2EntrepreneurThe word "entrepreneur" is derived from a French root ‘entreprendre’, meaning, "to undertake” and is commonly used to describe an individual who organizes and operates a business or businesses, taking on financial risk to do so.The term "entrepreneur" seems to have been introduced into economic theory by Cantillon (1755)
3Richard Cantillon : An entrepreneur is a person who pays a certain price for a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise.
4An entrepreneur is a person who starts an enterprise An entrepreneur is a person who starts an enterprise. He searches for change and responds to it.Entrepreneur is someone who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it.
5Entrepreneurs use personal initiative, and engage in calculated risk-taking, to create new business ventures by raising resources to apply innovative new ideas that solve problems, meet challenges, or satisfy the needs of a clearly defined market."
6E: xamine needs, wants, and problems to see how they can improve the way needs and wants are met and problems overcome.N: arrow the possible opportunities to one specific "best" opportunity.T: hink of innovative ideas and narrow them to the "best" idea.R: esearch the opportunity and idea thoroughly.E: nlist the best sources of advice and assistance that they can find.
7P: lan their ventures and look for possible problems that might arise. R: ank the risks and the possible rewards.E: valuate the risks and possible rewards and make their decision to act or not to act.N: ever hang on to an idea, no matter how much they may love it, if research shows it won't work.E: mploy the resources necessary for the venture to succeed.U: nderstand that they will have to work long and hard to make their venture succeed.R: ealize a sense of accomplishment from their successful ventures and learn from their failures to help them achieve success in the future.
8Four aspects of being an entrepreneur today Involves creation process.Requires devotion of time and effort.Involves rewards of being an entrepreneur.Requires assumption of necessary risks
9Characteristics of Entrepreneur be passionate about achieving their goalshave a spirit of adventure (in fact, the word "adventure" is derived from the Latin word meaning "to venture")have a strong need to achieve and seek personal accomplishmentbe self-confident and self-reliantbe goal-orientedbe innovative, creative, and versatilebe persistentbe hardworking and energetichave a positive attitudebe willing to take initiativehave a strong sense of commitment
10EntrepreneurshipEntrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise.Entrepreneurship is a creative activity. It is the act and art of being an entrepreneur to transform innovations into economic goods.It is a purposeful activity of an individual or group of individual undertaken to initiate and maintain an enterprise by production and distribution of economics goods and services to generate profit.
11An enterprise is the business organization that is formed and which provides goods and services, creates jobs, contributes to national income, exports and over all economic development.
13HistoryMiddle Ages The term entrepreneur was used to describe a person who managed large production projects This person did not take any risks, but managed the project with the resources provided A typical entrepreneur was the cleric who managed architectural projects.
1417th Century By the 17th century the entrepreneur was a person who entered into a contract with the government to perform a service Richard Cantillon, a noted economist of the 1700s, developed early theories of the entrepreneur and is regarded as the founder of the term. He viewed the entrepreneur as a risk taker who “buys at certain price and sells at an uncertain price, therefore operating at a risk.”
1518th Century. In the 18th century the entrepreneur was distinguished from the capital provider. 19th and 20th Centuries.The entrepreneur “contributes his own initiative, skill and perform the functions of planning, organizing and administering the enterprise assuming the chance of loss and gain.” In the middle of the 20th century, the entrepreneur was described as an innovator. Innovation, the act of introducing something new, is one of the most difficult tasks for the entrepreneur.
18Individual Factors Desire to do something Technical Background No. of years of experienceOccupational background-Educational background-Parental backgroundSometimes children continue their family business and make some changes in the existing business in the form of some new technology, new process, new product etc. they are called second generation entrepreneur.
19Political FactorsThe extent and process of government direct or indirect intervention and influence on businesses in an economy.Political factors includetax policy, labour law, environmental law, trade restrictions etc.Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods).Furthermore, governments have great influence on the health, education, and infrastructure of a nation.
20Economic FactorsLabour: Availability of quality rather than quantity of labour. Entrepreneurship is encouraged if there is a mobile and flexible labour force. Capital: Adequate sources of capital Market: Understanding of latest market trends and market techniques. The size and composition of market both influence entrepreneurship Raw material: Adequate supply of raw material
21Social FactorsCaste Factor : There are certain cultural practices and values in every society which influence the’ actions of individuals. It has also defined limits to the social mobility of individuals.Attitude of the Society: Certain societies encourage innovations and appreciate entrepreneurs’ actions and rewards like profits.Certain others do not tolerate changes and in such circumstances, entrepreneurship cannot take root and grow.Similarly, some societies have an inherent dislike for any money-making activity
22Family background : This factor includes size of family, type of family and economic status of family.
23Technological Factors Research and Development (R&D) activity, automation, technology incentives and the rate of technological change.They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions.Technological shifts can affect costs, quality, and stimulate further invention, innovation and competition.
24Technology is the art of converting the natural resources into goods and services that are more beneficial to the society.Due to technological development new products, new production process, new raw material ,new researches are encouraged for modernization.
25Legal FactorsIncluded in this component are discrimination law, consumer law, antitrust law, employment law, and health and safety law.These factors can affect how a company operates, its costs, and the demand for its products.
26Ecological FactorsThese include environmental aspects such as weather, climate, and climate change, which may affect industries like tourism, farming, and insurance.Growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.
27MotivationThe word Motivation has been derived from the word “Motive” .Motive may be defined as an inner state of our mind that moves or activates or energise and directs our behaviour towards our goal.Motivation is a drive to achieve a target.Motives are the expressions of a person’s goal or needs.They give direction to human behaviour to achieve goals or fulfil needs.
28Motivating Factors Internal Factors Desire to do Something Educational BackgroundExperienceExternal FactorsGovernment Assistance and SupportAvailability of Raw materialEncouragement from big business housesPromising demand for the product.
29Other Factors Responsible for Emergence of Entrepreneurship Background FactorsEducation ,Training and ExperienceFamily ,Role models and association with similar type of individualsFinancial Conditions
30Economic FactorsSupportive Government PoliciesAvailability of financial assistance from various funding bodiesAncillary Support: Support from Suppliers , Distributors , Retailers etc.Availability of Technical factors like premises , electricity, LabourRewardRecognisitionSocial Status
32Entrepreneurial Motivation McClelland says that, regardless of our gender, culture, or age, we all have three motivating drivers, and one of these will be our dominant motivating driver. This dominant motivator is largely dependent on our culture and life experiences.The three motivators are achievement, affiliation, and power. People will have different characteristics depending on their dominant motivator. These characteristics are as follows:
33Achievement: Has a strong need to set and accomplish challenging goals Achievement: Has a strong need to set and accomplish challenging goals. Need to accomplish something with own efforts.Takes calculated risks to accomplish their goals.Likes to receive regular feedback on their progress and achievements.Often likes to work alone.Achievers need regular feedback in order to monitor the progress of their achievement
34Affiliation:“a tendency of the people to conform to the wishes and norms of those whom they value.”Need to establish and maintain friendly and warm relations with others.Wants to belong to the group.Wants to be liked, and will often go along with whatever the rest of the group wants to do.Favors collaboration over competition.Doesn't like high risk or uncertainty.
35Power Wants to control and influence others. Likes to win arguments. Enjoys competition and winning.Enjoys status and recognition.Those with a strong power motivator are often divided into two groups: personal and institutional. People with a personal power drive want to control others, while people with an institutional power drive like to organize the efforts of a team to further the company's goals. Managers with a need of high institutional power tend to be more desirable than the managers with a high need of personal power.
36According to McClelland theory of needs, entrepreneurs would generally labelled as individuals with high need for achievement, moderate need for power and low need for affiliation.
38Maslow’s Need Hierarchy Theory Physiological Need-Basic Needs to human life that include food , clothing , shelter , water etc.Safety and Security Needs-Economic or financial security and Safety from physical danger.Social Needs-These needs refer to belongingness ,to be recognised and accepted by others.Esteem Needs-Self confidence, achievement, competence , knowledge and independence.Self Actualisation: Self fulfilment Need
39Barriers to Entrepreneurial ENVIORNMENTAL BARRIERSRaw materialLabourMachineryLand and BuildingInfrastructure RequirementsFinancial BarriersPERSONAL BARRIERS:These barriers are caused by emotional blocks of an individual.Lack of ConfidenceLack of dependability on othersLack of MotivationLack of patienceInability to DreamSense of embarrassmentSOCIETAL BARRIERSPressure from communityPressure from FamilyPressure from peer group
40Classification of Entrepreneur Classification of Entrepreneurs on the basis ofType of businessUse of TechnologyMotivationGrowthStages in DevelopmentOthers
41Type of businessBusiness entrepreneur: Convert ideas into reality; deal with both manufacturing and trading aspect of business (Small trading and manufacturing business)Trading entrepreneur: Trading means buying the finished product from the producer and selling off to the customer directly or through a retailer.He has to identify potential market, create demand through extensive advertisement of his product and thus inspire people to buy his product.Industrial entrepreneur: Undertakes manufacturing activities only; new product development etc (textile, electronics, etc)Corporate entrepreneur: Interested in management part of organisation; exceptional organising, coordinating skills to manage a corporate undertaking (Ambani, Tata families)Agricultural entrepreneur: Production and marketing of agricultural inputs and outputs (Dairy, horticulture, forestry)
42Use of TechnologyTechnical entrepreneur: Production oriented, possesses innovative skills in manufacturing, quality control etc.Non technical entrepreneur: Develops marketing, distribution facilities and strategiesProfessional entrepreneur: Uses the proceeds from sale of one business to start another one. Brimming with ideas to start new ventures
43MotivationPure entrepreneur: Pure entrepreneur is one who may or may not possess an aptitude for entrepreneurship but is tempted by the monetary rewards or profits to be earned from the business venture. He is status-conscious and wants recognition.Induced entrepreneur: Incentives, concessions, benefits offered by government for entrepreneurs motivates him.Most of the entrepreneurs who enter into business are induced entrepreneur as various kinds of financial, technical and managerial facilities are provided by the government to promote entrepreneurship.Motivated entrepreneur: Sense of achievement and fulfillment motivate himSpontaneous entrepreneur: Born entrepreneurs with inborn traits of confidence, vision, initiative. These entrepreneurs start their business out of their natural talents.
44GrowthGrowth entrepreneur: One who enters a sector with a high growth rate; is a positive thinker.Super growth entrepreneur: One who enters a business and shows a quick, steep and upward growth curve in terms of liquidity of funds, profitability.Stages in DevelopmentFirst generation entrepreneur: Innovator, risk taker, among the firsts in family to enter businessModern entrepreneur: One who undertakes those ventures which go well along with the changing demand and adapt to change and dynamic marketClassical entrepreneur: He is stereotype entrepreneur whose aim is to maximize his economic returns at a level consistent with survival of the firm with or without the element of growth.
45Others Area- Rural and Urban entrepreneur Gender/Age- Men and Women entrepreneurScale- Small and Large scale entrepreneur
46Theories of Entrepreneurship Early Theories of EntrepreneurshipRichard Cantillon ( ) was the first of the major economic thinkers to define the entrepreneur as an agent who buys means of production at certain prices to combine them into a new product. He classified economic agents into landowners, hirelings, and entrepreneurs, and considered the entrepreneur as the most active among these three agents, connecting the producers with customers.Jean Baptise Say ( ) improved Cantillion’s definition by adding that the entrepreneur brings people together to build a productive item.
47Frank Knight's Risk Bearing Theory Frank Knight ( ) first introduced the dimension of risk-taking as a central characteristic of entrepreneurship. He adopts the theory of early economists such as Richard Cantillon and J B Say, and adds the dimension of risk-taking.He points out that entrepreneurs are a specialized group of persons who bears risk and deal with uncertainity.This theory considers uncertainty as a factor of production, and holds the main function of the entrepreneur as acting in anticipation of future events.The entrepreneur earns profit as a reward for taking such risks.
48Alfred Marshall’s Theory of Entrepreneurship Alfred Marshall in his Principles of Economics (1890) held land, labor, capital, and organization as the four factors of production, and considered entrepreneurship as the driving factor that brings these four factors together.The characteristics of a successful entrepreneur include:thorough understanding of the industrygood leadership skillsforesight on demand and supply changes and the willingness to act on such risky foresightsSuccess of an entrepreneur however depends not on possession of these skills, but on the economic situations in which they attempt their endeavors.Many economists have modified Marshall’s theory to consider the entrepreneur as the fourth factor itself instead of organization, and which coordinates the other three factors.
49Sociological TheoryThe sociological theory entrepreneurship holds social cultures as the driving force of entrepreneurship.The entrepreneur is a role performer according to the role expectations by the society. such role expectations are based on religious beliefs, taboos, and customs.
50Mark Casson's Economic Theory Mark Casson (1945-) holds that entrepreneurship is a result of favourable economic conditions.In his book "Entrepreneurship, an Economic theory" he states the demand for entrepreneurship arising from the demand for change.Economic factors that encourage or discourage entrepreneurship include:taxation policyindustrial policyeasy availability of raw materialseasy access to finance on favorable termsaccess to information about market conditionsavailability of technology and infrastructuremarketing opportunities
51Joseph Schumpeter’s Innovation Theory Joseph Schumpeter’s innovation theory of entrepreneurship (1949) holds an entrepreneur as one having three major characteristics: innovation, foresight, and creativity.Entrepreneurship takes place when the entrepreneurcreates a new productintroduces a new way to make a productdiscovers a new market for a productfinds a new source of raw materialfinds new way of making things or organizationSchumpeter’s innovation theory however ignores the entrepreneur’s risk taking ability and organizational skills, and place undue importance on innovation.This theory applies to large-scale businesses, but economic conditions force small entrepreneurs to imitate rather than innovate.
52Leibenstein’s Theory of X-Efficiency Harvey Leibenstein ( ) consider entrepreneur as gap- fillers.X-Efficiency is the degree of inefficiency in the use of resources. It measures the extent to which the firm fails to realize its productive potential.Gap Filling :If not all factors are marketed or if there are imperfections in markets , the entrepreneur has to fill the gap.The three traits of entrepreneurship include:recognizing market trendsdevelop new goods or processes in demands but not in supplydetermining profitable activitiesEntrepreneurs have the special ability to connect different markets and make up for market failures and deficiencies.
53McClelland’s Theory of Achievement Motivation McClellands Theory of Achievement Motivation hold that people have three motives for accomplishing things: the need for achievement, need for affiliation, and need for power. Need for achievement and need for power drive entrepreneurship.David McClelland ( ) considers entrepreneurs as people who do things in a better way and makes decisions in times of uncertainty. The dream to achieve big things overpowers monetary or other external incentives.McClelland’s experiment reveled that traditional beliefs do not inhibit an entrepreneur, and that it is possible to internalize the motivation required for achievement orientation through training.
54Peter Drucker Theory of Entrepreneurship Peter Drucker ( ) defines entrepreneur as one who always searches for change, responds to it and exploits it as an opportunity.Innovation is the specific tool of entrepreneurs ,the means by which they exploit changes as an opportunity for a different business or a different service.According to him entrepreneurship involves increase in value or satisfaction to the customer from the resource creation of new values combination of existing materials or resources in a new productive combination.
55Concept of Entrepreneurship EnterpriseEntrepreneurshipEntrepreneurObjectPersonProcess of Action
56EntrepreneurshipEntrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise.Entrepreneurship is a dynamic process of vision, change, and creation. It requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions.
57A.H. Cole “Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or earn profit by production or distribution of economic goods andservices”.Entrepreneurship is the act of being an entrepreneur.
59Nature and Characteristics of Entrepreneurship 1.Innovation : The process of commercialising an invention is innovation. a) new products ; b) new methods of production ; c) new markets ; d) new sources of raw material e)New source of capital 2.Motivation : Motivation comes from the word ‘motive’ (or goal). It means the urge in an individual to achieve a particular goal
603. Risk Taking : Risk-taking implies taking decisions under conditions where the reward on a certain action is known, but the occurrence of the event is uncertain. 4.Organisation Building: It means the ability to ‘multiply oneself by effectively delegating responsibility to others. Entrepreneurs are good leaders and excellent administrator.
615. Managerial-Skills and Leadership: Performance of management functions using different managerial skills.6.Creative and purposeful activity: Entrepreneurship is a creative response to the changing environment.
63Primary MotivesTime OrientationAttentionEntrepreneurWants freedom, goal oriented.Self-reliant, and self-motivated.End goals of 5-10 year growth of business.Primarily on technology and market place.ManagerWant promotion and traditional corporate rewards. Power-motivated.Respond to quotas and Budgets, weekly,monthly, quarterly,horizons, the next promotion or transfer.Primarily on theevents inside corporation.
64Role of Entrepreneurship in Economic Growth Rate of economic progress of the country depend upon the rate of innovations which inturn depend upon the distribution of entrepreneurial talent in the population.Entrepreneur initiate and sustain the process of economic development in following waysCapital formationImprovement in per capita incomeGeneration of EmploymentBalanced regional developmentImprovement in living standardsEconomic IndependenceBackward and Forward linkages
65Capital Formation: Transfer of savings from individuals or households to the business sector; directly through investments or indirectly through bank deposits which are loaned out to firms.Capital formation facilitates infrastructure development, which is considered a vital tool for development and growth of any economy. It helps to exploit and utilise internal resources within a country for production or manufacturing which leads to self sufficiency
66Improvement in per Capita Income: Entrepreneurs locate and exploit opportunities by converting the idle resources into national income and wealth in the form of goods and services.Generation of Employment : Entrepreneurs generate employment directly(self employment) or indirectly by setting up industries and offering jobs to many.
67Balanced Regional Development: Entrepreneurs setup industries in backward areas to avail the various concessions and subsidies offered by state and central govt
68Improvement in living Standards: industries setup by an entrepreneur remove scarcity of essential commodities. Production of goods on mass scale and manufacture of handicrafts in the small scale sector to improve the standard of life of a common man.Economic Independence: Industrialist help to manufacture indigenous substitutes of imported products thereby reducing dependence on foreign countries. Business also export goods and services on a large scale and earn the scarce foreign exchange for the country.
69Backward linkages and Forward linkages: An entrepreneur initiate change which has chain reaction.
70Reasons for Entrepreneurship Development Increase in national production and productivity in different sectors : Indian entrepreneurs should work to increase the national production in primary, secondary and tertiary sectors. They should work to increase employment. They must be able to generate wealth from both national and international markets. They should produce such goods and services which can substitute the imports. They should give more effort for increasing export of goods and services.
71 Balanced regional development : Industrial setup in urban and semi-urban areas to the migration of people from rural areas to big cities which has created pressure on the Government to provide housing and other facilities to the people.In order to reduce this imbalance, Government has provided facilities to encourage entrepreneurs to setup new ventures in rural areas.
72Re-investment of profit : The objective of re- investment of profit for the betterment of the productivity and welfare of the community.Decentralization of economic power : The main drawback of large scale enterprises is the centralisation of economic power. In order to achieve equal distribution of wealth and balanced economic growth, the Government has targeted to develop competent entrepreneurs who can setup the small scale enterprises. This will help in the dispersal of wealth.
73Solving the problem of unemployment and under- employment : In large scale industries, the problem of unemployment and underemployment is more. It is so due to lack of capital and increase in labour force. The highly educated and technically experienced peoples get dissatisfied and frustrated with their job. In order to solve this socio-economic problem of India, Government has taken step towards the development of such programmes. Besides setting up of large scale industries, small scale industries are encouraged to setup, which can provide large number of employment with the same amount capital investment, compared to the large scale industries.
74Harnessing youth vigour : When government cannot provide work to the educated and highly qualified youths, to earn their livelihood, they turn up to violent activities. In order to reduce their frustration, anger and disappointment, the development of entrepreneurs is necessary in India. They provide self-employment work to the youth, to earn their living. Thus, they are diverted from destructive activities by entrepreneurial motivation to work for the country.
75Intra-preneurshipIntra-preneurship is defined as entrepreneurship within an existing business set– up.Intra-preneurship is corporate entrepreneurship.When a corporation indulges in entrepreneurial activities, like diversification into new businesses, it is called intra-preneurship.Intra-preneur is a manager who focuses on innovation and creativity; who brainstorms, dreams and puts ideas into profitable venture by operating within the organisational environment.It gives managers the freedom to try new ideas by employing firm’s resources in a unique way.
76CHARACTERISTICS OF AN INTRAPRENEUR The major difference being that an entrepreneur risks his own money where as an intrapreneur works with his employer’s money. Thus, the risk level of an intrapreneur is considerably reduced.Vision –An Intra-preneur has ability to visualize from idea to implementation. Motivation – Intra-preneur is generally self- motivated, but expect corporation reward and recognition.Orientation – Intra-preneur is achievement oriented.Risk Bearer– Intra-preneurs are moderate risk takers since risk acceptance depends on their skills.
77EDP:Entrepreneur Development programme A programme designed to help an individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entreneurial role effectively.EDP givesGeneral introduction to EntrepreneurshipMotivation TrainingManagement SkillsSupport System and ProceduresFundamentals of Project Feasibility Study
78EDPThe process of enhancing entrepreneurial skills and knowledge through structured training and institution building programmes.ED focuses on the individual who wishes to start or expand a business.
79EDP is primarily concerned with developing and motivating entrepreneurial talent and growing him to be an effective entrepreneur.Objectives of EDPTo formulate projectTo select Project/ProductTo analysis the environment.To acquire the basic managerial skillsTo understand the process and procedure of setting up of enterprise.Enable to communicate clearly and effectively.Enable to take decisions.
80It will give general introduction to entrepreneurship. It will afford motivational training.It will increase managerial skill of the entrepreneur,It makes entrepreneur to have expert knowledge on various support systems and procedure.It will give fundamental idea on project feasibility study.It will encourage plant visit to afford practical knowledge to entrepreneurs.
81Phases of EDP Pre-training phase Training phase Follow-up phase Pre-training phase consists of all activities and preparation to launch training programme.Pre-training phase of EDP consists of the following activities :Selection of entrepreneurs for the training programme.Arrangements of infrastructure are for the programme like selection of place of training.Deciding guest faculty for the programme from education industry and banks.Taking necessary steps for inauguration of programme.Formation of selection committee to select trainees from the programme.Making provision with regard to publicity and campaigning for the programme.
822. Training Phase:The primary objective of training programme is to develop motivation and skill or competency amongst the potential entrepreneurs.Impart both theoretical and practical knowledge to various trainees. The training phase of EDP will be so designed that it will answer the following questions:(a) Whether the attitude of the entrepreneur has been tuned towards the proposed project or no.(b) Whether the trainee has been motivated to accept entrepreneurship as a career.(c) How the trainee behaves like an entrepreneur.(d) Whether the trainee has sufficient knowledge on resources and technology or not.(e) What kind of entrepreneurial traits he lacks and what steps should be taken to set it.
843. Follow-up Phase:Follow up phase of EDP has been termed as post-training phase. The ultimate objective is to develop competent entrepreneurs.Post-training phase is a review phase of training programme. It consists of reviewing of work in the following manner:Assessment to judge how far the objectives of the programme have been achieved.Monitoring and follow up of earlier phases reveals drawbacks in the earlier phases and suggests guidelines for framing the future policy.Infrastructural support, Counselling and assistance in establishing new enterprise and in developing the existing units can be reviewed.
85Factors Influencing Entrepreneurial Mobility EDUCATION Education plays an important role in influencing one’s thinking and understanding horizons.An educated person can also easily adjust with the changed environment.
86Experience: An entrepreneur’s past experience in business and industry also increases his/her propensity to move.An experienced entrepreneur better perceives the available opportunities, better analyses his/her strengths and weaknesses.
87AVAILABILITY OF FACILITIES Entrepreneurs tend to move from areas with no or less facilities to the areas with more and better facilities.For example : Heavy concentration of industries in okhla,ghaziabad and faridabad near Delhi represent such examples.
88POLITICAL CONDITIONS Entrepreneurial mobility is influenced by the political factors .For example a well known enterprising Punjabi community lost almost everything during the partition and were compelled to move from Pakistan to India
89SIZE OF ENTERPRISE Larger business houses are found more mobile than smaller ones.Initially entrepreneurs try to consolidate their business position at a place, tries to achieve success in that area, attain the dominating position and thereafter try to successfully seize the business opportunities elsewhere.
91OCCUPATIONALMOBILITY Occupational mobility denotes movement or changes in occupation. Occupational mobility takes place in two forms :-1.Inter-generation occupational movement2.Intra-generation occupational movement
92Inter Generation Mobility: Movement of a son/daughter from principal occupation of his/her father Intra generation Mobility: Drift in one’s own occupation during his or her occupational career.Mobility is called Horizontal when it takes place between the occupational classes of the equal rank.Mobility is called Vertical if it takes place between the classes of unequal rank.
93Several factors affects the Occupational Mobility Freedom of choiceMotivationEfforts of an individualOpportunities Available
94Locational MobilityLocation Mobility means movement of entrepreneurs from one location to another.Movement of Entrepreneurs to another region helps to reduce the regional imbalances in economic development.The degree of the entrepreneurial mobility depends upon different factors :Availability of raw materialInfrastructure and labour Nearness to marketExperienceknowledge and informationsocio-political situation
95ntrepreneurs most importantconsideration for selecting the location of industries: considerationsEntrepreneurs (in%)Home land52Government incentives8Availability of raw material2Availability of labour4Availability of Market10Availability of Infrastructuralfacilities20Others 4Total10018Entrepreneur most important Considerations while selecting the locationConsiderationsEntrepreneursHomeland52Availability of Raw Material8Government Incentives2Availability of Labour4Availability of Market10Availability of Infrastructural Facilities20OthersTotal100
96Entrepreneurial 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, (4) management of the resulting enterprise.
97Identify and Evaluate an Opportunity Opportunity AssesmentReal and Perceived Value of OpportunityRisk and Returns of OpportunityOpportunity Vs Personal SkillsCompetitive Enviornment
98Business PlanA business plan is a complete description of a business, giving information on the product or service, marketing and finances. The plan brings your main ideas into focus, helps you work out what you want to achieve and how you are going to do it.An effective business plan can:• Identify if there is a market for your product/service• Determine your competition and identify advantages• Estimate start-up costs, income, expenses and profit• Show if your business idea is worth pursuing Strategic and Operational Planning
99Resources Required Determine the resources needed Determine the existing resourcesIdentify the resource gaps and available suppliersDevelop access to needed resources.
100Manage the EnterpriseAfter resources are acquired, the entrepreneur must use them to implement the business plan.The operational problems of the growing enterprise must also be examined.Implementing a management style and structureEstablishing a ontrol system so that any problem areas can be quickly identified and resolved.
101Entrepreneur Process Opportunity evaluation (investment prospectus) Company's plan Execution Need / problemSolutionCompetitive position TeamRisk / reward profileStrategy Target customerBusiness modelPositionMilestones / company objectivesOperating plan Company timelineStaffing planBudgetFinancing planMarket researchMarketingBusiness developmentForecastingSales planningR&D managementOperations managementPeople managementProcess and infrastructureBudgeting Financing
1021. Idea Generation: every new venture begins with an idea 1. Idea Generation: every new venture begins with an idea. In our context, we take an idea to be a description of a need or problem of some constituency coupled with a concept of a possible solution. (A characterization of this phase is still work in process on this site.) 2. Opportunity Evaluation: this is the step where you ask the question of whether there is an opportunity worth investing in. Investment is principally capital, whether from individuals in the company or from outside investors, and the time and energy of a set of people. But you should also consider other assets such as intellectual property, personal relationships, physical property, etc. 3. Planning: Once you have decided that an opportunity, you need a plan for how to capitalize on that opportunity. A plan begins as a fairly simple set of ideas, and then becomes more complex as the business takes shape. In the planning phase you will need to create two things: strategy and operating plan. 4. Company formation/launch: Once there is a sufficiently compelling opportunity and a plan, the entrepreneurial team will go through the process of choosing the right form of corporate entity and actually creating the venture as a legal entity. 5. Growth: After launch, the company works toward creating its product or service, generating revenue and moving toward sustainable performance. The emphasis shifts from planning to execution. At this point, you continue to ask questions but spend more of your time carrying out your plans.
103Psychological factors- IndependenceChallengeDream desireFamily backgroundMarket opportunityIdea drivenNeed for achievementProfit making
104CreativityCreativity is concerned with producing unique ideas, concepts and ways of doing things that would have not occurred normally or evolved routinely.Creativity can be defined as the discovery or production of something that is novel and also useful or relevant . The product or outcome of creative effort must be significant and markedly different from the existing product or outcomes.
105Component of Creativity Conceptual Fluency: Ability to generate large number of relevant ideas relatively rapidly with reference to a given problem/situation or issue.Conceptual Flexibility: Ability to shift perspective/view points,to move from one frame of reference to another and to change or vary the approaches to solution to problems.Originality: Ability to produce unusual, novel answeres to the questions to problems and interpretation of issues/situations and events.Complexity Orientation: Ability to challenge , and find meaning ,in complex and ambiguous problems and to enjoy the efforts to analyze,integrate,clarify and resolve them.
106Creative ProcessCreative process consists of many stages and in each stage , a creative individual behaves differently to move an idea from the seed stage of germination to verification.Step1 : Inspiration(Idea Generation):In which an individual generate a large number of ideas Creative ideas can be traced to an individual interest in or curiosity about a specific problem or area of study.
107Step 2 : PreparationSeeking information about the problem we define the problem, need, or desire, and gather any information the solution or response needs to account for, and set up criteria for verifying the solution's acceptability.Step 3 : Incubation:In which you leave the work alone, though you still ponder about it occasionally , leaving it ‘on the surface of your mind’. After you’ve gathered so much information, your conscious mind won’t be able to make sense of it for awhile. Your main job is to keep your conscious mind occupied with some small thing so your unconscious is free to search for new associations and connections.
108Step 4 : Illumination(Realization) : Recognisition of ideas as being feasible. As ideas begin to mature, it becomes more realistic. The moment of illumination can happen unexpectedly. For example, an individual with the task of putting together an office party may have an idea for a theme while driving home from work.Step 5 : Verification : Refining knowledge into application . Application or test to prove idea has value. This is the stage where you make something tangible out of the insight you received in Illumination, something that can be shared with others. the final stage, one carries out activities to demonstrate whether or not what emerged in illumination satisfies the need and the criteria defined in the preparation stageSuccessful entrepreneurs can identify ideas that are workable and that they have skill to implement them.Ideas in earlier phases afre in rough form so it needs to be modified and tested to get its final form.
109Entrepreneurial PlanAn Entrepreneurial plan is a written document that describes all the steps necessary in opening and operating a successful business.It serves as a blue print for building a company.
110Entrepreneurial Plan EP Provides a means to Determine whether the business is viableRaise capital for the businessProject sales, expenses and cash flows for the businessExplain to employees their responsibility as well as company expectationsImprove and access company performancePlan for new product development.
111Purpose of Entrepreneurial Plan/Business Plan Business Plan explains the idea behind the business and spells out how the product or services will be produced or sold.Business plans sets specific objectives and describes how the business expects to achieve themBusiness plan describes the background and experience of the people running the business.
112A Business Plan helps you evaluate the feasibility of a new business idea in an objective, critical, and unemotional way.Marketing – Is there a market? How much can you sell?Management – Does the management team have the skill?Financial – Can the business make a profit?It provides an operating plan to assist you in running the business and improves your probability of success.Identify opportunities and avoid mistakesDevelop production, administrative, and marketing plansCreate budgets and projections to show financial outcomesIt communicates your idea to others, serves as a “selling tool,”and provides the basis for your financing proposal.Determine the amount and type of financing neededForecast profitability and investor return on investmentForecast cash flow, show liquidity and ability to repay debt
113Elements of Business Plan History and BackgroundGoals and ObjectiveProducts or Services Industry:External factors affecting businessGrowth potential of industryEconomic trends of industryTechnology trendsForms of OwnershipManagement and StaffingMarketingCurrent and projected financial statements
114Market Summary: Opportunities: Opportunities Problems and opportunities State consumer problems, and define the nature of product/service opportunities that are created by those problems.Business Concept: Business Concept Summarize the key technology, concept, or strategy on which your business is basedCompetition: Competition Summarize competition Outline your company’s competitive advantage .
115Goals & Objectives: Short term, long term and medium term goals .It ill also describe where an entrepreneur wants his company to be in the future.Product or Services :This section describes the products or services the company plans to produce or sells.Financial Plan: Financial Plan A high-level financial plan that defines the financial model and the pricing assumptions and that reviews yearly expected sales and profits for the next three years Use several slides to cover this material appropriatelyResource Requirements: Resource Requirements Technology requirements Personnel requirements Resource requirements Financial, distribution, promotional, etc. External requirements Products, services, technologies that must be purchased outside the companyRisks & Rewards: Risks & Rewards Risks Summarize risks of proposed project Addressing risks Summarize how risks will be addressed Rewards Estimate expected pay-off, particularly if seeking funding
116SECTION 1: Overviewa. Business Detailsb. Summary of the Businessc. Aims of the Businessd. The Business Product/ServiceSECTION 2: Market Researcha. The Marketb. Competitionc. The Environmentd. Suppliers InformationSECTION 3: Marketinga. Marketing Strategyb. Brandingc. Advertising & Promotiond. Internet Strategye. Pricing Structure
117SECTION 4: Operationsa. Managementb. Staff Resourcesc. Premisesd. Regulationse. The FutureSECTION 5: Financial Forecastsa Survival Budgetb Personal Survival Budgetc Sales Forecastd Cash Flow Forecaste Projected Profit and Loss Accountf Projected Balance Sheet
118Idea GenerationIdea Generation stage is the first step of entrepreneurial activity.Ideas which employ the maximum of available resources to be take up for further evaluation.The ideas should take care of customer requirements.Such asType of needCompetitive ways to satisfy the needPerceived benefits and risksPrice Vs PerformanceMarket size and potentialBusiness ideas generation is a search of opportunities for new avenues of growth in business.
119Opportunities are of three types An additive opportunity more fully exploits already existing resources. It does not change the character of the business. The risks are small, so are the returns.The complementary opportunity will change the structure of the business. It offers something new which, when combined with the present business, results in a new total larger than the sum of its parts. The complementary opportunity always requires at least one new knowledge area in which excellence has to be attained.A complementary opportunity always carries with it considerable risk. But it may have the potential to enhance significantly the wealth- producing capacity of the entire business.
120The breakthrough opportunity changes the structure , strategies and characteristics of the business. It requires great effort and the employment of the best managers.New ideas, new technologies brings in fundamental change.It often requires major spending on research and development, if not also substantial capital investment. And the risk is always great.Opportunities have to be evaluated on the basis of the experience of a company and its past successes and failures.
121Methods of Idea Generation Focus Group: In this method group of individuals discuss and provide information in a structured form to arrive at new business idea. A leader or a moderator sits with the group of people and discussion are held in a free and frank manner regarding the ideas for industries and services.A focus group is a form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs, and attitudes towards a product, service, concept, advertisement, idea, or packaging.
122Use : The method is generally used for choosing apparel design, jewellery design, cosmetics, health care products etc.Applicability: Less time consuming and practical approach.
123Brain stormingGroup method for obtaining new ideas and business solutions.Brainstorming works by focusing on a problem, and then deliberately coming up with as many solutions as possible and by pushing the ideas as far as possible.RulesNo criticism: Criticism of ideas are withheld during the brainstorming session as the purpose is on generating varied and unusual ideals and extending or adding to these ideas. Criticism is reserved for the evaluation stage of the the process. This allows the members to feel comfortable with the idea of generating unusual ideas.Welcome unusual ideas: Unusual ideas are welcomed as it is normally easier to "tame down" than to "tame up" as new ways of thinking and looking at the world may provide better solutions.Quantity Wanted: The greater the number of ideas generated, the greater the chance of producing a radical and effective solution.Combine and improve ideas: Not only are a variety of ideals wanted, but also ways to combine ideas in order to make them better.
124The group should be informed of the broad areas of subject or area of discussions. People in a group are drawn from different streams such as production, quality control,finance,marketing etc.The member should have no inhibitions about their status or departments.There should be no criticisms or negative commentsThe ideas can be improved but no repetition.The method is applicable for new product packing and Distribution.Reverse Brainstorming :When criticism is allowed for obtaining new ideas.
125Checklist Method: The new ideas for the business are developed based on discussions on list of related issues. A specific area of discussion is listed by entrepreneur and a list of questions ,suggestions and statements are developed for in depth discussions and arrive at a business idea.A method of generating new ideas by making a list of related issues.
126Who uses the product? How it is used? What are the new ways of usage of the products?Can a copied and improved product will add value?Can we bring substitute product?What are the new emerging products in a particular product range?
127Problem Inventory Analysis Problem Inventory Analysis: it is a method of obtaining new ideas and solutions for business by focusing on the problems.The group is given the problems that are commonly felt by consumers, dealers and general public.The discussion are more focused and related to a particular problem.The method may not give many times new ,entirely new, product ideas but it may add to the value of the existing product.The PIA take care of the discussions on all the relevant and related aspects and see that the problem in one area doesnot become a headache in other areas.
128Gordon MethodWhen group members do not know the exact nature of the problem the method of developing new ideas is called Gordon method.Entrepreneur gives the general concepts associated with the problem to the group who responds by their suggestions. The actual problem is revealed at the end of the discussions.
129Idea ScreeningWith your list of potential new product ideas, you now need to decide which ideas to pursue and which to discard.Criteria for Idea ScreeningConsider your competition,Fit with the company production capabilities or technical expertise.Fit with company objective and imageMarket Sales and Profit PotentialDraw on the customer needs list you have developed, and the areas for product improvement you have identified.
130Feasibility AnalysisFeasibility Analysis is the process of determining if a business idea is viable.Feasibility analysis is completed to determines if an idea is worth pursuing and to screen ideas before spending resources on them.
131Concept StatementBefore a company undertakes a feasibility analysis a concept statement should be developed.A concept statement is a preliminary description of a business and includes the followingA description of product or services offered.The intended target market : This section describes the lists of businesses or people who will buy the product or services.The benefits of product or service : This section describes the benefits of product or services and includes an account of how the product or services add value and /or solves a problem.A description of how the product will be positioned relative to similar ones in the market.A description of how the product or services will be sold and distributed.
132Product/Service Feasibility Product Feasibility: Determine if the proposed product or service is desirable and serves a need in market place.An assessment of overall appeal of the product or service being proposed.It is what the customer want and will have a adequate market.Two test: Concept Testing and Usability testingConcept testing: A concept test entails showing a representation of the product or service to prospective users to gauge customer interest, desirability and purchase intent.
133Purpose of Concept Test 1.To validate the underlying premises of a product or service idea that entrepreneur thinks is compelling.To test his idea ,an entrepreneur must ask prospective customers and key industry participant what they think.2.To develop an idea : The objective is to refine the product or services to the point that the entrepreneur is confident that it satisfies a defined need and customers are willing to buy.3.To estimate the potential market share the product or service might command.
134Usability Testing requires that users of the product perform certain task in order to measure the product ease of use and the user’s perception of the experience.Usability test is sometimes called user test,beta test or field trials.A basic prototype is developed and is used to gauge customer interest and to conduct usability testing.Usability testing is important for websites and software designs.
135Market FeasibilityTo explore the industry of which your business will be part of and the niche market you plan to go after.The most attractive industries for new businesses have the following characteristicsAre large and growing rather than small and shrinkingAre important to their customersEnvironment trends moving in favour of the industry.Being fairly young rather than older and mature.Assess the attractiveness of the specific niche market that has places to target
136An entrepreneur must know the overall attractiveness of the industry it plans to enter. Primary Research: Research that is original and is collected by the entrepreneurAssessing market involves analysing potential customers and key industry participant.Secondary Research probes data that are already collected such as industry related publications, government statistics, industry reports.
137Organizational Feasibility The area to explore is whether the proposed business has sufficient managerial expertise , organizational competence and resources to be launched and successfully managed.Management Prowess: The two important factors are the passion that the individual have for the business and the extent to which the people involved understand the industry in which the business will operate.Resource Sufficiency: Determine whether the potential new venture has sufficient resources to move forward to successfully develop a product.The focus is on non financial resources such as availability of office space, quality of labour pool in the area where business is locatedThe other people related factors can beRelevant industry experience or prior business start up experienceExperience and expertise in cashflow management.Access to mentors or people who can provide start up advice.
138Financial Feasibility Two important factors to be considered are the total start up cash needed(Capital Requirement) and the financial performance of the similar business.Issues to be considered at this stage are capital requirements, `financial rate of return and overall attractiveness of investment.
139Importance of Idea Screening Minimize risk while maximizing the returnsDecide what is importantIdentify the strengths and weaknesses of ideasMake best use of limited resources.