entrepreneurship contents part 1 : the entrepreneurial perspective 1.entrepreneurship and the...

ENTREPRENEURSHIPContents Part 1 : The Entrepreneurial Perspective1. Entrepreneurship and the Entrepreneurial Mindset

2. Entrepreneurial Strategy : Generating & Exploiting New Entries

Cases / Exercises

Part 2 : From Idea to the Opportunity3. Creativity and the Business Idea

4. Identifying and Analyzing Domestic and International Opportunities

5. Legal issues

Cases / Exercises

Part 3 : From the Opportunity to the Business Plan6. The Business Plan : How to write a Business Plan its Components

Cases / Exercises

Part 3 : Socialization Process7. Negotiation skills

8. Networking – How to build networks

Part 4 : From the Business Plan to Funding the venture9. Sources of Capital

10. Informal Risk Capital, Venture Capital, and Going Public

Cases / Exercises

Part 5 : From Funding the Venture to Launching & Growing11. Strategies for Growth and Managing the Implications

12. Accessing Resources for Growth from External Sources

Cases / Exercises

ENTREPRENEURSHIP

Chapter 1

Entrepreneurship and the Entrepreneurial Mind-Set


Entrepreneurship - Define:

Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort; assuming the accompanying financial, psychic and social risks and uncertainties; and receiving the resulting rewards of monetary and personal satisfaction.


Entrepreneurship - Define: This definition stresses four basic aspects of being an entrepreneur.

1. First, entrepreneurship involves the creation process – creating something new of value. The creation has to have value to be entrepreneur and value to the audience for which it is developed. This audience can be :

• Market of organizational buyers for business innovation, • The hospital’s administration for a new admitting procedure

and software,• Prospective students for a new course or even college of

entrepreneurship, or • The constituency for a new service provided by a nonprofit

agency.



2. Second, entrepreneurship requires the devotion of the necessary time and effort. Only those going through the entrepreneurial process appreciate the significant amount of time and effort it takes to create something new and make it operational.

As one new entrepreneur so succinctly stated,

“While I may have worked many hours in the office while I was in industry, as an entrepreneur I never stop thinking about the business.”



3. The third part of the definition involves the rewards of being an entrepreneur. The most important of these rewards is independence, followed by personal satisfaction, but monetary reward also comes into play. For some entrepreneurs, money becomes the indicator of the degree of success achieved.



4. Assuming the necessary risks and uncertainties is the final aspect of entrepreneurship. Because action takes place over time, and the future is unknowable, action is inherently uncertain. This uncertainty is further enhanced by the novelty intrinsic to entrepreneurial action, such as the creation of new products, new services, and new ventures.

Therefore, entrepreneurs respond to, and create, change through their entrepreneurial actions, where entrepreneurial action refers to behavior in response to a judgmental decision under uncertainty about a possible opportunity for profit.


The Entrepreneurial Process: The process of pursuing a new venture is embodied in the entrepreneurial process.

The process has four distinct phases :

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.


The Entrepreneurial Process: 1. Identification and evaluation of the opportunity :• Opportunity assessment; • Creation and length of opportunity;• Real and perceived value of opportunity;• Risks and returns of opportunity;• Opportunity vs. personal skills and goals;• Competitive environment


The Entrepreneurial Process: 2. Develop Business Plan :• Title Page;• Table of contents;• Executive summary;• Major section : Description of business; Description of industry; Technology Plan; Marketing plan; Financial plan; Production plan; Organisation plan; Operational plan; Summary;• Appendixes (Exhibits)


The Entrepreneurial Process: 3. Resources Required :

• Determine resources needed;• Determine existing resources;• Identify resource gaps and available suppliers• Develop access to needed resources.


The Entrepreneurial Process: 4. Manage the Enterprise :

• Develop Management style;• Understand key variables for success;• Identify problems and potential problems;• Implement control systems;• Develop growth strategy


Entrepreneurial Thinking Process: Entrepreneurs think differently than nonentrepreneurs.

Entrepreneurs must often make decisions in highly uncertain

environments where the stake are high, time pressures are

immense, and there is considerable emotional investment.

Given the entrepreneur’s decision-making environment, he

or she must sometimes:

1. Effectuate;

2. Be Cognitively adaptable; and

3. Learn from failure.

We now discuss thought process behind each of these

requirements.


Entrepreneurial Thinking Process:

1. Effectuation :

Causal process : A process that starts with a desired

outcome and focuses on the means to generate that

outcome.

Effectuation process : A process that start with what

one has (who they are, what they know, and whom they

know) and selects among possible outcomes.


Entrepreneurial Thinking Process: Prof. Saras is a great Cook, so it is not surprising that

her ex. of these thought processes revolve around

cooking.Ex : Imagine a Chef assigned the task of cooking dinner. There

are two ways the task can be organized. In the first, the host or client picks out a menu in advance. All the Chef needs to do is list the ingredients needed, shop for them, and then actually cook the meal. This is a process of causation. It begins with a given menu and focuses on selecting between effective ways to prepare the meal.


Entrepreneurial Thinking Process: Ex : In the second case, the host asks the Chef to look through

the cupboards in the kitchen for possible ingredients and utensils and then cook a meal. Here, the chef has to imagine possible menus based on the given ingredients and utensils, select the menu, and then prepare the meal. This is a process of effectuation. It begins with given ingredients and utensils and focuses on preparing one of many possible desirable meals with them.


Entrepreneurial Thinking Process: In a nutshell, the process of effectuation process allows the entrepreneur to create one or more several possible effects irrespective of the generalized end goal with which she started. The process not only enables the realization of several possible effects (although generally one or only a few are actually realized in the implementation), but it also allows a decision maker to change his or her goals and even to shape and construct them over time, making use of contingencies as they arise.

This entrepreneurial mind-set involves the ability to rapidly sense, act, and mobilize, even under uncertain conditions.

In developing an entrepreneurial mind-set, individuals must attempt to make sense of opportunities in the context of changing goals.

Ex : Effective entrepreneurs are thought to continuously “rethink current strategic actions, organization structure, communication systems, corporate culture, asset deployment, investment strategies, in short every aspect of a firm’s operation and long-term health.”


Cognitive AdaptabilityDescribes the extent to which entrepreneurs are dynamic, flexible, self-regulating, and engaged in the process of generating multiple decision frameworks focused on sensing and processing changes in their environments and then acting on them.

Specifically, metacognition describes a higher-order cognitive process that serves to organize what individuals know and recognize about themselves, tasks, situations, and their environments to promote effective and adaptable cognitive functioning in the face of feedback from complex and dynamic environments.


Cognitive AdaptabilityHow cognitively adaptable are you?

To answer this question, we should ask ourselves a series of questions that relate to (1) comprehension, (2) connection, (3) strategy, and (4) reflection.

1. Comprehension questions are designed to increase entrepreneurs’ understanding of the nature of the environment. Understanding arises from recognition that a problem or opportunity exists, the nature of that situation, and its implications. In general, the questions that stimulate individuals to think about comprehension include: What is the problem all about? What is the question/ What are the meanings of the key concepts? What are the key elements to effectively pursuing this opportunity?




2. Connection tasks are designed to stimulate entrepreneurs to think about the current situation in terms of similarities to and differences from situations previously faced and solved. Generally, connection tasks focus on questions like : How is this problem similar to problems I have already solved? Why? How is this problem different from what I have already solved? Why?




3. Strategic tasks are designed to stimulate entrepreneurs to think about which strategies are appropriate for solving the problems (and why) or pursuing the opportunity (and how). These tasks prompt them to think about the what, why, and how of their approach to the situation. Generally, these questions include : What strategy/principle can I use to solve this problem? Why is the strategy/principle the most appropriate one? How can I organize the information to solve the problem? How can I implement the plan?




4. Reflection tasks are designed to stimulate entrepreneurs to think about their understanding and feelings as they progress through the entrepreneurial process. Generally, these questions include : What am I doing? Does it make sense? What difficulties am I facing? How do I feel? How can I verify the solution?


10-deadly mistakes of Entrepreneurship and how to avoid them1. Management mistakes ; In most small businesses, poor

management is the primary cause of business failure. Sometimes, the manger of a small business does not have the capacity to operate it successfully. The owner lacks the leadership ability, sound judgement, and knowledge necessary to make the business work.

2. Lack of experience : Small business managers need to have experience in the field they want to enter. For example, if an entrepreneur wants to open a retain clothing business, he or she should first work in a retail clothing store. This will provide practical exp. As well as knowledge about the nature of the business.


10-deadly mistakes of Entrepreneurship and how to avoid them3. Poor financial control : Sound management is the key to a

small company’s success, and effective managers realize that any successful business venture requires proper financial control. Business success also requires having a sufficient amount of capital on hand at start-up. Most entrepreneurs believe that profit is what matters most in a new venture, but cash is the most important financial resource a company owns.

4. Weak marketing efforts : Sometimes entrepreneurs make the classic “Field of Dreams mistake.” Building a growing base of customers require a sustained, creative marketing effort. Keeping them coming back requires providing them with value, quality, convenience, service, and fun – and doing it all quickly.


10-deadly mistakes of Entrepreneurship and how to avoid them5. Failure to develop a Strategic Plan : Too many small business

managers neglect the process of strategic planning because they think that it is something that benefits only large companies. Failure to plan, however, usually results in failure to survive. Without a clearly defined strategy, a business has no sustainable basis for creating and maintaining a competitive edge in the marketplace.

6. Uncontrolled growth : Growth is a natural, healthy, and desirable part of any business enterprise, but it must be planned and controlled. Management expert Peter Drucker says that start-up companies can expect to outgrow their capital bases each time sales increase 40 to 50 percent. As the business increases in size and complexity, problems increase in magnitude, and the entrepreneur must learn to deal with them.


10-deadly mistakes of Entrepreneurship and how to avoid them7. Improper inventory control : Normally, the largest

investment a small business owner makes is in inventory, yet inventory control is one of the most neglected managerial responsibilities. Insufficient inventory levels result in shortages and stockouts, causing customers to become disillusioned and leave.

8. Poor location : For any business choosing the right location is partly an art and partly a science. Too often, business locations are selected without proper study, investigation and planning. Especially for retailers, the lifeblood of the business – sales – is influenced heavily by choice of location.


10-deadly mistakes of Entrepreneurship and how to avoid them9. Incorrect pricing : Establishing prices that will generate the

necessary profits means that business owners must understand how much it costs to make, market, and deliver their products and services. The first step in establishing accurate price is to know what a product or service costs to make or to provide. Then, business owners can establish prices that reflect the image they want to create for their companies, always, of course, with an eye on the competition.

10. Inability to make the “Entrepreneurial transition.” Making it over the “entrepreneurial start-up hump” is no guarantee of business success. After the start-up, growth usually requires a radically different style of management, one that entrepreneurs are not necessarily good at. Growth requires entrepreneurs to delegate authority and to relinquish hands-on control of daily operations, something many entrepreneurs simply cannot do.


Ethics and Social Responsibility of EntrepreneursEthics refers to the “study of whatever is right and good for humans.” business ethics concerns itself with the investigation of business practices in light of human values.

A central question in business ethics is, “For whose benefit and at whose expense should be firm be managed?” In addressing this question we focus on means of ensuring that resources are deployed fairly between the firm and its stakeholders – the people who have a vested interest in the firm, including employees, customers, suppliers, and society itself.

Entrepreneurial process acts as a mechanism to ensure a fair and efficient system for redeploying the resources of a “victimized” stakeholder to a use where value supplied and received is equilibrated.


Role of Entrepreneurship in Economic DevelopmentIt involves more than just increasing per capita output and income; it involves initiating and constituting change in the structure of business and society. This change is accompanied by growth and increased output, which allows more wealth to be divided by the various participants. What in an area facilitates the needed change and development?

One theory of economic growth depicts innovation as the key, not only in developing new products (or services) for the market but also in stimulating investment interest in the new ventures being created. This new investment works on both the demand and the supply sides of the growth equation.

entrepreneurship contents part 1 : the entrepreneurial perspective 1.entrepreneurship and the...

Documents