ENTREPRENEURSHIP

Session 1

Who is an Entrepreneur?
Entrepreneur stems from French, means between-taker or go 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 introduces changes, 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

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 needed the money, the people, the business model, the strategyneeded to transform an invention or an idea into a viable business.

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

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.

Entrepreneurial Process
Identify and Evaluate opportunity Develop Business Plan Determine Resource Requirement Manage the enterprise

Identify a specific Opportunity Estimate Market Size Assess real and perceived value of opportunity

Title Page Table of Contents Executive Summary Description of Business , industry, technology, marketing, financials, production plan, organisation set up, operation plan

Determine resources Determine existing resources Identify resource gaps and available suppliers

Develop management style Understand key variables for success Identify problems current and potential

Evaluate risks and returns of opportunity

Assess personal skills and goals Assess competitive environment

SWOT
Summary

Develop access to needed resources

Implement control systems

Develop growth strategy

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

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

Thought Process of an Entrepreneur

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

Thought Process of an Entrepreneur

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

to
Comprehension Questions Questions designed to increase entrepreneurs understanding of the nature of environment Connection tasks Tasks designed to stimulate the entrepreneurs to think about the current situation in terms of similarities to and differences from situations previously faced and solved Strategy tasks Tasks designed to stimulate entrepreneurs to think about which strategies are appropriate for solving the problem (and why) or pursuing the opportunity Reflection tasks Designed to stimulate entrepreneurs to think about their understanding and feelings as they progress through the entrepreneurial process

Thought Process of an Entrepreneur

Learning From Failure
Hire and manage people effectively. Have a complete financial statement. Manage your financial resources effectively Develop a good, effective Business Plan Know your business

Why Become an Entrepreneur?

The three primary reasons that people become entrepreneurs and start their own firms

Desire to be their own boss

Desire to pursue their own ideas

Financial rewards

Characteristics of Successful Entrepreneurs

Four Primary Characteristics

Characteristics of Successful Entrepreneurs

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

viable business is a key characteristic of successful entrepreneurs.

Common Myths About Entrepreneurs

Myth 1: Entrepreneurs Are Doers, Not Thinkers Myth 2: Entrepreneurs Are Born, Not Made Myth 3: Entrepreneurs Are Always Inventors Myth 4: Entrepreneurs Are Academic and Social Misfits Myth 5: Entrepreneurs Must Fit the Profile Myth 6: All Entrepreneurs Need Is Money Myth 7: All Entrepreneurs Need Is Luck Myth 8: Ignorance Is Bliss For Entrepreneurs Myth 9: Entrepreneurs Seek Success But Experience High Failure Rates Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)

Entrepreneurial Schools-of-Thought Approach

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 growth capital.

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)

Macro View: External Locus of Control

Financial Analysis Emphasis Venture Stage
Start-up or acquisition Ongoing

Financial Consideration
Seed capital Venture capital sources Cash management Investments Financial analysis and evaluation Profit question Corporate buyout Succession question

Decision
Proceed or abandon Maintain, increase, or reduce size

Decline or succession

Sell, retire, or dissolve operations

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 for idea sources, the development of concepts, and the implementation of venture opportunities. Corridor principle: New pathways or opportunities will arise that lead entrepreneurs in different directions. The Strategic Formulation School of Thought Emphasizes the planning process in successful venture development.

The 10 Deadly Mistakes of Entrepreneurship

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 plan I dont have time for it Uncontrolled growth expansion should be financed by the profit they

generate 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

The 10 Deadly Mistakes of Entrepreneurship

Incorrect pricing costs, aims, methods Inability to make the entrepreneurial transition after the start up, growth

usually requires radical changes in several fields

Theories of Entrepreneurship
Discovery Theory
Emphasizes Assumes

on identification of opportunities by individuals

that different individuals has different ability of identifying opportunities that risk bearing is an essential part of the entrepreneurial process

Assumes

Creation Theory
Focuses

on entrepreneurs and the creation of enterprises that opportunities are not recognized by individuals, but created that individuals bear uncertainty not risk

Assumes

by them
Assumes

Models of Entrepreneurship Development

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 of entrepreneurial behavior in individuals.
model analyzes the determinants of entrepreneurship development.

Population-Ecology Model
This

Significance of Entrepreneurship

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

Traits and Characteristics of a Successful Entrepreneur

Creativity Innovation Leadership Dynamism Decision-Making Ability Self-Motivation Self-Confidence Time Management Vision Persistence Technical Knowledge Problem-Solving Skills Flexibility

Types of Entrepreneurs : On the basis of functional characteristics

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 others to start their own enterprise.
who are cautious and skeptic about bringing any change in their modus operandi or enterprises. who believe in status per quo.

Fabian Entrepreneurs
Entrepreneurs

Drone Entrepreneurs
Entrepreneurs

Types of Entrepreneurs: On the basis of nature of business

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 of developmental angle

Large-Scale Entrepreneurs: Entrepreneurs who are involved in

entrepreneurial 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 of personality traits

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 information

services.
Caretakers: Entrepreneurs who have helping personalities and are involved

in taking care of people and property.

Types of Entrepreneurs: Some others

Entertainers/Hosts: The entrepreneurs who thrive on being with people and

are involved in hospitality or service industries.

Investors/Owners: The entrepreneurs, who invest money to generate

profits. They invest their capital in stocks, real estate, or businesses.

Sellers: The entrepreneurs who make profits in the form of commissions

acquired on purchases by customers.

Technologists: The entrepreneurs who provide technological services. For

example, software developers and engineers.

Corporate Entrepreneurship
Corporate Entrepreneurship

Is the conceptualization of entrepreneurship at the firm level. All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. The position of a firm on this continuum is referred to as its entrepreneurial intensity.

Entrepreneurially managed firm v/s traditionally managed firm

Conceptual dimension
Strategic Orientation Commitment to opportunity Commitment of resources Control of resources Management structure Reward philosophy Growth orientation Entrepreneurial culture

Entrepreneurial focus
Driven by perception of opportunity Revolutionary with short duration Many stages with minimal exposure Episodic use or rent of required resources Flat with multiple informal network Based on value creation Rapid growth is top priority; risk accepted to achieve growth Promoting broad search for opportunities

Administrative focus
Driven by controlled resources Evolutionary with long duration A single stage with complete commitment to resources Ownership or employment of required resources Hierarchy Based on responsibility and seniority Safe, slow and steady Opportunity search restricted by controlled resources ,failure punished

Characteristics of an Entrepreneurial Environment

Organisation operates on frontiers of technology Long time horizon Volunteer program

New idea encouraged

Multidisciplinary teamwork

Appropriate reward program

Trial and error encouraged

Resources available and accessible

Sponsors available

Failures allowed

No opportunity parameters

Support of top management

Establishing Corporate Entrepreneurship in the Organization

Step one:

Secure a commitment to corporate entrepreneurship in the organization by top, 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 corporate venture. Establish mentor/sponsor system. Step three: Use of technology to ensure organizational flexibility.

Establishing Corporate Entrepreneurship in the Organization

Step four:

Identify interested managers to train employees and share their experiences. 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 units to expand and unsuccessful ones to be eliminated.

Establishing Corporate Entrepreneurship in the Organization

Problems and Successful Efforts

A study found that new ventures started within a corporation performed worse than those started independently by entrepreneurs. Reasons cited: Corporations difficulty in maintaining a long-term commitment. A lack of freedom to make autonomous decisions. A constrained environment. On average, independent start-ups become: Profitable twice as fast. End up twice as profitable. Companies that have adopted their own version of the implementation process to launch new ventures successfully: Minnesota Mining and Manufacturing (3M). Hewlett-Packard (HP). IBM.

Entrepreneurs Vs. Intrapreneurs

Entrepreneurs They work inside as well as outside the enterprise. They generate ideas. They employ intrapreneurs and pays them in exchange of their services. They work overtime to run his/her own business. The rewards of entrepreneurs depend on the success and profit margins of the enterprise. They work inside as well as outside the enterprise. Intrapreneurs They are bound to perform within the enterprise. They adopt the idea generated. They are paid for using their creative thinking. They work overtime helping to run someones else business. An intrapreneur is a person employed by an organization whose compensation is fixed. They are bound to perform within the enterprise.

Entrepreneurial Motivational Factors

Risk-Taking Ability Tolerance for Ambiguity Locus of Control

Self-Efficacy
Goal Setting Independence Egoistic Passion

21st Century Trends in Entrepreneurship Research

Venture Financing Corporate Entrepreneurship Social Entrepreneurship

Entrepreneurial Cognition

Trends in Entrepreneurship Research

Women and Minority Entrepreneurs

Global Entrepreneurial Movement

Entrepreneurial Education Family Businesses

Entrepreneurial Barriers
Economic Barriers
Capital Labor

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

Raw

End of Session