ENTREPRENEURSHIP

MANAGEMENT

WHAT DO YOU MEAN

BY
Entrepreneur

(oxford dictionary): Person who undertakes

an enterprise with chances of profit or loss.
Enterprise
(oxford
dictionary):
Bold
Undertaking
Entrepreneur-New Encyclopedia Britannica: An
individual who bears the risk of operating
business in the face of uncertainty about the
future conditions.
Common Meaning: one who starts his own,
new and small business

Entrepreneurship: It is a philosophy or process through which

an entrepreneur seeks innovation and employment.

Entrepreneur Entrepreneurship
Person
Process or Philosophy
Entre enter

Pre before

Enterprise
Object
Neur Nerve Centre

Entrepreneurship can be described as a creative

and innovative response to the environment.

ENTREPRENEURSHIP
THEORIES
French verb- Entreprendre to
undertake
1700: Person bearing Risks of Profit in a fixed
price contract (Risk)
1725: Richard Cantillon Person bearing risks
is different from Capital Supplier (Risk)
1803: J. B. Say Shifts economic resources
out of an area of lower into an area of higher
productivity & greater yields (Value Addition)
1934: Joseph Schumpeter Innovator and
develops untried technology (Productivity &
Innovation)
1600:

ENTREPRENEURSHIP
THEORIES
David McClelland highly motivated,
energetic,
moderate
risk
taker
(Need
for
achievement)
1964: Peter Drucker Searches for change, responds
to it & exploits as opportunity (Opportunity Focused)
1980:
Karl Vesper Behaviour PerceptionsEconomists,
Psychologists,
Businessmen,
Politicians (Environment)
1983: Gifford Pinchot- Intrapreneur
1985: Robert Hisrich - Creating something different
with value, devoting time & effort, assuming risks
(FPS); results-rewards and satisfaction (Leadership &
Vision)
1961:

How do you define an entrepreneur in

the 21st Century?

ENTREPRENEURSHIP
Is the process of creating
something different with value
by devoting the necessary time
and
effort,
assuming
the
accompanying financial, psychic,
social risks and receiving the
resulting rewards of monetary
and personal satisfaction and
independence

THE NATURE AND DEVELOPMENT OF

ENTREPRENEURSHIP
Entrepreneur stems from
French Verb Entreprendre
means between taker or go between
New Definition involves four aspects:

The creation process

The devotion of time and efforts
The assumption of risks
Rewards of independence, satisfaction,
money.

Advantages of Entrepreneurship

TO AN INDIVIDUAL
Self Employment
Employment for near & dear
Prolonged career for next generations
Freedom to use own ideas - Innovation and creativity
Unlimited income / higher retained income
Independence
Satisfaction

TO THE NATION
Provides larger employment
Results in wider distribution of wealth
Mobilizes local resources, skills and savings
Accelerates the pace of economic development
Stimulates innovation & efficiency

FACTORS FAVOURING
ENTREPRENEURSHIP
Growth of education- science, technology & management
Developed infrastructure facilities
Financial assistance
Training facilities
Protective and promotional policies
Globalization

Think of numerous other factors?

WHAT MAKES A SUCCESSFUL

ENTREPRENEUR?
The urge for achievement
Determination to win
Win-Win Personality
Willingness to take moderate risks
Ability to identify & explore opportunities
Analytical ability to take strategic decisions

Perseverance
Flexibility
Capacity to plan and organize
Preparedness to undergo physical and emotional stress
Positive self concept
Future orientation: Vision
Ethics and Values :Mission

WHO CAN BE AN
ENTREPRENEUR?
Who can take moderate risks
Who has ability to work hard
Who can capitalize on opportunities
Who has some financial strength
Who feels the need for achievement
Who has desire for responsibility
Who has perception of probability of success
Who gets stimulation by feedback
Who possess skills in organizing
Who can be male or female
Who may not have previous experience

CHARACTERISTICS OF
AN ENTREPRENEUR
Mental ability
Clear objectives
Business secrecy
H.R. ability
Communication
ability
Technical knowledge
Achievementoriented
Perseverance
Ethical

Motivator
Self-confident
Long term
involvement
High energy level
Problem solver
Initiator
Goal setter
Risk taker

KEY ELEMENTS OF
ENTREPRENEUR
Innovation
Vision
Ethics & Values
Organizing Skills
Risk taking
Need for Achievement

Study the Profile of a Successful Entrepreneur and

identify six key elements in order of priority

ENTREPRENEURS
BACKGROUND AND
CHARACTERISTICS

Family environment
Education
Age
Physical attributes
Marital status
Working history
Family contacts
Professional contacts
Personal values
Lifestyle

ANALYZE YOUR
PERSONALITY
Feelings about Control
Feelings about Independence
Willingness to take Risks

WHAT IS A JOB
COMPETENCY?

It is knowledge, skills and attitude

Knowledge collection and retention of information.
Skills are ability to do something well
(hard
and soft skills)
Motives are reasons for doing something
(need)
Traits characteristics way in, which a person
responds.
Attitude reflects the way of thinking and acting
(Self and others determine the attitude)

Performance emerges from

knowledge, skills and attitude

the

combination

of

Competency enables to perform better than others.

Competency is related to superior performance
Competency gets reflected in the job.
Competency is developed.

Initiative
Taking actions that go beyond job requirements or
demands of the situation.
Doing things on own before being asked for or being
forced by the events.
Taking actions to start the business and expand into new
areas, products and services.

Seeing & acting on opportunities

Looking for and taking actions to seize opportunities
Seeing and acting on opportunities for business
development or for personal growth.
Seeing unusual opportunities
Seizing opportunities, need, procuring and mobilizing
necessary resources.

Persistence
Taking repeated actions to overcome obstacles that
get in the way of achieving goals
Taking actions in the face of obstacles.
Ensuring all efforts to solve a problem or barrier.

Information seeking
Taking action s on own to help reach objectives.
Personally undertaking a research or analysis to
find out answers to some problem.
Seeking information to clarify what is needed.
Using networks to obtain information.

Concern for high quality of work

Doing things that meet or beat existing standard of
excellence.
Stating a desire to produce work of high quality
Comparing work favorably to that of others.
Making all out efforts to ensure the quality of product or
services.

Work commitment to contract

Placing highest priority for getting a job completed.
Taking all the effort to complete a job.
Accepting responsibilities for failures.
Expressing utmost concern for the customers
Readiness to work at any level to get work done.

Efficiency Orientation
Constantly looking for ways to do things faster or
with fewer resources or at a lesser cost.
Using business tools to increase personal or
professional efficiency.
Expressing concern for assessing cost versus
reward of some improvements, changes or action.

Systematic Planning
Developing and using logical steps to reach goals.
Breaking a large task into several sub tasks.
Developing plans after duly anticipating obstacles.
Evaluating alternatives on merits and demerits.

Problem Solving
Identifying and applying new ideas to reach the goals.
Identifying the root cause of the problem.
Developing strategies in the light of objectives,
resources, and constraints.
Generating new ideas or innovative solutions.

Self Confidence
Having a strong belief in own abilities.
Sticking with own judgment in the face of opposition
or early lack of success.
Doing something for which chances of success are
not very fair.

Persuasion

Persuading others successfully

Selling someone an idea, product or service.
Making someone agree to provide resources
Convincing with confidence, competence and respect.

Use of Influence Strategies

Using a variety of strategies to influence others
successfully
Developing professional and business contacts.
Using influential people to get own things done.
Carefully limiting the information to be given to others
Using others authority and resources, but remaining
ethical

Assertiveness
Confronting problems and issues with other directly
Speaking politely but firmly.
Telling others clearly what they have to do
Reprimanding those who fail to perform as
expected however close they may be.

Monitoring
Ensuring smooth progress of project or work.
Personally supervising all aspects of the work to its
completion.
Developing a system of supervision and
monitoring.

Concern for others welfare

Having a concern and taking actions to improve others
welfare.
Responding positively to employees specific needs.
Having a concern for the welfare of employees, their families
and society at large.

General Aspect
Political
Socio-cultural
Technological
Legal
Economic

Business Environment
&
Entrepreneurship Elements
Micro
Macro

Promoters /
shareholders values
Mission / objectives
Management Structure

Entrepreneurship
Competitive
Aspect
Potential New
Entrant

Internal Power
relationship
Physical assets &
facilities
Co. image/ brand equity

Buyers Bargaining
Power

Human resources

Suppliers
Bargaining Power

Technological
capabilities

Substitute
Products

Marketing capabilities

Financial capabilities

ENVIRONMENT
System, Stability, Leadership
Socio-cultural: Culture, Community, Values,
Ethics, Attitude
Technological: Education, Absorption,
Competition, Innovation
Legal: Regulatory framework, Consumer
protection, Concern for environment,
Labour laws
Economic: GDP, GNP, Resources, Fiscal, Nonfiscal policies, Incentives and Subsidies
Political:

Remember SLEPT to memorize

DIMENSIONS OF
ENVIRONMENT
SPECTACLES Social, Political, Economic, Cultural,
Technological, Aesthetic, Customer, Legal, Environmental
and Sectoral
PEETS Political, Economic, Ecological, Technological and
Socio-demographical
SLEPT Social, Legal, Economical, Political and
Technological

FACTORS INFLUENCING
ENTREPRENEURSHIP
Individual
Economic
Environment

Entrepreneurship

Socio-cultural
factors

Support
Systems
Political
Environment

Legal
Environment

Technological
Environment

PORTERS MODEL IN THE

COMPETITIVE ENVIRONMENT

BCG MATRIX

POLITICAL &
GOVERNMENTAL
ENVIRONMENT

Global

National

Trade

Barriers
Trade Agreements
Tariffs & Duties
Political Risks

Taxation

State Govt.

Local Issues

Taxation

Taxations

State Laws
Licensing /Approvals
Incentives

Zoning
Cost of Living
Lifestyle

Regulations
Protections (Patents)
Govt. spending

ENVIRONMENTAL
ANALYSIS
Scanning to detect change (identify key
elements and their characteristics)
Monitoring to track development (that affect
the survival and profitability of the new
business)
Forecasting to project the future (such as level
of prices, inflation, interest rates, availability
of funds, market share, market growth, etc.
Assessing to interpret data (what does it all
mean to the entrepreneur?)

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT
Entrepreneurs set up Enterprises
Entrepreneurs combines resources, put their time
and efforts and produce goods or services
What they contribute productivity, output, value
addition, income and employment
Entrepreneurship is a Low Cost Strategy.
Entrepreneurs perform the crucial role themselves
The spirit of Entrepreneurship Drive, achieving
higher goals, creativity, innovative attitude.
A dynamic society emerges and the spirit spreads
like a chain reaction.

THE INVENTION
PROCESS
Market Need

Technology
observation

Need
Analysis

Parameter
Identification

Creative
Synthesis

Realization

Invention,
which
meets the
need

PRODUCT EVOLUTION
PROCESS

Fundamentals
of Science

Technology

Recognized
Social Need

Beginning of Technological
Innovation

Development
Phase

Commercial
Phase

Concept Testing

Planning

Modeling

Financing

Product Testing

Manufacturing
Marketing

Invention / Innovation

THE EVOLUTION
PROCESS
Intersection of Knowledge and a recognized social need
Initiation of technological innovation
Iterative Synthesis
Development Phase
Industrial Phase

THE PRODUCT
PLANNING AND
DEVELOPMENT PROCESS
Idea Evaluate
Concept Stage Lab Development Evaluate
Product Development Stage - Pilot Production
Evaluation
Test Marketing Stage- Semi Commercial
Production Evaluation
Commercial Stage Introduction
Growth
Maturity
Decline
Idea Stage

COMMERCIALIZATION
Role of Government
Role of Corporate Intrapreneurship
Role of Individuals Entrepreneurship

Development of Technology
Utilization of materials
Exploitation & transformation of energy
Understanding and application of Scientific Principles
The Role of Government
Promotional
Neutral
Regulatory

THE ROLE OF SMALLER

FIRM
Large skilled resources, financial
backing. Act as a Supplier or Sub Contractor
T- High, M-Low - Specialist firm, access to low cost
research
T-Low, M-High Linkage with well-established
channels
T-Low, M- Low Well Suited to small firm
Low Tech High Volume
Financial Ability
High Tech Low Volume Strategic Ability
Emerging Options Franchisee; Sub-contractor
T- High, M-High

ENTREPRENEURSHIP AND MANAGEMENT STUDENTS

Enterprises in protected economy can be mismanaged.

Enterprises in competitive environment are essentially
to be managed.
A Management Graduate is a person trained to manage
an enterprise. Naturally, he will deliver the best results.
A Management Graduate should not be just a Job
Seeker. He can and should take the role of Job Provider.
Experience even from HBS confirm that more
Management Graduates take Entrepreneurial Role (after
some experience) and their income is higher than their
colleagues who are in job.

An Entrepreneur has to be a Manager.

But a Manager need not be an

ENTREPRENEURIAL
DECISION PROCESS
Pull Factors
Perception of Advantages
Spotting an Opportunity
Government Policies
Motivation from
Biographies or Success
Stories
Influenced by Culture,
Community, Family
Background, Teachers,
Peers, etc.

Push Factors
Job Dissatisfaction
Relocation
Lay-off
Retirement
Boredom

COMPARISON OF ENTREPRENEURS,
INTRAPRENEURS AND TRADITIONAL MANAGERS

Traditional
Managers

Entrepreneurs

Intrapreneurs

Primary motives Perks and

promotion

Self-employment,
satisfaction and
money

Creative freedom
and recognition

Time Orientation Short-term

meeting quotas and
budgets; weekly,
monthly, quarterly
and the annual
planning horizon

Short-term
business
establishment;
Long-term
growth of
business

Tend to follow the

middle path

Traditional
Managers

Entrepreneurs

Intrapreneurs

Activity

Delegates and
supervises

Direct involvement Direct

involvement , not
merely
delegation
Moderate risk
Moderate risk
taker
taker

Risk

Careful

Monetary Risk

Nil

Status

Concerned about unconcern about

status
status

unconcerned
about traditional
status

Failure and
mistakes

Tries to avoid
mistakes and
surprises

Attempts to hide
risky projects
from view until
ready

High

Deals with
mistakes and
failures

Nil

Traditional
Managers

Entrepreneurs

Intrapreneurs

Decisions

Like to take their

own but unable to
disagree with top

Follows dream
with decisions

Able to get others

to agree to help
achieve their
dreams

Who serves

Others

Self and
customers

Self, customers,
and sponsors

Family history

Family members
worked for large
organizations

Entrepreneurial
small-business,
professional

Entrepreneurial
small-business,
professional

Relationship
with others

Hierarchy as basic
relationship

Transactions and
deal-making as
basic relationship

Transactions
within hierarchy