Chap 1 entrepreneurship

DEFINITION OF ENTREPRENEUR

According to Oxford Dictionary

“One who undertakes an enterprise, especially a contractor – acting as

intermediary between capital and labor”

According to Peter .P. Drucker

“Innovation is the specific tool of entrepreneurs, the means by which they exploit

changes as an opportunity for different business or a different service”

CHARACTERISTICS OF AN ENTREPRENEUR

Mental Ability – Entrepreneur must have creative thinking and must be able to

analyze problems and situations. He should be able to anticipate changes.

Business Secrecy – He should guard his business secrets from his competitors.

Clear Objectives – He must have clear objectives as to the exact nature of

business or the nature of goods to be produced.

Human Relations – He must maintain good relation with his customers, employees,

etc. To maintain good relationship he should have emotional stability, personal

relations, tactfulness and consideration.

Communication Ability – He should have good communication skills means both

the sender and the receiver should understand each others message.

Technical Knowledge – He should have sufficient technical knowledge

PERSONAL CHARACTERISTICS OF AN ENTREPRENEUR

Long term involvement – An entrepreneur must be committed to the project.

Motivator

Moderate risk taker

Initiative

High energy level – He should be able to work for long hours, for which his energy

level should be high.

Goal setter

Self confidence

DEFINITION OF ENTREPRENEURSHIP

According to A.H. Cole

“Entrepreneurship is the purposeful activity of an individual or group of associated

individuals, undertaken to initiate, maintain or aggrandize profit by production or

distribution of economic goods or services”.

According to Peter .P. Drucker

“Entrepreneurship is neither a science nor an art. It is a practice. It is knowledge base.

Knowledge in entrepreneurship is a means to an end, that is ,by the practice”.

CHARACTERISTICS

Commercial learnings

Lack of structure/self-control

Visionary tendencies.

Risk-taking/appetite for uncertainty

Persistence

Doer/high initiative

Charisma and extroversion

High-energy level

Strong self-image

Team building skills/uses contacts

and connections

Views failure as learning

Commitment and fun

THE BENEFITS OF ENTREPRENEURSHIP:

Opportunity to create your own destiny-Owning a business provides an entrepreneurs the independence and the opportunity to achieve what is important to them.Entrepreneurs want to decide what they want in their lives, and they use their businesses to make their desire a reality (come true).

Opportunity to make a Difference-More and more entrepreneurs are starting businesses because they see this as an opportunity to make a difference in a route or way that is personally important to them.

Opportunity to reach your full potential-Many people find their work not challenging and not exciting. For entrepreneurs there is little difference between work and play.Entrepreneurs see their business as a vehicle of self expression of personal desire and eventual self actualization of their personal goals – the pinnacle of their career success

Opportunity to reap extraordinary (luar biasa) profits-The profit earned by an entrepreneur are an important motivation and indication factor for further increased performance. Thus these could spur them to greater achievement and success.

Opportunity to engage in work of their choice-Small business owners tend to engage in business that gives them personal satisfaction.Though they may work long hours and engage in very industrious work that is beneficial to their organization and themselves.Most of all the work they engage in helps to benefits the community, society and the nation.

THE DRAWBACKS OF ENTREPRENEURSHIP:

Uncertainty of Income-Opening and a running a business provides no guarantee that an entrepreneur will earn enough money and survive. Engaging in the wrong business and not able gain an advantage in the short run and eventually in the long run can be disastrous.Great effort and proper and effective management need to used in beginning to ensure the organization success

Risk of losing your entire Investment-Small business have a high failure rate.Though is successful initially it faces financial difficulty within the next five years.Entrepreneurs must be prepared to face the consequence of failure.Entrepreneurs must have acute sense of observation and be able to detect the early signs of failure. If a business fails the entrepreneur must have a contingency plan to overcome a bankruptcy or personal failure.

Long Hours and Hard Work-Entrepreneurs tend to be generally workaholic, and under tremendous pressure to produce the result they expect.Entrepreneurs seldom find time to be away from the business but tend to pour all their effort and resources to achieve their personal entrepreneurial objective.Some even go to extent of making big sacrifice and deprive themselves of a personal life, wife and children and social and family associates.

Lower Quality of Life until the business get established-In order for the business to be successful the entrepreneur must engage himself to produce the kind of result he expects.He cannot rest on his laurels (take it easy) until and certain the business has stabilized and established.

High level of stress-Starting the business can be very rewarding experience, but it can be stressful.An entrepreneur have left the comfort and security of secured job to venture into their own business.Failure can bring about tremendous personal failure, and in turn creates intense levels of anxiety and stress.Financial burden may increase and the entrepreneur may face difficulty sustaining the business or may decide to call it for day and wind up the business for good.

Complete Responsibility-Must be prepared to make decision that are unfavorable (swallow the bitter pill).Must make decision in areas that the entrepreneur is not familiar at all.Fear of making decision that can have a devastating effect on the business and its people.Tremendous pressure to perform as the entrepreneur is too deeply engaged in the business

Discouragement-To undertake a business requires a lot of dedication, discipline and tenacity.During running the business they will face many difficulties, obstacles which may difficult to overcome.Further difficulties, discouragement and disillusionment are common emotions.Successful entrepreneurs escape through rough times or difficult times through sheer hard work, self confidence and full of optimisms.

IMPORTANCE OF ENTREPRENEURSHIP IN DEVELOPED ECONOMY

The nature of a developing economy is quite different from a developed economy.

The developing economy can be an agricultural country moving towards the

industrialization or it may be the one where in the industry may be in its infancy

lacking advance technology.

The modern era is an era of changes. The whole world is becoming a village due to

the industrial revolution and fast developing communication technology. The

globalization of industry and commerce is bringing a vast change in various aspects

of life.

Economic development of a country is the outcome of purposeful human activity.

The modern era is an era of changes. The whole world is becoming a village due to

the industrial revolution and fast developing communication technology. The

globalization of industry and commerce is bringing a vast change in various aspects

of life.

Economic development of a country is the outcome of purposeful human activity.

Economic development is a highly dynamic process characterized by the pattern of

demand shifts, new products are needed, appear for the production of goods within

a country.

A developing country needs entrepreneurs who are competent to perceive new

opportunities and are willing to incur the necessary risk in exploiting them.

A developing economy is required to be brought out of the vicious circle of low

income and poverty.

Entrepreneur can break this vicious circle.

Entrepreneurs and helping government can change a developing economy in

developed economy.

MOTIVATION

Motivation is the act of stimulating someone or oneself to get a desired course of

action, to push the right button to get the desired results.

CHAP 2 INTRAPRENEURSHIP

Definition

“...Any of the dreamers who do. Those who take hands-on responsibility for creating innovation of any kind, within a business. The intrapreneur may be the creator or inventor but is always the dreamer who figures out how to turn an idea into a profitable reality.”

• Intrapreneurs are therefore people who put new ideas into action within established businesses.

• Although employed in a corporate position intrapreneurs are nevertheless given freedom and incentives to create and market their own ideas.

ORGANIZATIONAL CHARACTERISTICS THAT ENCOURAGE

INTERPRENEURSHP

The single most important factor in establishing an "intrapreneur-friendly" organization is making sure that your employees are placed in an innovative working environment. Rigid and conservative organizational structures often have a stifling effect on intrapreneurial efforts. Conservative firms are capable of operating at a high level of efficiency and profitability, but they generally do not provide an environment that is conducive to intrapreneurial activity (and organizations that do not encourage creativity and leadership often alienate talented employees). Companies that establish a culture of innovation through:

1) Formation of intrapreneurial teams and task forces;

2) Recruitment of new staff with new ideas;

3) Application of strategic plans that focus on achieving innovation; and

4) Establishment of internal research and development programs are likely to see tangible results.

Other keys to instilling an intrepreneurial environment in your business include the following:

1. Support from ownership and top management.

2. Recognition that the style of intrapreneurialism that is encouraged needs to be compatible with business operations and the organization's overall culture.

3. Make sure that communication systems within the company are strong so that intrapreneurs who have new ideas for products or processes can be heard.

4. Intelligent allocation of resources to pursue intrapreneurial ideas.5. Reward intrapreneurs.

ADVANTAGES

Ability to stay with the company, friendships, security of the corporation.1. Capital for the new idea is easier to come from inside the company.2. Practice of creating a business within the organization before starting one outside.3. Using the company name, goodwill, channels for your enterprise.4. Relatively less risk and liability5. Access to Capital Sources, Access to customers, Infrastructure, Management Pools,

Leverage on an existing business.6. Recognition7. Multiple credits8. Promotion9. Bonuses10. Leadership roles.

DRAWBACKS OF   INTRAPRENEURSHIP

The cost of failure is very expensive for the intrapreneurs. They will be held responsible for alltheir acts and their hands are tied. They always have the fear inside the heart and will not get anysupport from the higher level management if anything goes wrong. On the other hand, therewards of success are very low. There will be very few people to acknowledge success. Most ofthe organizations follow the principle of hire and fire policy. They do not bother to fire out theemployees during the struggling conditions. The employers should change this attitude ofviewing everything in terms of money. They should analyze the situation on what wentwrong and how it went wrong. 

EXAMPLES OF INTRAPRENEURS

A lot of companies are known for their efforts towards nurturing their in-house talents to promote innovation. The prominent among them is “Skunk Works” group at Lockheed Martin. This group formed in 1943 to build P-80 fighter jets. Kelly Johnson was the director of the project, a person who gave “14 rules of intrapreneurship”.

At “3M” employees could spend their 15% time working on the projects they like for the betterment of the company. On the initial success of the project, 3M even funds it for further development.

Genesis Grant is another 3M intrapreneurial program which finances projects that might not end up getting funds through normal channels. Genesis Grant offers $85,000 to these innovators to carry forward their projects.

Robbie Bach, J Allard and team’s XBOX might not have been feasible without the Microsoft’s money and infrastructure. The project required 100s of millions and quality talent to make the product.

DIFFERENCE BETWEEN ENTRENEUR AND INTRAPRENEUR

Entrepreneur IntrapreneurA person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.  An employer of productive labor; contractor.

An employee of a large corporation who is given freedom and financial support to create new products, services, systems, etc., and does not have to follow the corporation’s usual routines or protocols.

Solely responsible for capitalization, marketing, and taxation & licensing requirements.

Capitalization, marketing and law compliance are handled by the employing business.

Solely responsible for livelihood, insurance, retirement savings.

Salary & basic benefits are paid & managed by the employing business, which has an established relationship with insurance and financial providers.

Time off equates to opportunities lost.Time off may be paid, according to employer’s benefit package.

Business goals, culture, and operational rules are the sole discretion of the entrepreneur.  Faith, for example, may play a prominent role in the business environment.

Intrapreneur must remain within the boundaries of the business’ goals, culture, and operational rules.  Faith, for example, may be strictly off-limits.

All progress, patent rights, and profits are available to the Entrepreneur.

The employing company owns the progress, patent rights, and profits, which may or may not be shared with the Intrapreneur.

Corporate agreements, investments, and distribution of profits are at the sole discretion of the Entrepreneur. This would include any political or social backing.

Corporate agreements, investments, and distribution of profits are the employing company’s business, and may include items in opposition to the Intrapreneur’s beliefs and preferences.

Entrepreneurship is flexible and agile, focused on establishment and growth.

Corporations have a tendency to be bogged down in self-preservation, the demands of stockholders, and senior members dedicated to maintaining the status quo.

CHAP 3 WOMEN ENTREPRENEURSHIP

Definition

An enterprise owned and controlled by one or more women having a minimum financial holding of 51% or more, giving 51% or more employment to women.

MALE VS. FEMALE ENTREPRENEURS – A COMPARISON

Women Entrepreneurs do things differently, as compared to male entrepreneurs

Women tend to work more in teams

Are less self-centered

Personal ego to them is less important for them than success of the organization or business idea they are pursuing

It is a known fact that personal characteristics as well as social aspects clearly play some role in developing entrepreneurship but entrepreneurs can also be developed through conscious action

PROFESSIONAL WOMEN: PROBLEMS & PERCEPTIONS

When one tries to explore the root cause of the underachievement of women as professionals, one finds that reasons are actually different from the commonly attributed “lack of commitment and competence” on part of women professionals

The underlying reasons are more related to the social reality of Indian women which imposes certain socio-cultural role-models & stereotypes leading to a conditioning of people’s psyche

HOW CAN THE PROBLEM BE OVERCOME?

Women have to go through the same stages of setting up an enterprise as do men

They face similar challenges, irrespective of gender based social impediments like social stigma, unfavorable infrastructure, support systems, etc. which block their entry and reduce their pace of growth

The need today is to help women overcome these blocks and draw maximum participation from them to set up enterprises, which will help them

Educate/train the women entrepreneurs

Help then in setting up of home based businesses

Make easy finance available

Develop special schemes for women entrepreneurs

Achieve self reliance and place women entrepreneurs at par with their male counterparts

Develop gender sensitivity

Examine the processes of gender inequality

Acquire skills of identification of potential women entrepreneurs

CHAP 4-INSTITUTION SUPPORTING ENTREPRENEURSHIP

From text book

CHAP 5- . POLICY PERSPECTIVE AND LEGAL FRAMEWORK FOR NEW BUSINESS IN INDIA.

From text book

CHAP6- INNOVATIONS AND ENTREPRENEURSHIP.

Drucker discusses seven clear signs that indicate opportunity for business innovation: (1) unexpected success, (2) incongruity between reality and ideal, (3) identification of an unmet need, (4) changes in industry or market structure, (5) demographic shifts, (6) changes in public perception, and (7) discovery of new knowledge. By watching for these signs to identify an opportunity, then creating and acting on a systematic plan to deliver a valuable product, businesses can create new value.

The ppt could not be copied… so have study from text book.

CHAP 7 OPPORTUNITIES SCANNING, ENVIRONMENTAL ANALYSIS.

SOURCES OF OPPORTUNITIES

What is the most important thing to notice about the business environment? Change. Changes in the business environment offer opportunities for entrepreneurs. Existing firms have their resources, strategy, and organization structure geared for the past or current macroenvironment. When a change occurs, it is frequently easier for the new firm to spot the change and configure a set of resources and an organization to meet the new needs and the new realities. There are seven sources of opportunity to look for in the macroenvironment.14

　

THE UNEXPECTED

When current businesses are surprised by an unanticipated event, they are often un able to adapt quickly enough to take advantage. The event can be an unexpected success (good news) or an unexpected failure (bad news). For example, if war breaks out where it is unexpected, it changes the economics and demand structure of the warring parties and their populations. This can provide opportunity if it is ethically pursued. Similarly, a breakthrough in a peace negotiation also provides opportunity, since it changes the economies of the former combatants.

　

THE INCONGRUOUS

Incongruity is dissonance, things that "ought to be" but are not. It creates instability and opportunity. For example, it is incongruous for a growing industry with increasing sales not to be profitable. But it happens and is happening now on the Internet. Some key to the industry's economics has yet to be discovered. When reality and conventional wisdom collide, incongruity exists. Listen for ''expert old-timers" who use the words "never" and "always" to explain how things should be. These unexamined assumptions have once been right but may now be wrong, and therefore provide opportunities for the responsive entrepreneur.

　

THE PROCESS NEED

This opportunity has its source in technology's inability to provide the "big break through." Technicians often need to work out a way to get from point A to point B in some process. Currently, efforts are being made in the areas of superconductivity, fusion, interconnectivity, and the search for a treatment and cure for AIDS. Thomas Edi son and others knew that in order to start the electric energy industry, they needed to solve a process need-to develop a light bulb that worked. Process need opportunities are often addressed by program research projects, which are the systematic research and analysis efforts designed to solve a single problem, such as the effort against AIDS

　

INDUSTRY AND MARKET STRUCTURES

Changes in technology, both innovation and invention, change market and industry structures by altering costs, quality requirements, and volume capabilities. This alteration can potentially make existing firms obsolete if they are not attuned to it and art inflexible. Similarly, changes in social values and consumer tastes as well as demographics shift the economics of industries to new equilibria. The markets of firms that do not adapt are fair game for the entrepreneur.

　

DEMOGRAPHICS

Demographic changes are changes in the population or subpopulations of society. They can be changes in the size, age, structure, employment, education, or incomes of these groups. Such changes influence all industries and firms by changing the mix of products and services demanded, the volume of products and services, and the buying power of customers. Some of these changes are predictable, since people who will be older are already alive and birth and death rates stay fairly stable over time. Other changes are not predictable and are caused by natural disasters, war, social change, and immigration. Population statistics are available for assessment, but opportunities can be found before the data arc published by observing what is happening in the street and being reported in the newspaper.

　

CHANGES IN PERCEPTION

"Is the glass half full or half empty?" The two perceptions are logically equivalent but reflect significantly different attitudes and behaviors. People hold different perceptions of the same reality, and these differences affect the products and services they demand and the amounts they spend. Some groups feel powerful and rich, others disenfranchised and poor. Some people think

they are thin when they are not, others think they are too fall when they are not. The entrepreneur can sell power and status to the rich and powerful, and sell relief and comfort to the poor and oppressed. Whether people are rich or poor, if they perceive that they are middle class, they will demand education for their children, good housing for their family, and travel for their vacations.

　

NEW KNOWLEDGE

New knowledge is often seen as the "superstar" of entrepreneurial opportunity. Yet it can be "temperamental, capricious, and hard to manage."15 It is not enough to have new knowledge; there must also be a way to make products from it and to protect the profits of those products from competition as the knowledge is spread to others. In addition, timing is critical. It frequently takes the convergence of many pieces of new knowledge to make a product. For example,

　

Sources of opportunity in the macro environment can originate with:

• The unexpected,

• The incongruous,

• The process need,

• Industry and market structures,

• Demographics,

• Changes in perception,

• New knowledge.

ENVIRONMENTAL ANALYSIS

Analysis of the business environment includes:

• scanning to detect change,

• monitoring to track development,

• forecasting to project the future,

• assessing to interpret data.

　

SCANNING

How does this comprehensive process begin? It begins by looking around. Scanning the environment is the process by which the entrepreneur first identifies the key elements and their characteristics. It is a surveillance system for early detection. The goal of scanning is to detect change that is already underway. Successful scanning catches important changes early, giving the new venture enough lead time to adapt.

The entrepreneur scans innumerable sources of data. The Wall Street Journal, Business Week, and The Economist are solid sources for the broad picture. Television provides a general and continuous source of data through Cable News Network (CNN), network news, special reports, and documentaries. More specialized business programming is becoming increasingly popular on cable channels like MSNBC. Surfing the Internet has become an important scanning activity. In addition, through "people-to-people" interactive scanning, entrepreneurs consult with a wide variety of professionals and experts outside their field of expertise. Accountants, lawyers, engineers, consultants, and, yes, even professors are available to the entrepreneur for in formation and advice. Scanning gives the entrepreneur a sensitivity to environmental conditions that sometimes looks like intuition.

　

MONITORING

Monitoring is the process of tracking the evolution, development, and sequence of critical events that affect the survival and profitability of the future new business. Data from the scanning process are input into the monitoring process. Specific trends and events identified for the new venture are monitored in real time to confirm or disprove predictions about how they will affect the firm. Monitoring is less general and therefore more focused than scanning. The entrepreneur follows specific periodicals, consults selected experts, and even convenes focus groups.3 The outcome of the monitoring process is a detailed model of how various elements in the macro environment influence and affect the firm. The model, however, is not reality, but a workable version of cause and effect.

　

FORECASTING

Forecasting enables the entrepreneur to develop plausible projections for the future. These can be projections for elements such as the level of prices, the direction of interest rates, or future scenarios for cause and effect; for example, a typical forecast might be-if the money supply grows at above-target rates, then inflation will occur. Thus inputs for forecasts are the data from monitoring.

Forecasting uses a series of techniques to provide insight into the future. The specific techniques chosen for a task should correspond to the type of data used as input and the nature of the desired forecast. When forecasting is used to help search for new business opportunities and to uncover potential macroenvironmental constraints on these opportunities, the following five-step process is suggested.4

　

1. Choose the macroenvironmental variables that arc critical to the new venture. These will probably relate to the resource base of the firm.

2. Select the sources of data for the forecast. These will probably be those you have been monitoring.

3. Evaluate various forecasting techniques.

4. Integrate forecast results into your plan for the creation of the new venture. These will probably concern resource levels and availability and sales forecasts.

5. Keep track of the critical aspects of your forecast. This will mean comparing ac tual results with forecasted results. If and when a gap appears, it is time for an other forecast, beginning at step 1.

　

TABLE 3-1 Quantitative and Judgmental Forecasting Methods for Emerging Industries, New Ventures, New Products

Method Description Cost Complexity

1. Sales force estimateA bottom-up approach that aggregates unit demand. Low Low

2.Juries of executive opinion Forecasts jointly prepared by experts in a functional area. LowLow

3. Customer surveys: market research focus groups Learning about intentions of potential customers and final users. Medium Medium

4. Scenario development Effects of anticipated conditions imagined by forecasters.Medium Low

5. Delphi method Experts guided to consensus. Low Medium

6. Brainstorming Idea generation in a noncritical group situation. Low Medium

Source: Adapted from J. Pearce and R. Robinson, Strategic Management. 4th ed. (Homewood, IL: Irwin, 1991).

　

Table 3-1 summarizes the costs and benefits of six quantitative and judgmental forecasting techniques.

　

ASSESSING

Assessing the environment is the most difficult and important of the four tasks of environ mental analysis. Here the entrepreneur has to answer that most difficult of questions: "What does it all mean?" Interpretation is an art form, and so is assessment. In a poker game, players can agree on what cards arc showing, the previous bets made, and the value of the cards they are holding. Yet some players hold, some fold, and others raise. Because their assessments are different, their behavior is different. So also, in assessing most entrepreneurial opportunities, there arc few facts that people would agree can be generalized.

Political and Governmental Analysis

Politics is the art of the possible. You could say the same thing about entrepreneur-ship. Analyzing the political scene will give the entrepreneur a feeling for what is pos sible, what is probable, and what is unlikely. The political and governmental segment of the business environment is the arena where different interest groups compete for attention and resources to advance their own interests, establish their own values, and achieve their own goals. It is the arena in which particular individuals and groups exercise political power. To a large extent, the individual entrepreneur is forced to accept the current political environment of the new venture. Collectively and over time, however, an organized group of entrepreneurs can influence the political sector. One such group, the National Federation of Independent Business (NFIB) lobbies hard for issues that effect entrepreneurs and small businesses.

　

CHAP 8-BUSINESS PLANNING.

Text book

CHAP 9. MODES OF VENTURE EXPANSION AND SOURCES OF FINANCE ( IT ALSO INCLUDES NEW MARKET ENTRY MODE).

Text book

10. ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES.

About edp

• A Programme designed to help a prospective Entrepreneur would achieve the following objectives :

• Identify abilities.

• Analyse the environmental setup of small scale business and industry.

• Fulfilling his entrepreneurial motives.

• Acquiring skills & capabilities.

• Motivating

• Arranging sources of help and provide support systems and procedures

• To provide training assistance.

• Prepare him to face the uncertainities involved in running a business.

• Develop a broad vision about the business.

• Develop passion for integrity and honesty.

• Make him learn compliance with law.

Need and Relevance of EDP’s

• It is now believed that Entrepreneurs are made not born.

• EDP’s are based on this belief that they can inculcate relevant attributes ignite the dormant skills and talents, change the outlook and convert the ideas into action through the systematic and organised training.

• They tend to change the personality of the participants.

Role & Contribution of EDP’s in India

• Great role in increasing the supply of new entrepreneurs to accelerate the process of industrialisation.

• Elimination of Unemployment & Poverty

• Balanced Regional Development

• Utilisation of local resources

• Large scale employment can reduce unrest and violence amongst the youth as they would be gainfully employed.