UNIT 1

ENTREPRENEURSHIP

 Foundations of Entrepreneurship: Nature of Entrepreneurship, social & cultural factors in nurturing entrepreneurship. Institutional support for promoting entrepreneurship in India, role of Universities & Colleges, CSIR labs. Case study of incubation

 Every class, you should have the entrepreneurship magazine along with the regular business magazine. A news paper for news analysis is the preferred. Formals (no jeans, T-Shirts, sports shoes) Formal gadgets (Pen, hanky, king size note book with motivating cover etc) Assignments 1) 2) Two page hand written Challenging journey of an entrepreneur ( Minimum 8 words in a line and minimum 20 lines in a A4 sheet). Business plan for a new start up .

Group Activities 1) What business would you start if given Rs 10 Lacks to you? Prepare a business plan 2) Presentation about a entrepreneurship article from any of the magazines.

What Is An Entrepreneur?
ENTREPRENEUR
A vision-driven individual who assumes significant personal and financial risk to start or expand a business.

What Is An Entrepreneur?
ENTREPRENEURSHIP
The pursuit of opportunity through innovation, creativity and hard work without regard for the resources currently controlled.

Entrepreneurship
Entrepreneurship: a way of thinking, reasoning, and acting that is: opportunity obsessed holistic in approach and leadership balanced
(This definition of entrepreneurship has evolved over the past two decades from research at Babson College and the Harvard Business School and has recently been enhanced by Stephen Spinelli, Jr., and John H. Muller, Jr., Term Chair at Babson College.)

Who is an Entrepreneur?
Situational more than personality
Flexibility
Age Distribution for Starting Company

Ability

20

25

30

35

40

45

Age

Who is an Entrepreneur?
Managers Opportunities
Future Goals
Change Status Quo

Possible

Entrepreneur

Satisfied manager

Perceived Capability
Blocked
Frustrated manager Classic bureaucrat

Burch's Entrep. Personality Traits

1.A desire to achieve

Conquer problems, create successful venture Their workload is very hard to match

2.Hard work

3.Nurturing quality 4.Acceptance of responsibility

Morally, legally and mentally accountable Want be rewarded for their efforts

5.Reward orientation

Burch's Entrep. Personality Traits

6.Optimism

Anything is possible Pride in something first class They are wholly "take charge" people

7.Orientation to excellence

8.Organization

9.Profit orientation

Profit primarily a gauge of performance

An entrepreneur is a job-giver and not a job-seeker. This means that he is his own boss. The characteristics which make him his own boss are given below: (a)Strong achievement orientation. (b)Unwavering determination and commitment. (c)Self-reliance and independence. (d)Hunger for success. (e)Self-confidence and self-faith. (f)Sustained enthusiasm. (g)Single-mindedness. (h)Strong reality orientation. (i)Willingness to accept responsibility. (j)Courage. (k)Ability to survive defeat. (l)Become wealthy and stay humble.

Failure? So what!
Failure seen differently in America & Europe.
In Europe it is a major set-back U.S. expected (required even!) Canada - in between but tending to U.S.

Our System:
Many entrepreneurs had been "blue collar" Many come from families of entrepreneurs Many are immigrants or their children But, there are no "rules" that ensure success

Universally, entrepreneurs shake off failure!

Failure as Learning Process

Ignore it, then start again
Some find it easy to blame someone else

In public, always optimistic

Especially with funders Agonise over what went wrong in private

Willingness to disregard the rules

Start from first principles.

Ability to "bend, not break" rules of life

The Timmons Model of the Entrepreneurial Process

Communication

Opportunity (2)
Ambiguity

Business Plan Fits and gaps

Resources (4)
Exogenous forces Leadership

Creativity Uncertainty

Team (3)

Capital markets

Founder (1)

Entrepreneurship
II. DEFINITION OF ENTREPRENEUR A. Almost all definitions of entrepreneurship include:

1. Initiative taking.
2. The organizing and reorganizing or social/economic mechanisms to turn resources and situations to practical account. 3. The acceptance of risk or failure. B. To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets

into combinations that make their value greater than before, and one who introduces changes,
innovations, and a new order. C. Entrepreneurship is the dynamic process of creating wealth.

 Our definition of entrepreneurship involves four aspects:

1. Entrepreneurship involves the creation processcreating something new of value to the entrepreneur and to the audience. 2. It requires the devotion of the necessary time and effort. 3. It involves assuming the necessary risks.

4. The rewards of being an entrepreneur are independence, personal satisfaction, and monetary reward.
E. The entrepreneurial experience is filled with enthusiasm, frustration, anxiety, and hard work. 1. For many reasons there is a high failure rate among business owners. 2. The financial and emotional risk can be very high.

Nature of Entrepreneurship
The distinctive features of entrepreneurship are as follows 1. Innovation : a)new products; b)new methods of production; c)new markets; d)new sources of raw material; or e)new forms of organisation. 2. Motivation : 3. Risk taking 4. Organisation building 5. Managerial skills and leadership

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

1. 2. 3. 4. 5. 6. 7. Capital formation Improvement in per capita income Improvement in living standards Economic independence Backward and forward linkages Generation of Employment Harnessing Locally Available Resources and Entrepreneurship 8. Balanced Regional Growth 9. Reducing Unrest and Social Tension Amongst Youth 10. Innovations in Enterprises

Historical Development
The term entrepreneur comes from the French and translates between-taker or go-between. o In the Middle Ages the term entrepreneur was used to describe both an actor and a person who managed large production projects, not a risk taker. o The concept of risk was tied to entrepreneurship by the 17th century. o By the 18th century the entrepreneur was distinguished from the capital provider. o In the late 19th and early 20th centuries, entrepreneurs were usually not distinguished from managers. o At the middle of the 20th century, the notion of an entrepreneur as an innovator was established.

The entrepreneurial decision process.

Two work environments tend to be good for spawning new enterprises: research and development and marketing. o The decision to start a new business occurs when an individual perceives that forming the venture is both desirable and possible. + American culture places a high value on being your own boss, being a success, and making money. + Influences include mothers and fathers, teachers, and peers. o Several factors determine the possibility of forming a new company. + The government provides the infrastructure to help a new venture. + The entrepreneur must have the necessary background. + The market must be large enough and the entrepreneur must have the marketing know-how to put it all together. + Financial resources must be available.

Concept of Entrepreneurship
1. 2. 3. 4. It has assumed super importance for accelerating economic growth both in developed and developing countries. It promotes capital formation and creates wealth in country. It is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and it is a pathway to prosper.

5.

Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain.
It is the process of planning, organising, opportunities and assuming. Thus it is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost earnings in the market.

6. 7.

8.

It is a creative and innovative skill and adapting response to environment.

Financial Bootstrapping
Financial bootstrapping is a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors. While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers and Facebook were founded this way. Different types of bootstrapping: 1. Owner financing 2. Sweat equity (Sweat equity is a party's contribution to a project in the form of effort -- as opposed to financial equity, which is a contribution in the form of capital ) 3. Minimization of the accounts receivable 4. Joint utilization 5. Delaying payment 6. Minimizing inventory 7. Subsidy finance 8. Personal Debt

Social & cultural factors in nurturing entrepreneurship

1. The perception that starting a new company is desirable results from an individuals culture, family, teachers, and peers.

a. American culture places a high value on being your own boss, being a success, and making money.
b. In some cultures making money is not as valued, and failure may be a disgrace; the rate of business formation in these countries is not as high. 2. Many subcultures that shape value systems operate within a cultural framework. a. In the U.S. they include Route 128 (Boston), Silicon Valley (California), and North Carolina Triangle. b. These subcultures support and even promote entrepreneurship. 3. Studies indicate that a high percentage of founders of companies had fathers and/or mothers who valued independence. 4. Encouragement to form a company is also gained from teachers, who can significantly influence individuals toward entrepreneurship. 5. An area with a strong educational base is also required for entrepreneurial activity. 6. Peers are important, also, as is an area with an entrepreneurial pool and peer meeting place.

Social Factors in nurturing the Entrepreneurship

1. 2. 3. 4. 5. 6. Caste factor Family background Education Attitude of the Society Cultural Value Conservative societies

Cultural factors in nurturing entrepreneurship

Western culture contributes and supports to entrepreneurship in a big way. Developing countries fund raising is the main challenge. Mind set up of getting a fixed income as most have already spent enough money on education. India is a country with villages, support if you start an agriculture related entrepreneurial activity. The family setup the Indian society pulls back the entrepreneurs. Multicultural society provides avenues for multiple experiments. French will be more entrepreneurial in the fields of fashion & designs. Indians in the fields of agriculture and related activities, Jews in financial field, Italians in gold and ancient art, Japanese in robotics, Americans in software and internet field.

Institutional support for promoting entrepreneurship in India

District Industries Centres (DICs)and Industrial Estate, Small Industries Development Organisation (SIDO), Small Industries Service Institutes (SISI), Small Industry Development Corporation(SIDCO), Entrepreneurial Guidance Bureau (EGB), National Alliance of Young Entrepreneurs (NAYE), National Productivity Council (NPC) and Venture capital funds (VCF). In addition, all India financial institutions-IDBI, IFCI, ICICI-have promoted/sponsored a number of Technical Consultance Organisations (TCOs)to assist small entrepreneurs in different ways. Recently, the Small Industries Development Bank of India (SIDBI) has been established to help small scale units. Besides, agencies like Khadi and Village Industries Commission, Commercial Banks, Cooperative Banks, EXIM Bank and National Science and Technology Entrepreneurship Board undertake promotional activities aiming at support in entrepreneurship development. Assignment : Visit any of these organizations and get the details how they will support your business plan. Go with a business plan.

Entrepreneurship Development Institute of India Study

Following is the list of major competencies identified by the study that lead to superior performance of the entrepreneurs: 1.Initiative. 2.Looking for opportunities. 3.Persistence. 4.Information Seeker. 5.Quality Conscious. 6.Committed to work. 7.Efficiency seeker. 8.Proper planning. 9.Problem Solver. 10.Self-confidence. 11.Assertive. 12.Persuative. 13.Efficient monitor. 14.Employees well wisher. 15.Effective strategist.

Role of Universities & Colleges

Apart from providing the academic knowledge, the educational institutions are carrying the following support activities for the aspirants 1. Conducting seminars by renowned entrepreneurs and entrepreneurship supporting agencies. 2. Establishing the business incubation centers 3. Providing the seed fund for the best business plants (IIM Bangalore etc) 4. Business plan competitions 5. Providing legal support and guidance 6. Mentorship services 7. Consultancy in-house and external expert guidance. 8. Converting the students from Jobseekers to job providers. 9. Providing support of the angel financers and venture capitalist firms. 10. Providing the summer internships so that students get the idea of how the business world works. 11. Facilitating in getting the loans from financial institutions and under various government schemes.

CSIR labs

Incubation case studies

Incubation: Business incubators are programs designed to support the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a startup company will stay in business for the long term: older studies found 87% of incubator graduates stayed in business, in contrast to 44% of all firms. Wonder Grass Bamboo house building company of Mr. Vaibhav Kale, from Bangalore was provided the incubation services at IIM Bangalore. Hundreds of entrepreneurial ideas incubated by the incubation cells of top B-Schools.

The incubation process

Most common incubator services: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Help with business basics Networking activities Marketing assistance High-speed Internet access Help with accounting/financial management Access to bank loans, loan funds and guarantee programs Help with presentation skills Links to higher education resources Links to strategic partners Access to angel investors or venture capital Comprehensive business training programs Advisory boards and mentors Management team identification Help with business etiquette Technology commercialization assistance Help with regulatory compliance Intellectual property management

Business incubation has been identified as a means of meeting a variety of economic and socioeconomic policy needs, which may include 1. Creating jobs and wealth 2. Fostering a community's entrepreneurial climate 3. Technology commercialization 4. Diversifying local economies 5. Building or accelerating growth of local industry clusters 6. Business creation and retention 7. Encouraging women or minority entrepreneurship 8. Identifying potential spin-in or spin-out business opportunities 9. Community revitalization About one-third of business incubation programs are sponsored by economic development organizations. Government entities (such as cities or counties) account for 21% of program sponsors. Another 20% are sponsored by academic institutions, including two- and four-year colleges, universities, and technical colleges.

What is Intrapreneurship?
Intrapreneurship is defined as entrepreneurship within an existing business set up. That is to say Intrapreneurship is corporate entrepreneurship. When a corporation indulges in entrepreneurial activities, like diversification into new businesses, it is called intrapreneurship.

Intrapreneur is a manager who focuses on innovation and creativity; who brainstorms,dreams and puts ideas into profitable venture by operating within the organisational environment.
It is a tool for capitalizing the entrepreneurial spirit of employees in the organisation. It gives managers the freedom to try new ideas by employing firms resources in a unique way.

 Seeing and acting on opportunities There is a case of a film distributor in Jamshedpur, Mr. Nair. The story of how he became a distributor is interesting. He was working for TISCO at Jamshedpur. One day, he met the Secretary of one United Club in the town, who asked him whether he could help him in getting a movie to show in his club as he had difficulties in procuring it. Nair agreed and went to Calcutta to get the movie. There he met an acquaintance who was connected with the film line; on being asked Nair told him the reasons for his visit. The acquaintance offered to help him, but Nair refused and- still collected name and addresses of some distributors, He then went to a well-known firm of distributors, got a movie for Rs.5,000/- and gave it to the club for Rs.7,000/-. This started him off and he began supplying movies to that club and other movie theaters in Jamshedpur. Gradually the work increased and he established an office in Calcutta and became a full time distributor.

Persistence: Takes repeated action to overcome obstacles that get in the way of reaching goals.
Look at the case of Leela. She decided to set up a unit manufacturing FRP products. She purchased land, engaged a firm of contractors for construction of building. As luck would have it, the watchman engaged there got murdered (some personal enmity) and the contractors workers panicked and left the construction work. Somehow she managed to get the construction completed. Much later, by the time she could start production, FRP technology had changed and she hardly had any orders. As a result she defaulted in payment of interest to the financial institution which had extended financial assistance in initial investment. But did she lose heart? No, she sold the land and building, paid the financial institution, salvaged the machinery, shifted it to a rented place and started again.

Commitment to work contract

Agnes Kottoor is a woman entrepreneur manufacturing optical lenses in Kochi. She employs about a dozen girl workers and has built up a good clientele. Kerala is known of load shedding and power cuts. Agnes also has to suffer due to this. During day time there would be power-cuts and so obviously the work would have to stop and as her workers are all girls, they have to be allowed to go home on time. But what about timely delivery to the customers? Agnes is very particular about that. So what does she do? She herself works on the machines, grinding the lenses, sometimes upto2 a.m. in the morning and finishes the work. That is an example of commitment to work contract.

Sources
http://www.scribd.com/doc/66406996/8/IN STITUTIONAL-SUPPORT-TO-ENTREPRENEURS