Presentation on theme: "Why Entrepreneurship: Economic Development & Entrepreneurship"— Presentation transcript:
1 Why Entrepreneurship: Economic Development & Entrepreneurship
2 Road Map Entrepreneurship and the economy What is Entrepreneurship The Entrepreneurial Process
3 The Main IdeaEntrepreneurship is the primary catalyst for economic growth.Being a successful entrepreneur requires an understanding of how the economy works.
4 Entrepreneurship and the Economy content vocabulary Entrepreneur, entrepreneurial &entrepreneurshipventureeconomicsfree enterprise systemprofitoligopolygoodsservicesneedwantfactors of productionscarcitymarket structuremonopolydemandelastic demandinelastic demanddiminishing marginal utilitysupplyequilibriumGross Domestic Productbusiness cycle
5 Small Business and Entrepreneurship As an entrepreneur, you accept the risks and responsibilities of business ownershipentrepreneuran individual who undertakes the creation, organization, and ownership of a business
6 Small Business and Entrepreneurship Creating and running a business venture requires a variety of skills.venturea new business undertaking that involves risk
7 Small Business and Entrepreneurship Starting a home-based business calls for entrepreneurship on the part of the owner.About one in three households is involved in an entrepreneurial enterpriseentrepreneurialthe process of recognizing an opportunity, testing it in the market, and gathering the resources necessary to go into business
8 Differentiating Small Business and Entrepreneurship The difference between small businesses and entrepreneurial ventures is that owners start small businesses to create jobs for themselves; while founders of entrepreneurial ventures have a desire to innovate, grow, and create new value.
9 Entrepreneurship Today Knowledge of economics contributes to an understanding of how entrepreneurs and customers interact.economicsthe study of how people allocate scarce resources to fulfill their unlimited wants
10 Economic SystemsAn economic system includes a set of laws, institutions, and activities that guide economic decision making.
11 What goods and services should be produced? Economic SystemsWhat goods and services should be produced?All economic systems attempt to answer four basic questions.
12 The Free Enterprise System Most democratic nations have a free enterprise systemfree enterprise systeman economic system in which people have important rights: to make economic choices of what products to buy, to own private property, and to choose to start a business and complete with other businesses
13 The Free Enterprise System Making a profit is a primary incentive of free enterpriseprofitmoney that is left over after all expenses of running a business have been deducted from the income
14 The Free Enterprise System Perfect competition is a market structure in which there are numerous buyers and sellers and no single buyer or seller can affect price.market structurethe nature and degree of competition among businesses operating in the same industry; market structure affects market price
15 The Free Enterprise System The government may grant a temporary monopoly to an inventor.monopolya market structure in which a particular commodity has only one seller
16 The Free Enterprise System Under antitrust laws, some forms of oligopoly are illegal.oligopolya market structure in which there are just a few competing firms
18 Goods and ServicesGoods and services are the products of our economic systemservicesintangible (nonphysical) products that satisfy consumers’ wants and needs
19 Goods and ServicesEntrepreneurs respond to consumers’ wants and needs with goods and servicesneeda basic requirement for survival
20 Factors of Production There are four basic factors of production land laborentrepreneurshipcapitalfactors of productionthe resources businesses use to produce the goods and services that people want
21 ScarcityThe principle of scarcity means giving up one thing in order to have something else.scarcitythe difference between demand and supply; limited resources
22 Supply and Demand Theory In a free enterprise system, the price of a product is determined by demand.demandthe quantity of goods or services that consumers are willing and able to buy at various prices
23 Supply and Demand Theory The degree to which demand for a product is affected by its price is either governed by elastic demand or inelastic demandinelastic demandsituations in which a change in price has little or no effect on the demand for products
24 Supply and Demand Theory Due to the law of diminishing marginal utility, even when a product’s price is low, people will not keep buying it indefinitely.diminishing marginal utilitythe effect or law that establishes that price alone does not determine demand, and that other factors, such as income, taste, and the amount of product already owned, play a role as well
25 Supply and Demand Theory Supply is continually shifting in the marketplacesupplythe amount of goods or services that producers are willing to provide
26 Supply and Demand Theory If something is in heavy demand, but in short supply, prices will go up. If something is in heavy supply, but in short demand, prices will go down.
27 Supply and Demand Theory Because supply and demand are continually shifting in the marketplace, the change creates surpluses, shortages, and equilibrium.equilibriumthe point at which consumers buy all of a product that is supplied; at this point, there is neither a surplus nor a shortage
28 Economic Indicators and Business Cycles There are four stages of the business cycle: growth, recession, depression, and recovery.business cyclethe general pattern of expansion and contraction that the economy goes through
29 The Entrepreneur entreprende, which means – ‘to undertake’ Webster dictionary – one who organizes, manages and assumes the risks of a business or enterpriseRichard Cantillion – an entrepreneur is someone who takes the risk of running an enterprise by paying a certain price for securing and using resources to make a product and reselling the product for an uncertain price.
30 Joseph Schumpeter - an innovator playing the role of a dynamic businessman adding material growth to economic developmentTimmons - Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled
31 What is Entrepreneurship? Common Themes in Definitions of EntrepreneurshipThe role of the entrepreneurInnovationOrganization creationCreating valueProfit or Not-for-ProfitGrowthUniquenessProcess
32 So can Entrepreneurship be taught ? Most entrepreneurs and investors seem to think the answer is "no"Most academicians and students think the answer is "yes."Business can be TaughtRisk-Taking Cannot be TaughtBorn entrepreneurs can be taught how to become better businesspeople. But businesspeople cannot be taught how to become entrepreneurs.
33 Can Entrepreneurship be taught ? If you ask, most entrepreneurs will tell you that the reason they started out was because the urge to start became so strong that they just had to give up what they were doing and dive into it. Hardly anybody will say that they started a company because they attended a course in entrepreneurship.
34 Entrepreneurial Attitudes Comfortable with lifestyle changesWillingness to break / bend / stretch lawsPatience to start smallPrepared to make enemiesComfort with confrontationsDealing with failureWillingness to learn
36 Why is it Important ?Entrepreneurship contributes to job creation and growthEntrepreneurship is crucial to competitivenessEntrepreneurship unlocks personal potentialEntrepreneurship promotes societal interestsEntrepreneurship contributes in fostering social and economic cohesion for regions whose development is lagging behind
37 And Why are you the Best suited for Entrepreneurship ? YoungIndependentEnergeticDynamicAdaptiveCreativeTechnically SoundPassionate to Achieve
38 Start-UpsAny new venture initiated by an Entrepreneur is called a Start-Up.There are different kinds of Start-UpsLifestyle Firm – A small venture that supports the owner & usually doesn’t grow.Foundation Company – Formed from Research & Development that usually doesn’t go public.Gazelles – Very high growth venturesHigh-Potential Venture – That has high growth potential & hence receives great investor interest.
39 Entrepreneurship v/s Intrapreneurship Intrapreneurship – Entrepreneurship within an existing organization.Independence & ability to advance in the corporate rewards.Depending on urgency to meet self- imposed & corporate timetable.Direct involvement more than delegation.Moderate risk takerAttempts to hide risky projects from view until ready.Independence, opportunity to create & money.Survival & achieving yr growth of business.Direct InvolvementModerate risk takerDeals with mistakes & failuresPrimary MotivesTime OrientationActivityRiskFailures & Mistakes
40 Entrepreneurship v/s Intrapreneurship Follows dream with decisions.Self & CustomersEntrepreneuria l small- business, professional, or farm background.Transactions & deal making as basic relationshipAble to get others to agree to help achieve dream.Self, Customers & SponsorsEntrepreneurial small- business, professional or farm-background.Transactions within hierarchy.DecisionsWho ServesFamily HistoryRelationship withothers
41 Intrapreneurial Environment Organization operates on frontiers of technologyNew ideas encouragedTrail and error encouragedFailures allowedNo opportunity parametersResources available and accessibleMultidiscipline team workLong time horizonVolunteer ProgramAppropriate reward systemSponsors and champions availableSupport of top management
42 Establishing Intrapreneurship in the Organization An organization desiring to establish an intrapreneurial environment must implement the following steps :Secure a commitment to intrapreneurship in the organization by top, upper & middle mgmt levelsIdentify the areas in which top mgmt is interested in along with the amount of risk money available to develop them furtherDeploy Technology to make it flexibleTrain the employees.Develop ways to get closer to its customers
43 Establishing Intrapreneurship in the Organization 6) Learn to be more productive with fewer resources (e.g Downsizing etc.)7) Establish a strong support structure for Intrapreneurship.8) Reward the employees for their performance9) Implement an evaluation system that allows successful intrapreneurial units to expand and unsuccessful ones to be eliminiated.
44 Entrepreneurial Background Childhood Family EnvironmentEducationPersonal ValuesAgeWork History
45 Indian Attitude towards Entrepreneurship A great Entrepreneurial Optimism is seen in India now than previously.A largest chunk of the India’s population is in the age group, and that’s a time when people are the least afraid to take risks.On the other hand, India’s greatest liability is the corruption in its system, which is a big dampener to entrepreneurship.
46 Global- Indian Entrepreneurship The social meaning of risk taking varies from country to country.When you start an enterprise, does your culture allow you to borrow money from friends and relatives? Or even from banks? Some countries encourage entrepreneurship and others don’t .One measure of a society’s entrepreneurship levels is its attitude towards failure. In China and Japan, there’s a big stigma attached to business failure, making it quite impossible for a failed entrepreneur to recoup and try again. In some societies, business failure marks you for life.
47 Global- Indian Entrepreneurship On the other hand, in countries like the USA, UK or Israel, it doesn’t necessarily do you any damage, unless you failed because of some unethical conduct.American business history offers up many instances of tycoons who went bankrupt several times before they built their fortunes. And the American corporate world usually sees entrepreneurial experience as an asset and those who have it are a valued commodity.If successful entrepreneurs know what to do The failed ones know what not to do…….Which is equally important.
48 Global- Indian Entrepreneurship Financial institutions & their policies have a big impact on a country’s entrepreneurship levels.“The financial institutions of France and Germany generally don’t encourage risk taking”Britain and Holland are the entrepreneurial champs on the other hand.
49 Indian Scenario: Entrepreneurship Access to information has been the biggest factor contributing to the global mindset in Indian Entrepreneurs.The other factor is the global flow of capital, which enables people to go wherever the money is.Govt. policies and Organizations like NEN (National Entrepreneurial Network) who are actively promoting Entrepreneurship.
50 To be a Global Entrepreneur….. Launching yourself as a global entrepreneur means competing with the best in the world.First, a global entrepreneur needs to build and manage a global supply chain, from raw materials to the final customer.Second, global entrepreneurs may have small bodies but they need to have long hands. They need a world-wide partnership network, to be managed adroitly despite the problem of time-zone differences.
51 To be a Global Entrepreneur….. Third, they need to build and manage global organizations, wherein key executives may be stationed far from headquarters.Lastly, global players need to have an understanding of geopolitics.E.g: How does a news from Ethiopia affect the business
53 Get Rich Quick! Myth #1 Truth is Life as an entrepreneur is not about money.Success rarely happens overnight.It's about what you want to do with your life.
54 Myth # 2 Truth is: You must be born an entrepreneur (trait theory) some of the most successful entrepreneurs are the most unlikely.It is a lifestyle choice, not an accident.Entrepreneurship can be LearntLeaders are not born but are mLeaders like mahatma gandhi or infy chairman narayanmurthy were not born leaders. The thing they had in plenty was a sense of purpose and zeal to work towards it. But again noone is born with a purpose
55 Myth # 3 Entrepreneurs are high risk takers Truth – Entrepreneurs are calculatorsStudies show entrepreneurs are only moderate risk takers
56 Myth # 4 You have to have a great idea Truth Your idea must be good Your idea must be doableYour idea must be wanted or neededYour idea must be priced rightSo you have to have a Great Opportunity by being at a right place, at a right time having right product or service.
57 Myths and Misconceptions About Entrepreneurship Entrepreneurs are Doers, Not ThinkersEntrepreneurs are Born, Not MadeEntrepreneurs are always InventorsEntrepreneurs are Academic and Social MisfitEntrepreneurs Must Fit the ProfileAll Entrepreneurs Need Is MoneyAll Entrepreneurs Need is a LuckIgnorance is a Bliss for EntrepreneursSuccessful entrepreneurship needs only a great ideaEntrepreneurship is easyEntrepreneurship is a risky gambleEntrepreneurship is found only in small businessesEntrepreneurial ventures and small businesses are the same thing