Entrepreneurship and Small MAM 2nd

Business Management T-204

Dr. Rahul Pratap Singh Kaurav
Asst. Professor (Marketing)
Prestige Institute of Management, Gwalior
Unit I
EntrepreneursChallenging the Unknown

Entrepreneurs
Recognize opportunities where
others see chaos or confusion
Are aggressive catalysts for
change within the marketplace
Challenge the unknown and
continuously create the future
Entrepreneurs versus
Small Business Owners: A Distinction

Small Businesses Owners

Manage their businesses by expecting stable
sales, profits, and growth
Entrepreneurs
Focus their efforts on innovation, profitability
and sustainable growth
Entrepreneurship: A Mindset

Entrepreneurship is more than the mere creation of

business:
Seeking opportunities
Taking risks beyond security
Having the tenacity to push an idea through to reality
Entrepreneurship is an integrated concept that
permeates an individuals business in an innovative
manner.
The Evolution of Entrepreneurship

In Malaysia, the
Entrepreneur is derived from the French term
entreprendre, meaning to undertake. usahawan is
used to mean
First coined by Richard Cantillon (1755) entrepreneur.
The entrepreneur is one who undertakes to organize,
manage, and assume the risks of a business.
Although no single definition of entrepreneur exists and no
one profile can represent todays entrepreneur, research is
providing an increasingly sharper focus on the subject.
A Summary Description
of Entrepreneurship

Entrepreneurship (Robert C. Ronstadt)

The dynamic process of creating incremental wealth.
This wealth is created by individuals who assume major
risks in terms of equity, time, and/or career
commitment of providing value for a product or
service.
The product or service itself may or may not be new or
unique but the entrepreneur must somehow infuse
value by securing and allocating the necessary skills
and resources.
An Integrated Definition

Entrepreneurship
A dynamic process of vision, change, and creation.
Requires an application of energy and passion towards the creation and
implementation of new ideas and creative solutions.
Essential ingredients include:
The willingness to take calculated risksin terms of time, equity, or
career.
The ability to formulate an effective venture team; the creative skill
to marshal needed resources.
The fundamental skills of building a solid business plan.
The vision to recognize opportunity where others see chaos,
The Myths of Entrepreneurship

Myth 1: Entrepreneurs Are Doers, Not Thinkers

Myth 2: Entrepreneurs Are Born, Not Made
Myth 3: Entrepreneurs Are Always Inventors
Myth 4: Entrepreneurs Are Academic and Social Misfits
Myth 5: Entrepreneurs Must Fit the Profile
Myth 6: All Entrepreneurs Need Is Money
Myth 7: All Entrepreneurs Need Is Luck
Myth 8: Ignorance Is Bliss For Entrepreneurs
Myth 9: Entrepreneurs Seek Success But Experience high Failure Rates
Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)
Entrepreneurial Schools-of-thought Approach
Macro View: External Locus of Control

The Environmental School of Thought

Considers the external factors that affect a potential
entrepreneurs lifestyle.
The Financial/Capital School of Thought
Based on the capital-seeking processthe search for seed and
growth capital.
The Displacement School of Thought
Alienation drives entrepreneurial pursuits
Political displacement (laws, policies, and regulations)
Cultural displacement (preclusion of social groups)
Micro View: Internal Locus of Control (contd)

The Entrepreneurial Trait School of Thought

Focuses on identifying traits common to successful
entrepreneurs.
Achievement, creativity, determination, and technical knowledge
The Venture Opportunity School of Thought
Focuses on the opportunity aspect of venture development
the search for idea sources, the development of concepts,
and the implementation of venture opportunities.
Corridor principle: New pathways or opportunities will arise that
Micro View (contd)

The Strategic Formulation School of Thought

Emphasizes the planning process in successful venture
development.
Ronstadts View
Strategic formulation is a leveraging of unique elements:
Unique Marketsmountain gap strategies
Unique Peoplegreat chef strategies
Unique Productsbetter widget strategies
Unique Resourceswater well strategies
Key Concepts

Entrepreneurship
A process of innovation and new-venture creation through four
major dimensionsindividual, organizational, environmental,
processthat is aided by collaborative networks in government,
education, and institutions.
Entrepreneur
A catalyst for economic change who uses purposeful searching,
careful planning, and sound judgment when carrying out the
entrepreneurial process.
Key Concepts

Entrepreneurial Management
The discipline of entrepreneurial management:
Entrepreneurship is based upon the same principles.
It matters not who or what that the entrepreneur isan
existing large institution or an individual, for-profit business
or a public-service organization, a governmental or non-
governmental institution.
The rules are much the same: things that work and those
that dont are much the same, and so are innovations and
where to look for them.
Evolutionary Definitions

Period and Opinion on Entrepreneur

Personality
17th Century-General Person bearing risks of profits (loss) in a fixed price
Concept contract with Govt.
1725: Richard Person bearing risks is different from one supplying
Cantillon capital.
1797: Beaudeau Person bearing risk, planning, supervising, organising and
owning.
1803: Jean Baptiste Separate profile of entrepreneur from profits of capital.
Say
1934: Joseph An entrepreneur is an innovator and develops untried
Schumpeter technology.
Evolutionary Definitions

Period and Opinion on Entrepreneur

Personality
1964: Peter Drucker Entrepreneur maximizes opportunities through systematic
innovations.
1975: Albert Sharpero Entrepreneur takes initiatives, organizes some socio-
economic mechanism, and accepts risk of failure.
1980: Karl Vesper Entrepreneur seen differently by economist, psychologist,
businesspersons, and politicians.
1985: Robert Hisrich Entrepreneurship is the process of creating something
different with value by devoting the necessary time and
effort, assuming the social risks and receiving the results-
rewards of monetary and personal satisfaction.
Entrepreneurship in India

Founder Year
Pre-independence period
Shiv Narayan Birla 1863
Post-independence period
Nusserwanji Tata 1868
Ramdutt Goenka 1863
Founder Year
KC Mahindra 1956 Lakshmanrao Kashipath 1902
Kirloskar
Dhirubhai Ambani 1958 Gaganbhai Mafatlal 1905
Nemnath Jain **** Karamchand Thapar 1922
Jamnalal Bajaj 1932
Gujarmal Modi 1939
Importance and Contribution of Entrepreneur

Develop new markets

Discover new sources of material
Mobilize capital resources
Need of
Introduce
entrepreneurship
New technologies,
New industries, and
development?
New product.
Create employment
Advantages of being entrepreneur

Your are your own boss and have control over your future.
Feel of decision maker not follower.
Opportunities to fully utilize your talents, skills, knowledge, and
creativity
Financial rewards (profit).
Job security (own employment).
Self-satisfaction, personal achievement, and recognition.
Disadvantages of being entrepreneur

Chance of business failure.

Time-consuming (need more hours).
Not secured and stable income
Pressure to succeed.
Financial risk and stress.
Responsibilities and sacrifices.
Characteristics of successful entrepreneur

An especially skillful person. Creator of wealth,

An innovator, Self-confident and ambitious,
Providing completeness to the Risk-bearer
factor of production, Adventurer
Decision-making person,
A man of creative personality,
A basic-plan maker,
Dynamic leader,
Innovation

Innovation is the means by which the entrepreneur either creates

new wealth-producing resources or endows existing resources with
enhanced potential for creating wealth
- Peter F. Drucker

Process of doing something new.

Process of Innovation

Transformation of creative ideas into useful application

Invention

Some new creations, which did not have any existence before.
Creation of new product,
Technology,
Theory,
Formula etc.

Invention Development of new ideas Results in new knowledge creation

The conversion of an idea or Results in new product, process or

Innovation
resources into real life application services
Creativity

Any form of any thing which has not been seen or thought
Opportunity through change

The potential for change, improvement or advantage arising from our

action in the circumstances may defined as opportunity.
Here are few types of opportunity:
gap in the market
a mismatch between supply and demand
a future possibility which can be recognised or created
a more effective or efficient business process, system or model
a new or existing technology or approach which has not yet been applied
a commodity or experience people would desire or find useful if they knew about
it.
Opportunity centered entrepreneurship
What are the Lessons? 28

1.Who sells the largest number of cameras in India?

2. Who has the biggest revenue from music business
in India?
3. Who gained the most when business of British
Airways was affected due to the 2008 recession?
Answers to the Lessons? 29

Ans 1: Samsung (whose main line of business is NOT

cameras but cell phones)
Ans 2: Airtel (which is not in music business)- by
selling caller tunes makes more money than HMV
etc
Ans 3: videoconferencing and telepresence services
of HP and Cisco.
What are the Lessons? 30

Nokia missed the Smartphone bus. Apple's I phone

and Google's Android are making life difficult for
Nokia.

But Google is not a mobile company

Nokia is a global behemoth, with 35% of the
worlds handset market.
What are the Lessons? 31

Products have vanished from the market in the past 20

years:
Black & white TVs
Fountain pens
Type writers
Alarm Clocks
Audio cassettes
And many others
What are the Lessons? 32

Lessons by the Managerial economist:

Today's competitor is obvious. Tomorrow's is not-
Think beyond conventional framework; think
beyond the obvious
Need to identify competition (present)
Need to foresee competition (Future)
Need to beat competition (Strategies)