Iv sem ed module 01

Entrepreneur.

ENTREPRENEURSHIP DEVELOPMENT.IV SEMESTER MBA.

Module 01.VTU Syllabus.

GSSSIETW IMS MYSORE P.K.KUMAR 1

Meaning of Entrepreneur.• An entrepreneur is a person who starts an enterprise. He searches for

change and responds to it.

• A number of definitions have been given of an entrepreneur- The economists view him as a fourth factor of production along with land, labour and capital.

• The sociologists feel that certain communities and cultures promote entrepreneurship like for example in India we say that people from Gujarat and Sind are very enterprising.

• Still others feel that entrepreneurs are innovators who come up with new ideas for products, markets or techniques.


Meaning of Entrepreneur.• To put it very simply an entrepreneur is someone

who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it.

• Computers, mobile phones, washing machines, ATMs, Credit Cards, Courier Service, and Ready to eat Foods are all examples of entrepreneurial ideas that got converted into products or services.

• Some definitions of an entrepreneur are listed below:


Definition of Entrepreneur.• Stems: from the French word ‘entrependre’ meaning one who undertakes

or one who is a ‘go-between’ • Richard Cantillon: An entrepreneur is a person who pays a certain price

for a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise.

• According to J B Say, an entrepreneur is “one who combines the land of one, the labor of another, the capital of yet another and thus produces a product”. By selling the product in the market, he pays interest on capital, rent on land, wages to the labor and what remains is his profits. A close look at this definition Say emphasizes the functions of co-ordination, organisation, and supervision. Thus entrepreneur is an organizer.


Meaning of Entrepreneurship• According to Peter F Drucker “ Entrepreneur is one who

considers the changes that take place in the market as an opportunity to do business. Innovation is his tool. He further states that entrepreneur need to search purposefully for the sources of innovation, the changes and their symptoms that indicates opportunities for successful innovation. And they need to know and to apply the principles of successful innovation. Here the definition seem to suggest:

• Innovation work,• Success based on strength / hard work,• Activity close to market, focus on the market and every thing

else is market driven.


Evolution of the Concept.

• In olden days the builders of forts for the king were called ‘entrepreneurs’. It was believed that such builders required skills of special nature & that the forts built by them would lost longer & stronger. Thus people who were capable of delivering any thing to society which was novel & that required special skill to develop were started to be called entrepreneurs.


Qualities of Entrepreneur.• Mental Ability,• Organizing skills,• Hard Work,• Discipline,• Clear goals,• Desire to Achieve,• Optimistic,• Ready to take risk,• Good at HR,• Emotional Stability,• Communication ability,• Self-Confidence,• Adaptability,• Positive Attitude.


Functions of an Entrepreneur.• Market research,• Idea Generation,• Product/service analysis,• Form of business,• Determination of business objectives,• Promotional formalities,• Raising the Capital,• Providing Infrastructure,• Selection of human resource,• Carrying out the Operations,• Risk bearing,• Organisation.• Innovation,• Exploration of new opportunity,• Providing Leadership.


Types of Entrepreneurs.• Based on Business Type; Trading,• Industrial, • Corporate,• Agricultural,• Based on Skills; Technical, • Non-Technical,• Based on Motivation: Pure,• Motivated,• Based on Growth; Growth oriented,• Non growth oriented,• Based on Scale/Size; Small,• Medium, • Large•


Types of Entrepreneurs.• Based on founder: First Generation,• Inherited,• Based on Gender: Men,• Women,• Based on Study: Innovative,• Imitative,• Fabian,• Drone,• Other types; Public,• Private,• Forced,• Artisan.


Intrapreneurs.

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.

Intrapreneurs have entrepreneurial skills blended with managerial skills but operate within the confines of an organization.


Intrapreneurs & Enterpreners.

• Dependant Vs Independent,• No risk Vs risk,• Salary Vs Reward,• Qualified Vs may or may not be qualified,• Restricted area of operation Vs limitless• boundary for operation,• No high achievement desire Vs desire to achievement,


Entrepreneurs Vs Managers. Entrepreneur Manager ======================================== An entrepreneur is involved A manager with running the With the start-up process business over a long period of time ------------------------------------------------------------------------ An entrepreneur assumes A manager does not have to financial, material and bear risks, psychological risks ------------------------------------------------------------------------ An entrepreneur is driven by A manager by the resources perception of opportunity he currently possesses, ---------------------------------------------------------------------- An entrepreneur is his own A manager follows rules & boss,

procedures, ---------------------------------------------------------------- An entrepreneur gets A manager gets fixed uncertain rewards, rewards, ====================================


Concept of Entrepreneurship.• Entrepreneurship can be described as a process of action an

entrepreneur undertakes to establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. It is a knack of sensing opportunity where others see chaos, contradiction and confusion. Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive benefits by setting up

a venture. It comprises of numerous activities involved in conception, creation and running an enterprise.

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Concept of Entrepreneurship.• According to Peter Drucker Entrepreneurship is defined as ‘a

systematic innovation, which consists in the purposeful and organized search for changes, and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation.’

• Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of complex socio-economic, psychological, technological, legal and other factors. It is a dynamic and risky process. It involves a fusion of capital, technology and human talent.

• Entrepreneurship is equally applicable to big and small businesses, to economic and non-economic activities.

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Concept of Entrepreneurship.• Different entrepreneurs might have some common traits but

all of them will have some different and unique features. If we just concentrate on the entrepreneurs then there will be as many models as there are ventures and we will not be able to predict or plan, how and where, and when these entrepreneurs will start their ventures. Entrepreneurship is a process. It is not a combination of some stray incidents. It is the purposeful and organized search for change, conducted after systematic analysis of opportunities in the environment.

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Concept of Entrepreneurship.

• Entrepreneurship is a philosophy- it is the way one thinks, one acts and therefore it can exist in any situation be it business or government or in the field of education, science and technology or poverty alleviation or any others.

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Development of Entrepreneurship.• Economic development does not occur automatically. It mainly depends

on the utilization of available resources which in turn depends on the number & quality of entrepreneurs. Thus there is a direct relationship between economic development & entrepreneurship. Earlier there was a belief that entrepreneurs are born and not made. Emergence of entrepreneurs in a few restricted castes and regions of people more often than others, perhaps, made this belief stronger. Many economists & sociologists have done research in the area to know what makes an individual an entrepreneur. One such study by David McClelland brought to lime light that a strong individual desire to achieve high as one of the reasons not withstanding the non business background. Thus now it is a known facts that entrepreneurs can be made besides those born.

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Development of Entrepreneurship.• Entrepreneurship is now developed through education.Usually the model

used for entrepreneurial education has three phases:

• Stimulatory Phase- This phase involves planned publicity for opportunities, motivation training and help and guidance in selection of product or service.

• Support Phase- This provides help in registration of units, arrangement of finance as well as land, sheds, power, water, common facility centres etc. Help is also provided in marketing of products.

• Sustenance Phase- Once the enterprise is set up then help is provided for modernization, diversification, additional finance etc.

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Entrepreneurial CultureCulture can be defined as the mix of norms,

values and beliefs that are shared by a particular community [be it a business community, a cultural (or ethnic) community, a country, or a geographical region].

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Cultural Values• Linton (1975) describes values as a predisposition to act in a certain way.• Values of entrepreneurs:

According to Sexton & Bowman (1986), entrepreneurship is a value in itself for Americans. Different authors suggest different values for entrepreneurs:

• Kets de Vries (1984): reputation, power, status and recognitionGordon Survey of values (1976): independence, efficacy and a negative reaction to affiliation.

• There is a general presumption that a society may have potential entrepreneurs, but only becomes entrepreneurial if it has a culture that supports innovation and initiative.

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Cultural Attitudes• According to J. M. Toulouse (1990), entrepreneurial culture is favored by the

following set of attitudes:1. Business activities are valued.2. Individual and collective initiatives are highly rated.3. Determination and perseverance are desirable qualities.4. An equilibrium between security and risk is accepted.5. The tension between stability and change is resolved.

Therefore, in a society favoring entrepreneurship, entrepreneurs are role models who are not only acceptable, but desirable.

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• According to Prosek, the key to unleashing that creative energy is to create an entrepreneurial culture based on four pillars.

• Authenticity -- Demonstrate your sincerity by being enthusiastic about entrepreneurial strategies and actions pursued by the business.

• Commitment to People – “An entrepreneurial culture is based on the idea that each individual can be a powerful force for change in the organization,” said Prosek. Support the professional development of your staff, celebrate exceptional work, and don't forget to have fun.

• Commitment to the Business -- Align an individual's interests with those of the business. “

• Continuous Effort -- The work of building a company’s culture never ends.

*Prosek Partners, New York

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Sustaining an entrepreneurial culture starts with who you hire. It is essential to carefully screen prospective employees to ensure that they will fit within your culture. An entrepreneurial culture is also sustained by your reward system, by the autonomy and respect you give to your employees, and by consistent communication about your ongoing entrepreneurial vision for the company.

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The entrepreneurial process.

Steps in the Entrepreneurial Process

1. Discovery2. Concept

Development3. Resourcing4. Actualization5. Harvesting


1. Discovery: The stage in which the entrepreneur generates ideas, recognizes opportunities, and studies the market

Innovation

Opportunity

Discovery

Consider your hobbies or skills

Consider consumer needs and wants

Conduct Surveys and questionnaires – test the

market Study demographics

There are five basic questions that you should ask as you evaluate an opportunity.

• Is there a sufficiently attractive market opportunity?• Is your proposed solution feasible, both from a market

perspective and a technology perspective?• Can we compete (over a sufficiently interesting time

horizon): is there sustainable competitive advantage?• Do we have a team that can effectively capitalize of

this opportunity?• What is the risk / reward profile of this opportunity,

and does it justify the investment of time and money?

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2. Concept Development: – Develop a business plan: a

detailed proposal describing the business idea

Executive summaryCode of ethics

Mission Statement

Concept Development

– Choose business location– Will a patent or trademark be required?


3. Resourcing: The stage in which the entrepreneur identifies and acquires the financial, human, and capital resources needed for the venture startup, etc

Start-up resourcesStart-up resources

http://www.google.com/imgres?imgurl=http://upload.ecvv.com/upload/Product/20093/China_Deck_Oven_bakery_equipment20093181628580.jpg&imgrefurl=http://www.ecvv.com/product/1891054.html&usg=__FUYEJwgpEaM8baXaVztLLG5clMw=&h=749&w=600&sz=57&hl=en&start=2&zoom=1&itbs=1&tbnid=QOkK5E_GPvE6OM:&tbnh=141&tbnw=113&prev=/images%3Fq%3Dbakery%2Bmachinery%26hl%3Den%26safe%3Dactive%26gbv%3D2%26tbs%3Disch:1&ei=fmRtTaCgMs-3tgfA6fmBBg

Resourcing

Identify potential Identify potential investorsinvestors

Hire Hire employeesemployees

Apply for loans, Apply for loans, grants and grants and assistanceassistance


4. Actualization: The stage in which the entrepreneur operates the business and utilizes resources to achieve its goals/objectives.

$$ Grand Opening $$

Day-to-Day Operations


5. Harvesting: The stage in which the entrepreneur decides on venture’s future growth, development, or demise

What is your 5-year or 10-year plan?

Consider adding locations or providing different products/services

Will you go public?

Check for Understanding

You are collecting, reviewing, and interpreting surveys you distributed last week about your new business idea. What stage of the entrepreneurial

process are you in?

A.A. ActualizationActualizationB.B. Concept Development Concept Development

C.C. DiscoveryDiscoveryD.D. Harvesting Harvesting

You are currently seeking people and companies to invest in your business venture. What stage of

the entrepreneurial process are you in?


C.C. DiscoveryDiscoveryD.D. Resourcing Resourcing

What is an example of an activity for a businessperson who is entering the harvesting stage of

entrepreneurship?

A.A. Considering opening a second storeConsidering opening a second storeB.B. Gathering market research data about the Gathering market research data about the

productproductC.C. Having a grand opening for the businessHaving a grand opening for the business

D.D. Seeking financial assistance from the Small Seeking financial assistance from the Small Business AdministrationBusiness Administration

Preparing a business plan for a new business, renting a building for the new store, and

copyrighting the website for the new business are all classified as which stage of the entrepreneurial

process?


C.C. DiscoveryDiscoveryD.D. Resourcing Resourcing

Offering shares of stock to public investors and planning goals for the business during the next

five years are examples of activities in which stage of the entrepreneurial process?


C.C. Harvesting Harvesting D.D. Resourcing Resourcing

Having a large grand opening sale or a summer clearance sale are examples of which stage of the

entrepreneurial process?


C.C. Harvesting Harvesting D.D. Resourcing Resourcing

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Iv sem ed module 01