UNDERSTANDING ENTREPRENEURSHIP

UNDERSTANDING ENTREPRENEURSHIP

Chapter Objectives
To understand the evolution of the term entrepreneur To study the reasons for the current growth in entrepreneurship To list various reasons driving a person to starting a business To explore the characteristics and skills of successful entrepreneurs To classify different types of entrepreneurs To look at the reasons for entrepreneurial failure

The Entrepreneur
entreprende, which means to undertake Webster dictionary one who organizes, manages and assumes the risks of a business or enterprise Richard Cantillion an entrepreneur is someone who takes the risk of running an enterprise by paying a certain price for securing and using resources to make a product and reselling the product for an uncertain price.

Joseph Schumpeter - an innovator playing the role of a dynamic businessman adding material growth to economic development Timmons - Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled

Reasons for Growth of Entrepreneurship

Industry Structure New technologies Deregulation and privatization Formation of new business communities Increasing demand for variety Government incentives and subsidies Increasing flow of information

Easier access to resources Entrepreneurial education Return on innovation Entrepreneur as a Hero Self-employment is highly valued Rising dissatisfaction at job Acceptance of ex-entrepreneurs in the job market

Gurubhai and Dhirubhai

Both start their career from the gulf Both come to Mumbai to deal in synthetic yarn Gurus battle against an anglicized scion of an established business family seems to mirror Ambanis spat with Nusli Wadia. Gurus success in getting people to invest in his IPO is similar to what happened in Ambanis case. Mithun Chakraborty plays a newspaper owner in the film and his character resembles Ramnath Goenka. The virulent attacks of the newspaper on Guru are similar to what is alleged of Indian Express and Reliance in real life.

Impact of Entrepreneurial Firms

Job Creation Economic growth New Technology Serving small markets

Why Start a Business?

Control The idea Flexibility Money

Pros

&

Cons
You are alone All decisions are yours All losses are yours Work may not be satisfying You will need to put in long hours Lack of success will effect self esteem Exiting the business is difficult Pressures will affect social and family life

You are the boss All profits are yours There will be great variety in roles and tasks Increases self confidence Work can be very satisfying Success will give you immense satisfaction

Entrepreneurial Characteristics
Timmons: 1. commitment and determination; 2. leadership; 3. opportunity obsession; 4. tolerance of risk, ambiguity and uncertainty; 5. creativity, self-reliance and ability to adapt; and 6. motivation to excel

Bianchi 1. being an offspring of self-employed parents; 2. being fired from more than one job; 3. being an immigrant or a child of immigrants; 4. previous employment in a firm with more than 100 people; 5. being the oldest child in the family 6. being a college graduate

Entrepreneurial Skills
Creativity and Opportunity Evaluation Real-time Strategy and Decision Making Comfort with Change and Chaos Teamwork Evangelism, Selling, Negotiation, and Motivation through Influence and Persuasion Oral and Written Communication Basics of Start-Up Finance, Accounting and Law

Entrepreneurial Attitudes
Comfortable with lifestyle changes Willingness to break / bend / stretch laws Patience to start small Prepared to make enemies Comfort with confrontations Dealing with failure Willingness to learn

Entrepreneurial Motivation
Environment
IDEA

Personal Goals Entrepreneurial Motivation

Personal Characteristics

Entrepreneurial Activity

Expectations

Match

Outcomes

Types of Entrepreneurs
1. Early starters 2. Experienced 3. Mature 1. 2. 3. 4. 1st generation entrepreneurs From Business families Minority entrepreneurs Women Entrepreneurs

1. Novice 2. Serial 3. Portfolio

Reasons for Entrepreneurial Failure

Lack of experienced management Few trained or experienced manpower Poor financial management Rapid growth Lack of business linkages Weak marketing efforts Lack of information Incorrect pricing Improper inventory control Short term outlook