Entrepreneurship And Business

Plan Session 1st

By: - Neeraj Gupta

Meaning ‘Entrepreneurship‘: -refers to a process by which

individuals launch and manage their business and industrial enterprises.

It is a dynamic process of creating wealth.

‘Entrepreneurs’: - are the ones who risk and invest their own capital into the business and industrial-ventures.

And the fact is everybody is an entrepreneur. We ask how is everybody an entrepreneur anyone who exhibits the characteristics of self-development,

creativity, self-decision making and risk-taking can be rightly called as a person with entrepreneurial traits.

And if these traits are exhibited by a business person than he is called an entrepreneur.

Meaning & Definition Acc. To Dictionary: -Person who reorganizes and manages

only enterprise specially involving high risk.

But actually entrepreneurs are the ones who cleverly try to reduce risk and increase profitability.

Acc. To economist: - Person who brings resources, labour, material, and other assets into combinations that make their value greater than before and also one who introduces changes, innovations and a new order.

Acc to Psychologist: -Person who is typically driven by some forces, which create a desire to attain something.

Acc to Sociologist: -Person whose actions determine his social status and who contributes to society.

Management experts define him as a person who has a vision and generates an action plan to achieve it

Entrepreneurship involves 4 aspects1. Entrepreneurship involves the creation process—creating

something new of value to the entrepreneur and to the audience.2. It requires the devotion of the necessary time and effort.3. It involves assuming the necessary risks.4. The rewards of being an entrepreneur are independence, personal

satisfaction, and monetary reward.

The entrepreneurial experience is filled with enthusiasm, frustration, anxiety, and hard work.1. For many reasons there is a high failure rate among business owners.2. The financial and emotional risk can be very high.

Evolution of Entrepreneurship Earliest Period

Marco Polo, who acted as a go-between and attempted to establish trade routes to the far east, was an early example.

The profits were divided between the capitalist and the merchant. Middle Ages

The term entrepreneur was used to describe both an actor and a person who managed large production projects.

A typical entrepreneur was the cleric who managed architectural projects.

17th Century entrepreneur -a person who entered contract with govt. to perform a service. Any profits or losses were, tying risk to the entrepreneur for the first time. John Law, a Frenchman, established a royal bank which evolved into an

exclusive franchise trading company in the New World, leading eventually to Law’s downfall.

Richard Cantillon, a noted economist of the 1700s, developed early theories of the entrepreneur and is regarded as the founder of the term.

He viewed the entrepreneur as a risk taker who “buy[s] at certain price and sell[s] at an uncertain price, therefore operating at a risk.”

Evolution of Entrepreneurship 18th century

entrepreneur was distinguished from the capital provider. Inventors Eli Whitney and Thomas Edison (both were capital

users) were unable to finance invention themselves and raised money from venture capitalists.

A venture capitalist is a professional money manager who makes risk investments from a pool of equity capital to obtain a high rate

of return on investments. 19th and 20th Century

The entrepreneur “contributes his own initiative, skill & ingenuity in planning, organizing and administering the enterprise… assume[ing] the chance of loss and gain.”

Andrew Carnegie is one example, building the American steel industry through competitiveness rather than creativity.

In the middle of the 20th century, the notion of an entrepreneur as an innovator was established.

Nature and Development of Entrepreneurship Entrepreneurs can contribute a lot to society so

researchers have tried to analyze them on the whole. Acc. To David McClelland in 1960’s entreprenerur’s

like careers, and have high need for achievement and always take calculated risks.

Five Dimensions of Entrepreneurs by Thomas Bigley and David Boyd given in mid 1980’s High in Need for achievement They like to think and don’t depend on luck or fate Willing to take moderate risks Ability to tolerate ambiguity Drive to get more done in less time

Traits of Entrepreneurs By John Hornday of Bobson College

Self Confidence and Optimism

Positive response to challenges

Ability to take calculated risk

Flexibility and ability to adapt

Knowledge of markets

Ability to get along with others better

Independent mindedness

Versatile knowledge

Energy and efficiency

Traits of Entrepreneurs By John Hornday of Bobson College

Creativity, need to achieve Dynamic leadership Responsive to suggestions Take initiatives Resourceful and persevering Perceptive with foresight Responsive to criticismEnergy and efficiency

Skills Required of Entrepreneur

TechnicalBusiness

Management Personal

Writing Planning Inner Control

Oral Communication Decision MakingRisk Taking

Monitoring The Environment

Human RelationsInnovative

Use TechnologyMarketing(Selling)

Change-Oriented Visionary

Entrepreneurial Decision

Present Present LifestyleLifestyle

New EnterpriseNew EnterpriseDesirableDesirablePossiblePossible

CatalystCatalyst

Entrepreneurial Decision Process Entrepreneurial decision process entails a movement from

something to something. Change from Present Lifestyle Two work environments good for spawning new enterprises:

R&D and marketing. A stronger incentive to leave a present live-style comes from a

negative force—disruption. Companies formed by people retired, moved, or been fired. Completing an educational degree.

The decision to start a new company occurs when an individual perceives that forming a new enterprise is both desirable and

possible.

Drivers of New Venture Formation Desirability Influences

Culture/Subculture Family/Peers Teachers

Possibility Factors Government Background Market Marketing Role Models Finances

Entrepreneurial Decision Process On lookout for opportunity and minimization

of risk Experience based decisions Market Situation based Profit margin taken into account Market expansion Goodwill etc.

Role and Scope of Entrepreneurship in Economic Development Role and type of career lays down his pattern of living, determines his social

status and controls his present and future life

It provides numerous opportunities for self-expression and realization of one's passion for doing something new and different.

There are numerous opportunities for growth and self-development. Monetary rewards are greater. Entrepreneur enjoys the power of decision-making.

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Reward of working on one's own leads to immense satisfaction. Product-Evolution Process Iterative Synthesis Innovation Technology Transfer Development of community Generates employment

Careers/Education

Life Space Work/Occupation Individual/Personal Nonwork/family

Skills Required Technical Business Management Personal

Entrepreneurial Checklist-What it takes to be an Entrepreneur

Business skills, Attitude, and Experience Health and Stress Management Confidence, Optimism, and self reliance People skills Creativity and Innovation

Ethics & Social Responsibility

Ethics- Behavior/Morals in Business Social Responsibility Value System

Peer Pressure Social Norms Competitors Individual vs. Community

Entrepreneurial Process What entrepreneurs do can be explained as a six

step process: - They see opportunities where others don't. They have a 'vision', a clear understanding of the concept

and of what they're trying to do. They persuade others of their vision, they can

communicate the concept effectively. They gather resources to make their vision become a

reality (money, people, things). They organize these resources to create a new venture,

product or market (leadership, teams). They constantly change/adapt themselves according to the

changing demands of the market.

Entrepreneurial Process

Identify an Opportunity

Establish a Vision

Persuade Others

Gather Resources

Entrepreneurial Process-Gather Resources Resources can be classified into 4 categories: -

Financial Personal Savings Family and Friends Retained Capital Commercial Partnerships Floating Public Issues Venture Capital Government Institutions Banks Non-Governmental Organizations

Operating: -Tangible Machineries Raw material Land and Buildings Office Equipments

Operating: -Intangible Company’s image Operating Procedures Transportation Management

Information Primary Secondary

Entrepreneurial Process-Gather Resources Human

Whether to employ permanent or temporary/casual employees?

What should be amount and type of manpower in organization?

What should be the system for training the employees? How should the compensation system be designed? What method of performance appraisal should be used by the

organization? What should be the system of rewards? How can healthy IR be maintained between the employees

and the employer? What method of grievance procedure should be adopted? How to maintain a healthy organizational culture? What should be the procedure for recruitment and selection to

acquire the best of the resources available in the market?

Entrepreneurial Process

Create New Venture

Change/Adapt with time

Intrapreneurship

It is the practice of entrepreneurial skills and approaches by or within the company.

This means that to retain the entrepreneurs within the organization they should be provided entrepreneurial chances within the organization.

For this managers who listen and respond to new ideas and are willing to risk their future, a system that rewards managers who may fail but who have generated and experimented with ideas.

Intrapreneurial Intrapreneurial ActivitiesActivitiesNew Business VenturingNew Business Venturing

InnovationInnovation

Self-RenewalSelf-Renewal

ProactiveProactive

Intrapreneuring & Characterstics of Intra preneurs Intrapreneuring: - means entrepreneurial activities that acquire

organizational sanctionsand commitments of resources for the sole objective of innovative results.

Characterstics: - Intrapreneurs bridge gap between inventors and managers.

They take new ideas and turn them into profitable realities. They have a vision and the courage to realize it. They can imagine what business prospects will follow from

the way customers respond to their innovations. They have ability to plan necessary steps for actualization

of idea. They have high need for achievement and they take

moderate calculated risks. They are dedicated to their work that they shut out other

concerns, including their family life.

Reasons for Promoting Intrapreneurs in Organization

Intrapreneurs thrive and vibrate in all organizations: big or small.

Through their expertise and rich experience in organization.

Basic Differences between Managers, Entrepreneurs and Intrapreneurs

Building and Nurturing Intrapreneurs: A Theoretical Model: Analysis

Similarities and Economic differences Between Entrepreneur and Intrapreneur Economic Differences: -Entrepreneur is starting a

business while Intrapreneur is developing a new product in an already existing business.

Intrapreneurs succeed when you as the owner: - Walk your own talk Select people with more breadth than depth Pick champions with marketplace, distribution, product and

technology experts. Choose “doers” who are talked about Don’t lead your good people to a slaughter Don’t ask your Intrapreneur to fix your entire sales, marketing

or organization plan

Intrapreneurs Fail When you as a Owner tolerate Leadership lip service Insurmountable politics A dysfunctional culture- to fix it change 4 S’s

System Staff Salary

Structure

What to do as an Intrapreneur Seize the moment

Your corporate and salaried people do not feel empowered to make needed changes but you do.

Your hourly people do not connect the quality of quantity of their work to the success of your company or an increase in their pay but you do.

No one in your company, including your sales force, has really had to sell an idea, product, or service to make a mortgage payment but you have.

You see your organization going along to get along but you can't.

What to do as an Intrapreneur

Pass on the opportunity and perhaps become and entrepreneur when you see Your owners are motivated more by protecting

their wealth then they are by creating new value. Your owners are threatened, weak and don't

really want to change. Insiders protecting the status quo control your

organization. The pain of your organization changing is greater

than the pain of your organization not changing.

Corporate Vs Intrapreneurial CultureCorporateCorporate Sum of values, cultures, Sum of values, cultures,

traditions etc.traditions etc. Climate/Reward System Climate/Reward System

Favors ConservatismFavors Conservatism Follow Instructions, No Follow Instructions, No

InitiativeInitiative Hierarchy Of AuthorityHierarchy Of Authority Stimulates innovationStimulates innovation

IntrapreneurialIntrapreneurial The character of an The character of an

organizationorganization Develop Vision, Goals, & Develop Vision, Goals, &

PlansPlans Suggest, Try, ExperimentSuggest, Try, Experiment Flat Organizational Flat Organizational

Structure- Networking & Structure- Networking & TeamworkTeamwork

Cultural Cultural Norms/ValuesNorms/Values

CorporateCorporate IntrapreneurialIntrapreneurial

FragmentedFragmented WholeWhole

InstructionInstruction VisionVision

ControlledControlled In ControlIn Control

Outer-DirectedOuter-Directed Inner-DirectedInner-Directed

AlienationAlienation ResponsibilityResponsibility

““Chores”Chores” Enthusiasm/MotivationEnthusiasm/Motivation

Defined LimitsDefined Limits Space/FreedomSpace/Freedom

InterferenceInterference TrustTrust

DistrustDistrust Belief In PeopleBelief In People

ExpendableExpendable ExpandableExpandable

Limiting PeopleLimiting People Growing PeopleGrowing People

Climate for Climate for IntrapreneurshipIntrapreneurship• TechnologyTechnology• New Ideas EncouragedNew Ideas Encouraged• Trial/Error EncouragedTrial/Error Encouraged• Failure AllowedFailure Allowed• No Opportunity ParametersNo Opportunity Parameters• Resources Available & Resources Available &

AccessibleAccessible

• Multidiscipline TeamsMultidiscipline Teams• Long Time HorizonLong Time Horizon• Volunteer ProgramVolunteer Program• Appropriate Reward SystemAppropriate Reward System

• Sponsors/Champions Sponsors/Champions

AvailableAvailable• Support of Top ManagementSupport of Top Management

Intrapreneurial Intrapreneurial LeadersLeaders

Understand EnvironmentUnderstand Environment

Have Vision/FlexibilityHave Vision/Flexibility

Create Management OptionsCreate Management Options

Encourage TeamworkEncourage Teamwork

Encourage Open DiscussionEncourage Open Discussion

Build CoalitionsBuild Coalitions

PersistPersist

Evaluating Evaluating Intrapreneurship Intrapreneurship ProposalsProposals

Corporate FitCorporate Fit Initial InvestmentInitial Investment Experienced Venture Experienced Venture

ChampionChampion Experience With Experience With

Product/ServiceProduct/Service

Competitive ThreatCompetitive Threat Proprietary Proprietary

TechnologyTechnology Gross MarginGross Margin Rate Of ReturnRate Of Return

Barriers ToBarriers ToIntrapreneurshipIntrapreneurship

Inherent Nature of Large OrganizationsInherent Nature of Large Organizations No Long-Term CommitmentNo Long-Term Commitment Lack Of Autonomy For Decision MakingLack Of Autonomy For Decision Making Lack of Intrapreneurial TalentLack of Intrapreneurial Talent Inappropriate Compensation MethodsInappropriate Compensation Methods Constrained EnvironmentConstrained Environment

Thank You