ch1 - entrepreneurship and new venture opportunities

8/10/2019 Ch1 - Entrepreneurship and New Venture Opportunities

1/59

Entrepreneurship

(CMS-109)

Dr.M.TayyebJaved HeadORIC

[email protected]

Office:C217

PABX:3243

1http://goo.gl/2teRWx


2/59

Approved Contents

IntroductiontoEntrepreneurship;

EntrepreneurialProcess;

Business

OpportunityIdentification;Market

Assessment;FinancingtheEmergingFirm;

NewProduct

Innovation;

Technology

Commercialization;BusinessPlan

Development;

Strategy

and

Entrepreneurship;Managingthegrowing

firm 2


3/59

Entrepreneurship @PIEAS YESYouthEngagementsServiceNetwork

SPEL Society

for

the

promotion

of

Entrepreneurship

and

Leadership

PENPIEASEntrepreneurshipNetwork

TiETheIndusEntrepreneurs

GISTTechIGISTGlobalInnovationthroughScience&Technology

TheEntrepreneurialChallengeIBAInvent

"Discover"NUSTBusinessPlanCompetition

SparkCASEBusinessSchool(CBS)Event

SPDC

StudentProfessional

Development

Conference

UET

KSK

RYMUNPMUN

CREATE 3


4/59

Opportunities

4

MobilinkDiscover NUSTBusinessPlanCompetition

AlFikraQatarNationalBusinessPlanCompetition

FLoW

Clean

Energy

Business

Challenge

RiceBusinessPlanCompetition

MITClean

Energy

Prize


5/59

Prosperity through entrepreneurship

5


6/59

Four Rounds Round1

The

students

are

required

to

research

and/or

seek

guidance

from

expertstocomeupwithanideaandalsotoformteamsthatare

multidisciplinary.Theideaswouldbegradedbyexpertsandupto

top100willbeshortlisted

Round2

Teamswouldgothroughworkshopstoacquireknowledgeabout

howtodevelopanExecutiveSummary(ES),Elevatorpitch(EP),

BusinessPlan(BP)andBusinessPlanPresentation(P).Inthisround

onlyESsandEPsaretobesubmittedbytheteams.Thesewouldbe

gradedby

experts

and

the

up

to

top

50

teams

will

be

short

listed.

6


7/59

Four Rounds Round3

Teams

would

then

be

assigned

mentors

from

the

industry

who

wouldprovideoneononementoringandhelptheteamsin

preparingtheirFinalBusinessPlansandDraftPresentations(DP).

BPsandDPs,submittedbyteams,wouldbegradedbyexpertsand

theuptotop10Finalistswillbeselectedfromeachtrack.

Round4

TheFinalistwouldbeprovidedmentoringandcoachingtoimprove

theirDraftPresentation.Thesepresentationswouldthenbemade

infrontofJudgesfromthetwotracks,whowouldbesuccessful

social,or

business

entrepreneurs

or

senior

executives

from

the

corporateandindustrialworld,attheGrandFinaleinDec2014.The

judgeswouldselectthetopfiveteamsfromeachtrack.7


8/59

Entrepreneurship and New

Venture Opportunities

Lecture Outline

Definitions EntrepreneurshipinPractice

CaseStudies

Progressthrough

Innovation

Luckorpersistence

8Text Book:

Entrepreneurship New Venture Creation by David H. Holt


9/59

Synopsis for learning Evolutionofentrepreneurshipfromeconomictheory

Characteristicsof

entrepreneurs

Smallbusinessasadimensionofentrepreneurship

Corporateentrepreneurship

Economicdevelopmentandproductivity

9


10/59

Evolution of Entrepreneurship Suddendiscovery

Americadiscovered

and

nourished

by

entrepreneurs

now

worldeconomicpower

Risktakerswhoseizeopportunitiestoharnessanduseresourcesinunusualways

Largecorporations

evolved

from

backyard

enterprises

Fourmainstreameconomicfactors land,labor,capital,andentrepreneurship

17th centuryFrenchwordentreprendrereferstoindividualswho

were

undertakers,

meaning

those

who

undertook

the

riskofnewenterprise

14th centuryContractors.TaxEntrepreneur 10


11/59

Economics and

Entrepreneurship RichardCantillon,(1755)aFrencheconomistofIrishdescent,

iscreditedwithgivingtheconceptofentrepreneurshipa

centralroleineconomics

AcriticalpointinCantillonsargumentwasthatentrepreneursconsciouslymakedecisionsaboutresourceallocation

Astuteentrepreneurs

would

always

seek

the

best

opportunitiesforusingresourcesfortheirhighestcommercial

yields

11


12/59

Cantillons

Early View of Entrepreneurial Behavior

AwealthyarbitrageurinvestinginEuropeanventures,dealinginmonetaryexchange,andcontrollingcommodities,suchas

farmproduce,toauctioninhighdemandmarkets

Investment

(Entrepreneurbuysfarm

produceatcertainprices)

Transformation

(Entrepreneurrepacksand

transportsfarmproducetomarket)

ProfitorLoss

(Entrepreneursellsfoodproduce

incityatuncertainprices)

12


13/59

Economics and Entrepreneurship. AdamSmith enterpriserWealthofNations(1776)

individualwhoundertooktheformationofanorganizationfor

commercial

purposes JeanBaptisteSay(Frencheconomist) AtreatiseonPolitical

Economy,1803:1845

onewhopossessedcertainartsandskillsofcreatingnew

economicenterprises,

yet

aperson

who

had

exceptional

insight

intosocietysneedsandwasabletofulfillthem.

SaycombinedtheeconomicrisktakerofCantillonandtheindustrialmanagerofSmithintoanunusualcharacter

In1948,

John

Stuart

Mill

(British

economist)

elaborated

the

necessityofentrepreneurshipinprivatesector

Entrepreneurbecomefourthfactorofeconomicendeavor13


14/59

Carl Menger (1840-1921)

Subjectivist Perspective ofEconomics

Principlesof

Economics

1871

In Carls view the economic change does not arise fromcircumstances but from an individuals awareness and

understanding of those circumstances

The entrepreneur becomes, therefore, the change agent whotransforms resources into useful goods and services, often

creating the circumstances that lead to individual growth

Envisioned a causal chain of events wherby resources havingno direct use in terms of fulfilling human needs were

transformed into high valued products

14


15/59

Mengers Model of Value-Added

Transformation of ResourcesMengerassigned

prioritynumbers

to

differentevents(orcircumstances)inthischainsothathigh

priorityevent

would

havealownumber(e.g.1)andwouldbe

an

ultimate

end

use

tosatisfyahumanneed

15


16/59

Entrepreneurship as a Process JosephSchumpeter(18831950):entrepreneurshipasaforce

ofcreativedestructionestablishedwaysofdoingthingsare

destroyedbycreationofnewandbetterwaystogetthingsdone

Entrepreneurshipasaprocessandentrepreneursas

innovators

who

use

the

process

to

shatter

the

status

quo

throughnewcombinationsofresourcesandnewmethodsof

commerce

Today,therebirthofentrepreneurshipinhighereducationhas

notcome

from

the

discipline

of

economics

but

from

those

whoteachsmallbusinessmanagementorwhohaveinstituted

newcoursesinentrepreneurship16


17/59

Fortune 500 Resultofanentrepreneurwhotookasimpleideaand

persisted

WalMartStores

WalMart(netsalestotaled$473.1billion)isbullishaboutitsplanstoopenevenmoresmallstores,whichcompetewithdrugstoresand

smallgrocerystores

ExxonMobil

XOMtotalrevenue $438.26billion DeepwaterprojectsintheGulfofMexicoandaliquefiednaturalgasprojectinPapuaNewGuinea

areamongtheventures

Chevron U.S.ssecondlargestoilcompanytotalrevenue$228.9billion.

17


18/59

2011

Pakistan

25

18

CompanyName Rank GrowthRate RevenueRange Industry

EXCEED 1 1,351.00 510millionUSD ConstructionandEngineering

NayaTel 2 1,076.00 15millionUSD HighTechandTelecommunications

AdvancedResearch

Projects&

Technologies

3 699.00 15millionUSD HighTechandTelecommunications

E2ESupplyChain

Management4 648.00 510millionUSD TransportationandAviation

TRADEKEY 5 424.00 15millionUSD Professional,ScientificandTechServices

Sofizar 6 412.00 15millionUSD HighTechandTelecommunications

S.K.Stones/AmishMarble 7 302.00 15millionUSD ConstructionandEngineering

EXPRESSPAC 8 271.00 15millionUSD ConsumerGoods

i2cInc 9 246.00 15millionUSD HighTechandTelecommunications

Meskay&FemteeTrading 10 236.00 1050millionUSD AgricultureandMining

AbacusConsulting

Technology11 192.00 1050millionUSD Professional,ScientificandTechServices

Folio3 12

160.00

15million

USD

Professional,

Scientific

and

Tech

Services

FaysalAssetManagement 13 128.00 15millionUSD FinanceandInsurance

CorvitNetworks 14 86.00 15millionUSD HighTechandTelecommunications

CityUniversityofScience

andInformation

technology

15 83.00 15millionUSD EducationandTraining

iTextiles 16 64.00 510millionUSD TextilesandFashion


19/59

2011

Pakistan

25Multilynx 17 63.00 1050millionUSD HighTechandTelecommunications

IndependentMedia

Corporation

18 56.00 1050millionUSDPublicRelations,MediaandPublishing,

Advertising

CottonWeb 19 52.00 1050millionUSD TextilesandFashion

Egas 20 47.00 15millionUSD EnergyandPower,Water

PeshawarModelDegree

College(Boys)21 45.00 15millionUSD EducationandTraining

SPELSyntheticProducts

Enterprises 22 35.00 510millionUSD Automotive

RoshanPackages 23 33.00 510millionUSD AgricultureandMining

KhushhalFeed&Farms 24 31.00 15millionUSD AgricultureandMining

Rozee.pk 25 15millionUSD HighTechandTelecommunications

GCS 25 15millionUSD HighTechandTelecommunications

AlmoizIndustries 25

10

50

million

USD

Agriculture

and

Mining

RiazTextileMills 25 1050millionUSD TextilesandFashion

InterwoodMobel 25 510millionUSD ConstructionandEngineering

RawalpindiFlour&

GeneralMills25 510millionUSD AgricultureandMining

19


21/59

Defining Entrepreneurship No indisputable definition ofentrepreneurship or entrepreneur

Schumpeter provides us with a framework for understandingboth in terms of a process

The entrepreneur seeks to reform or revolutionize the pattern ofproduction by exploiting an invention or, more generally, an untried

technological possibility for producing a new commodity or

producing an old one in a new way, by opening up a new source of

supply of materials or new outlet for products.

Entrepreneurship, as defined, essentially consists in doing things

that are not generally done in the ordinary course of business

routine.

21


22/59

Defining Entrepreneurship Schumpeterdidnotequateentrepreneurswithinventors

Inventormightonlycreateanewproduct

Entrepreneurwillgatherresources,organizetalent,andprovideleadershiptomakeitacommercialsuccess

TheviewpointwasmirroredbyPeterDrucker

Entrepreneurialrole

as

one

of

gathering

and

using

resources,

but

headdedthatresourcestoproduceresults,mustbeallocated

toopportunitiesratherthantoproblems

Entrepreneurshipoccurswhenresourcesareredirectedtoprogressiveopportunities,notusedtoensureadministrative

efficiency

Thisredirectionodresourcesdistinguishestheentrepreneurialrolefromthatofthetraditionalmanagementrole HenryFord 22


23/59

Defining Entrepreneurship Theevolutionoftheconcepthasgeneratedmanydefinitions,

butperhapsrecentonebyRobertRonstadtcaptureits

essence

Entrepreneurshipisthedynamicprocessofcreatingincrementalwealth.Thiswealthiscreatedbyindividualswhoassumethe

majorrisksintermsofequity,time,and/orcareercommitmentof

providingvalue

for

some

product

or

service.

The

product

or

serviceitselfmayormaynotbeneworuniquebutvaluemust

somehowbeinfusedbytheentrepreneurbysecuringand

allocatingthenecessaryskillsandresources.

23


24/59

Defining Entrepreneurship On the basis of various definitions by different persons, it can

be concluded that an entrepreneur is one who evaluates the new

situations in his environment and directs the making of such

adjustments in the economic systems as he deems necessary

In the process of bringing the new project into the market, theentrepreneur undertakes number of responsibilities such

as perceiving opportunities for profitable investments, explores

the prospects of starting a enterprise, obtains the license,

arranges the required initial capital, provides personal

guarantees to the financial institutions, supplies the required

technical knowhow, etc.

24


25/59

EntrepreneurshipEntrepreneursmakethingshappen.

Theyareindividualswhotakeaconceptandconvertitinto

areality.

A

product,

policy

or

institution.

Theybecomethechampionsofanewprocess,andthey

are

engines

of

change.

Entrepreneurshipoccursinallareasoflife.Inbusiness,academy,governmentandNGOs.

Entrepreneursare

everywhere,

in

Wall

street

and

the

Sahel.25


26/59

Importance of Entrepreneur Entrepreneurisan economicagent who unitesallmeansof

productiontomaximizehisprofitsbyinnovations.

Entrepreneur puts to use capital, labor andtechnologyandactsasaneconomicagent.

Entrepreneurs are key to the creation of enterprise. They play

vital role for the

economic

development of a country in the

followingways:

26


27/59

i. Formation of Capital

Entrepreneur helps to mobilize thecapital,which results in motivating theinvestors

to divert their idle savings inindustrialsecurities

Investment ofpublic money in

industrial

sector helps the country to use suchresourcesforproductive

purposes

Thegrowthrateofcapitalformationwillbeincreased,whichis

highlyessentialforrapid economic development of acountry

27


28/59

ii. Balanced Regional

Development They helpto remove regional disparitiesbysettingup

industriesinthebackwardareas

Government extend various concessionsandsubsidiestotheentrepreneurswhotakeinitiativetosetupindustriesinthe

underdeveloped

regions

28


29/59

iii. Generates Employment Generating employment directly andindirectly

Directly employ themselves by startingtheirownenterprise

Indirectly provide jobs to manyunemployedbysettinguplargeandsmallscaleindustries

29


30/59

iv. Improvement of Per Capita

Income They have the skills of locating andidentifying

opportunities to establish theirownenterprise

Theypossesthecapacitiestoconverttheresourceslikeland,laborandcapitalintogoodsandservices

This will result in increase in the nationalincomeandwealth

of

a

nation,

and

increase

in

the

per

capita

income

of

the

country

30


31/59

v. Improvement of Standard of

Living The initiative taken by entrepreneurs tosetupindustries

helps in removingscarcityofessentialcommodities

New products, varied products andqualitativeproducts would bemanufacturedtosuittherequirements

of differentsegmentsofmarket

The

efforts

of

entrepreneurs

to

set

up

large

scale

and

small

scaleindustriesoffergoods

at a lower price to the consumers andincreasevarietyintheir

consumption

31


32/59

vi. National Self-reliance They help to manufacture indigenoussubstitutestoimported

productswhichreducesthe dependence on foreigncountries

There is possibility of exporting goodsandserviceswhich leads to earningforeignexchangeforthecountry

Theimport substitutionandexportpromotionensure

economic

independence

and

the

country

will

become

self

reliant

32


33/59

vii. Planning Production Entrepreneurs are considered aseconomicagentssincethey

uniteallthemeansofproduction,i.e.,land,laborandcapital

Thiswillhelptomakeuseallthe factorsofproduction with a proper judgment,

perseverance and with a knowledge of theworldofbusiness

A true

entrepreneur

is

endowed

with

more

than

average capacities in the task of organizing and

coordinating the variousfactorsofproductiontogethigher

profitsforhisenterprise

33


34/59

viii. Backward and Forward

Linkages The entrepreneur always initiates changeandtries

to maximize his profits byinnovations

Example:Theestablishmentoftextileunitgenerates several ancillary units andexpands

demand for cotton, chemicals,dyes,spinning mills,

etc. (BackwardLinkages)

By increasing the supply of textiles, the textileunit

facilitates the growth of opening salesunitsindifferentmarkets,

stitchingofclothes,machinebuildingand other units (Forward

Linkage)

34


35/59

ix. Dispersal by Economic

Power Themodernworldisdominatedbyeconomicpower

Economic power is the natural outcome ofindustrialandbusinessactivity

Industrial development may lead toconcentrationof economic power in fewhandswhich result in the growth of

monopolies The increasing number of entrepreneurs helpindispersalofeconomic

powerintothehandsofmanyefficientmanagersofnew enterprises

35


36/59

Entrepreneurs

Can

Be

EncouragedandPromoted

Opennesstonewideas,freedomfrominvestigation

of

operation,

and

promotion

and

paybasedonmeritencourage

entrepreneurship.

Excessiveregulation,

rigid

hierarchy,

lack

of

freedom,andexcess controldiscourage

entrepreneurship.

36


37/59

Requirements of Entrepreneurs

Entrepreneurs

need

a

keen

eye

to

understand

economic,

social,andscientificrealitiesandthecapacitytounderstandevolutionaryprocessesinthefuture.

Theyneedtounderstandhowinstitutionswork,and

individualsreact

in

order

to

introduce

activities

and

productsthatservepeoplesneedandthataresustainableeconomicallyandpolitically.

Entrepreneurs

also

need

dedication

and

commitments

andthecapacitytoovercomefailure.

37


38/59


39/59

Marketing & environmental leadership

Aleader mayhavetosellideas,promoteconcepts,raisefunds,recruitfollowerswhichrequiresmarketing.

Frequently,Environmental

issues

are

abstract

and

removedfromthedailyreality

Formostpeoplemarketingenvironmentalissuesisa

challenge.

39


40/59

Small Businesspersons Individualswhosimplysubstituteincomebyleavingjobstooperatelocalstoresorindependentservicebusinesses

ThedistinctionbetweenanentrepreneurandSBPisdelicatebut

important

ThepersonwhoestablishafastfoodfranchisechainiscalledentrepbutthelocalrestaurantowneriscalledaSBP

40


41/59

Distinguish factors Visionforgrowth

Commitmenttoconstructivechange

Persistencetogathernecessaryresources

Energytoachieveunusualresults

Prerequisitefor

an

entrepreneur

41


42/59

Corporate Entrepreneurship Intrapreneurshipisconcernedwithinnovationthatleadsto

newcorporatedivisionsorsubsidiaryventuresinestablished

largefirms

ORIC???

42


43/59

Small Business Lessthan$10Millioninannualsalesandhasfewerthan1000

employees

Exceptionto

these

criteria

flourish

Firmswith100employeescangenerate$50Millionsormorewithhighspeedproductionlines

43


44/59

Family Enterprises Arelocallyownedandoperated,oftenbyonepersoncalleda

soleproprietor

Successionis

aserious

problem

Successfulbusinessownersoftenmustresignthemselvestodissolvingtheirfirms

44


45/59

Personal Service Firms Relycruciallyonuniqueskillsoftheirfounders

45


46/59

Franchises Arecreatedbyacontract

46


47/59

Type of Small Business:Advantages and DisadvType Advantages Disadvantages

FamilyEnterprise Offers economic

independence;promotes

familyunity

Familyliabilities

for

business,unsure

succession

PersonalServiceFirms

(PSF)

Offerspersonalfreedom

anduse

of

talent

and

skillsforpersonalgrowth

Personalliabilitiesand

lackof

secure

income

withoutclearsuccession

Franchise Franchisorprovidesmost

businessstartupneeds

withrelative income

security

Less freedomand

adventurethanothers;

contractedtofranchisor

forservices

and

royalty

leasepayment

47


48/59

Entrepreneurial Characteristics

Persistent,Selfconfident,Diligent,Creative,OptimisticandIndependentmindedthelistisuseful,butthereareother

characteristicstoconsider

Unusuallygood

health,

realistic

about

working

hard

and

driving

towards

measureableresults

JeromeAKatz(1984) 86%ofentrepreneurswhostartnewbusinesshavebachelorsdegree(morethanhalfofthoseinliberalarts)

48


49/59

Jerome A Katz (1984) 71%whobuyintoexistingbusinesseshaveBAdegrees

90%hadseveralyearsofpriorexperience

Thedatasuggestthatmostentrepreneursarereasonablywelleducatedwithsolidworkexperience

49


50/59

Robert Ronstadt Startupventureswithbettereducatedyouthwho,

incidentally,oftenhadentrepreneurialparents

Nearly76%

had

fathers

who

were

also

entrepreneurs

and

13%

hadmothersinentrepreneurialroles

Averageageofentrepreneursatstartupwas32

50


51/59

Milestone Report (1987)Characteristics of Women Entrepreneurs

Mostwomenentrepreneursstartedbusinessbetweentheage

of38

to

48

56%weremarried,and42%havechildren

70%ofthosegraduatedinliberalarts

9%inmanufacturing

51

O f C O


52/59

Organization for Economic Co-Operation

and Development

52


53/59

Transition economies

53

D l i C i


54/59

Developing Countries

54

C 1 1 P h h


55/59

Case 1-1: Progress through

Innovation Portuguesenavigationalinstrumentsopenedtheworldto

rapidcolonization

Scottishsteam

engines

and

power

looms

vaulted

us

into

industrialage

AmericantechnologycreatedanindustrialsocietyfoundedonenginesofgrowthsuchasFordsassemblylinetechnology,

Bellstelephone,

and

Edisons

electric

systems

55

C M C i k


56/59

Cyrus McCormick Mechanicalreaperin1831 theShenandoahValley,cutting6Acres

ofwheatinlesstimethanahealthyfarmercouldcutoneacre

TheMcCormickReaperreplacedthewayfarmerhadharvestedgrain

formore

than

2,000

years

and

farm

productivity

was

increased

more

thantenfold

Theinventionwasnotasuddenbrainstorm

56

M C i k R


57/59

McCormick Reaper TheideabeginwithMcCormicksfather,whowasdetermined

tofindawaytoprovidemorefoodforAmericasgrowing

population

Thefarmer

who

worked

only

with

ascythe

or

sickle

quickly

realizedthathehadtoaccepttheinevitablechange

McCormickfoundedInternationalHarvesterCorporation Payoncredit

57

M C i k R


58/59

McCormick Reaper McCormickrefinedhiscreditpoliciesandintroduced

installmentssales

McCormickwasaninventorturnedentrepreneurwho

recognizedthe

value

of

marketinghired

the

best

people

with

marketingandengineeringtalent

Billboardsandbrochures

200modelsoffieldplantingandharvestingequipments

58

L k P i t


59/59

Luck or Persistence KimMerritt,11years,sampledchocolateatacandystore

Sheworkedafterschool,weekendsandholidays

Afterschoolfundraisingeventdemandexceededcapacityshe

boughtequipments,

fired

staff

KimChocolate,occupiedherentirefamilyduringfirstmonthshehad18,000orders

59

ch1 - entrepreneurship and new venture opportunities

Documents