UNIT 1: ENTREPRENEURIAL

MANAGEMENT

BY NILANJANA ROY
 Concept of Entrepreneurship

ENTERPRISE
ENTREPRENEUR ENTREPRENEURSHIP
CREATION

INDIVIDUAL/PERSON AN ACTION PROCESS OBJECT

 What is Entrepreneurship

Entrepreneurship is a dynamic process of vision,

change and creation. It requires an application of
energy and passion towards the creation and
implementation of new ideas and creative solution.
According to John Kao- “Entrepreneurship is the
attempt to create value recognition of business
opportunity, the management of risk-taking
appropriate to the opportunity and through the
communicative and management skills to mobilize
human financial and material resources necessarily
to bring a project to fruition.”
Entrepreneur Vs Entrepreneurship
 Difference
Basis of Entrepreneur Entrepreneurship
Comparison
Meaning An Entrepreneur is an Entrepreneurship is a risky
individual or team activity of commencing a
thereof, having and business usually a start up
innovative idea, taking company, offering distinct
every step to turn the idea products and services to the
into reality, while bearing target customers, which may
the risks or may not get success

What is it? Person who has an idea Process which gives shape to
an gives shape to it the idea
Represents An innovator who chased A procedure through which
the dream, till it becomes an innovation is done
true
Business Venture He/She is the one who It is an activity, which an
sets up the business entrepreneur undertakes to
venture, to turn the set up the business venture
concept into reality
 Intrapreneur

Intrapreneur and entrepreneurs are not the same.

Intrapreneur has the capability of becoming an
entrepreneur.
They work in other businesses but are so serious that
they act and work as an entrepreneur in the
business.
 Difference
Basis Intrapreneur Entrepreneur
Definition Intrapreneurs take responsibility An Entrepreneur is a person who
of building an idea into finished sets up a business to make profit and
and profitable product with is accountable for all risks involves
support from the employer in the process
Dependence Dependent on employer Works independently
Resources Dependent on employer Needs to mobilize the resources on
his/her own, from fundraising to
hiring, planning, launching &
marketing
Funds Funds provided by employer Raises funds on his/her own in the
form of loans or equity from
investors, family or friends
Work Persistently involved in top level Has to take care of all tasks
tasks
Decision- Collaborative decision making Independent decision making
making
Risk Insulated from external risk by High or moderate risk takers
employer
Defining Entrepreneurship
 Nature & Characteristics of Entrepreneurship

1. Economic Activity: Entrepreneurship is primarily an

economic activity because it involves the creation and
operation of an enterprise.
2. Entrepreneurship Involves Innovation:
Entrepreneurship involves changing, revolutionizing,
transforming, and introducing new approaches.
3. Goal-oriented Activity: The entrepreneur who creates
and operates enterprises seeks to earn profits through
satisfaction of needs of consumers; hence,
entrepreneurship is a goal-oriented activity.
4. Value Creation: Creation of new products, ideas or
services adds value to the marketplace and the society.
 Nature & Characteristics of Entrepreneurship

5. Enterprise Creation: In order to pursue the perceived

opportunities for innovation and to create value, there
must be organized efforts and actions.
6. A Function of Risk Bearing: Risk is an inherent and
inseparable element of entrepreneurship
7. Entrepreneurship Implies Growth:
Entrepreneurship is about growing a business and
pursuing opportunities as they arise.
8. Managerial Skill and Leadership Function: An
entrepreneur leads, provides direction, create work
culture, and build teamwork and cohesiveness among
employees.
 Nature & Characteristics of Entrepreneurship

9. Recognition that it is a process:

Entrepreneurship is not a one-time phenomenon; it
occurs over time. It involves a series of decisions and
actions from initial start-up to managing the
entrepreneurial venture
10. Gap Filling Function: The gap between human
needs and the available products and services filled
by entrepreneurship
 Features/ Characteristics of Entrepreneur

Initiative Taking (self-starter)

Organising and recognizing of social & economic
mechanisms to turn resources and situations to
practical account.
Recognizing opportunities where others see chaos or
confusion
Highly creative & innovative
Acceptance of risk and failure
Possess business know how, network and general
management skills.
 Role of an Entrepreneur

The Inventor: The originator of the product or

concept
The Opportunity-spotter: The person who realizes
the opportunity and is determined to engage in it
The project champion: The person who makes things
happen
John Kao’s Model of Entrepreneurship
 John Kao’s Model of Entrepreneurship

 Entrepreneurial Personality: The overall success of a new

venture largely depends upon the skill, qualities, traits and
determination of the entrepreneur.
 Entrepreneurial Task: It is a role played by entrepreneur in an
enterprise. The major task of the entrepreneur is to recognize and
exploit opportunities.
 Entrepreneurial Environment: It involves the availability of
resources, infrastructure, competitive pressures, social values,
rules and regulations, stage of technology etc.
 Organisational Context: It is the immediate setting in which
creative and entrepreneurial work takes place. It involves the
structure, rules, policies, culture, human resource system,
communication system.
 Idea Generation

Idea generation is the creative process or

procedure that a company uses in order to figure out
solutions to any number of difficult challenges.
It involves coming up with many ideas in a group
discussion, selecting the best idea or ideas, working
to create a plan to implement the idea, and then
actually taking that idea and putting it into practice.
The idea can be tangible, something you can touch
or see, or intangible, something symbolic or
cultural.
 Idea Generation Techniques

The Storyboarding Method – A storyboard is a linear

sequence of illustrations used in animation to develop a
broader story.In businesses it is used to understand and map
customer’s experience and enable the growth of the company
using that process.
Daydreaming – Boredom generates creativity.In practical
terms a business leader needs to structure time for just staring
at the walls or looking out the window. Time just for boredom.
The greater the boredom the more likely the daydreaming,
with a constant increase in problem solving capacity.
The Mind Mapping Method – A mind map involves writing
down a central theme and thinking a new and related ideas
which radiate out from the centre.
 Sketching As a Group
 Forced relationships – This method introduces two random
and seemingly unrelated items and forces you to create a
connection between them. This technique encourages
innovative thinking in order to build those relationships and
possibly develop a new product.
 SCAMPER (Substitute, Combine, Adapt, Modify, Put to
another use, Eliminate, Reverse)
 Creating Word Banks
 Visualisation
 The Thinking Hats Technique (Six Thinking Hat Technique)-
facts, feelings, optimism, negatives, control, creativity
Brainstorming & Brainstorming in Reverse – It
combines a relaxed, informal approach to problem
solving with lateral thinking. It encourages people to
come up with thoughts and ideas that can at first be
crazy. Then later it can be crafted into original and
creative solution to a problem, while others can
spark even more ideas.
Illumination and Incubation –These are the second
and third stages of creative process. First stage –
Preparation, second stage – verification.
 Sources of Idea Generation

Internal Sources:
 R & D (Research & Development)
 Employees
External Sources:
 Customers
Distributors & Suppliers
Competitors
Others
 Process of Idea Generation to Development

Idea selection
Scrutiny of all aspects
Feedback
Feedback reaction
A Basic Version / Product
Hitting the market
Go for a test drive
Corrections and improvements
Growth Planning
Time to expand
 Ways to identify opportunities

Listen to your potential clients and past leads. When

you're targeting potential customers listen to their
needs, wants, challenges and frustrations with your
industry
Listen to your customers
Look at your competitors
Look at industry trends and insights
 Steps to evaluating Business Opportunities

Self- Analysis
Financial Components
Market Research
Risk Assessment
Support
 Building Team/Leadership

Define your desired business culture and find people who fit
Make sure the team embodies a common definition of
success.
Everyone must choose to contribute, activate, and connect.
Assure each team member has barrier breaking authority.
Foster solid relationships to keep focus on what matters.
Energize the team around a shared purpose and reality
Convert your vision to milestones to mobilize hearts and
minds.
 Ways to lead as an Entrepreneur

Lead with purpose

Express your vision regularly
Be willing to listen
Manage wit existing resources
Be quick to decide in uncertain times
Attract & retain the top talent
Business Life Cycle
 Business Life Cycle

Start-up Stage
Growth Stage
Maturity Stage
Decline Stage
 Harvest Strategy

A harvest strategy is a calculated decision to

minimize all types of spending on a specific product
to maximize profitability, despite a potential decline
in market share.
A harvesting strategy can be developed for product
or business lines and serves as an “exit” plan when a
product become outdated. Sometimes Companies
use a harvesting strategy when a product has reached
the cash cow stage.
 Methods to Harvest

Arrival of a product or business line at the cash-cow

or declination stage.
Development of new products and other interests.
Discontinuation of a product or business line.
 What is a cash cow?

cash cow is a profitable product or business that

brings in a steady flow of income. It may also refer to
a business venture that generates more profit than it
cost to acquire or create.
The expression refers to the idea that something
produces ‘milk,’ i.e., profit, long after we have
recovered the cost of investment.
The cash cow generates more money than the
amount needed to maintain the business. In other
words, it gives back more than you put into it.
When implementing a harvest strategy, the company
has three options:
Eliminate or reduce all capital spending on the
product. In other words, keep using existing
equipment until it no longer works.
Reduce or eliminate marketing and advertising
expenditure. New sales will rely on brand loyalty.
Eliminate or reduce operating expenses. In other
words, only approve expenditure when the return on
investment is very high.
 Exit Strategy

Exit strategies are plans executed by business

owners, investors, traders, or venture capitalists to
liquidate their position in a financial asset upon
meeting certain criteria. An exit plan is how an
investor plans to get out of an investment.
Entrepreneur needs to plan for that
 When to use Exit Strategy

An exit plan may be used to:

Close down a non-profitable business
Execute an investment or business venture when
profit objectives are met
Close down a business in the event of a significant
change in market conditions
Sell an investment or a company
Sell an unsuccessful company to limit losses
Reduce ownership in a company or give up control
 Types of Exit Strategies

Liquidation.
Liquidation Over Time.
Keep Your Business in the Family.
Sell Your Business to Managers and/or Employees.
Sell the Business in the Open Market.
Sell to Another Business (Global integration, merger or
acquisition)
Selling to a financial buyer
Strategic sale. To a supplier, customer, or competitor as a
part of a of vertical or horizontal integration.
The IPO (Initial Public Offering)
 Corporate Entrepreneurship/ Intrapreneur

Corporate Entrepreneurship is a process used to

develop new businesses, products, services or
processes inside of an existing organization to create
value and generate new revenue growth through
entrepreneurial thought and action. Corporate
entrepreneurship sets the context for innovation and
growth.
Characteristics of Corporate Entrepreneurship

Atmosphere and Vision

Orientation to the market
Small and Flat organisations.
Multiple Approaches
Interactive Learning
Skunk Works
IMPORTANCE OF CORPORATE ENTREPRENEURSHIP

Increasing productivity and performance of

employees (skunk works)
More resources are readily available (interactive
learning)
Failure will not result in the downfall of the company
( parallel development or multiple approaches)
 TYPES OF ENTREPRENEURS

 Innovative entrepreneurs: who introduce new goods,

inaugurate new method of production, discover new market and
reorganise the enterprise.
 Imitative entrepreneurs: who adopt successful innovations,
they are risk aversive or avoiding
 Fabian entrepreneurs: are highly cautious and sceptical in
their approach. They are readily or easily interested in
introducing any change in their organisation until required.
 Drone entrepreneurs: are not open to creativity and change.
They cannot be successful in this period of competition
 Pure entrepreneurs: founders of a business
 Induced entrepreneurs: induced or influenced by some
external force to start a business
 TYPES OF ENTREPRENEURS

Industrial entrepreneurs: who are into

manufacturing a product
Trading entrepreneurs: who only indulge in buying
and selling activities by identifying potential markets
Corporate entrepreneurs: who demonstrate their
innovative skills in formulating strategic planning
Classical entrepreneurs: stereo-types whose aim is
to maximize the economic returns at a level consistent
with the survival of the firm, with or without growth.
Copreneurs: when both husband and wife together
start and run a business venture
 Risk Analysis

Risk analysis is the review of the risks associated

with a particular business venture. It is applied to
projects, information technology, security issues and
any action where risks may be analyzed on a
quantitative and qualitative basis. Risk analysis is a
component of risk management.
 Type of Risks

 Competitive risk: risk of competitors or new entrants

 Technological risk: risk that a firm’s technology may become obsolete in
order to compete with the rivals and meet the changing needs of the customers
 Political & Legal risk: the political condition of the country may change
which may adversely affect the business or there might be changes in laws which
may affect the business venture
 Economic risk: the condition of the economy determines the price of the
product, demand of the product etc. These risks may also involve risks
associated with inflation, deflation, changes in exchange rates, decrease in value
of currency etc.
 Financial risk: risks associated financially like if the company would be able to
pay off their debts and creditors or earn enough revenue to provide for their
expenses
 Employee risk: the risk associated with employees like if the employees
disclose confidential information about the organisation or efficient leave the
organisation for better offers in competitive firms.
 Type of Risks

 Strategic risk: firms develop their strategies and decide what

strategies they would be following, so a risk remains if the
strategies chosen would lead to success of the organisation or not
 Health & Safety risk: while operating the business a risk of
health and safety prevails. For example in case of glass cutting
firms there is a risk of their employees to be prone to various
diseases and even loss if eye sight. Proper care must be taken in
such cases
 Environmental risk: firms might be producing wastes that are
affecting the environment adversely like soil pollution, water
pollution etc. getting the environment into risk
 Operational risk: risk if certain operations taking place in due
course of the business would lead to expected results or not.
 PROCESS OF RISK ANALYSIS

Identify and quantify uncertainty (quantifiable

terms)
Compute the impact of uncertainty
Formulate a risk analysis model
Explore the model with proper simulation
(with proper simulation tools necessary such as
statistical tools)
Analyze the results
Make decisions to better manage risks
 Risk Management Process

Risk Assessment & Analysis

Risk Evaluation
Risk Treatment & Response