1. Entrepreneurship and Business Management
Mega Bucks Workshop
Indian Institute of Technology Kanpur
Prof Parameshwar P Iyer Indian Institute of Science

2. What is Entrepreneurship?
Capacity to take risks
Ability to own and organize
Desire and capability to innovate and diversify (Stepanek, 1962)
Prof Parameshwar P Iyer Indian Institute of Science

3. Prof Parameshwar P Iyer Indian Institute of Science
Who is an entrepreneur?
Person conducting own business (Webster)
Person who sets up business deals in order to make profits (Collins Cobuild)
Organizer of an economic venture, one who owns, organizes, manages, and assumes the risks of the business (Chandrashekhar)
Prof Parameshwar P Iyer Indian Institute of Science

4. Prof Parameshwar P Iyer Indian Institute of Science
Why entrepreneurship?
Process of creating something different, with value, by devoting necessary time and effort, by assuming the accompanying financial, psychological, and social risks, and receiving the resulting rewards of monetary and personal satisfaction (Bowen and Hisrich, 1986).
Prof Parameshwar P Iyer Indian Institute of Science

5. Role of the Entrepreneur
An innovator who combines technical innovations and financial finesses.
Important role in producing competitive products, processes, and services.
Generation of new employment
Local and regional economic development
Improved allocation of resources and transfer of technologies
Prof Parameshwar P Iyer Indian Institute of Science

6. Entrepreneur as an Economic Pioneer
Introduction of new goods and products
Introduction of new processes and methods of production
Opening up of new markets
Opening up of new sources of supply
Industrial re-organization
Prof Parameshwar P Iyer Indian Institute of Science

7. Strategic Importance of the Small-Scale Sector
Significant contributions to national income, employment, and export earnings
Value of output over Rs. 5,70,000 crores
Employment of over 17.5 million (> twice the private sector; almost as much as all public sector employment)
Exports of over Rs. 54,000 crores (> 35 per cent of all exports) ( figures)
Prof Parameshwar P Iyer Indian Institute of Science

8. Entrepreneurship and Small Businesses
Entrepreneurship is especially critical in small businesses because:
Important sources of competition for large firms; challenge their economic power
Offer a wide range of choice to consumers
Sources of innovation and creativity
Good career opportunities to work in an unstructured environment of a small company
Prof Parameshwar P Iyer Indian Institute of Science

9. Prof Parameshwar P Iyer Indian Institute of Science
Marketing Management
Demand variables:
Demographic, social, economic, political, and competitive factors in market environment
Psychological, social, and economic patterns in customer motivations
All autonomous factors
Prof Parameshwar P Iyer Indian Institute of Science

10. Prof Parameshwar P Iyer Indian Institute of Science
Marketing Management
Semi-demand variables:
Market segmentation
Customer behavior
Only partially under the control of the entrepreneur
Prof Parameshwar P Iyer Indian Institute of Science

11. Prof Parameshwar P Iyer Indian Institute of Science
Marketing Management
Decision Variables:
Product characteristics and pricing
Distribution and personal selling
Advertising policies
Mostly under the control of the entrepreneur
Prof Parameshwar P Iyer Indian Institute of Science

12. Prof Parameshwar P Iyer Indian Institute of Science
Marketing Management
The essential entrepreneurial function in marketing management is to design an integrated marketing plan, where the demand and semi-demand variables of the market are related to the product and decision variables of the firm.
Prof Parameshwar P Iyer Indian Institute of Science

13. Prof Parameshwar P Iyer Indian Institute of Science
Market Research
Marketing success depends on design of a distinctive marketing plan
A small entrepreneur should not try to compete on a product-to-product basis with large firms (same goods to same customers thru same channels at same prices !!)
Instead, try to do “something different”.
Prof Parameshwar P Iyer Indian Institute of Science

14. Operations Management
Process of designing and utilizing the physical resources of the firm to maximize the operational capabilities of the company
Product/ service design
Process design
Job design
Job standards
Prof Parameshwar P Iyer Indian Institute of Science

15. Operations Management
The entrepreneur’s smaller firm generally has to provide specialized, few-of-a-kind products and personalized services, without the benefits of mass production and mass distribution
Prof Parameshwar P Iyer Indian Institute of Science

16. Prof Parameshwar P Iyer Indian Institute of Science
Financial Management
1. Effective utilization of the assets- current(short-term) and capital (long-term)
2. Provision of funds to support those assets
3. Use of current liabilities, intermediate loans, and capital debt or equity
4. Difficult for smaller companies to compete, in finance, with larger firms, simply because they lack money.
Prof Parameshwar P Iyer Indian Institute of Science

17. Prof Parameshwar P Iyer Indian Institute of Science
Financial Management
Finances needed for:
1. New investments in product development
2. Expansion of markets
3. Process improvements, etc.
Conserve available funds by preparing detailed financial plans, e.g. cash budgets, capital investment analysis, short-term plans
Prof Parameshwar P Iyer Indian Institute of Science

18. Prof Parameshwar P Iyer Indian Institute of Science
Financial Management
Finding additional funds from sources as
1. Current liabilities
2. Bank loans
3. Equity investments
4. Retained earnings
5. Venture capital proposals
6. Angel funding proposals
Prof Parameshwar P Iyer Indian Institute of Science

19. Prof Parameshwar P Iyer Indian Institute of Science
Product Development
Improvements in design of existing product
Inventions of new products
Lack resources for full R&D facility
Must use available capabilities efficiently
Outsourcing of R&D and innovation
Technical feasibility, market feasibility, development time and cost, manufacturing capability, and strategic fit
Prof Parameshwar P Iyer Indian Institute of Science

20. Organizational Management and Control
Smaller companies go thru identifiable stages of growth
Increased specializations in tasks of staff
Increased delegation on part of founder
Increased systematization and formalization of information reporting and accounting procedures
Prof Parameshwar P Iyer Indian Institute of Science

21. Prof Parameshwar P Iyer Indian Institute of Science
Formation and Growth
Formal and legal procedures of formation- memoranda and articles of association
Sole proprietorship
Partnership
Private limited
Public listing
Cooperative
Prof Parameshwar P Iyer Indian Institute of Science

22. Prof Parameshwar P Iyer Indian Institute of Science
Formation and Growth
Purchase of a small company- identify, screen, evaluate, negotiate, and structure payments
Consolidation of a new company- intense conservation of cash, firm limitations on expenses, continual examination of company’s strategy.
Prof Parameshwar P Iyer Indian Institute of Science

23. Prof Parameshwar P Iyer Indian Institute of Science
Conclusions
Entrepreneurship is a challenging and rewarding profession
Need to concentrate on market analysis, financial resources, and technology management
Cannot compete directly with the “big guys”, so need to be ingenious and innovative in all entrepreneurial functions
Prof Parameshwar P Iyer Indian Institute of Science