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Entrepreneurship
Session-156/07/07
What is Venture Capital? Venture capital - high risk contributions
made usually to new and expanding companies
Venture capitalist - a person or company that invest in generally high risk business ventures
Venture capital fund - a company that invests capital accumulated by third party investors
Types of venture capital
Seed Capital--There are different kinds of venture capital available for different stages of business development.
If you are a company still in initial development stage you would most likely need seed capital. Seed capital is usually for the purpose of marketing research and product or service testing.
Types of venture capital
Start-up Capital--If your company has already gone past the research and testing stage and is ready to begin doing business then you are in need of start-up capital.
Startup capital is mainly used for hiring staff, renting office space, purchasing computer equipment, purchasing inventories, building production system, and other activities involved in starting the business.
Types of venture capital
Development Capital: If your company is already gone
beyond the start-up stage and has grown to a point where the company needs to expand in order to maximize profitability but does not have enough liquid assets to make it happen, you are in need of development capital.
The Role of the venture capitalist
directly providing funds for high risk, high return ventures
arranging additional financing from other sources
assessing and revising the proposed business model
reformulating the overall strategy
The Role of the venture capitalist
finding and hiring key managers finding supportive service
companies and other business contacts
firing existing managers when they think this is necessary
buying-out existing partners (owners) when they think this is necessary
What is a Social Entrepreneur?
Someone who adopts a mission to create and sustain social values.
Someone who constantly pursues new
opportunities to serve a particular social mission
Someone who is engaged in a continuous process of creative destruction, i.e. innovation, adaptation and learning.
What is a Social Entrepreneur?
Someone who takes accountability to the constituencies served and the outcomes created
Why Create Social Value? Businesses are motivated by profit-creation
whereas social projects have to be driven towards social value creation.
As a result most successful social entrepreneurs that face various challenges share the same philosophy or a strategic service vision, that is, a set of ideas and actions that maximizes the leverage of results over efforts directed toward well-defined targets and supported with highly-focused operating strategies.
Why Create Social Value?
It is necessary for Social entrepreneurs not only to create social value for its ‘customers’ i.e. its target group but also its ‘investors’ i.e. its donors.
Social entrepreneurs generate social capital when they create channels in which individuals can contribute to their communities and to the welfare of others
Example of a Strategic Service Vision Framework
India’s Aravind Eye Hospital is the largest provider of eye surgery in the world, performing 180,000 cataract operations a year, 70% percent of them for free.
It costs the hospital about $10 to perform a cataract operation which would cost about $1650 in the United States.
Why Marketing Research Is Necessary?
Marketing communications is typically
asked to achieve four things - introduce
a new fact or idea, correct an existing
misconception, reinforce a favorable
opinion or stimulate action.
What Is Marketing Research:
‘Marketing Research’ is the function which links the consumer,customer and public to the marketer through information – information used to identify and define marketing opportunities and problems;generate,refine and evaluate marketing actions;monitor marketing performance; actions; improve understanding of marketing as a process.
Marketing Research can reveal consumer characteristics:
Demographic. Socio-economic. Life-style. Awareness. Behavior (past, present and
intended )
Market research in pre start up phase
Who is the customer? Gender and Age Income Status Occupation and Education Other customer characteristics
Market research in pre start up phase
Where is the market? Market size and changes Segmenting the Market Growth characteristics Sales Forecast
Market research in pre start up phase
Competition Who are the market players? Existing competitors Products or substitutes
Market research in pre start up phase
Distribution How will customers be reached?
Market research in pre start up phase
Sources of market intelligence: Existing competitors Trade publications Securities Analysts Reports Potential customers
The Importance of Information
Companies need information about their: Customer needs Marketing
environment Competition
Marketing managers do not need more information, they need better information.
The Marketing Information System
Developing Marketing Information
Internal Databases: Electronic collections of information obtained from data sources within the company.
Marketing Intelligence: Systematic collection and analysis of publicly available information about competitors and developments in the marketing environment.
Marketing Research: Systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization.
Competitive Intelligence:
It is the selection ,collection,interpretation and distribution of publicly-held information that has strategic importance.
Competitive Intelligence:
Competitor intelligence is the analytical process that transforms disaggregated competitor intelligence into relevant, accurate and usable strategic knowledge about competitor performance
It is highly specific and timely information about a corporation.
Competitive Intelligence:
Goals: Detecting competitive threats. Eliminating or lessening
surprises. Enhancing competitive advantage
by lessening reaction time. Finding new opportunities.
From Information to Intelligence
All the information needs to be collated.
The information need to be indexed and catalogued.
It pieces of information to be analyzed and interpreted.
Source: H. I. Ansoff, New Corporate Strategy (New York: Wiley, 1988), p. 109.
Competitive Growth Strategies
Growth Strategies for Business Units
Intensive Growth Growth occurring when current
products and current markets have the potential for increasing sales
Market penetration: increasing sales of current products in current markets
Growth Strategies for Business Units
Market development: increasing sales of current product in new markets
Product development: increasing sales by improving present products or developing new products for current markets
Growth Strategies for Business Units (cont’d)
Diversified Growth Growth occurring when new products
are developed to be sold in new markets Advantage of diversified growth is the
spread of risk across a number of markets
Diversification allows for a wider use of managerial, technical, and financial resources
Growth-Share Matrix Developed by the Boston Consulting Group
Source: Perspectives, No. 66, “The Product Portfolio.” Reprinted by permission from The Boston Consulting Group, Inc., Boston, MA. Copyright © 1970.