chapter 5 _entrepreneur

Management and Entrepreneurship, RVCE

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Chapter – 5 ENTREPRENEUR


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CONTENTS

Meaning of Entrepreneurship

Entrepreneurship Core Competencies

Evolution of Concept

Functions of Entrepreneur

Types of Entrepreneurship

Intrapreneur – an emerging Class

Concept of Entrepreneurship


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CONTENTS• Development of Entrepreneurship

• Steps in Entrepreneurial Process

• Role of Entrepreneurship in Economic

Development

• Economic development

• Entrepreneurship – is Barriers

• Entrepreneurship in India


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Meaning of Entrepreneur

An entrepreneur is a person who has possession

over a new company, or enterprise, and assumes

significant accountability for the inherent risks and

the outcome.

The term is a loanword from French and was first

defined by the Irish economist Richard Cantillon.


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Meaning of Entrepreneur contd…

A female entrepreneur is sometimes known as an

entrepreneuse. However, with the word

"entrepreneuse" being the French feminine form of

entrepreneur, its usage in English in delineating

sexes detracts from the meaning of the word

"entrepreneur".


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Meaning of Entrepreneur contd…

Entrepreneur in English is a term applied to the

type of personality who is willing to take upon

herself or himself a new venture or enterprise and

accepts full responsibility for the outcome.


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Sl. No.

Core Competencies

Entrepreneurial Activities

1. Initiative Does things before asked for or forced by events, and acts to extend the business to new areas, products, or services.

2. Perceiving Opportunities

Identifies business opportunities and mobilises necessary resources to make good an opportunity.

3. Persistence Takes repeated or different actions to overcome obstacles.

4. Information Gathering

Consults experts for business and technical advice. Seeks information on client’s or supplier’s needs. Personality undertakes market research and makes use of personal contacts or information network to obtain useful information


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Sl. No.

Core Competencies


5. Concern for quality work

States desire to produce or sell a better quality product or service. His performance compares favourably with that of others.

6. Commitment to contractual obligations

Makes a personal sacrifice or expends extraordinary effort to complete a job. Accepts full responsibility in completing a job contract on schedule. Pitches in with workers, or works in their place, to get job done. Shows utmost concern to satisfy customer.

7. Efficiency orientation

Finds ways and means to do things faster, better, and economically.

8. Planning Various inter-related jobs are synchronised according to plan.


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Sl. No.

Core Competencies


9. Problem Solving Conceives new ideas and finds innovative solutions.

10. Self confidence Makes decisions on his own and sticks to them in spite of initial setbacks.

11. Expertise Possesses technical expertise in area of business, finance, marketing, and so on.

12. Self-critical Aware of personal limitations but tries to improve upon them by learning from his past mistakes, or experience of others and is never complacent with success.

13. Persuasion Persuades customers and financiers to patronize his business.


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Sl.

No.

Core

Competencies


14. Use of influence

strategies

Develops business contracts. Retains influential people

as agents. Restricts dissemination of information in his

possession.

15. Assertiveness Instructs, reprimands, or disciplines for failing to

perform.

16. Monitoring Develops a reporting system to ensure that work is

completed and that it meets quality norms.

17. Credibility Demonstrated honesty in dealing with employees,

suppliers, and customers even if it means a loss of

business.


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Sl.

No.

Core

Competencies


18. Concern for

employee welfare

Expresses concern for employees by responding

promptly to their grievances.

19. Impersonal

relationship

Places long-term good will above short-term gain in a

business relationship

20. Expansion of

capital base

Reinvests a greater portion of profits to expand capital

base of the firm.

21. Building product

image

Concerned about the image of his product among

customers. Does everything possible to establish a

niche for his product in the market.


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Evolution of the Concept

The concept of entrepreneurship has been around for a very long time, but its resurgent popularity implies a ”sudden discovery”, as if we had stumbled onto a new direction for American enterprise.

This is a myth, as we shall see, because the American system of free enterprise has always engendered the spirit of entrepreneurship.


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America was discovered by entrepreneurs, and the

United States became a world economic power

through entrepreneurial activity.

More important, our future rests squarely on

entrepreneurial ventures founded by creative

individuals.

Evolution of the Concept contd..


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They are inspired people, often adventurers, who

can at once disrupt a society and instigate

progress.

They are risk takers who seize opportunities to

harness and use resources in unusual ways, and

entrepreneurs will thrust us into the twenty-first

century with a thunderous roar.

Evolution of the Concept contd..


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Functions of Entrepreneur

• Innovation

• Risk and uncertainty bearing

• Organization building


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According to Kilby in a developing country even the

imitator entrepreneurs are very important and the

entrepreneurial role encompasses the following:

• Perception of market opportunities

• Gaining command over scarce resources

• Purchasing inputs

• Marketing the products

• Dealing with bureaucrats

Functions of Entrepreneur contd…


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• Managing human relations within the firm

• Managing customer and supplier relation

• Managing finance

• Managing production

• Acquiring and overseeing assembly of the factory

• Industrial engineering

• Upgrading process and product

• Introducing new production techniques and products

Functions of Entrepreneur contd…


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Types of Entrepreneur

The Achiever

The Salesperson

The Manager

The Inventor


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The Achiever

Achievers are willing to work long and hard to

reach their personal goals.

They like to plan and are committed to making

things happen.

They are good at dealing with crises and trying

to be good at everything.


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They should focus on running small

organizations and be careful not to expect

themselves to know everything.

Large organizations or those that are controlled

by outsiders may be too structured for the

achiever.

The Achiever contd…


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Salespeople care about people and want to help

them.

They use a soft-sell approach, and their

customers buy from them as a way to show

gratitude for the help offered by the salesperson.

They should focus on selling and have someone

else manage the business.

The Salesperson


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Managers are competitive, decisive, and feel

comfortable being in charge.

They may be good at sales because they use

logic and persuasion.

The

Manager


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They are good at managing major growth in a

new organization or an existing operation

needing their talents.

They may tend to over-manage a small operation

and need to be careful that they really have the

knowledge and skills they need.

The Manager contd…


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Inventors are drawn to new ideas and finding

ways to get ahead of the competition.

They may be idealistic and get carried away with

their enthusiasm. They are good at envisioning

solutions to challenges for an organization.

The Inventor


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They need to stay away from areas in which they

are not experts and remember that some of their

ideas may not be the best. Some people possess

more than one type of entrepreneurship.

The Inventor contd…


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Intrapreneur – an Emerging Class

Corporate entrepreneurship, whereby an organization seeks to expand by exploring new opportunities through new combinations of its existing resources

Intrapreneurship, an obvious play on “entrepreneurship,” is the practice of beginning and developing new business ventures within the structure of an existing organization.


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Concept of Entrepreneurship

Entrepreneurship is a process undertaken by an

entrepreneur to augment his business interests.

It is an exercise involving innovation and creativity

that leads towards establishing his/her enterprise.

One of the qualities of entrepreneurship is the

ability to discover an investment opportunity and to

organize an enterprise, thereby contributing to real

economic growth.


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It involves taking of risks and making the

necessary investments under conditions of

uncertainty and innovating, planning, and taking

decisions so as to increase production in

agriculture, business, industry etc.

Concept of Entrepreneurship contd…


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Entrepreneurship is a composite skill, the

resultant of a mix of many qualities and traits -

these. include tangible factors as imagination,

readiness to take risks, ability to bring together

and put to use other factors of production capital,

labour, land, as also intangible factors such as

the ability to mobilize scientific and technological

advances.

Concept of Entrepreneurship contd…


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Development of Entrepreneurship

Develop a business description

Describe business facility and location

Develop an organizational chart

Develop funding/financial resources

Generate a budget


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Create forms/records

Design a personnel management plan

Apply laws, regulations and codes

Select supply and equipment needs

Formulate an advertising and customer

recruitment plan

Develop a list of resources

Development of Entrepreneurship contd…


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Steps in Entrepreneurial Process

The Entrepreneurial Process :The process of

starting a new venture is embodied in the

entrepreneurial process, which involves more than

just problem solving in a typical management

position.


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(1) Identification and evaluation of the opportunity,

(2) Development of the business plan,

(3) Determination of the required resources,

(4) Management of the resulting enterprise.

An entrepreneur must find, evaluate, and develop an

opportunity by overcoming the forces that resist the

creation of something new. The process has four

distinct phases:

Steps in Entrepreneurial Process contd…


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Identification and evaluation of the

opportunity

Development of the business plan

Determination of the required

resources

Management of the resulting

enterprise

Steps in Entrepreneurial Process


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Opportunity identification and evaluation is a very

difficult task.

Most good business opportunities do not suddenly

appear, but rather result from an entrepreneur’s

alertness to possibilities, or in some case, the

establishment of mechanisms that identify potential

opportunities.

Identify and Evaluate the Opportunity


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The assessment of the opportunity requires answering the following questions:

• What market need does it fill?• What personal observations have you

experienced or recorded with regard to that market need?

• What social condition underlies this market need?

• What market research data can be marshaled to describe this market need?

contd…


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What patents might be available to fulfill this

need?

What competition exists in this market? How

would you describe the behavior of this

competition?

What does the international market look like?

What does the international competition look like?

Where is the money to be made in this activity?

contd…


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A good business plan must be developed in order

to exploit the defined opportunity.

This is a very time-consuming phase of the

entrepreneurial process. An entrepreneur usually

has not prepared a business plan before and does

not have the resources available to do a good job.

Developing a Business Plan


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A good business plan is essential to developing

the opportunity and determining the resources

required, obtaining those resources, and

successfully managing the resulting venture.

Developing a Business Plan contd…


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The resources needed for addressing the

opportunity must also be determined. This

process starts with an appraisal of the

entrepreneur’s present resources.

Any resources that are critical need to be

differentiated from those that are just helpful.

Determine the Resources Required


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Care must be taken not to underestimate the

amount of variety of resources needed. The

downside risks associated with insufficient or

inappropriate resources should also be assessed.

Acquiring the needed resources in a timely manner

while giving up as little control as possible is the

next step in the entrepreneurial process

Determine the Resources Required contd…


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An entrepreneur should strive to maintain as

large an ownership position as possible,

particularly in the start-up stage.

Alternative suppliers of these resources, along

with their needs and desires, need to be

identified.

Determine the Resources Required contd…


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After resources are acquired, the entrepreneur

must use them to implement the business plan.

The operational problems of the growing

enterprise must also be examined.

This involves implementing a management style

and structure, as well as determining the key

variables for success.

Manage the Enterprise


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A control system must be established, so that

any problem areas can be quickly identified and

resolved.

Some entrepreneurs have difficulty managing

and growing the venture they created.

Manage the Enterprise contd…


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Role of Entrepreneurship in Economic Development

The entrepreneur who implements ‘new

combinations of means of production' plays a crucial

role in disturbing the status quo through innovation –

or ‘creative destruction’ – and there by becomes an

agent of change.


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1. Increase opportunities for employment (comprising various competitive skill sets);

2. Additional wealth creation;

3. Introduction and dissemination of new methods and technology; and

4. Overall economic growth.

As such, the ‘dynamic equilibrium’ achieved by a

constantly innovating entrepreneur could generate

conditions for:

Contd…


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• Difficulties of access to new technologies or the

inability to adapt to local conditions

• Inability to access private and public

• procurement opportunities

• Non-availability of affordable technical and

managerial consultancy

Entrepreneurship Barriers


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• Educational levels including computer competency

• Inability to conduct Market research

Entrepreneurship Barriers contd…


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1. Market Contacts

2. Local Incubator Companies

3. Capable Local Manpower

4. Technical Education &

Support

5. Supplier Assistance

& Credit

6. Local Venture Capitalists

7. Venture – Savvy Bankers

8. Capable Local Advisors

9. Entrepreneurial Education

10.Successful Role Models

A. Lack of Viable Concept

B. Lack of Market Familiarity

C. Lack of Technical Skills

D. Lack of Seed Capital

E. Lack of Business Knowhow

F. Complacency, Nomotivation

G. Social Stigma

H. Job “Lock-ins”, “Golden

Handcuffs”

I. Time Pressures, Distractions

J. Legal Constraints, Regulation,

Red Tape

K. Protectionism, Monompoly

L. Patent Inhibitions

Personal Pushes

Personal Pushes Venture

Environmental Helps Barriers

Barriers to Entrepreneurship


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Entrepreneurship in India

Entrepreneurship has been ‘embedded in Indian

genius and is part of its tradition. To quote the

renowned economist, T.N.Srinivasan, ‘Indian has

been entrepreneurial society… we had the

entrepreneurial skill but suppressed it for too long

time…and now it is thriving.


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Entrepreneurship in India occurs in ‘far more

encompassing and far reaching ways than in

developed countries. And could therefore be far more

complex, ‘for there is so much more that needs to be

done’.

Entrepreneurship in India contd…


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Is India a right place to start a startup? Following are

few interesting observations:

1. People: India is a land of technologists. It is the

best place for techies with similar interests to

combine their skills and innovate than in any

other countries.

2. Funding: Indian startups can survive for much

longer time than in any other countries looking

at the limited amount of cash requirement for

running business here.

contd…


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It is required to create right environment to create

successful business builders in India. To do this India

should be focusing on following areas:

1. Create the right environment for success2. Ensure that entrepreneurs have access to the

right skills3. Ensure that entrepreneurs have access to

“smart” capital:4. Enable networking and exchange:

contd…


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This case is about James Dyson (Dyson), a UK-

based engineer and founder of Dyson Appliances

Ltd (DAL), best known as the inventor of the bag

less vacuum cleaner. With sales of over £514.7

million and a presence in 45 countries worldwide as

of 2007, DAL had emerged as the market leader in

the vacuum cleaner market in UK as well as the

USA.

CASE STUDY 1


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Analysts noted that Dyson's journey from launching the award-winning Ballbarrow (a gardening tool) in the 1970s to building one of the most successful multinational brands (i.e. the vacuum cleaners that are called Dysons) in the 2000s had been anything but easy.There were plenty of challenging moments that punctuated his career, be it in the initial struggles to get funding for his venture or the patent litigation involving a major rival, which came much later.

contd…


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Despite all the problems, Dyson managed to build

DAL into a market leader in a highly competitive

industry dominated by multinational companies.

While analysts hailed him as a great entrepreneur

and praised his business acumen and approach

towards innovation, Dyson also earned many laurels

including receiving the knighthood for his services to

the business world on December 2006.

contd…


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Experts felt that Dyson was not only a great

inventor but had also shown sound business

acumen which helped him build DAL from the

ground up to a global company. However, he was

also criticized for shifting the company's production

base to Malaysia in 2002. Union leaders alleged

that this move had affected around 800 workers in

the already waning manufacturing industry in the

UK.

contd…


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Issues:• Understand the personality traits of an

entrepreneur from the life and work of James Dyson.

• Identify the benefits and challenges faced by an entrepreneurial venture with regard to managing its business growth and sustaining its innovation.

• Understand the leadership and management style of James Dyson and his contribution to the success of Dyson Appliances Ltd.

• Appreciate the sources of inspiration for an entrepreneur in the consumer appliances industry.

contd…


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Sam Walton, the founder of Wal-Mart, grew up poor

in a farm community in rural Missouri during the Great

Depression. The poverty he experienced while

growing up taught him the value of money and to

persevere.

CASE STUDY 2SAM WALTON 1918-1992


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After attending the University of Missouri, he immediately worked for J.C. Penny where he got his first taste of retailing. He served in World War II, after which he became a successful franchiser of Ben Franklin five-and-dime stores. In 1962, he had the idea of opening bigger stores, sticking to rural areas, keeping costs low and discounting heavily. The management disagreed with his vision. Undaunted, Walton pursued his vision, founded Wal-Mart and started a retailing success story. When Walton died in 1992, the family's net worth approached $25 billion.

CASE STUDY 2 contd…


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Today, Wal-Mart is the world's #1 retailer, with

more than 4,150 stores, including discount stores,

combination discount and grocery stores, and

membership-only warehouse stores (Sam's Club).

Learn Walton's winning formula for business.

contd…

Rule 1: Commit to your business

Rule 2: Share your profits with all your associates,

and treat them as partners

Rule 3: Motivate your partners


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Rule 4: Communicate everything you possibly can

to your partners

Rule 5: Appreciate everything your associates do

for the business

Rule 6: Celebrate your success

Rule 7: Listen to everyone in your company and

figure out ways to get them talking

contd…


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Rule 8: Exceed your customer's expectations

Rule 9: Control your expenses better than your

competition

Rule 10: Swim upstream

contd…


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References

• Principles of Management-P C Tripathi, P N

Reddy; TMH

• Management-Stephen Robbins; PHI

• Management - VSP Rao, V H Krishna; Excel

• Essentials of Management-Koontz, Weihrich,

TMH

• Entrepreneurship and Economic Development,

Kilby, Peter (1971), New York Press.


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References

• Innovation and Entrepreneurship, Drucker, Peter

F (1985) New York.

• The Achieving Society, McClelland. D.C. (1961),

New York Free Press.

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