ENTREPRENEUR AND BUSINESS PLANNING

Chapter 2:THE ENTREPRENEURIAL AND

INTRAPRENEURIAL MIND

Prepared by:

Prof. SEYED ALI FALLAHCHAY

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.

An entrepreneur must find, evaluate, and develop an

opportunity by overcoming the forces that resist the

creation of something new.

Aspects of Entrepreneurial process

The process has four distinct phase:

1) Identification and evaluation of the opportunity

2) development of the business plan,

3) determination of the required resources, and

4) management of the resulting enterprise.

Identify and Evaluate the Opportunity

Opportunity Identification and evaluation is a very

difficult task. Most good business opportunities do not

suddenly appear, but rather results from an

entrepreneur’s alertness to possibilities or, in some

cases, the establishment of mechanism that identify

potential opportunities.

Steps to identify and evaluate the opportunity

• Opportunity assessment

• Creation and length of opportunity

• Real and perceived value of opportunity

• Risk and returns of opportunity

• Opportunity versus personal skills and goals

• Competitive environment

Develop a Business Plan

A good business plan must be developed in order to

exploit the defined opportunity. this is very time-

consuming phase of the entrepreneurial process.

A good business plan is essential to developing the

opportunity and determining the resources required,

obtaining those resources, and successfully managing

the resulting venture.

Steps to develop Business Plan

• Title page

• Table of contents

• Executive Summary

• Major Section

• Appendixes

1. Description of Business

2. Description of Industry

3. Technology Plan

4. Marketing Plan

5. Financial Plan

6. Production Plan

7. Organization Plan

8. Operational Plan

9. Summary

Determination of the required resources

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. Care must be taken not

to underestimate the amount and variety of resources

needed. The downside risks associated with insufficient

or inappropriate resources should also be assessed.

Steps to Determine Resources Required

• Determine resources needed.

• Determine existing resources.

• Identify resource gaps and available suppliers.

• Develop access to needed resources.

Manage the Enterprise

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. A control

system must be established, so that any problem areas

can be quickly identified and resolved.

Steps to Manage the Enterprise

• Develop management style.

• Understand key variables for success.

• Identify problems and potential problems.

• Implement control systems.

• Develop growth strategy.

Managerial Vs. Entrepreneurial decision making

Five different dimensions between entrepreneurial decision making and managerial styles:• strategic orientation• commitment to opportunity• commitment of resources• control of resources• management structure

Managerial styles are called the administrative domain.Administrative domain is the way manager make decisions.

CAUSES FOR INTEREST IN INTRAPRENEURIALSHIP

These differences in entrepreneurial and managerial domains have contributed toward an increased interest in intrapreneurship. This interest has intensified due to a variety of events occurring on social, cultural, and business levels.On a social level , there is an increasing interest in “doing your own thing” and doing it on one’s own terms. Individuals who believe strongly in their own talents frequently desire to create something of their own. They want responsibility and have a strong need for individual expression and freedom in their work environment.

When this freedom is not there, frustration can cause that individual to become less productive or even leave the organization to achieve self-actualization elsewhere.The resistance against flexibility, growth, and diversification can, in part, can be overcome by developing a spirit of entrepreneurship within the existing organization, called intrapreneurship. An increase in intrapreneurship reflects on an increase in social, cultural, and business pressures.

Corporate Vs. Intrapreneurial Culture

Corporate Culture- is the environment of a particular organization.Shared values and norms:• Hierarchical in nature• Established procedures• Reporting systems• Line of authority and responsibility• Instructions• Control mechanism.

Intrapreneurial culture- Is the environment of an entrepreneurial-oriented

organization.Shared values and norms:• Flat organizational structure with networking• Team work• Sponsors• Mentors aboundingNote: Close-working relationship help to establish an atmosphere of trust that facilitates the accomplishment of visions and objectives.

Climate for Intrapreneurship• Organization operates on frontiers of technology• New ideas encouraged• Trial and error encouraged• Failures allowed• No opportunity parameters – barrier to new product

creation and development• Resources available and accessible• Multi-discipline teamwork approach• Long-time horizon • Volunteer program • Appropriate reward system• Sponsors and champions available• Support of top management

Intrapreneurial Leadership Characteristics

• Understand the environment• Visionary and flexible• Creates management options• Encourages teamwork• Encourages open discussion• Build a collision of supporters• Persists

Establishing Intrapreneurship in the Organization

1. To secure a commitment to intrapreneurship in the organization by top, upper, and middle management levels.

2. Ideas and general areas that top management are interested in supporting should be identified, along with the amount of risk money that is available to develop the concept further.

3. A company need to use technology to make it more flexible.

4. The organization should have a group of interested managers who will train employees as well as share their experiences.

5. The organization needs to develop ways to get closer to its customers.

6. An organization that want to become more intrapreneurial must learn to be more productive with fewer resources.

7. The organization needs to establish a strong support structure for intrapreneurialship.

8. Support must also involve trying the rewards to the performance of the intrapreneurial unit.

9. The organization need to implement an evaluation system that allows successful intrapreneurial unit to expand and unsuccessful ones eliminated.

Establishing Intrapreneurship in the Organization