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Chapter 2

The Entrepreneurial and


Intrapreneurial Mind
Chapter Learning Objectives
• To explain the aspects of the entrepreneurial
process
• To explain the differences between the
entrepreneurial and managerial domain
• To explain the organizational environment
conducive to intrapreneurship
• To explain the general characteristics of an
intrapreneur
• To explain the process of establishing
intrapreneurship in an organization
The Entrepreneurial Process
The Entrepreneurial process has the following
four steps.
2. Identification and evaluation
3. Development of the business plan
4. Determination of the required resources
5. Management of the resultant enterprise
Step 1. Identify and Evaluate
the Opportunity
Some sources for new opportunities are:

• Consumers and business associates

• Members of the distribution system

• Technical people
Step 1. Identify and Evaluate
the Opportunity (Contd.)
• Evaluation allows the entrepreneur to do a
risk-return assessment to find out if the
return is worth the risk.
• Cause of opportunity maybe:
– Technological change
– Market shift
– Government
– Competition
Step 1. Identify and Evaluate
the Opportunity (Contd.)
• Market size and the length of the window-
of-opportunity form the primary basis for
determining risks and rewards.
– Risks reflect the market, competition,
technology, and amount of capital involved.
– The amount of capital forms the basis for the
return and rewards.
– Follow on products become very important for
a firm expanding or diversifying
Step1. Identify and Evaluate
the Opportunity (Contd.)
• Finally the opportunity must fit the personal
skills and goals of the entrepreneur
• Opportunity Analysis is not a business plan,
it is typically:
– Shorter
– Focus on the opportunity not the entire venture
– Provide basis for deciding to act or not
Step1. Identify and Evaluate
the Opportunity (Contd.)
• Opportunity Analysis involves answering
the following questions:
– What market need does it satisfy?
– Your personal observations regarding the need?
– What social condition underlies the market
need?
– What market research data describes this need?
– What patents might be available to fulfill this
need
Step 1. Identify and Evaluate
the Opportunity (Contd.)
- What competition exists in the market?
- How would you describe behavior of the
competition?
- What does the international market look like?
- What does the international competition look
like
- Where is the money to be made in this
opportunity?
Step 2. Develop the Business
Plan
• Covered in greater detail in Chapter 7.
Consists of the following:
Title Page
Table of Contents
Executive Summary
1.0 Description of Business
2.0 Description of Industry
Step 2. Develop the Business
Plan
3.0 Marketing Plan
4.0 Financial Plan
5.0 Production Plan
6.0 Organization Plan
7.0 Operational Plan
8.0 Summary
Appendices (Exhibits)
Step 3. Determine the
Resources Required
• Evaluate the available resources
• Critical resources must be distinguished
from the helpful resources
• How the resources will be acquired
• Alternative suppliers along with their needs
should be identified
Step 4. Manage the Enterprise
• Implement a management style.

• Determine the key variables for success.

• Control system must be identified.


Managerial Versus
Entrepreneurial Decision Making
• Strategic Orientation:

– Entrepreneur makes rapid changes keeping


environment in consideration.

– In larger organizations with planning systems


in place this is not so easy.
Managerial Versus Entrepreneurial
Decision Making (Contd.)
• Commitment to Opportunity

– Entrepreneur is pressured by the short term


decision window

– Managers are not only slow in taking decisions


but once decisions are made they are long term.
Managerial Versus Entrepreneurial
Decision Making (Contd.)
• Commitment of Resources

– Entrepreneur commits resources on a need basis

– Managers tend to commit the full amount of


resources required before start up
Managerial Versus Entrepreneurial
Decision Making (Contd.)
• Control of Resources
– Entrepreneur tries to use rented resources were
possible as he has difficulty in obtaining
resources, he tends to have multi uses for the
same resources.
– Manager tends to accumulate resources as it is a
source of power for him
Managerial Versus Entrepreneurial
Decision Making (Contd.)
• Management Structure

– Entrepreneur tends to have a flat organization


as it allows him greater degree of control
– Managers tend to follow a formalized
hierarchical structure as they know this
consolidates their power
Intrapreneurship

• Entrepreneurship within an
organization is called
Intrapreneurship
Corporate Versus Intrapreneurial Culture

• Corporate Culture • Intra Culture


• Favors Conservatism • Develop vision
• Data back up • Goals and action plans
• Adhere to instructions • Rewarded for actions
• Do not make mistakes taken
• Do no take initiative, wait • Suggest, try and
for instructions experiment
• Stay in our own turf • Create and develop
• Protect your backside regardless of area
• Take responsibility and
ownership
How Intrapreneurial Climate
can be Developed
• Organization operates on frontiers of
technology
• New ideas encouraged
• Trial and error encouraged
• Failure allowed
• No opportunity parameters
• Resources available and accessible
How Intrapreneurial Climate
can be Developed (Contd.)
• Multidiscipline teamwork approach
• Long time horizon
• Volunteer Program
• Appropriate reward system
• Sponsors and champions available
• Support of top management
Intrapreneurial Leadership
Characteristics
• Understands the environment
• Visionary and flexible
• Creates management options
• Encourages teamwork
• Builds a coalition of supporters
• Persists
Establishing Intrapreneurship
in the Organization
1. Secure top management commitment
2. Ideas and general areas that top management is
willing to support must be identified
3. Company needs to use technology to make itself
more flexible
4. Use groups of interested managers to train
employees.
5. Organizations needs to get closer to its
customers
Establishing Intrapreneurship
in the Organization (contd.)
1. Organizations needs to learn to do more with
fewer resources.
2. Strong support system needs to be developed
3. Rewards must tied to performance of the team
4. Evaluation system that allows successful
intrapreneurial units to expand while it allows
the unsuccessful ones to close down.
END OF CHAPTER 2