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NEGOTIATION Lecture 1Lecture 1

Matching Matching Entrepreneurial & Management Entrepreneurial & Management

Characteristics Characteristics with thewith the

Business IdeaBusiness Idea

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NEGOTIATION ESSENTIAL CHARACTERISTICS:ESSENTIAL CHARACTERISTICS:

1.1. ECONOMIC THEORYECONOMIC THEORY Some one who can coordinate the factors of Some one who can coordinate the factors of

production (resources) to gain a profitable outcome.production (resources) to gain a profitable outcome. 2.2. KIRZNERKIRZNER Some one who has information additional to that held Some one who has information additional to that held

by competitorsby competitors

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NEGOTIATION 3.3. SCHUMPETERSCHUMPETER The ability to innovate from existing products and The ability to innovate from existing products and

practicespractices 4.4. KNIGHTKNIGHT On who is prepared to take risks in an uncertain On who is prepared to take risks in an uncertain

environmentenvironment 5.5. CASSONCASSON Some one who has command over resources and Some one who has command over resources and

can also coordinate and reallocate these resourcescan also coordinate and reallocate these resources

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NEGOTIATION . Most common identified characteristicsMost common identified characteristics

High Achievement OrientatedHigh Achievement Orientated .. High Ambiguity ToleranceHigh Ambiguity Tolerance .. High Internal Locus of ControlHigh Internal Locus of Control .. High need for IndependenceHigh need for Independence .. InnovativeInnovative .. VisionaryVisionary

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NEGOTIATION Deviant (none conformist)Deviant (none conformist) .. ProactiveProactive .. Self ConfidentSelf Confident .. Ability to Deal with FailureAbility to Deal with Failure .. Fit & EnergeticFit & Energetic .. Creative & InnovativeCreative & Innovative .. Risk TakerRisk Taker

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NEGOTIATION THE MANAGEMENT PERSONALITYTHE MANAGEMENT PERSONALITY

Ability to Take DecisionsAbility to Take Decisions .. Commitment to OthersCommitment to Others .. Self ConfidentSelf Confident .. ConformistConformist .. Emotional StabilityEmotional Stability .. Good CommunicatorGood Communicator .. Ability to Lead and Work with OthersAbility to Lead and Work with Others .. Knowledge of and Access to ResourcesKnowledge of and Access to Resources

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NEGOTIATION THE ENTREPRENEURIAL BUSINESSTHE ENTREPRENEURIAL BUSINESS Established to provide the founder with commercial prosperity and the Established to provide the founder with commercial prosperity and the

satisfaction of being innovative. Additionally this type of business will be looked satisfaction of being innovative. Additionally this type of business will be looked upon to create new wealth, employment and economic development.upon to create new wealth, employment and economic development.

THE MANAGED BUSINESSTHE MANAGED BUSINESS The role of the manager is to plan, make decisions, change and coordinate The role of the manager is to plan, make decisions, change and coordinate

resources and take control of the business activities on a daily basis and in so resources and take control of the business activities on a daily basis and in so doing satisfies the objectives of the businesses owners.doing satisfies the objectives of the businesses owners.

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NEGOTIATION SUCCESSFUL ENTERPRISE VENTURESSUCCESSFUL ENTERPRISE VENTURES

There are 4 fundamental needs for an enterprise venture to succeed:There are 4 fundamental needs for an enterprise venture to succeed: 1.1. A BUSINESS IDEAA BUSINESS IDEA The market opportunity that fits the skills and interest of the persons The market opportunity that fits the skills and interest of the persons

concerned.concerned. 2.2. ENTREPRENEURIAL DEVELOPMENTENTREPRENEURIAL DEVELOPMENT Developing self confidence, initiative and harnessing the Developing self confidence, initiative and harnessing the

motivation/enthusiasm of the entrepreneur.motivation/enthusiasm of the entrepreneur. 3.3. MANAGEMENT SKILLS DEVELOPMENTMANAGEMENT SKILLS DEVELOPMENT Enhancing the functional management skills of the entrepreneurEnhancing the functional management skills of the entrepreneur 4.4. RESOURCESRESOURCES Information of and access to land, labour, finance and tangible assets Information of and access to land, labour, finance and tangible assets

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NEGOTIATION WHAT BUSINESS DO I WANT TO BE INWHAT BUSINESS DO I WANT TO BE IN

ADVANTAGES OF RUNNING YOUR OWN BUSINESSADVANTAGES OF RUNNING YOUR OWN BUSINESS .. Development of an hobby or interestDevelopment of an hobby or interest .. Play to own knowledge, skills and experiencePlay to own knowledge, skills and experience .. Work in field of enjoymentWork in field of enjoyment .. Opportunity to create your own companyOpportunity to create your own company .. Independence form employerIndependence form employer .. Determine own remuneration packageDetermine own remuneration package .. Tax advantagesTax advantages DISADVANTAGES OF RUNNING YOUR OWN COMPANYDISADVANTAGES OF RUNNING YOUR OWN COMPANY .. Personal LiabilityPersonal Liability .. StressfulStressful .. Unsociable HoursUnsociable Hours .. MeetingsMeetings .. BureaucracyBureaucracy .. Seed CapitalSeed Capital

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NEGOTIATION

DISADVANTAGES OF RUNNING YOUR OWN COMPANYDISADVANTAGES OF RUNNING YOUR OWN COMPANY .. Personal LiabilityPersonal Liability .. StressfulStressful .. Unsociable HoursUnsociable Hours .. MeetingsMeetings .. BureaucracyBureaucracy .. Seed CapitalSeed Capital

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NEGOTIATIONBUSINESS START-UP STATISTICSBUSINESS START-UP STATISTICS

80% OF NEW BUSINESSES FAIL IN THE FIRST 6 MONTHS80% OF NEW BUSINESSES FAIL IN THE FIRST 6 MONTHS .. ONLY 40% WILL SURVIVE TO THE 4ONLY 40% WILL SURVIVE TO THE 4THTH YEAR YEAR .. 120,000 BUSINESSES FILE FOR BANKRUPTCY EACH YEAR120,000 BUSINESSES FILE FOR BANKRUPTCY EACH YEAR .. 70% OF ALL INSOLVENCIES ARE CAUSED THROUGH DEBT70% OF ALL INSOLVENCIES ARE CAUSED THROUGH DEBT .. 1989 WAS THE BEST YEAR TO DATE FOR BUSINESS 1989 WAS THE BEST YEAR TO DATE FOR BUSINESS

LAUNCHES (520,000)LAUNCHES (520,000) .. OVERTADING COMMON CAUSE OF BUSINESS FAILUREOVERTADING COMMON CAUSE OF BUSINESS FAILURE . . MAJORITY SEED FINANCE IS THE OWNERS OWNMAJORITY SEED FINANCE IS THE OWNERS OWN

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NEGOTIATION REASONS FOR BUSINESS FAILURESREASONS FOR BUSINESS FAILURES

11 DEADLY SINS:11 DEADLY SINS: .. Lack of ExpertiseLack of Expertise .. No Product/Service Market StrategyNo Product/Service Market Strategy .. Over Optimism of Market sizeOver Optimism of Market size .. Under Estimating Start-up timeUnder Estimating Start-up time .. Lack of Working CapitalLack of Working Capital .. Start-Up costs to highStart-Up costs to high .. Over-Trading Over-Trading .. Mistaking Profit for CashMistaking Profit for Cash .. Wrong LocationWrong Location .. Wrong Staff SelectionWrong Staff Selection .. Poor Accounting Standards Poor Accounting Standards

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NEGOTIATION CHOOSING THE BUSINESSCHOOSING THE BUSINESS

SPOTTING A GAP IN THE MARKET:SPOTTING A GAP IN THE MARKET:

FACTORS THAT SHOULD INFLUENCE YOUR CHOICEFACTORS THAT SHOULD INFLUENCE YOUR CHOICE .. What are you good at that could influence your choiceWhat are you good at that could influence your choice .. (a) Organising(a) Organising .. (b) Selling(b) Selling .. (c) buying(c) buying .. How much start-up capital is neededHow much start-up capital is needed .. Is there a market for your ideaIs there a market for your idea .. Will you like the workWill you like the work .. How much time are you prepared to put inHow much time are you prepared to put in .. What business is right for youWhat business is right for you

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NEGOTIATION QUALITIES YOU NEED TO SUCCEEDQUALITIES YOU NEED TO SUCCEED

Self ConfidenceSelf Confidence .. Being an all RounderBeing an all Rounder .. Ability to Bounce backAbility to Bounce back .. InnovativeInnovative .. Positive Result OrientatedPositive Result Orientated .. Risk-TakerRisk-Taker .. Total CommitmentTotal Commitment .. (a) Single Minded (a) Single Minded .. (b) Energetic (b) Energetic .. (c) Hardworking (c) Hardworking ..

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NEGOTIATION

QUALITIES YOU NEED TO SUCCEEDQUALITIES YOU NEED TO SUCCEED

Self MotivationSelf Motivation .. InitiativeInitiative .. Communication SkillsCommunication Skills .. PatiencePatience .. Attention to DetailAttention to Detail