2.5 Entre vs Manager

8/3/2019 2.5 Entre vs Manager

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EntrepreneurshipEntrepreneurship

DEEPAK BAJAJDEEPAK BAJAJ


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Entrepreneur Vs. ManagerEntrepreneur Vs. Manager

SESSION VSESSION V

Chapter I Entrepreneurship DevelopmentChapter I Entrepreneurship Development


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ENTREPRENEURS AND MANAGERSENTREPRENEURS AND MANAGERS

Entrepreneurs and professional managers have comparableEntrepreneurs and professional managers have comparable

yet different scope of their functions.yet different scope of their functions.

They are two like sides of the coin, inseparable yet different.They are two like sides of the coin, inseparable yet different.

An effective entrepreneurial strategy should be an integralAn effective entrepreneurial strategy should be an integral

part of an enterprises competitive positioning.part of an enterprises competitive positioning.

The progressive development in the size of business and theThe progressive development in the size of business and the

separation of ownership and management in the enterpriseseparation of ownership and management in the enterprise

has made management a distinct profession.has made management a distinct profession.

Although both strive to achieve similar goals, they are said toAlthough both strive to achieve similar goals, they are said to

distinguish themselves in different measures.distinguish themselves in different measures.

Both managers and entrepreneurs are answerable forBoth managers and entrepreneurs are answerable for

producing results. The results are, of course, different. Inproducing results. The results are, of course, different. In

their respective result areas, the buck stops with them.their respective result areas, the buck stops with them.

While they can delegate, they are finally accountable.While they can delegate, they are finally accountable.


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Both have to produce results through people working withBoth have to produce results through people working with

them though they deal with different set of people. They arethem though they deal with different set of people. They are

not effective in the long run, if they are loners.not effective in the long run, if they are loners.

Both are decision makers but decisions are different as theirBoth are decision makers but decisions are different as their

tasks vary.tasks vary.

Both have to operate under constraints which areBoth have to operate under constraints which are

understandably different.understandably different.

To be effective in their respective role, both have to followTo be effective in their respective role, both have to follow

sound principles of management like planning, staffing,sound principles of management like planning, staffing,

delegation and control. The focus of these management toolsdelegation and control. The focus of these management tools

may vary upon the ultimate purpose.may vary upon the ultimate purpose.


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ENTREPRENEUR Vs MANAGERENTREPRENEUR Vs MANAGER

Professional ManagerProfessional Manager A professional manager is one who specializes in the work ofA professional manager is one who specializes in the work of

planning, organizing, leading & controlling the efforts of othersplanning, organizing, leading & controlling the efforts of othersby the systematic use of classified knowledge and principles.by the systematic use of classified knowledge and principles.

He subscribes to the standards of practice and code of ethicsHe subscribes to the standards of practice and code of ethicsestablished by a recognized body.established by a recognized body.

To be a professional manager, he shouldTo be a professional manager, he should

have an insight of his job requirements,have an insight of his job requirements,

carry out continuous updating of his learning to fulfill hiscarry out continuous updating of his learning to fulfill hisjob requirement,job requirement,

have a performance-oriented relationship with hishave a performance-oriented relationship with his

subordinates & colleagues based on mutual respect tosubordinates & colleagues based on mutual respect tofacilitate team work for collective contribution to thefacilitate team work for collective contribution to theorganization,organization,

have comn with colleagues to improve the standard ofhave comn with colleagues to improve the standard ofcontribution and the prestige of the managerial profession.contribution and the prestige of the managerial profession.


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have a relationship based on long term mutual benefit approachhave a relationship based on long term mutual benefit approachwith customers, suppliers and other members of the publicwith customers, suppliers and other members of the public

A professional manager is required to possess specific mgtA professional manager is required to possess specific mgtknowledge relating toknowledge relating to

technical processes, products, materials, equipment andtechnical processes, products, materials, equipment andproceduresprocedures

economic knowledge about the basic objective of theeconomic knowledge about the basic objective of theentrepreneurs and its position in the economic and socialentrepreneurs and its position in the economic and socialsystem within which it is operating,system within which it is operating,

human knowledge about employee motivation, morale andhuman knowledge about employee motivation, morale anddelegation of authority anddelegation of authority and

administrative knowledge about application and analysis ofadministrative knowledge about application and analysis ofdata. This will facilitate him to deal with various problems ofdata. This will facilitate him to deal with various problems of

the organization in an effective manner.the organization in an effective manner. A professional manager brings into operation planning, organizing,A professional manager brings into operation planning, organizing,

staffing, motivating, controlling and coordinating the works ofstaffing, motivating, controlling and coordinating the works oftechnocrats and professional aspects to achieve pre-determinedtechnocrats and professional aspects to achieve pre-determinedgoals.goals.


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The professional manager must possess a desire to achieve, toThe professional manager must possess a desire to achieve, toexpand, to build and to grow.expand, to build and to grow.

The manager who has had the benefit of formal managerialThe manager who has had the benefit of formal managerialeducation and has been exposed to the managerial tools andeducation and has been exposed to the managerial tools and

techniques of achieving the profit-cum-growth will be in a goodtechniques of achieving the profit-cum-growth will be in a goodposition to deliver the goods to in developing economy like ours.position to deliver the goods to in developing economy like ours.

Entrepreneur as Owner ManagerEntrepreneur as Owner Manager Entrepreneur may be a manager but a paid manager cannotEntrepreneur may be a manager but a paid manager cannot

acquire the position of an entrepreneur. An entrepreneur hasacquire the position of an entrepreneur. An entrepreneur hasgreat motivation to manage his business successfully and laysgreat motivation to manage his business successfully and laysdown the policies for the business.down the policies for the business.

He is keen towards developing business through innovations andHe is keen towards developing business through innovations andis satisfied when his efforts give him positive results.is satisfied when his efforts give him positive results.

He is an investor, risk bearer, manager and the controller.He is an investor, risk bearer, manager and the controller. The entrepreneur may appoint a manager and delegate part ofThe entrepreneur may appoint a manager and delegate part of

his functions.his functions.

The manager however, even after satisfactorily performing hisThe manager however, even after satisfactorily performing his

assigned duties can not substitute the entrepreneur.assigned duties can not substitute the entrepreneur.


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The entrepreneur is motivated to satisfy a high need forThe entrepreneur is motivated to satisfy a high need forachievement in innovative and creative activities.achievement in innovative and creative activities.

The entrepreneur perceives and exploits opportunity and theThe entrepreneur perceives and exploits opportunity and thetakes the subsequent steps necessary for management of antakes the subsequent steps necessary for management of anorganization.organization.

The entrepreneur differs from a professional manager in thatThe entrepreneur differs from a professional manager in thathe undertakes a venture for his personal gratification. As suchhe undertakes a venture for his personal gratification. As suchhe can not live within the framework of occupationalhe can not live within the framework of occupational

behaviour set by others.behaviour set by others. The owner-manager exhibits a strong desire for independence,The owner-manager exhibits a strong desire for independence,

which he demonstrates through the building of an organization.which he demonstrates through the building of an organization.

He may employ a professional manager to perform some of hisHe may employ a professional manager to perform some of hismanagement related functions, however, the entrepreneurialmanagement related functions, however, the entrepreneurial

functions of innovation, assumption of business risk andfunctions of innovation, assumption of business risk andcommitment to his vision can not be delegated to any body.commitment to his vision can not be delegated to any body.

Failure to the professional executive may at the worst meanFailure to the professional executive may at the worst meanlocating a new job, whereas failure for an entrepreneur in hislocating a new job, whereas failure for an entrepreneur in hisefforts would mean a devastating loss.efforts would mean a devastating loss.


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The principles are with referenceto macro-social aspects like socialresponsibility, equal opportunity,ethical advertisement practices,employment, adherence togovernment policies etc.

The principles are more orientedtowards internal administration andcontrol like planning, budgeting,responsibility, accountability,delegation, reporting & info system.

To follow soundprinciple ofmanagement

The constraints are usuallyenvironmental which lie outside anorganization like the policy offinancial institutions, importpolicy, infrastructural constraintsetc.

The constraints are usuallyorganizational, i.e. those within theorganization like machine capacity,labour productivity, routing andscheduling, information availability,financial limitations etc.

To co-operate underconstraints

Most strategic decisions, involving

growth through expansion, take-overs & mergers.

Operational & administrative

decisions, which have a bearing onshort term and medium term resultsTo take decisions

Have to deal with people who canconceptualize with aggregateperspectives Strategists.

Have usually to handle peopleoriented to day-to-day managementof nitty-gritty & nuts & bolts

To produce resultsthrough people

Results of tomorrow, next year and

coming five years. Long term &very long term.

Results of today, this month, this

year. Short term & medium term

To produce results

EntrepreneurManagerAreas ofSimilarity

Table 6.1


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1.1. Setting of objectivesSetting of objectives

2.2. Tactical planningTactical planning

3.3. Formal communicationFormal communication

4.4. OrganizingOrganizing

5.5. MotivatingMotivating

6.6. ControllingControlling

7.7. AdministratorAdministrator

8.8. Skilled, knowledgeableSkilled, knowledgeable

9.9. ConfidentConfident

10.10. SpecialistSpecialist

11.11. LoyalLoyal

12.12. PlannerPlanner

13.13. ImplementerImplementer

1.1. Perception of opportunityPerception of opportunity

2.2. Risk takingRisk taking

3.3. Strategic PlanningStrategic Planning

4.4. Inter-personal communicationInter-personal communication

5.5. NegotiatingNegotiating

6.6. Trouble shootingTrouble shooting

7.7. Making it a growing concernMaking it a growing concern

8.8. InnovatorInnovator

9.9. MotivatorMotivator

10.10. DeterminedDetermined

11.11. IdealistIdealist

12.12. CommittedCommitted

13.13. VisionaryVisionary14.14. PlannerPlanner

15.15. Policy formulationPolicy formulation

ProfessionalProfessional ManagerManagerEntrepreneurEntrepreneur

Table 6.2

A successful organization needs both entrepreneurs & managers. Entrepreneurial roleA successful organization needs both entrepreneurs & managers. Entrepreneurial role

may be played by Chief Executive and his team of top level executives & managerialmay be played by Chief Executive and his team of top level executives & managerial

role by the middle level and joint level executives.role by the middle level and joint level executives.


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MANAGERIAL Vs ENTRAPRENEURIALMANAGERIAL Vs ENTRAPRENEURIAL

DECISION MAKINGDECISION MAKING

To be specific, the difference between the entrepreneur andTo be specific, the difference between the entrepreneur and

the managerial styles can be viewed from five key businessthe managerial styles can be viewed from five key businessdimensions dimensions

Strategic orientation,Strategic orientation,

Commitment to opportunity,Commitment to opportunity,

Commitment to resources,Commitment to resources, Control of resources &Control of resources &

Management structure. Managerial styles are normallyManagement structure. Managerial styles are normallytermed astermed as administrative domainadministrative domain..

Strategic OrientationStrategic Orientation Entrepreneurs strategic orientation depends upon his or herEntrepreneurs strategic orientation depends upon his or her

perception of the opportunity. This orientation is moreperception of the opportunity. This orientation is moreimportant when other opportunities have diminishing returnsimportant when other opportunities have diminishing returnsaccompanied by rapid changes in technology, consumeraccompanied by rapid changes in technology, consumer

economics, social values or political rules.economics, social values or political rules.


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When the use of planning system as well as measuringWhen the use of planning system as well as measuringperformance to control current resources is the strategicperformance to control current resources is the strategicorientation, the administrative domain is operant, as is theorientation, the administrative domain is operant, as is thecase with many large multinationals.case with many large multinationals.

Commitment to OpportunityCommitment to Opportunity In terms of the commitment to opportunity, the second keyIn terms of the commitment to opportunity, the second key

business dimension, the two domains vary greatly with respectbusiness dimension, the two domains vary greatly with respectto the length of this commitment. Theto the length of this commitment. The entrepreneur domainentrepreneur domain isis

pressured by the need for action, shorter decision windows, apressured by the need for action, shorter decision windows, awillingness to assume risk and few decision constituencies andwillingness to assume risk and few decision constituencies andhas a short time span in terms of opportunity commitment.has a short time span in terms of opportunity commitment.

TheThe administrative domainadministrative domain is not only slow to act on anis not only slow to act on anopportunity, but once action is taken, the commitment isopportunity, but once action is taken, the commitment is

usually for a long time span, too long in some instances. Thereusually for a long time span, too long in some instances. Thereare often no mechanisms set up in companies to stop and re-are often no mechanisms set up in companies to stop and re-evaluate an initial resources commitment once it is made aevaluate an initial resources commitment once it is made amajor problem in administrative domain.major problem in administrative domain.


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Commitment to ResourcesCommitment to Resources

An entrepreneur is used to having resources committed atAn entrepreneur is used to having resources committed atperiodical intervals that are often based on certain tasks orperiodical intervals that are often based on certain tasks orobjectives being arrived at. These resources, often acquiredobjectives being arrived at. These resources, often acquiredfrom others, are usually difficult to obtain, forcing thefrom others, are usually difficult to obtain, forcing theentrepreneur to maximize any resources used.entrepreneur to maximize any resources used.

This multistage commitment allows the resource providerThis multistage commitment allows the resource provider(such as venture capitalists or private investors) to have as(such as venture capitalists or private investors) to have as

small an exposure as possible at each stage of businesssmall an exposure as possible at each stage of businessdevelopment and to constantly monitor the task records beingdevelopment and to constantly monitor the task records beingestablished.established.

Even though the funding may also be implemented in stages inEven though the funding may also be implemented in stages inthe administrative domain, the commitment of the resources isthe administrative domain, the commitment of the resources is

for the total amount needed.for the total amount needed. Administratively orientated individuals respond to the sourceAdministratively orientated individuals respond to the source

of the reward offered and receive personal rewards byof the reward offered and receive personal rewards byeffectively administering the resources under their control.effectively administering the resources under their control.


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Control of ResourcesControl of Resources Control of resources follow a similar pattern. Since theControl of resources follow a similar pattern. Since the

administrator is rewarded by effective resourceadministrator is rewarded by effective resource

administration, there is often a drive to own or accumulate asadministration, there is often a drive to own or accumulate asmany resources as possible.many resources as possible.

The pressures of power, status and financial rewards causeThe pressures of power, status and financial rewards causethe administrator to avoid rental or other periodic use ofthe administrator to avoid rental or other periodic use ofresources.resources.

The opposite is true for the entrepreneur who under theThe opposite is true for the entrepreneur who under thepressure of limited resources, the risk of obsolescence, a needpressure of limited resources, the risk of obsolescence, a needfor flexibility and the risks involved strives to rent, orfor flexibility and the risks involved strives to rent, orotherwise achieve periodical use of, the resources on an as-otherwise achieve periodical use of, the resources on an as-needed basis.needed basis.


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Managerial StructureManagerial Structure The final business dimension, management structure, alsoThe final business dimension, management structure, also

differs significantly between the two domains.differs significantly between the two domains.

In the administrative domain, the organizational structure isIn the administrative domain, the organizational structure isformalized and hierarchical in nature, reflecting the need forformalized and hierarchical in nature, reflecting the need forclearly defined lined of authority and responsibility.clearly defined lined of authority and responsibility.

The entrepreneur, true to his or her desire for independence,The entrepreneur, true to his or her desire for independence,

employs a flat organizational structure with informal networkemploys a flat organizational structure with informal networkthroughout.throughout.


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2.5 Entre vs Manager