Professional Documents
Culture Documents
PRASANJEET BHATTACHARJEE
UNIT - I
Definition of Entrepreneur
The entrepreneur, by definition, shifts resources from areas of low productivity and yield to areas of higher productivity and yield. Of course, there is a risk the entrepreneur may not succeed.
(Drucker, 85)
DEFINITION OF ENTREPRENEURSHIP
It is more than mere creation of business Entrepreneurship is a process of innovation and new venture creation through four major dimensions individual, organizational, environmental and process. The entrepreneurship process is aided by collaborative networks in government, education and institutions.
DEFINITION OF ENTREPRENEURS Functional definition of entrepreneurs offers the following definition: Entrepreneurs are individuals who actively form or lead their own business and nurture them for growth and prosperity.
What is an Entrepreneur?
An Entrepreneur (ahntra pra nur) is a person who organizes and manages a business undertaking, assuming the risk for the sake of profit. Any person (any age) who starts and operates a business is an entrepreneur.
Definition: Entrepreneurship
The Spirit of Creative Risk Taking
What is entrepreneurship?
A person who destroys the existing economic order by introducing new products and services, by creating new forms of organization, or by exploiting new raw materials Schumpeter Someone who perceives an opportunity and creates an organization to pursue it - Bygrave Most current: A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced for the purpose of wealth creation - Babson College
Entrepreneurship
Some advantages
You are your own boss Enjoy the profits from you efforts Sense of pride in your business Flexibility in your work schedule
Entrepreneurship
Some disadvantages
Will need to put in long hours Need money to start Have to keep up with government rules and regulations May have to mark hard decisions (hiring, firing, etc.) May lose money
Intrapreneurship defined
Intrapreneurship is entrepreneurship by employees
in existing organisations
Source: Antoncic and Hirsh, 2003
Entrepreneurship (contd)
Intrapreneurs
Individuals (managers, scientists, or researchers) who work inside an existing organization and notice an opportunity for product improvements and are responsible for managing the product development process.
Intrapreneurs frustrated with the lack of support or opportunity at their firm often leave and form their own new ventures.
Entrepreneurship Vs Management
Entrepreneurship
Creating something new New product, new method of production, new markets, new source of raw material Challenges the norm
Management
Protects Stewardship of existing resources
Characteristics of an Entrepreneur
Drive Perseverance Ambition Leader Survivor status Competitive Interpersonal skills Innovative skills Ability to bounce back Vision Motivation Self-confidence Self Satisfaction Extrovert Results orientated Committed Risk taker Sociable
Risk taking
Businesses, financial and personal
I can.Communicate I can.... Present I can. Represent my opinion I can. Co-ordinate tasks I can. Develop alternative plans I can. Hand tasks over to a 3rd party I can. Co-operate with others I can. Negotiate I can . Sell I can. Organise and plan I can. Handle numbers I can. Handle technical devices My literacy is . My interaction with people is .
Have you the fire in your belly? Not indigestion but a vision; a concept; a belief; in your future? Have you the guts to take the rough with the smooth? Sure rough times but accept it and move on. If you are entrepreneur work is fun!! Have some fun.
CATEGORIES OF ENTREPRENEURS
Individual
Entrepreneurship driven by instincts to survive
Vegetable vendor Cattle rearing Tea Stall
Large Markets
Large businesses with large scope and employment
Typically run by highly educated managers Exit markets well understood
The area of microfinance Supported by small loans between USD $50 - $200 Debt structure; short payback period Proven area for finance
Currently with limited financial support Need USD $20K to $250K Generally rely on personal funds, family, friends, and money lenders
Significant conventional venture capital support Need USD millions in equity Primarily service export or urban focused Proven area for finance
Environment
Behavior
Functions of an Entrepreneur
Job Creator Risk Taker
Coordinator
Promoter
Value Creator
Profit Maximiser
What is EM?
Entrepreneurial motivation refers to the way in which urges, drives, desires, striving, aspirations or needs direct, control or explain the entrepreneurial behavior of human beings.
Elements of EM
Motive Behavior Goal
Goal
Motive
Behavior
Help (Assistance)
Goal
Intention (Motive)
Barriers (External)
Expectation (+ve/-ve)
Feelings (+ve/-ve)
External/Extrinsic
Compulsion Support Successful entrepreneurs Access to capital Status
Models of EM
Needs-based entrepreneurial motivation A general model of entrepreneurial motivation Entrepreneurial intentions model Enterprise formation model Model of entrepreneurial motivation and the entrepreneurial process
reward.
obtainable goals Concern for personal achievement rather than the rewards of success (How well am I doing?) rather than for attitudinal feedback (How well do you like me?)
Entrepreneurial Strategy
Entrepreneurial Management
Firm Outcomes
Implementation/ Outcome Perception PC = Personal Characteristics PE = Personal Environment PG = Personal Goals BE = Business Environment
BE IDEA
Internal/External
Self-employment intentions
DECISION:
START (Triggers > Barriers)
ENVIRONMENT:
Industry Social Economic Political Infrastructure development
INTENTIONALITY
DECISION:
ABANDON (Triggers < Barriers)
Triggers to start up
Invest (need a job; way to personal savings, super,
redundancy; earn a better salary)
Market Opportunity (saw one) Money (make more, keep more RM)
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Barriers to start up
Lack of resources - lack of marketing skills, lack of management/financial expertise, lack of information, difficulty in obtaining finance Compliance costs - high taxes and fees, compliance with government regulation, problems finding suitable labour Hard reality - assessment that risks are greater than expected, uncertainty and fear of failure
Pull Factors
Religious Values
A lot of bounties in business Follow the teachings of the religion Duty to lead a prosperous life
Psychological
Doesnt like to be controlled Want freedom
Pull Factors
Entrepreneurial Culture
Entrepreneurial mindset Business succession
Push Factors
Frustration
Limited job mobility VSS and retrenchment Dissatisfaction
Necessity
No jobs Need to support family Lack educational qualifications
Barriers to Entrepreneurship
Too much to lose Personal inadequacy Fear of Competition Lack of Capital Lack of Opportunity
Classification of Entrepreneurship
Contextual Basis Novelty Basis Intention Basis
Contextual Basis
Entrepreneurship (stand alone start up) Corporate entrepreneurship (new ventures within large established organizations) Co-preneurship (a working professional starts a business and runs it alongside his / her job) Technology Entrepreneurship (start-ups witjh product and process which are technology based) Service Entrepreneurship (start-ups in the services domain of activity) E-entrepreneurship (start-ups wherein business is on internet platform)
Novelty Basis
Innovating Entrepreneurship
Innovating Entrepreneurship involves introduction of new goods, new methods of production, discovers new market and reorganizes the enterprise. This is usually the case with technology companies but it is not ruled out for other ventures also. It is also called Schumpeterian Entrepreneurship.
Imitative Entrepreneurship
This is the type of entrepreneurship wherein the entrepreneur is poised to adopt successful innovations which are already in the market
Intention Basis
Build to sell
THE EVOLUTION OF ENTREPRENEURSHIP THEORY Definition of Entrepreneurship: Entrepreneurship involves not only the process that leads to the setting up of a business entity but also the expansion and development of an on going concern. The study of entrepreneurship is concerned with the entrepreneurial behavior, the dynamics of business set up and expansion and development.
THE EVOLUTION OF ENTREPRENEURSHIP THEORY Adam Smith (1776) - An entrepreneur is a person who acts as agent in transforming demand into supply.
Jean Babtiste Say (1803) - An entrepreneur is a person who shifts resources from an area of low productivity to high productivity.
Concept of Entrepreneurship
Development of Entrepreneurship Entrepreneurial Culture and Stages in the entrepreneurial Process
o o o o o o o o o Stage-I: Entrepreneurial Interest Stage-II: Generate Ideas for screening Stage-III: Venture Screening Stage-IV: Develop and refine the concept Stage-V: Determine resources required Stage-VI: Acquiring necessary financials Stage-VII: Developing business plan Stage-VIII: Implement and manage Stage-IX: Growth or Exit
Concept of Entrepreneurship
What makes a culture Entrepreneurial
o o o o Treat what people respect Help employees stay healthy Open doors to communication Build camaraderie
Development of Entrepreneurship
Key Dimensions of Entrepreneurship
Entrepreneur Economy
Venture
UNIT - II
Feasibility Analysis
Economic Feasibility Market Feasibility Financial Feasibility Technical Feasibility
The various details that emerge from the feasibility analysis and contribute to larger portion of the business plan are as follows:
Executive summary The industry and the firm Market research and analysis The economics of the business Marketing plan Design and development plan Manufacturing and operational plan Management team Overall schedule Critical Risks, Problems and Assumptions Financial Plan Appendices
Economic Feasibility
Value cost price Hidden Costs Trade offs
Cost Functions
People / Knowledge and machines Scale Vs. Scope Market and demand Risks
Marketing Feasibility
Description of the industry Current Market Analysis Competition Anticipated Future Market potential Potential Buyers and sources of Revenues Sales Projections
Financial Feasibility
Start-Up-Capital Requirements Calculating Business Start-up costs Project Start-up costs conservatively Segregate one-time start-up costs from recurring costs Never run out of cash Cash is king Know the cash balance now Do todays work today Do the work or get someone else Do not manage from the bank balance Know your six months cash balance Cash flow problems do not just happen Have cash flow projections Take care of customers
Technical Feasibility
Preparing an outline for writing your technical feasibility study Calculating material requirements Calculating labor requirements Transportation and shipping requirements Physical location of your business Technology requirements to run your business
Project Planning
A project is an organized unit dedicated to the attainment of a goal the successful completion of a development project on time, within budget, in conformance with predetermined programme specification.
Project Classification
Quantifiable and non-quantifiable projects Sectoral projects
Agricultural and allied Irrigation and Power Industry and Mining Transport and communication Social service Miscellaneous
Project Classification
Project Formulation Contents of a project report
Executive summary The industry and the firm Market research and analysis Economics of the business Marketing plan Design and development plan Manufacturing and operational plan Management team Overall schedule Critical risks Financial plan Appendices
Project Implementation
Project evaluation
There are various methods used for evaluating projects. Some of these are as:
Simple rate of return (SRR) Payback Period (PBP) Benefit Cost Ratio (BCR) Net present value (NVP) Internal Rate of Return (IRR)
Ill-structure
Problems for which there are no known algorithmic solutions are called ill-structured. A well structured problem has the following characteristics: All information relevant to the problem can be represented in an appropriate model. The model should include all feasible solutions There exists an algorithm for finding the optimal solution to the model. All data required should be economically practical to gather.
Brainstorming
Brainstorming can be effective way to generate lots of ideas on a specific issue and then determine which idea or ideas is the best solution.
Brainstorming requires a facilitator in order to guide the session. It should be energetic and openly collaborative.
Brainstorming
Step by step process of brainstorming:
Define your problem / issue Give yourself a time limit It must be written down, without any criticism Select your five best ideas best solve your problem, Criteria should start with the word should Give each idea a score (0-5 points) The idea with the highest score will best solve your problem. (Keep a record of all of your best ideas)
Brainstorming
Factors to be considered for successful brainstorming
Mixed participants Enthusiastic facilitator Well stated challenge
Brainstorming
Factors to be considered for successful brainstorming:
Mixed participants Enthusiastic facilitator Well stated challenge
Process
The process was derived from tape-recording (initially audio, later video) of thousands of meetings, analysis of the results and experiments with alternative ways of dealing with the obstacles to success in the meeting. "Success" was defined as getting a creative solution that the group was committed to implement. This history of sustained Research and Development provides a scientific foundation for the Synectics body of knowledge. Prince emphasized the importance of Creative Behaviour in reducing inhibitions and releasing the inherent creativity of everyone. He and his colleagues developed specific practices and meeting structures which help people to ensure that their constructive intentions are experienced positively by one another. The use of the Creative Behaviour tools extends the application of Synectics to many situations beyond invention sessions (particularly constructive resolution of conflict). Gordon emphasized the importance of "'metaphorical process' to make the familiar strange and the strange familiar". He expressed his central principle as: "Trust things that are alien, and alienate things that are trusted." This encourages, on the one hand, fundamental problem-analysis and, on the other hand, the alienation of the original problem through the creation of analogies. It is thus possible for new and surprising solutions to emerge. As an invention tool, Synectics invented a technique called "springboarding" for getting creative beginning ideas. For the development of beginning ideas, the method incorporates brainstorming and deepens and widens it with metaphor; it also adds an important evaluation process for Idea Development, which takes embryonic new ideas that are attractive but not yet feasible and builds them into new courses of action which have the commitment of the people who will implement them. Synectics is more demanding of the subject than brainstorming, as the steps involved mean that the process is more complicated and requires more time and effort. It is also much more rewarding because the end product is action not just ideas.
Innovation
Innovation is defined as the ability to apply creative solutions to problems or opportunities to enhance or to enrich peoples lives. Innovation could take the form of
a new good a new method of production a new market a new source of supply of raw materials carrying out of a new organization
UNIT - III
Examples
The liberalization and globalization of Indian business has seen a lot of increased activity in this field, venture based con specialized resources are able to capitalize on markets elsewhere Dr. Reddys Lab Biocon And many more..
Complexities
Controlling the market Exhausting natural resources Importance to Luxuries Trade practices Economic Development Shifting of Investment
Financial Support
Debt & Equity Funding, Tax Holidays, etc.
Skills Support
Supply of educated, qualified, trained workforce
Incubation Support
Mentoring-technical & business guidance for success & growth of ventures
Procedural Support
Simplifying the process of starting & doing business
Govt. launched the credit Guarantee Fund Scheme for small Industries on 30th August, 2000 Alleviating the problem of collateral security & impediment to flow of credit to Small Scale Industries (SSI) sector The govt. approved Credit Guarantee Fund Scheme for small industries on 19th May, 2000 Loans up to Rs. 10Lacs w/o collateral / third party guarantees The scheme is being operated by the credit Guarantee Trust Fund for small for small industries (CGTSI) set up by Govt. of India & SIDBI The trust was incorporated on 27th July, 2000 The scheme has been operationalised w.e.f. 1st January, 2001
The Govt. decided to increase the eligibility limit of loans to be guaranteed from Rs. 10 Lacs to Rs. 25 Lacs. Necessary modifications have been carried out in the indenture of the trust to enable CGTSI to guarantee loans up to Rs. 25 Lacs & to provide for counter guarantees to other institutions
SIDBI has been implementing two special schemes for women : (i) Mahila Udyam Nidhi & (ii) Mahila Vikas Nidhi
SIDBI also provides training
Small Industries Development Bank of India (SIDBI) (B) Co-ordination and Understanding
As an apex institution SIDBI makes use of the network of the banks & state level financial institutions which have retail outlets
SIDBI has signed memorandum of understanding with 18 banks & the agencies
High Contribution to domestic production Significant export earnings Low investment requirements Operational Flexibility Location wise mobility Low intensive imports Contribution towards defense production Technology-oriented industries Competitiveness in domestic and export markets
At the same time, one has to understand the limitations of SMEs, which are as follows:
Low capital Base Concentration of functions in one / two persons Inadequate exposure to international environment Inability to face impact of WTO regime Inadequate contribution towards R&D Lack of professionalism
In site of these limitations, the SMEs have made significant contribution towards technological development and exports. EMEs have been established in almost all major sectors in the Indian industry as follows:
Food Processing Agricultural Inputs Chemicals and Pharmaceuticals Engineering, Electricals, Electronics Electro-medical equipment Textiles and Garments Leather and leather goods Meat products Bio-engineering Sports goods Plastics products Computer Software, etc.
Industrial extension services Institutional support in respect of credit facilities Provision of developed sites for construction of sheds Provision of training facilities Supply of machinery on hire purchase terms Assistance for domestic marketing as well as exports Special incentive for setting up enterprises in backward areas, etc. Technical consultancy and financial assistance for technological up gradation
Technological Up gradation
Department of Science and Technology Department of Bio-technology National Research and Development Corporation Commercial Activities Promotional Activities Development and Promotion of Rural Technology Export of Technology Dissemination of Information on Technology and its and its transfer to Industry
UNIT - IV
Elements of Professionalism
Altruistic: Showing unselfish concern for welfare of others Accountability responsibility and reliability Excellence
Knowledgeable Competency to retrieve and handle information Appropriate decision making skills Competency in communication
Integrity the quality of being honest moral soundness undivided or unbroken Dutiful appreciation of the role aptitude for personal development Respect to others
VC is different from other type of financing as in following: Development Finance Seed capital Term Loan Passive equity investment support R&D funding sources
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