Prof Parameshwar P Iyer

Indian Institute of Science 1

Entrepreneurship and
Business Management
Mega Bucks Workshop
Indian Institute of Technology
Kanpur
Prof Parameshwar P Iyer
Indian Institute of Science 2
What is
Entrepreneurship?
Capacity to take risks
Ability to own and organize
Desire and capability to innovate and
diversify (Stepanek,
1962)
Prof Parameshwar P Iyer
Indian Institute of Science 3
Who is an entrepreneur?
Person conducting own business
(Webster)
Person who sets up business deals in
order to make profits (Collins Cobuild)
Organizer of an economic venture, one
who owns, organizes, manages, and
assumes the risks of the business
(Chandrashekhar)
Prof Parameshwar P Iyer
Indian Institute of Science 4
Why entrepreneurship?
Process of creating something different,
with value, by devoting necessary time
and effort, by assuming the
accompanying financial, psychological,
and social risks, and receiving the
resulting rewards of monetary and
personal satisfaction (Bowen and
Hisrich, 1986).
Prof Parameshwar P Iyer
Indian Institute of Science 5
Role of the Entrepreneur
An innovator who combines technical
innovations and financial finesses.
Important role in producing competitive
products, processes, and services.
Generation of new employment
Local and regional economic development
Improved allocation of resources and transfer
of technologies
Prof Parameshwar P Iyer
Indian Institute of Science 6
Entrepreneur as an
Economic Pioneer
Introduction of new goods and products
Introduction of new processes and
methods of production
Opening up of new markets
Opening up of new sources of supply
Industrial re-organization
Prof Parameshwar P Iyer
Indian Institute of Science 7
Strategic Importance of
the Small-Scale Sector
Significant contributions to national income,
employment, and export earnings
Value of output over Rs. 5,70,000 crores
Employment of over 17.5 million (> twice the
private sector; almost as much as all public
sector employment)
Exports of over Rs. 54,000 crores (> 35 per
cent of all exports) (2000-01 figures)
Prof Parameshwar P Iyer
Indian Institute of Science 8
Entrepreneurship and
Small Businesses
Entrepreneurship is especially critical in small
businesses because:
Important sources of competition for large
firms; challenge their economic power
Offer a wide range of choice to consumers
Sources of innovation and creativity
Good career opportunities to work in an
unstructured environment of a small company
Prof Parameshwar P Iyer
Indian Institute of Science 9
Marketing Management
Demand variables:
Demographic, social, economic,
political, and competitive factors in
market environment
Psychological, social, and economic
patterns in customer motivations
All autonomous factors
Prof Parameshwar P Iyer
Indian Institute of Science 10
Marketing Management
Semi-demand variables:
Market segmentation
Customer behavior
Only partially under the control of the
entrepreneur
Prof Parameshwar P Iyer
Indian Institute of Science 11
Marketing Management
Decision Variables:
Product characteristics and pricing
Distribution and personal selling
Advertising policies
Mostly under the control of the
entrepreneur
Prof Parameshwar P Iyer
Indian Institute of Science 12
Marketing Management
The essential entrepreneurial function in
marketing management is to design an
integrated marketing plan, where the
demand and semi-demand variables of
the market are related to the product
and decision variables of the firm.
Prof Parameshwar P Iyer
Indian Institute of Science 13
Market Research
Marketing success depends on design of a
distinctive marketing plan
A small entrepreneur should not try to
compete on a product-to-product basis with
large firms (same goods to same customers
thru same channels at same prices !!)
Instead, try to do something different.
Prof Parameshwar P Iyer
Indian Institute of Science 14
Operations Management
Process of designing and utilizing the
physical resources of the firm to
maximize the operational capabilities of
the company
Product/ service design
Process design
Job design
Job standards
Prof Parameshwar P Iyer
Indian Institute of Science 15
Operations Management
The entrepreneurs smaller firm
generally has to provide specialized,
few-of-a-kind products and personalized
services, without the benefits of mass
production and mass distribution
Prof Parameshwar P Iyer
Indian Institute of Science 16
Financial Management
1. Effective utilization of the assets-
current(short-term) and capital (long-term)
2. Provision of funds to support those assets
3. Use of current liabilities, intermediate
loans, and capital debt or equity
4. Difficult for smaller companies to compete,
in finance, with larger firms, simply because
they lack money.
Prof Parameshwar P Iyer
Indian Institute of Science 17
Financial Management
Finances needed for:
1. New investments in product development
2. Expansion of markets
3. Process improvements, etc.
Conserve available funds by preparing
detailed financial plans, e.g. cash budgets,
capital investment analysis, short-term plans
Prof Parameshwar P Iyer
Indian Institute of Science 18
Financial Management
Finding additional funds from sources as
1. Current liabilities
2. Bank loans
3. Equity investments
4. Retained earnings
5. Venture capital proposals
6. Angel funding proposals
Prof Parameshwar P Iyer
Indian Institute of Science 19
Product Development
Improvements in design of existing product
Inventions of new products
Lack resources for full R&D facility
Must use available capabilities efficiently
Outsourcing of R&D and innovation
Technical feasibility, market feasibility,
development time and cost, manufacturing
capability, and strategic fit
Prof Parameshwar P Iyer
Indian Institute of Science 20
Organizational
Management and
Control
Smaller companies go thru identifiable
stages of growth
Increased specializations in tasks of
staff
Increased delegation on part of founder
Increased systematization and
formalization of information reporting
and accounting procedures
Prof Parameshwar P Iyer
Indian Institute of Science 21
Formation and Growth
Formal and legal procedures of
formation- memoranda and articles of
association
Sole proprietorship
Partnership
Private limited
Public listing
Cooperative
Prof Parameshwar P Iyer
Indian Institute of Science 22
Formation and Growth
Purchase of a small company- identify,
screen, evaluate, negotiate, and
structure payments
Consolidation of a new company-
intense conservation of cash, firm
limitations on expenses, continual
examination of companys strategy.
Prof Parameshwar P Iyer
Indian Institute of Science 23
Conclusions
Entrepreneurship is a challenging and
rewarding profession
Need to concentrate on market analysis,
financial resources, and technology
management
Cannot compete directly with the big guys,
so need to be ingenious and innovative in all
entrepreneurial functions