ENTREPRENEURSHIP MANAGEMENT

1. ENTREPRENEURSHIP MANAGEMENT Prof Bharat Nadkarni

2. Entrepreneurship Management Reference Books • Entrepreneurship by Hisrich & Peters • Entrepreneurship by Rajeev Roy (Oxford Univ. Press) • Entrepreneurial Management by R K Mittal • Entrepreneurship Development – Programmes & Practices by J S Saini • Entrepreneurship – strategies and resources by Marc D Dollinger • Indian Entrepreneurship – its past and present by V Chernovskaya • Entrepreneurship Management by P N Singh & J C Saboo

3. Business Excellence Prof Bharat Nadkarni Who are the Stakeholders of Business ? Shareholders and Promoters Customers Employees Suppliers and Partners (incl Contractors, Agents etc) Government Society

4. Business Excellence Prof Bharat Nadkarni Most Admired Business “Balancing and Exceeding the Expectations of all it’s Stakeholders.” Innovation is the sole cause of profit or Success N D B

5. Entrepreneurship : Definition Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Points to note • Creating something different with value • Devoting necessary time & effort • Assuming accompanying financial, psychic and social risks • Receiving resulting rewards – Monetary, Personal satisfaction, independence

6. Entrepreneurial Traits Need for achievement High level of motivation Creative / Innovative Moderate risk taker Agility / quickness in analysing and picking up opportunities Self Confidence Excellent Leadership Qualities Good business acumen Independence of thought & action Flexible/ Ready to change Resilience Entrepreneurship Management

7. Who is an Entrepreneur “Entrepreneur”, a french word literally translated means go between. Oxford Dictionary defines it as a person who organizes a commercial undertaking involving personal financial risk. “An Entrepreneur is one who organizes and operates an enterprise for personal gain. He pays current prices for the materials consumed in the business, for the use of the land, for the personal services he employs and for the capital he requires. He contributes his own initiative, skill and ingenuity in planning, organizing and administering the enterprise. He also assumes the chance of loss and gain consequent to unforeseen and uncontrollable circumstances. The net residue of the annual receipts of the enterprise after all costs have been paid, he retains for himself.” Entrepreneurship Management

8. Decision Process for a potential entrepreneur Entrepreneurship Management Form new enterprise DesirablePossible - Cultural - Government - Family - Background - Teachers - Marketing - Peers - Financing - Role Models Change from present lifestyle - Work Environment - Disruption

9. Origin & Development Marco Polo as a Trader Thomas Edison as an Inventor Narayan Murthy / Shahnaz Huassain as Innovators J N Tata & Dhirubhai Ambani as Visionaries Venture Capital concept The function of an entrepreneur is to reform or revolutionize the pattern of production by exploiting an invention or more generally an untried technological possibility for producing a new commodity or producing an old one in a new way, opening a new source of supply or a new outlet for products by re- organizing a new industry. Entrepreneurship Management

10. Challenges Involved Person who actually starts his/ her own business, the experience is filled with enthusiasm, frustration, anxiety and hard work. There is a high failure rate due to: External Factors Inflation, recession, lack of infrastructure, corruption, economic & political uncertainty, Intense competition. Internal Factors Lack of capital, poor sales, lack of managerial ability. WHAT THEN CAUSES A PERSON TO MAKE THIS DIFFICULT DECISION? Entrepreneurship Management

11. Advantages of Entrepreneurship To an Individual • Self Employment • Employment for near & dear • Prolonged career for next generations • Innovation & Creativity • Unlimited income/ higher retained income • Freedom to use own ideas • Independence • Satisfaction

12. Advantages of Entrepreneurship To the Nation • Provides larger employment • Results in wider distribution of wealth • Mobilises local resources, skills and savings • Accelerates the pace of economic development • Stimulates innovation & efficiency. • Competition

13. Factors favouring Entrepreneurship • Growth of education – science, technology & management • Developed infrastructure facilities • Financial assistance • Training facilities • Protective and promotional policies • Globalization

14. Entrepreneurship Theories 1. 1600 : French verb – Go between or To undertake 2. 1700 : Person bearing Risks of Profit in a fixed price contract 3. 1725 : Richard Cantillon – Person bearing risks is different from capital supplier (Risk) 4. 1803 : J B Say – Shifts economic resources out of an area of lower into an area of higher productivity & greater yields (Value Addition) 5. 1934 : Joseph Schumpeter – “ Innovation is the sole cause of profit. 6. 1961 : David McClelland – Need for Achievement – N Ach factor - highly motivated, energetic, moderate risk taker.

15. Entrepreneurship Theories .... Contd. 7. 1964 : Peter Drucker – Searches for change, responds to it and exploits as opportunity. (Opportunity focused) 8. 1980 : Karl Vesper – Behaviour perceptions – Economists, Psychologists, Businessmen, Politicians, (Environment) 9. 1983 : Gifford Pinchot – Intrapreneur 10. 1985 : Robert Hisrich – Creating something different with value, devoting time and effort, assuming risks – financial, psychic and social, results – rewards, satisfaction (Leadership & Vision)

16. How entrepreneurship helps in economic development • Employment Generation • Distribution of economic power • Optimum utilisation of regional resources • Meeting the demand gap by seizing appropriate opportunity • Export potential • Regional development Entrepreneurship Management

17. Entrepreneurship Management Karl Vesper’s Theory

18. Entrepreneur to an economist One who brings resources, labor, material and other assets into combinations that make their value greater than before and also one who introduces changes, innovations and a new order. Entrepreneur to a psychologist One who is typically driven by certain forces – need to obtain or attain something, to experiment, to accomplish or perhaps to escape authority of others. Entrepreneur to a businessman One who appears as a threat and an aggressive competitor OR an ally, a source of supply, a customer or someone who creates wealth for others as well, who finds better ways to utilize resources, reduce waste and produces jobs for others. Entrepreneurship Management

19. Entrepreneurship & Leadership MCCLELLAND’S NEED THEORY OF MOTIVATION

20. MCCLELLAND’S NEED THEORY OF MOTIVATION Three basic types of motivating needs • 1] Need for achievement • Have an intense desire for success and an equally intense fear of failure • Want to be challenged • Set moderately difficult goals for themselves • Take realistic approach to life • Would analyse and assess problems and take personal responsibility of completing a job • Like specific and prompt feedback on how they are doing

21. MCCLELLAND’S NEED THEORY OF MOTIVATION • 2] need for power • People with high need for power have a great concern for exercising influence and control • They seek positions of leadership • Good conversationalists • Can be argumentative • Forceful, outspoken, hardheaded and demanding • Enjoy teaching and public speaking

22. MCCLELLAND’S NEED THEORY OF MOTIVATION • 3] need for affiliation • Derive pleasure from being loved and tend to avoid the pain of being rejected by a social group • Concerned with maintaining pleasant social relationships • Enjoy sense of intimacy and understanding • Ready to console and help others in trouble

23. MCCLELLAND’S NEED THEORY OF MOTIVATION • How it applies to managers • Entrepreneurs : showed very high need for achievement ; fairly high need for power ; low in their need for affiliation • In small companies/ Ventures : president/ entrepreneur has a very high achievement motivation • In large companies : • CEO/ Entrepreneur tend to be average in achievement but stronger in power and affiliation • Entrepreneurs: rated higher in achievement motivation

24. Entrepreneurship Management Innovation and Entrepreneurship Prof Bharat Nadkarni

25. Entrepreneurship Management Breaking of the Circular Flow Schumpeter’s Model Profits caused by a particular innovation tends to be competed away as other imitate and adapt that. But if the entrepreneur comes out with another innovation at that time when the favourable effects of the former innovation are dying out, he will make profits again. Therefore, as long as innovation exist, profits continue to arise out of them. According to Schumpeter, Innovation is the sole cause of Profit.

26. Entrepreneurship Management Thank You