session 1ent

7/28/2019 Session 1ent

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ENTREPRENEURSHIP

Session 1


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Who is an Entrepreneur?

Entrepreneurstems from French, meansbetween-takerorgo between

Different meaning to different people

An economists view : An Entrepreneur is one who brings resources,

Labor, Materials and other assets into combinations that make

their value greater than before, and also one who introduceschanges, innovations, and new order.

A psychologist view: a person with certain traits

Entrepreneur is an individual who takes initiatives to bundle resources in

innovative ways and is willing to bear the risk and/or uncertainty to act


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What is Entrepreneurship?

Academic Definition (Stevenson & Jarillo)

Entrepreneurship is the process by which individuals pursue opportunities

without regard to resources they currently control.

Venture Capitalist (Fred Wilson) Entrepreneurship is the art of turning an idea into a business.

Explanation of What Entrepreneurs Do

Entrepreneurs assemble and then integrate all the resources neededthe

money, the people, the business model, the strategyneeded to transform

an invention or an idea into a viable business.


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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 uncertainties, and receiving the resulting rewards

of monetary and personal satisfaction.

Basic Aspects

It involves a creation process

Devotion to time and efforts

Accepting risks

Rewards , Personal satisfaction


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Entrepreneurial Process V/s Action?

Entrepreneurial action: Behaviour in response to a judgmental decision

under uncertainty about a possible opportunity.

Entrepreneurial Process: the process of creating something new with value

by devoting the necessary time and effort assuming the accompanying

financial, psychic and social risks and uncertainties and receiving the rewards

of monetary and personal satisfaction.


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Entrepreneurial Process

Identify and Evaluateopportunity

Develop BusinessPlan

Determine ResourceRequirement

Manage theenterprise

Identify a specificOpportunity

Title Page Table ofContents

Determine resources Develop managementstyle

Estimate Market Size Executive Summary Determine existingresources

Understand keyvariables for success

Assess real andperceived value ofopportunity

Description ofBusiness , industry,technology,marketing, financials,production plan,organisation set up,operation plan

Identify resource gapsand available suppliers

Identify problemscurrent and potential

Evaluate risks andreturns of opportunity

SWOT Develop access toneeded resources

Implement controlsystems

Assess personal skillsand goals

Summary Develop growthstrategy

Assess competitive

environment


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How Entrepreneurs Think

Entrepreneurs thinks differently than non-entrepreneurs

Decisions made in uncertain environments, under pressure where stakes are

high

Entrepreneur must

Effectuate Be cognitively adaptable

Learn from failure


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Thought Process of an Entrepreneur

Casual Process A process that starts with a desired

outcome and focuses on the means

to generate that outcome

Effectuation Process A process that starts with what one

has (who they are, what they know,

and whom they know) and selects

among possible outcome


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Cognitive Adaptability: it describes the extent to which entrepreneurs are

dynamic, flexible, self regulating, and engaged in the process of generating

multiple decision frameworks focused on sensing and processing changes in

their environments and then acting on them

The ability to reflect upon ,understand and control ones thinking and

learning

Be self aware

Think aloud

Reflect

Be strategic to plan Self monitor


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..The same is possible by asking the following questions relating

to

ComprehensionQuestions

Questionsdesigned toincreaseentrepreneursunderstandingof the nature ofenvironment

Connection tasks

Tasks designedto stimulate theentrepreneursto think aboutthe currentsituation interms of

similarities toand differencesfrom situationspreviouslyfaced andsolved

Strategy tasks

Tasks designedto stimulateentrepreneursto think aboutwhichstrategies areappropriate for

solving theproblem (andwhy) orpursuing theopportunity

Reflection tasks

Designed tostimulateentrepreneursto think abouttheirunderstandingand feelings as

they progressthrough theentrepreneurialprocess


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Know your business

Develop a good, effectiveBusiness Plan

Manage your financialresources effectively

Have a complete

financial statement.

Hire and managepeople effectively.Learning From

Failure


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Why Become an Entrepreneur?

The three primary reasons that people becomeentrepreneurs and start their own firms

Desire to be their own boss

Financial rewards

Desire to pursue theirown ideas


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Characteristics of SuccessfulEntrepreneurs

Four Primary Characteristics


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Characteristics of SuccessfulEntrepreneurs

Passion for the Business: Passion typically stems from the entrepreneurs

belief that the business will positively influence peoples lives.

Product/Customer Focus: An entrepreneurs keen focus on products and

customers typically stems from the fact that most entrepreneurs are, at heart,

craftspeople.

Tenacity Despite Failure : Because entrepreneurs are typically trying

something new, the failure rate is naturally high. A defining characteristic for

successful entrepreneurs is their ability to persevere through setbacks andfailures.

Execution Intelligence: The ability to fashion a solid business idea into a

viable business is a key characteristic of successful entrepreneurs.


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Entrepreneurial Schools-of-ThoughtApproach


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Macro View: External Locus of Control

The Environmental School of Thought

Considers the external factors that affect a potential entrepreneurs lifestyle.

The Financial/Capital School of Thought

Based on the capital-seeking processthe search for seed and growthcapital.

The Displacement School of Thought

Alienation drives entrepreneurial pursuits

Political displacement (laws, policies, and regulations)

Cultural displacement (preclusion of social groups)

Economic displacement (economic variations)


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Venture Stage Financial Consideration Decision

Start-up or

acquisition

Seed capital

Venture capital sources

Proceed or abandon

Ongoing Cash management

Investments

Financial analysis and

evaluation

Maintain, increase, or

reduce size

Decline or

succession

Profit question

Corporate buyoutSuccession question

Sell, retire, or dissolve

operations

Macro View: External Locus of Control

Financial Analysis Emphasis


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Micro View: Internal Locus of Control

The Entrepreneurial Trait School of Thought

Focuses on identifying traits common to successful entrepreneurs.

Achievement, creativity, determination, and technical knowledge

The Venture Opportunity School of Thought

Focuses on the opportunity aspect of venture developmentthe search foridea sources, the development of concepts, and the implementation ofventure opportunities.

Corridor principle: New pathways or opportunities will arise that leadentrepreneurs in different directions.

The Strategic Formulation School of Thought Emphasizes the planning process in successful venture development.


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The 10 Deadly Mistakes ofEntrepreneurship

Management mistakes capacity, leadership ability, knowledge etc.

Lack of experience professional, economic, organisational, dealing with

human resources etc.

Poor financial control undercapitalization (consequence: the firm runs out of

capital before it is able to generate positive cash flow)

Weak marketing efforts mistake: if the entrepreneurs dream it, customers will

automatically come; instead of providing them with value, quality, convenience,

service and fun!

Failure to develop a strategic planIdont have time for it

Uncontrolled growth expansion should be financed by the profit theygenerate or by capital contributions from the owners

Poor location they often choose a vacant building

Improper inventory control neglected in many cases, problems: too much or

too few inventory, and even too much of the wrong type of inventory


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The 10 Deadly Mistakes ofEntrepreneurship

Incorrect pricing costs, aims, methods

Inability to make the entrepreneurial transition after the start up, growth

usually requires radical changes in several fields


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Discovery Theory

Emphasizes on identification of opportunities by individuals

Assumes that different individuals has different ability of identifying

opportunities

Assumes that risk bearing is an essential part of the entrepreneurial process

Creation Theory

Focuses on entrepreneurs and the creation of enterprises

Assumes that opportunities are not recognized by individuals, but created

by themAssumes that individuals bear uncertainty not risk

Theories of Entrepreneurship


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Psychological Model

This model signifies that psychological factors are responsible for the

development of entrepreneurial behavior in individuals.

Sociological Model

This model considers societal factors responsible for the development ofentrepreneurial behavior in individuals.

Population-Ecology Model

This model analyzes the determinants of entrepreneurship development.

Models of EntrepreneurshipDevelopment


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Generating Employment

Developing the Economy of a Country

Improving Standard of living

Facilitating proper utilization of resources Creating new market

Fuelling technological innovations

Increasing productivity

Significance of Entrepreneurship


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Creativity

Innovation

Leadership

Dynamism

Decision-Making Ability Self-Motivation

Self-Confidence

Time Management

Vision

Persistence

Technical Knowledge

Problem-Solving Skills

Flexibility

Traits and Characteristics of aSuccessful Entrepreneur


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Innovative Entrepreneurs

Entrepreneurs who continuously strive to introduce new products in the

market, new technologies, and new markets to do business.

Imitative Entrepreneurs

Entrepreneurs who imitate techniques and technologies innovated by othersto start their own enterprise.

Fabian Entrepreneurs

Entrepreneurs who are cautious and skeptic about bringing any change in

their modus operandi or enterprises.

Drone Entrepreneurs

Entrepreneurs who believe in status per quo.

Types of Entrepreneurs : On the basis offunctional characteristics


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Manufacturing Entrepreneurs: Entrepreneurs who are involved in producing

goods, and mobilizing resources and supplies to sell those products.

Service Entrepreneurs :Entrepreneurs who are involved in producing and

rendering services.

Trading Entrepreneurs: Entrepreneurs who are involved in trading activities

only.

Private Entrepreneurs: Entrepreneurs who establish and operate private

enterprises free from the control of the government.

State or Public Entrepreneurs: Entrepreneurs who are involved in enterprises

that are owned and controlled by the state government. Joint Entrepreneurs: Entrepreneurs who establish and operate enterprises in

partnership.

Types of Entrepreneurs: On the basis ofnature of business

f h b i f


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Large-Scale Entrepreneurs: Entrepreneurs who are involved inentrepreneurial activities at large scale.

Small-Scale Entrepreneurs: Entrepreneurs whose activities are limited to

local markets only.

Satellites: Entrepreneurs who start as suppliers and moves towards a

productive enterprise.

Managers: Entrepreneurs who do not initiate expansion and are satisfied just

in managing and staying in business.

Minor Innovators: Entrepreneurs who participate in the economic progress

by finding the making the better use of the existing resources.

Types of Entrepreneurs: On the basis ofdevelopmental angle

f O h b i f


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Advisors: Entrepreneurs who provide an extremely high level of assistance

and advice to customers.

Administrators or Organizers: Entrepreneurs who manage various events

and processes.

Builders or Creators: Entrepreneurs who are involved in building or

creative works.

Communicators or Trainers: Entrepreneurs who provide informationservices.

Caretakers: Entrepreneurs who have helping personalities and are involved

in taking care of people and property.

Types of Entrepreneurs: On the basis ofpersonality traits


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Corporate Entrepreneurship

Corporate Entrepreneurship

Is the conceptualization of entrepreneurship at the firm level.

All firms fall along a conceptual continuum that ranges from highlyconservative to highly entrepreneurial.

The position of a firm on this continuum is referred to as its entrepreneurial

intensity.

E i ll d fi /


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Entrepreneurially managed firm v/straditionally managed firm

Conceptualdimension

Entrepreneurial focus Administrative focus

Strategic Orientation Driven by perception of opportunity Driven by controlled resources

Commitment toopportunity

Revolutionary with short duration Evolutionary with long duration

Commitment ofresources

Many stages with minimal exposure A single stage with completecommitment to resources

Control of resources Episodic use or rent of requiredresources

Ownership or employment ofrequired resources

Managementstructure

Flat with multiple informal network Hierarchy

Reward philosophy Based on value creation Based on responsibility and seniority

Growth orientation Rapid growth is top priority; risk acceptedto achieve growth

Safe, slow and steady

Entrepreneurialculture

Promoting broad search for opportunities Opportunity search restricted bycontrolled resources ,failure

punished


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E t bli hi C t E t hi


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Establishing Corporate Entrepreneurshipin the Organization

Step one:

Secure a commitment to corporate entrepreneurship in the organization bytop, upper, and middle management levels.

Establish initial framework and embrace the concept.

Identify, select, and train corporate entrepreneurs.

Step two: Identify ideas and areas that top management is interested in supporting.

Identify amount of risk money available to develop the concept.

Establish overall program expectations and target results of each corporateventure.

Establish mentor/sponsor system.

Step three:

Use of technology to ensure organizational flexibility.

E t bli hi C t E t hi


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Step four:

Identify interested managers to train employees and share theirexperiences.

Step five:

Develop ways for the organization to get closer to its customers.

Step six: Learn to be more productive with fewer resources.

Step seven:

Establish a strong support structure for corporate entrepreneurship.

Step eight:

Tie rewards to the performance of the entrepreneurial unit.

Finally:

Implement an evaluation system that allows successful entrepreneurial unitsto expand and unsuccessful ones to be eliminated.

Establishing Corporate Entrepreneurshipin the Organization


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Entrepreneurs Intrapreneurs

They work inside as well as outside the

enterprise.

They are bound to perform within the

enterprise.

They generate ideas. They adopt the idea generated.

They employ intrapreneurs and paysthem in exchange of their services.

They are paid for using their creativethinking.

They work overtime to run his/her own

business.

They work overtime helping to run

someones else business.

The rewards of entrepreneurs depend

on the success and profit margins ofthe enterprise.

An intrapreneur is a person employed

by an organization whose compensationis fixed.

They work inside as well as outside the

enterprise.

They are bound to perform within the

enterprise.

Entrepreneurs Vs. Intrapreneurs


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Risk-Taking Ability

Tolerance for Ambiguity

Locus of Control

Self-Efficacy Goal Setting

Independence

Egoistic Passion

Entrepreneurial Motivational Factors

C T d i E hi


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21st Century Trends in EntrepreneurshipResearch

VentureFinancing

SocialEntrepreneurship

CorporateEntrepreneurship

Trends inEntrepreneurship

Research

EntrepreneurialCognition

GlobalEntrepreneurial

MovementFamily

Businesses

Womenand Minority

Entrepreneurs

EntrepreneurialEducation


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Economic BarriersCapital

Labor

Raw Materials

Non-Economic Barriers

Social

Social Norms

Practical Values

Emotional Blocks

Personal

Lack of Sustained Motivation

Unclear or Ambiguous Ideas

Lack of Vision

Lack of Clear Perception

Entrepreneurial Barriers


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