ed_ashima rathee (2)

8/6/2019 Ed_ashima Rathee (2)

1/68

THE FOUNDATIONS OFENTREPRENEURSHIP


2/68


3/68

What is Entrepreneurship?

I t is the process of mind to takecalculated risk with confidence to achievepre-determined objectives .

ORT he process of creating somethingdifferent with value by devoting thenecessary time and effort, assuming theassociated financial , psychological, andsocial risks , and receiving the resultingrewards of monetary and personalsatisfaction.


4/68

Commo n The mes in Definiti o ns o f

Entrepreneurship?


5/68

EntrepreneurInnovation: E ntrepreneurship involves changing, revolutionizing,

transforming, and introducing new approaches.O rganization creation : In order to pursue the perceived opportunitiesfor innovation and to create value, there must be organized efforts andactions. Someone must take the initiative to do something-take action toget the entrepreneurial venture up and running. Without some type of organized effort whether as an individual or as a team of individuals-theability to obtain resources to pursue the entrepreneurial opportunity willbe limited, of not completely closed off.C reating Value: T hrough E ntrepreneurship new products ,services,transactions, approaches, resources, technologies ,and market arecreated that contribute some value to a community or marketplace. Wecan also see value created when through entrepreneurship, resources aretransformed into outputs such as products or services.


6/68

P rofit and not-for profitGrowth : E ntrepreneurship is about growing a business and

pursuing opportunities as they arise.U niqueness : E ntrepreneurship involves new combinationsand new approaches with which entrepreneurs are willing toexperiment. E ntrepreneurship isn t merely imitating whatothers have done. It s doing something new, somethinguntested and untried-something unique.P rocess: A process, very simply, is a set of ongoing decisionsand actions. E ntrepreneurship is not one time phenomenon;it occurs over time. It involves a series of decisions andactions from initial start-up to managing the entrepreneurialventure to even ,at some point ,exiting it.


7/68

Historical Perspectives onEntrepreneurship


8/68

C reative Destruction is a process whereby existingproducts ,processes, ideas, businesses are replacedwith the better ones. Schumpeter believed thatthrough the process of creative destruction ,old and

outdated approaches and products are replacedwith better ones.


9/68

Misconceptions about

Entrepreneurship & EntrepreneursM yth 1: E ntrepreneurs A re doers, Not T hinkersM yth 2 : E ntrepreneurs A re Born, Not M adeM yth 3: E ntrepreneurs A re A lways InventorsM yth 4 : E ntrepreneurs A re A cademic and Social M isfitsM yth 5 : Successful entrepreneurship needs only a great ideaM yth 6 : A ll E ntrepreneurs Need Is M oneyM yth 7: A ll E ntrepreneurs Need Is LuckM yth 8 : E ntrepreneurship is easyM yth 9 : E ntrepreneurs Seek Success But E xperience

High Failure RatesM yth 10 : E ntrepreneurs A re E xtreme Risk Takers (Gamblers)M yth 11: E ntrepreneurship is found only in small BusinessM yth 12 : E ntrepreneurship ventures and small businesses are the same thing


10/68

Small Business and Entrepreneurial

Ventures The DifferencesSmall Business

Independently owned, operated, and financed

has fewer than 100 employeesdoesn t engage in new or innovative practicesHas relatively little impact on its industry

E ntrepreneurial VenturesA n organization pursuing opportunitiesCharacterized by innovative practicesM ain goals are profitability and growth


11/68

Current Importance of

EntrepreneurshipIt s importance can be shown in three areas :-I nnovation (agents of change); Source of newtechnology and products (Creative Destruction)N umber of new Start-ups ; Key to economicdevelopment and growth (increase number of new firms)

J ob Creation & Employment ; Creates jobs, income, and

wealth (New ventures create 60-80% of net new jobs)


12/68

Global Entrepreneurship

Monitor( GEM)P rovides an annual assessment of the entrepreneurial environment of 21 countries.Latest G EM study : the U.S. outranks the rest of the world in important entrepreneurialsupport.

Top Level Middle Level Lowest Level

High-Growth /Income Avg. Growth Low GrowthAustralia Argentina FranceU nited States Belgium JapanC anada Brazil

Norway Denmark

Korea Finland

GermanyIndia

Israel

Ireland

Italy

Singapore

Spain


13/68


14/68

Exploring the Entrepreneurial context : T he context determines therules of the game and what decisions are likely to be successful.

Identifying O pportunities and possible C ompetitive advantageStarting the ventureResearching feasibilityP lanning the ventureOrganizing the Venture

Launching the ventureManaging the ventureM anaging processesM anaging people

M anaging growth and other entrepreneurial challenges


15/68

Who is an Entrepreneur?

An Entrepreneur (ahn tra pra nur) is a person who organizes and manages abusiness undertaking, assuming the risk for the sake of profit. Any person (any age) whostarts and operates a business is anentrepreneur.

ORWho initiates and actively operates anentrepreneurial ventures


16/68

Types of Entrepreneurs

1 . Nascent Entrepreneur: An individual who is inthe process of starting a business

2 . Novice Entrepreneur: A n individual who has noprior business ownership experience as a businessfounder, inheritor of business or a purchaser of abusiness

3. Habitual Entrepreneur: A n individual who hasprior business ownership experience as a businessfounder, inheritor of business or a purchaser of abusiness . T he nascent entrepreneur can either be anovice or a Habitual E ntrepreneur .


17/68


18/68

Characteristics of

Entrepreneurs1. Demographic profile of Entrepreneurs.

o Family birth ordero Gendero Work experienceo Educationo Entrepreneurial Family

.


19/68

2 . P ersonality profile of Entrepreneurs:-high level of motivation-Abundance of self confidence-Ability to be involved for the long term-High energy level-P ersistent problem solver-High degree of initiative-Ability to set goals

-Moderate risk taker-resourcefulness-desire and ability to be self-directedP roactive P ersonality--- individual who is more prone to take actions to influence his or

her environment-that is a person who is more proactive .

3. Intentions profile of E ntrepreneurs : E ntrepreneurial action(decision) by an individual is preceded by the intention to do so,which in turn is influenced by both contextual factors

(social, political, economic opportunities) and personal factors(history, personality, abilities)


20/68

Bird s Model of Entrepreneurial

Intentionality

IntuitiveT hinking -

Vision

Opportunitiesin Social,P olitical

,E conomicContext

P ersonalHistory

Background,P

ersonality,A bilitieshistory

RationalanalyticalT hinking-

Goal-DirectedBehavior Intentionality A ctions


21/68

ACE Mod el f o r pre d ictingEntrepreneurial Intenti o n


22/68

R ewards and Challenges of being

an EntrepreneurshipR ewards C hallenges

High degree of independence-freedom from constraintsGet to use a variety of skills andintentions.Freedom to make decisionsA ccountable to only yourself

Opportunities to tacklechallengesFeeling of achievement andprideP otential for greater financialrewards

M ust be comfortable withchange and uncertaintyM ust make a bewilderingnumber of decisionsM ay face tough economicchoices

M ust be comfortable with takingrisksNeed many different skills andtalentsM ust be comfortable with the

potential of failure


23/68

THE CONTEXT OFENTREPRENEURSHIP


24/68

Issues Affecting

Entrepreneurship

IssuesA ffecting

E ntrepreneurship

E conomy

LegalFactors

Changingworld of

Work

SocialResponsibilities

and E thics


25/68

1. Tod ay s Ec o nom y

( Characteristics)Drivers of the New

EconomyInformation Revolution Technological A dvances

Globalization Demographics

ImplicationsTurbulence and

ChangeReduced need of

physical assetsVanishing distanceCompressed T ime

C ritical SuccessFactors

E mbracing changeCreativity and

Innovation CapabilitiesVision and LeadershipToday Quality Culture


26/68

Drivers of the New Economy

1. T he Role Information Revolution (Information Age)-Telecommuters- Virtual Organizations

2. Technological A dvances3. Globalization4. Demographics : A ge, gender, income levels, family

composition, birthrates, employment status, level of education etc.


27/68

Drivers of the New Economy

1. T he Role Information Revolution (Information Age)R ole of Information : If there s one driving forcethat has set the tone for today s economy, it s the

role of information. Information is now readily topractically anyone from anywhere on the globe atany hour of the day and in almost any format.

e.g Since the development of the first transistorsin the 1940s ,information accessibility hasflourished primarily because of technologicaldevelopments.

- Telecommuters- Virtual Organizations


28/68

2. Technological A dvancesA ll organizations regardless of size, shape ,type or location-use someform of technology to do their work.e.g in a college classroom ,aprofessor can access different forms of technology for presenting theinformation.

- Increasing rate of technological change and diffusion

- Increasing commercialization of innovation; patent- increasing knowledge intensity- increasing recognition that advanced Information Technologies arecritical

3. Globalization4. Demographics : A ge, gender, income levels, family composition,

birthrates, employment status, level of education etc.


29/68

Implications of Driving

forcesContinual Turbulence andC

hangeReduced need of physicalassetsVanishing distanceCompressed T ime


30/68

Critical Success Factors

A bility to embrace change

Creativity andInnovationCapabilities

Vision and LeadershipToday Quality Culture


31/68

Critical Success Factors

Today Quality C ulture- Transcendent-Based Quality ; determined by

innate excellence

- U ser- Based Quality ; determined by customer spreferences, wants and needs- Value - Based Quality ; determined by the

value(price) placed on a product or service- P roduct-Based Quality ; determined by a product

attribute that s highly regarded- Manufacturing-Based Quality ; determined by

close attention to details in the creation anddelivery of the products or service


32/68

L egal Factors

Legal issues in Managingthe ongoing Business

Human Resourcemanagement Laws andregulationsSafety Laws andregulations (product,workplace, environment)

Financial and A ccountingLaws and regulationsM arketplace Laws andregulations

Legal Issues in Start-up

Determine form of business organizationSetup record keeping fortax purposeConduct lease andfinancial negotiation

Draw up contractsFile for patents,trademarks, andcopyright protection


33/68

Changing World of Work

- P ast A pproach ; Routine work - P resent A pproach

- Nature of Work & Organizational Settings- Knowledge intensive (due Information A ge )- Learning Organizations (LO)- A P rojects ; a temporary set of work tasks that

has a definite beginning and ending point intime.


34/68


Definition L O ; A learning organization is the term

given to a company that facilitates thelearning of its members and continuously transforms itself.Learning organizations develop as a

result of the pressures facing modernorganizations and enables them toremain competitive in the businessenvironment.


35/68


Learning Organizations mainfeatures :

M ainFeatures

of LO

SharedVision

SystemsT hinking,

M entalmodelsP ersonalM astery

TeamLearning


36/68


Benefits of L O :M aintaining levels of innovation and remainingcompetitive

Being better placed to respond to externalpressures [Having the knowledge to better link resources tocustomer needsImproving quality of outputs at all levelsImproving corporate image by becoming morepeople orientedIncreasing the pace of change within theorganization


37/68

Social Responsibility and

EthicsSocial Responsibility is a obligation of organizationaldecision makers to act in ways that recognize theinterrelatedness of business and society

Possible

Organization Stakeholders

E mployees

Suppliers

Customers

P oliticalA ctionGroups

Communities

SocialA ctionGroup

TradeA ssociations

Governments

Stockholders


38/68

Social Responsibility and

EthicsEth ics ;Doing the right thing or doing things ethically

I nvolves the rules and principles that defineright and wrong decisions and behaviors


39/68

Identifying Environmental

OpportunitiesO pportunities ;

P ositive external trends or changesthat provide unique and distinctpossibilities for innovating andcreating value


40/68

Identifying Environmental

Opportunities

SevenP otentialSource of

Opportunity

T heUnexpecte

dT he

inconsistent

T he P rocessneed

Industry andM arket

StructuresDemographics

Change inP erception

NewKnowledge


41/68

Competitive Advantage

C ompetitive Advantage;I ts Competitive edge for long term success.

T he Different View :1. Industrial Organization; focus of analysis inthe I/O view is external

2. Resourced-Base View (RBV);

focus of analysis in the RBV view is internal

3. Guerilla View; Organization Competition Advantage is temporary


42/68

Researching the Venture

Feasibility


43/68


44/68

Generating and Evaluating the

Business IdeasGenerating Ideas

Where Ideas come from

Ways to generate Ideas1. E nvironmental Scanning2. Creativity and Creative P roblem

Solving3. Brainstorming4. Focus Groups

T he Role of Intuition


45/68


Business IdeasP otential Sources of E ntrepreneurial IdeasSources What to Look for

P ersonal Interests or Hobbies Limitations of what scurrently available

Work E xperiences, Skills ,abilities New and differentapproaches

P roducts and Services Familiar A dvances andones unfamiliar ones breakthroughs E xternal E nvironmental Unfilled Niches

Opportunities in these Sectors:

T

rends and Changes- Technological- Societal Culture- Demographics- E conomic- Legal- P olitical

Ideas forE ntrepreneurial

Venture


46/68


Business IdeasE valuating Ideas-Why Is E valuation Important ?

M inimize risk WhileM aximizing return

E valuatingE ntrepreneurial Ideas

Identify Strengthsand Weakness of

Ideas

M ake best UseOf Limitedresources

Decide What IsImportant


47/68


Business IdeasE valuating Ideas- How to E valuate Ideas? ; Two Specific E valuationTechniques :

- T he Four -Questions A pproach1. Do you love the Business?

2. A re you Skilled at the Business?

3. Do you have E xperience at the Business ?4. Is that Business Simply a Fad or Trend?

- Feasibility Study ( P ossibility)


48/68


Business IdeasFeasibility StudyA. Introduction, historical background, description of product or service:

1. Brief description of proposed entrepreneurial venture2 . Brief history of the industry

3. Information about the economy and important trends4. C urrent status of the product or service

5. How you intend to produce the product or service6. C omplete list of goods or services to be provided

7. Strengths and weaknesses of the business

8. Ease of entry into the industry, including competitor analysisB. Accounting considerations:

1. P roforma balance sheet 2 . P roforma profit and loss statement 3. P rojected cash flow analysis


49/68


Business IdeasC . Management considerations:1. P ersonal expertise strengths and weaknesses

2 . P roposed organizational design

3. P otential staffing requirements

4. Inventory management methods

5. P roduction and operations management issues

6. Equipment needs.

D. Marketing considerations:

1. Detailed product description2 . Identify target market (who, where, how many)

3. Describe place product will be distributed (location, traffic, size, channels, etc.)

4. P rice determination (competition, price lists, etc.)

5. P romotion plans (personal selling, advertising, sales promotion, etc.)


50/68


Business IdeasE. Financial considerations:1. Start-up costs2 . Working capital requirements

3. Equity requirements

4. Loans amounts, type, conditions5. Breakeven analysis

6. C ollateral

7. C redit references

8. Equipment and building financing costs and methods

F. Legal considerations:1. P roposed business structure (type; conditions, terms, liability, responsibility;

insurance needs; buyout and succession issues)2 . C ontracts, licenses, and other legal documents

G. Tax considerations: (sales/property/employee; federal, state, and local)

H. Appendix: charts/graphs, diagrams, layouts, resumes, etc.


51/68

Researching Competitors

What is Competition?Organization batting with each other for some

desired outcome- customers, market shares, surveyranking or needed resources.

Who A re the Competitors ?- T he Industry P erspective

- T he M arketing P erspective

- T he Strategic Groups P erspective

P ossible Dimensions ForIdentifying Strategic

Groups P rice M arket ShareQuality P roduct CharacteristicsGeographic Scope P rofits

P roduct Line Breadth


52/68


Getting Competitors Information (Competitor Intelligence)What type of competitive Information Should you Look for?

What types of products or services are competitors offering?

What are the major characteristics of these products or services?What are their products strengths and weaknesses?How do they handle marketing, pricing, and distributing?What do they attempt to do differently from other competitors?Do they appear to be successful at it? Why or why not?What are they good at?What competitive advantage(s) do they appear to have?What are they not so good at?What competitive disadvantage(s) do they appear to have?How large and profitable are these competitors?


53/68


Getting Competitors InformationWhere to get that competitive Information?

P ublished Financial Sources

FormerE

mployeesDealersRepresentativesDistributorsSuppliersP rofessional M eetingsM arket SurveysTrade FairsE xhibitsCompetitors Web s P agesTechnical analysis of competitor s product (Reverse E ngineering)


54/68

Researching Financing

OptionsP ossib le Financing Options- E ntrepreneur's

P ersonal resources- Financial Investors

- A ngel Investors- venture Capitalists

- P ublic Offering- Business Development

P rograms


55/68

Researching Financing

OptionsE valuating Financing OptionsControlRisk

Reward

Guidelines for Seeking Financing- Write a feasibility Study and then a Business P lan

- Get professional A dvice and Help

- Get References

- Go do it


56/68

P lanning The Venture


57/68

P lanning the Venture

Vision: A vision statement is sometimes called a picture of your company in the future but it s so much more than that . Y our visionstatement is your inspiration, the framework for all your strategic planning .

A vision statement may apply to an entire company or to a singledivision of that company . W hether for all or part of an organization,the vision statement answers the question, W here do we want to go? W hat you are doing when creating a vision statement is articulating your dreams and hopes for your business . I t reminds you of what you

are trying to build .


58/68

Vision: Vision is a broad comprehensive picture of what anentrepreneur wants his or her organization to become. T hevision provides a vibrant and compelling picture of thefuture, and presents a view of what the entrepreneurialventure can be. T he vision is the statement of theentrepreneur s dream.While an organization s vision provides an overall picture of where the entire organization would like to be in the future,a mission is a statement of what the organizational units dowhat they hope to accomplish in alignment with theorganizational vision.


59/68

Why o rganizati o nal visi o n

an d Missi o n I mpo rtantT hey provide clear directionT hey guide the management team

T hey create a sense of shared endeavor andpurpose.

In short ,the vision and missionstatements establish a general tone orclimate for the organization.


60/68

Important Components of

Organizational VisionOrganizational Vision

Core Values and Beliefs

OrganizationalP urpose

Summary of whatorganization

does

Broad goals


61/68

Com po nents o f Organizati o nal

Visi o n an d Missi o nState mentsImportant Components to include

Concern foremployees

P hilosophy M arkets

Self-Concept

Customers

Concern forSurvival,

profitabilityand growth

Concern forP ublic Image

P roduct orservices

Technology


62/68


63/68


64/68


65/68

H ow Organizational Culture

is learned StoriesRituals

M aterial SymbolsLanguageRole of P hysical surroundings


66/68

Developing and writing

business P lanSatchel P aige, the famous baseball player ,once said , if you don t know where youare going, any road will take you there.T he process of developing and writing a business plan will help you identify andclarify most of the issues that needed to be addressed as an entrepreneurial ventureis organized, launched, and managed.T he process of planning involves where you want to go ,how to get there, and whereto do reduce any uncertainties.It s a way of thinking about the future in which planning serves as the bridge

between the present and the future-that is ,where we currently are and where wewould lik to be.E

.g college degree

For an entrepreneurial venture ,one document that results from theplanning process is a business plan ,which is a written documentthat summarizes a business opportunity and defines how the

identified opportunity is seized and exploited .


67/68

It serves five main purposes :

1. T he first purpose of a business plan is it s a development tool for theorganizational founders . A s the founder identify and assess opportunities ,the

structured outline of a business plan forces them to address important issues.Rather than just blindly and wildly pursuing ideas ,the business plan provides acheck and balance for the founders.

2. It is useful for helping to clarify the venture s vision and mission .

3. Business plan serves is that it defines planning and evaluation guidelines formanaging the ongoing entrepreneurial venture.

4. Tool for the securing financial resources. P otential lenders and investors willrequire some type of financial analysis and projections before making a decisionon whether to provide a loan or to invest capital in business.

5. T he final purpose of the business plan is that its an effective tool for guidinggrowth.

A well written business plan can lay foundation for growth to happen.Business plan provides the road map for pursuing the opportunities that

await.


68/68

W hat should the Business

P lan IncludeE xecutive SummaryA nalysis of opportunity

A nalysis of the ContextDescription of the BusinessFinancial data and P rojections

Supporting Documentation

ed_ashima rathee (2)

Documents