase?

Peoples buying decision is 3-pronged a) Needs b) Competitive prices c)

availability of Substitutes - Shaving Cream / Foam / Gel

How can we influence the behaviour of our targettedconsumers/customers?

Lecture 9


Impact of Price on Market Behaviour

- Economic definition- Marketing perspective. Market Behaviour changes with price,

alongside other factors like category of product/service,availability of substitutes, macroeconomic situation etc


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Lecture 9


Types of Competition

Based on the Degree of Competition, there are 4 basic types.

Monopo y 1 se er, wit no su stitutes ( , A , Oligopoly few dominant players that constitute 70-80% of industry

sales (MOBILINK, U-FONE, WARID, TELENOR, PAKTEL) Monopolistic Competition many firms, each producing small share of

sales, with slight product / feature variations (Most small businesses fallinto this) (TAILORS, CONECTIONARY SHOPS, SHOES etc)

Pure Competition many independent sellers offer same products.

Lecture 9


Once you get the idea of what the market is and how the competition isaffecting this market, then you need to examine the current market niche.

Market Niche is your segment of the market, Who are customers, Their, ,

questions will give you Customer Profile.

Lecture 9

Class Discussion 2

Entrepreneural Ability

Men are blessed morethan women!


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Lecture 10

Home AssignmentQuizPrersentation by Group


Need to understand what is marketingConsumer BehaviourImpact of price on Market BehaviourTypes of CompetitionMarket Research

Lecture 10

Pricing for Profit, Promotion and Personal Selling

Lecture 10

Pricing ConsiderationFind the extent of price sensitivity of your product (how much price

sensitive or insensitive your product is. Example: Flour, Sugar, Petrol)

{Nature of Product}

A lot of times your product will be brought solely on the basis of

competitive pricing {Competition}


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Lecture 10

How do you want sell / market your product?What is your positioning? Is it for high class?

All such marketing strategy issues addressed {Marketing Strategy}

Economic downturn / upturn, religious factors, cultural sensitivities,

{General Business Conditions}

Lecture 10

Key Pricing Factors Cost of Goods, common sense {Selling Price = Purchase price + operating

expense + profit} Competitive Prices Market Demand {CNG}

Lecture 10

Pricing Strategies

Skimming Pricing{selling a high price to skim off t he strongest demand in

the market place} Often a short range activity as skimming conditionsdo not last for long- New Mobile Phones, Laptops with Wireless LAN,

e ecommunication c arges

Penetration Pricing strategy of employing a low price that is competitiveand designed both to stimulate demand and t o discourage competition.{mobile phones}

Odd Pricing(psychological pricing) setting of a price just below a roundnumber. Rs. 299.9. this only works when it gives a psychological benefitto the customer


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Lecture 10

Leader Pricing reducing the high price of a popular product in order tosell more

Price Lining offering merchandise in several different price ranges. IceCream plain , ice cream with topping.

Geographic Pricing technique of charging customers on the basis of wherethey live (geography). Ads on the cost of transporting from one place toanother

Discounts reduction in the list price. Seasonal Discounts, Group

Discounts, Quantity discounts, Cash discounts

Combination Strategy can also be used

Lecture 10

Markup difference between price and its cost to business.

Markon Cushion in case the products get sold after discounts.

Channel Members.

Lecture 11

QuizPrersentation by Group


Pricing for Goods and ServicesKey Pricing FactorsPricing StrateiesMarkup and Markon


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Lecture 11

Risk AnalysisExit Strategy

Lecture 11

Risk Analysis

is a measure of the likelihood and consequences of not achieving a definedtarget

1. Likelihood2. Consequence

How do we calculate Risk?

Likelihood x Consequence = Intensity of Risk

Prepare back-up plans in accordance with how intensive a particular risk is

Lecture 11

Risk of Business Failure (due to any reason)

Risk of technological obsolence

Risk of switching HR

Risk of Safety and Security aspects

Risk of any other factor beyond ones control (Force Majeur)


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Lecture 11

Exit Strategy

What is Exit Strategy?Why do we need to plan ahead for our failure?

What are the advantages of doing so?

Lecture 11

Exit Strategy

What are the key factors that you should keep in mind when it comes todevising an Exit Strategy?

- Chalk out all possible areas/reasons for business failure?- , ,

People, Customers, Suppliers, Environment, Legal/Political/Culturalaspect, Technology, others

- List possible solutions to the above potential problems.- Analyze still if everything fails, how would you respond?- Flight vs Fight- List down the steps you would take to divest the business and their

implications.- Always end in good notes.

Lecture 11

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