entrapreneurship

Concepts and OverviewsConcepts and Overviews

Module 1

Santanu MukherjeeSantanu Mukherjee

Entrepreneurship

IEM - Entrepreneurship - Santanu Mukherjee 22

Learning ObjectivesLearning Objectives

What is entrepreneurship?

What are the motivations of

entrepreneurship?

Classifications of entrepreneurs.

Role of government to promote

entrepreneurship.


Entrepreneur Entrepreneur

The concept was first established in the 1700s - the meaning has evolved ever since;

Entrepreneur is a French word and commonly used to define a person, who organizes and operates a business or businesses;

To some economists, the entrepreneur is One who is willing to bear the risk of a new venture if there is a

significant chance for profit;Others emphasize the entrepreneur’s role as an innovator who

markets his/her innovation;Some other economists say that entrepreneurs develop new

goods or processes that the market demands and are not currently being supplied.


What is Entrepreneurship?What is Entrepreneurship?

Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence (Bowen and Hisrich, 1986).


Entrepreneurship - Remarks of two successfulEntrepreneurship - Remarks of two successful

Being an entrepreneur and creating a new business venture is analogous to raising children – it takes more time and effort than you ever imagine and it is extremely difficult and painful to get out of the situation. Thank goodness you can’t easily divorce yourself from either situation.

When people ask me if I like being in business, I usually respond: On days when there are more sales than problems, I love it; on days where there are more problems than sales, I wonder why I doit. Basically, I am in business because it gives me a good feeling about myself. You learn a lot about your capabilities by puttingyourself on the line. Running a successful business is not only a financial risk, it is an emotional risk as well. I get a lot of satisfaction from having dared it- done it-and been successful.


What Makes a Successful Entrepreneur?What Makes a Successful Entrepreneur?

There is no definitive profile.

Successful entrepreneurs Come in various ages, income levels, gender, and race;

They differ in education and experience;

Research indicates that most successful entrepreneurs share certain personal attributes, including: Creativity, Dedication, Determination, Flexibility, Leadership,

Passion; Self-confidence, and Smartness.



Creativity is the sparkDrives the development of new products or services or ways to

do businessIt’s the push for innovation and improvementIt’s continuous learning, questioning, and thinking outside of

prescribed formulas

Dedication motivates the entrepreneurWork hard - 12 hours a day or more, even seven days a week,

especially in the beginning, to get the endeavor off the groundPlanning and ideas must accompany hard work for success

FlexibilityAbility to move quickly in response to changing market needs;It is being true to a dream while also being mindful of market

realities.



LeadershipAbility to create rules and to set goals;It’s the capacity to follow through to see that rules are followed

and goals are accomplished.

Passion Gets entrepreneurs started and keeps them there;Provides the ability to convince others to believe in the vision;It helps to stay focused and to get others to look at the plans.

Self-confidence Comes from thorough planning, reduces uncertainty and the

level of risk;Self-confidence gives the entrepreneur the ability to listen

without being easily swayed or intimidated.



SmartnessCommon sense coupled with knowledge or experience in a

related business or endeavor;

The former gives a person good instincts, the latter, expertise;

Many people have smartness they don’t recognize;

Employment, education, and real life experiences all contribute to smarts.


What Motivates an Entrepreneur?What Motivates an Entrepreneur?

Internal FactorsStrong desire to do something

new;To be independent in Life;Make maximum use of technical

/ professional knowledge;Occupational experience

background;Passionate about particular

activity;Dissatisfaction with present job;Self-satisfaction.

External FactorsGovernment grants &

subsidiaries;To continue ancestor business;Financial assistance from

Institutions;Availability of resources;Encouragement from big

business houses;Availability of sick units on

easy financial terms;Encouragement from family

members – role model in the family



Perhaps a person has been laid off once or more;Sometimes a person is frustrated with his or her current

job and doesn’t see any better career prospects on the horizon;

Some people are actually repulsed by the idea of working for someone else.



Some people are attracted to entrepreneurship by its advantages Be your own BOSS - Make decisions, choose who you want to

work with, when you want to work with them and for what amount you work for. (CONTROL);

You decide how to operate your business, conceptualize and design your setup and work exactly how you want your sales and operation flows to be. (CONTROL);

Being an entrepreneur gives you the prospect of achieving significant financial payouts. (MONEY) - There is no cap to the amount to money you can earn;

Freedom to decide your working hours, as well as what to pay and when to take vacations. (FREEDOM);

More time to spend with your family and live the life that you want. (FREEDOM);


Classifications of EntrepreneursClassifications of Entrepreneurs

Danhof classifies Entrepreneur into four typesInnovative entrepreneurThis category of entrepreneur is characterized by smell of

innovativeness;

They sense the opportunities for introduction of new ideas, new technology, discovering of new markets and creating new organizations;

Can work only when certain level of development is already achieved and people look forward to change and improvement;

Very much helpful for their country because they bring about a transformation in life style;

Example: Steve Jobs the founder of iPod, Michael Dell, founder of Dell Computers.



Adoptive or imitative entrepreneur:Imitate the existing entrepreneur and set their enterprise in the

same manner;Instead of innovation, may just adopt the technology and

methods innovated by others;Suitable for under-developed countries for imitating the new

combination of production already available in developed countries;Example: Walton BD. has introduced its motorbikes,

refrigerators, televisions and other electronic appliances in Bangladesh not being the original inventor of those products.



Fabian entrepreneurs: Who attributes preferenceCustoms;Religions;Traditions;Past habits;Being shy and lazy, they are very cautious to accept changes

and they view changes with suspicion;They imitate only when it becomes perfectly clear that failure to

do so would not result in a loss of the relative position in theenterprises;Example: Kodak, a company that happened to be the market

leaders in producing analog cameras but they did not realize thechange and the introduction of the Digicam.



Drone entrepreneurs: Such entrepreneurs are conservative or orthodox in outlook;They always feel comfortable with their old fashioned

technology of production even though technologies have changed;They never like to get rid of their traditional business, traditional

machineries and traditional system of business even at the cost of reduced returns;Example: Citycell Telecom Bangladesh, in spite of having

knowledge about there market fall they have not yet changed there business policy.



Other entrepreneursSolo-operator:The shopkeepers are like the solo-operators;They operate there business without recruiting any men power and

supply the capital alone.

Active partners:The active partners are different partnership firms;The partners actively participate in the raising of funds as well as

with the operation of the internal management.

Inventors:The software developers are also an entrepreneur as they invent

new products for the solution of the new problems.

Challengers:The challengers always seek for the new opportunities in the

market to invest.



Other EntrepreneursBuyers:The buyers can also be the entrepreneurs;They find out an established institution and they buy the maximum

share of that particular institution;On 20 October 2006 the board of directors of Anglo-Dutch

steelmaker Corus accepted a $7.6 billion takeover bid from Tata Steel, the Indian steel company, at 455 pence per share of Corus.

Life timers:The life timers are those who operate the business developed by

one and is operated by generation to generation.


IntrapreneurshipIntrapreneurship

A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation;

Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship.


Entrepreneur Vs IntrapreneurEntrepreneur Vs Intrapreneur

Entrepreneur Intraprenuer

1. Entrepreneur is employer 1. Intraprener is employee

2. Independent in operation 2. Depends on the organization to implement his ideas.

3. Bears all the risk involved in enterprise. 3. Does not bear all the risk.

4. Exhibits higher need for achievement. 4. May not have high need for achievement

5. Profit is the reward. 5. Attractive salary, promotion & incentives are the reward.

6. May not have formal qualification. 6. Should have some professional or technical qualification.

7. Do not have any boundary for operations. 7. He has to operate within the organisational policies.


Entrepreneurship - Role of GovernmentEntrepreneurship - Role of Government


Drivers to Create Vibrant Entrepreneurial EcosystemDrivers to Create Vibrant Entrepreneurial Ecosystem

Catalytic government policy and regulatory frameworkFacilitate investmentsRecognition and promotion of early-stage investments, and;Angel investors, venture and seed funds, and impact investors

through development of appropriate policy measures and fiscal incentives.

Enhance and scale-up venture incubation programsPrograms designed to support the successful development of

entrepreneurial companies through an array of business support in terms of resources and services

– Help with business basics;– Marketing assistance;– High speed internets;– Access to bank loans, loan funds and guarantee programs;– Technology commercialization assistance.

Source: Government of India Planning Commission, New Delhi, 2012



Ease entrepreneurial activityGovernments at all levels (central, state, and local) - reduce

transaction time & costs through measures i.e. single-window clearance and access to well developed industrial clustersSoftware Technology Parks of India (STPI) model could be

emulatedThe STPI scheme provides various benefits to the registered units

i.e. 100% foreign equity, tax incentives, duty free import, duty free indigenous procurement etc.

Easy exits for investorsPolicy framework for easier exits to encourage early stage

investments by Angels and othersProvide appropriate fiscal incentive on capital gains to Angels and

other early stage investors




Establish expeditious procedures for closing of businesses

Complexity of closing down a business is a disincentive to set up a business in the first place;

Ecosystem must recognize that business ventures fail and such failure is neither a stigma nor a constraint on future entrepreneurial activity.

Easy access to equity capital and debt

Remove regulatory hurdles that inhibit domestic fund raising

Permit pension funds, insurance funds and provident funds to invest in early-stage venture funds could significantly improve capital flows;

Special incentives i.e. tax credits could be provided to HNIs, corporate and institutions that invest in early stage venture funds or to incubators and to angel investors;

Banks must also be encouraged to invest in early-stage venture capital funds.




Easy access to equity capital and debtGovernment could establish a “fund-of-funds (FOF)” to seed

other early stage venture fundsCapital from other sources (domestic and foreign) can be raised

thereby creating a multiplier effect

Develop and scale-up debt offerings

A debt is created when a creditor agrees to lend a sum of assets to a debtor;

Usually granted with expected repayment; in modern society, in most cases, this includes repayment of the original sum, plus interest;

Critical to meeting working capital requirements;

Early stage ventures cannot meet lender requirements.




Businesses as entrepreneurial hubs: Greater engagement of established businesses with emerging

ventures is neededPrivate sector could participate in setting up and operating

incubators in PPP;

Such incubators would have access to high quality managerial andtechnical resources of the sponsoring private enterprise.

Industry bodies and chambers of commerce could drive greater collaboration between established and emerging businessesStrategic collaboration to source collaboration and technology;

Develop solutions and products tailored for emerging firms.




Culture and institutions encouraging entrepreneurship over careerism: Ecosystem to encourage a culture of entrepreneurship – risk

taking ability, failure for tolerance

Educational institute can greatly help throughUpgraded courses and programs on entrepreneurship;

Promotion of innovation and commercialization;

Engagement of entrepreneurs, angel investors, and venture capitalists as faculty and mentors;

Share success stories through TV and print media.




Adequate and effective collaboration forumsA vibrant entrepreneurial ecosystem needs forums, virtual or

physical, where all stakeholders can come together to share experience, expertise and develop symbiotic relationshipsDevelop online portals to

– Provide comprehensive information to a new entrepreneur is highly valuable;

– Provide information on government policies and regulations;

– Provide means for virtual mentorship support.

Set up Innovation Labs (iLabs):– Develop a network of 15-20 iLabs that can serve as the focal points

for collaboration across the region



Thank YouThank You

entrapreneurship

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