GSBD

AIBS

Global Sourcing & Business Development

Course Code: MIB 402

Course Facilitator: Dr Meghna Sharma

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The NATURE and IMPORTANCE of ENTREPRENEUR

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Entreprendre
(derived from French word) which means to initiate or undertake

The word entrepreneur is approx. 180 years old, having come into English from French in 1828

Who is Entrepreneur?

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At least a Person

Who is a Person

Any Human Being (but human are unique and critical) Has own i) thinking, ii) working style and iii) reaction after receiving (may be right or wrong in ones view)

Entrepreneur is a Person, who is IPS

I - Ability to initiate and Innovate

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P - Can generate Profit and

S - Total work is dedicated to Society

Businessman Politician Director of any Institute Employees You

Entrepreneurship: A Mindset
Entrepreneurship is more than the mere creation of business:

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Seeking opportunities
Taking risks beyond security Having the tenacity to push an idea through to reality

Entrepreneurship is an integrated concept that permeates an individuals business in an innovative manner.

What is Entrepreneurial Development?

Its a development by which a Person can be converted to an Entrepreneur May be by their own by others or both Most complex phenomenon (Not a set of rules)

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with many factors like

i) psychological, ii) family imbibes, iii) qualification, iv) parental occupation, v) his standing etc.

It reflects; how to work?

What is Entrepreneurship?

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Socio-economical activities; how an entrepreneur takes things (qualities & characteristics) in his nature, team and organization i.e. enterprise. It is a process; how he works?

That means it is in between an Entrepreneur and Enterprise

and if we combine all,,,

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Any Human Being (but human are unique and critical) Has own thinking, working style and reaction after receiving. Ability to initiate and innovate for profit concern with optimism, hardwork, analysis and administration. Work is dedicated to the society. An object, to be achieved by a team (for the growth of all) in Growth, Development and Support phases. Led by Entrepreneur with Clear and Stable Vision.

Person

Entrepreneurial Development

Entrepreneur

Most complex phenomenon (Not a set of rules) with many factors like psychological, family imbibes, qualification, parental occupation. It reflects; how to work?

Entrepreneurship

Enterprise

Socio-economical activities; how an entrepreneur takes things in his nature, team and organization. It is a process; how he works?

An Integrative Model of Entrepreneurial Inputs AIBS and Outcomes

Types of Entrepreneur
On various classification

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1. 2. 3. 4. 5. 6. 7. 8.

Type of business Use of technology Motivation Growth Area Gender Age Others

Types of Business
A. Business Entrepreneur B. Trading Entrepreneur C. Agricultural Entrepreneur D. Retail Entrepreneur E. Corporate Entrepreneur F. Industrial Entrepreneur G. Service Entrepreneur Types of Use of Technology A. Technical Entrepreneur B. Non-technical Entrepreneur C. Professional Entrepreneur D. High Tech Entrepreneur E. Low Tech Entrepreneur Types of Use of Motivation A. Pure Entrepreneur B. Induced Entrepreneur C. Motivated Entrepreneur D. Spontaneous Entrepreneur

Types of Growth

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A. Growth Entrepreneur B. Super Growth Entrepreneur

Types of Area A. Urban Entrepreneur B. Rural Entrepreneur

Types of Gender A. Men Entrepreneur B. Women Entrepreneur Types of Age A. Young Entrepreneur B. Old Entrepreneur C. Middle aged Entrepreneur Others A. Imitation Entrepreneur B. Forced Entrepreneur C. Immigrant Entrepreneur

Note 1
Traditional Definition of Entrepreneurship Risk Taker Founder Innovator Capitalist Scoundrel Born not Learned

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Some Views of Entrepreneurship

Francis A. Walker (1876) - the new captains of industry as the principals agents of production and industrial process. Joseph Schumpter (1934) - the entrepreneur is the man who gets new things done. Peter F. Drucker (1964) - maximization of opportunities is a meaningful, indeed a precise, definition of the entrepreneurial job. It implies that effectiveness rather than efficiency is essential in business. The pertinent question is not how to do things right but how to find the right things to do, and to concentrate resources and efforts on them. William Baumol (1968) - he is the individual who exercises what in the business literature is called leadership Albert Shapero (1975) - a kind of behavior that includes: 1) initiative taking, 2) the organizing or reorganizing of social / economic mechanisms to turn resources and situations to practical account, 3) the acceptance of risk of failure. A major resource utilized by the entrepreneur is himself.

The Myths of Entrepreneurship

Entrepreneurship
A dynamic process of vision, change, and creation.

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Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions.

Essential ingredients include:

The willingness to take calculated risksin terms of time, equity, or career. The ability to formulate an effective venture team; the creative skill to marshal needed resources. The fundamental skills of building a solid business plan.

The vision to recognize opportunity where others see chaos, contradiction, and confusion.

Note 2: The Myths of Entrepreneurship

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Myth 1: Myth 2: Myth 3: Myth 4: Myth 5: Myth 6: Myth 7: Myth 8: Myth 9: Myth 10:

Entrepreneurs Are Doers (who does something), Not Thinkers Entrepreneurs Are Born, Not Made Entrepreneurs Are Always Inventors Entrepreneurs Are Academic and Social Misfits Entrepreneurs Must Fit the Profile All Entrepreneurs Need Is Money All Entrepreneurs Need Is Luck Ignorance Is Bliss For Entrepreneurs Entrepreneurs Seek Success But Experience High Failure Rates Entrepreneurs Are Extreme Risk Takers (Gamblers)

The INDIVIDUAL ENTREPRENEUR

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Why to become Entrepreneur?

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YOU
Why Entrepreneurship

SOCIETY

Your Family

Country

For You

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own organization high motivation family business

work for yourself secured future support to family

total satisfaction charm for life social attribute

For Society employment opportunities in India develop the entrepreneurial culture among the business community augment national GDP and improve BOP migration of qualified people to other country for employment. Prevent people to indulge in anti social activities and thereby lead to crime.

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YOU
THINK ABOUT

SOCIETY

Your Family

Country

MOTIVATION Employee Promotion Increment Facility

Reality

Entrepreneur Success Charm Self Actualization

Dream

Before We Proceed further

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Know About

How He/She has to MOVE

How His/Her Business has to MOVE

How He/She has to MOVE

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Identifying Entrepreneurial Opportunity

Regular Feedback Functions of Entrepreneur

Turning Idea into action

Growth and Development

Feasibility study

Manage the Enterprise

Resourcing

Setting up an Enterprise

How His/Her Business has to MOVE

Environmental Law Regulations Competitive forces Economic Condition Technological Changes Organizational Objectives Purchase Policy Resources Centre Buying Structure

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Sales Profit

Introduction Stage

Growth Stage

Maturity Stage

Decline stage

Interpersonal Co-operation Conflict Power Emotional Relationships

Individual Age Income Personality Job Status Education Level

Qualities of Entrepreneur

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What do YOU think!!!

Remember At-least THREE

Which All NEXT

Qualities All Together

Clear Vision Optimistic Proactive

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Ability to take work

Stable

Well Informed

Love of Success

Hardworking

Risk Taker

General Awareness

Determinant

Decision Maker

Administrative Ability

Public Relation

Flexible

Analytical

Leadership

Ability to diverse

Innovative

Realistic

Good Memory

Qualities of an Entrepreneur

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Innovative

Optimistic

Determinant

Analytical

Love of Success

Proactive

Decision Maker

Flexible

Hardworking

Ability to take work Stable

Administrative Ability Clear Vision

Leadership

Risk Taker General Awareness In the beginning

Ability to diverse Good Memory Long Long Time

Well Informed In Middle Stage Business

Public Relation Long Time

Video Case and Discussion

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Next Entrepreneurship: Evolutionary DevelopmentRevolutionary Impact

Online Marketing at Travelocity

http://college.hmco.com/business/video/travelocity.wmv

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Case Study and Discussion

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The ENTREPRENEURIAL and INTRAPRENEURIAL MIND

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Entrepreneur Vs Intrapreneur Vs Manager

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Entrepreneur You know!!! Who is Intrapreneur?

Entrepreneur within an existing organization is INTRAPRENEUR

Who is Manager???

??? in a non-intraprenerial oriented organization is MANAGER

What is Intrapreneurial oriented organization

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Its Developing Entrepreneurial Culture

Who makes it? Entrepreneur

Intrapreneur

Entrepreneur

Manager
Both

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Intrapreneur (counter part of entrepreneur), meaning "a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation."

Manager (first step into management career), meaning a person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary.

Manager Primary motives Promotion and other traditional corporate rewards, such as office, staff and power Short term meeting quotes and budgets, weekly, monthly, quarterly, and the annual planning horizon. Delegates and supervises more than direct involvement Careful Concerned about status symbols

Entrepreneur Independence, opportunity to create, and money Survival and achieving 5 to 10 years growth of business. Direct involvement Moderate risk taker Not concerned about status symbols Deals with mistakes and failures

Intrapreneur

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Independence and ability to advance in the corporate rewards. Between entrepreneurial and traditional managers.

Time orientation

Activity Risk Status

Direct involvement more than delegation Moderate risk taker Not concerned about traditional status symbols desires independence Attempts to hide risky projects from view until ready

Failure and mistakes

Tries to avoid mistakes and surprises

Decisions

Usually agrees with those in upper management positions

Others Family members worked for large organizations Hierarchy as basic relationship

Follows dream with decisions

Self and customers Entrepreneurial small business, professional, or farm background Transactions and deal making as basic relationship

Able to get others to agree to help achieve dream

Self, customers, and sponsors Entrepreneurial small business, professional, or farm background Transactions within hierarchy

Who serves Family history

Relation with others

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Mindset / Thinking of 1. Entrepreneur 2. Intrapreneur 3. Manager

Entrepreneur Leader (Prime)

Yes Man

Intrapreneur (Asset to Prime)

Yes Man

Manager (Employee)
Above illustration is only for Gap Understanding

Thinking
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Entrepreneur Creativity Intrapreneur Creativity (with limitation) and Efficiency Manager Efficiency

Entrepreneur Designing a new dishes with ingredients already in hand

Intrapreneur Cooking a dishes with some innovative change Manager Cooking a dishes with pre-specified ingredients and methods

Entrepreneur - X

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Entrepreneur Thinking

Creativity

Innovation

Generation of IDEA

Plan your Business

Entrepreneur -Y

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CREATIVITY and the BUSINESS IDEA

Repeat

Entrepreneur - X

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Entrepreneur Thinking

Creativity

Innovation

Generation of IDEA

Plan your Business

Entrepreneur -Y

Entrepreneurial Thinking

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Individual Thinking (critical)

Entrepreneurial Thinking (focused)

Group Thinking

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Egoistic Individual Thinking Optimistic

Dominating

Pessimistic

Emotional Vicious & Aggressive

Realistic

Depending upon various factors

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Individual Thinking

Parallel Thinking

You Alone

You in a Group

Individual Vs Parallel thinking

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Unstructured thinking process is unfocussed without structure or strategy. As individuals we are used to this and develop our own habits unconsciously. Sometimes these are effective, other times not. What is certain is that when thinking in a group these individual strategies will not tend to converge. As a result, discussion will tend not to converge due to the factors and reasons discussed in previous slides.

Parallel thinking is associated with a means for groups to think together more effectively, and a means to plan thinking processes in a detailed and cohesive way.

Individuals are thinking differently because were wearing Different colored HATS

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Dr. Edward de Bono in his book, Six Thinking Hats.

White

Red

Black

Green

Yellow

Blue

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Neutrality (White) considering purely what information is available, what are the facts?

Feeling (Red) instinctive gut reaction or statements of emotional feeling (but not any justification)
Negative Judgment (Black) logic applied to identifying flaws or barriers, seeking mismatch Positive Judgment (Yellow) logic applied to identifying benefits, seeking harmony Creative thinking (Green) statements of provocation and investigation, seeing where a thought goes Process control (Blue) thinking about thinking

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Blue Hat

- The Agenda of the Meeting is ABC. - What are your submissions

White Hat

- Total sales of this product is XYZ p.a. - Our sales data is two years old

Red Hat

- Promotion of this product doesn't appeal to me. - I'd like to do that but I feel uncertain about it. - I'm frustrated that we have let the situation get this bad!

Black Hat

- We will be facing strong competition in that market - We might not be able to make it cheaply enough for our customers to buy it - There is a risk that new legislation will make this market unattractive

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Yellow Hat

- That would be useful in market X - This approach will make our operations more efficient - We could use our existing distribution channels for this product

Green Hat

- What if we provided it for free? - Could we achieve it using technology X instead? - How would someone from profession X view this

Blue Hat

- We'll follow this program of thinking to start the day does everyone agree? - OK time to move on to some yellow hat thinking - Stop there - you are getting into debate. lets do some - I think we need to revisit our objectives, I'm not sure that they are right in light of our work so far

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Problem Solving Something happens which creates a problem. For eg. performance drops. We need to find out what caused the problem and then figure out ways to fix the problem.

The objective is to get performance back to where it should be.

For Example: A production line has an established run rate of 1000 books per hour. All of a sudden the run rate drops to 839 books per hour. Something happened, we don't know what problem caused the production rate to drop by 161 books per hour. We need to find out and fix the problem so we can get back to producing 1000 books per hour. Problem solving is focused on closing this performance gap.

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Creative Problem Solving The objective is to find ways to create new levels of performance that we haven't reached before.

For Example: We routinely produce 1000 books per hour on our production line. In this example creative problem solving could be directed at:

finding ways to produce 1500 books per hour; finding other ways to use the production line; finding ways to reduce the cost to run the production line, etc.

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Lateral Thinking

It is a method/tool kit that can be applied during the

problem solving and/or creative problem solving processes

to help come up with possible workable solutions.

Note: Lateral thinking is a term coined by Edward de Bono for the solution of problems through an indirect and creative approach. Lateral thinking is about reasoning that is not immediately obvious and about ideas that may not be obtainable by using only traditional step-by-step logic.

What is Creativity

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Creativity is a mental and social process involving the generation of new ideas or concepts.

It is an essential part of innovation and invention and is important in professions such as business, economics, architecture, industrial design, graphic design, advertising, mathematics, music, art, science and engineering, and teaching.

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Creativity is the generation of IDEAs that result in the improved efficiency or effectiveness of a system.

Two important aspects of creativity are 1. Process 2. People

The Process is goal oriented, it is designed to attain a solution to a Problem. The People are the resources that determines the Solution.

Therefore Creativity is used to refer to the act of producing new ideas, approaches or actions.

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Then what is Innovation???

Innovation is the process of both generating and applying such creative ideas in some specific context.

creativity by individuals and teams is a starting point for innovation; but innovation is the entire process by which an organization generates new ideas and convert them usefully in commercial products, services and business practices.

It results Introduction of a Product/ services in the Market

Bill has led a normal life. That was until the day he destroyed his wifes automatic waffle-maker. AIBS Who is Bill? A regular chap in all senses of the word. A high school track coach, bill liked his job, He loved his wife and insisted that his kids go to Church.

If he wanted anything, he wanted his team to win every time.

He knew they were faster than they were. All they needed were better feet. Or shoes that felt like feet. One day, a short while later his wife came home and found her husband Bill in his boxers, a crazed look in his eye, melting old bicycle tyres over the stove and squealshing them in her Waffle-maker. Most other wives would have probably dropped everything and made a run for it. But she knew her Bill. The stove and waffle-maker succumbed to a painfully slow death. But his team won. Apparently his boys felt like they were running on air. A few year later, Nike was born.

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Case Study and Discussion

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Idea Generation

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Business Idea Innovation, which is feasible to apply or practice and through which profit can be generated.

Business Idea is to be adapted only if it is feasible. Feasible means, feasibility in all directions Financial Marketing Legally Economical Man Power Industrial Technical Socially Value Chain

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Sources of New Idea

1. Consumers 2. Existing Product and Services 3. Distribution Channels 4. Government 5. Research and Development

Methods of Generating Ideas

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Focus Groups

Group of individuals providing information in a structured format

Brain Storming A group method for obtaining new ideas and solutions Problem Inventory Analysis A method for obtaining new idea and solution by focusing in problem (s)

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You know what is Problem Solving and Creative Problem Solving

Problem Solving + Something = Creative Problem Solving Something Idea

Idea Generation

Creative Problem Solving

Innovation

Creativity

Declines with AGE and STAGE, But should be at least Unlocked.

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Techniques for Creative Problem Solving Brainstorming A method for obtaining new ideas focusing in the parameters. Reverse Brainstorming A group method for obtaining new ideas focusing on the negatives. Brainwriting A form of written brainstorming.

Gordon Method A method for developing new ideas when the individuals are unaware of the problem.
Checklist Method Developing a new idea through a list of related issues.

Free Association Developing a new idea through a chain of word association. Forced Relationship Developing a new idea by looking at product combination.

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Collective Notebook Method Developing a new idea by group members regularly recording ideas.
Attribute Listing Developing a new idea by looking at the positives and negatives. Big-dream Approach Developing a new idea by thinking without constraints. Parameter Analysis Developing a new idea by focusing in parameter identification and creative systhesis.

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BUSINESS PLAN

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Idea Generation

Feasibility Study

Business Plan

Final Project Report

What is a Feasibility Study?

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A feasibility study is an analysis of the viability of an IDEA through a disciplined and documented process of thinking through the idea from its logical beginning to its logical end. A feasibility study provides an INVESTIGATING function that helps answer Should we proceed with the proposed project idea? Is it a viable business venture? A feasibility study should be conducted to determine the viability of an idea BEFORE proceeding with the development of a business.

What is a Business Plan?

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A Business Plan summarizes the PLAN OF ACTION after a course of action has been determined through the Feasibility Study

A Business Plan provides a Planning function

A Business Plan outlines the actions needed to take the proposal from idea to reality A Business Plan tells How your business will be created and Why it will be successful A Business Plan provides a road map for strategic planning

Why do a Feasibility Study?

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Provide a thorough examination of all issues and assessment of probability of business success Give focus to the project and outline alternatives Narrow business alternatives Surface new opportunities through the investigative process Identify reasons NOT to proceed Enhance the probability of success by addressing and mitigating factors early on that could affect the project Provide quality information for decision making Help to increase investment in the company

Provide documentation that the business venture was thoroughly investigated

Help in securing funding from lending institutions and other monetary sources

Why to make a Business Plan?

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Put the Pieces TogetherDo the pieces fit together in a logical manner? Create a Blueprint for Action

Focus Founders and/or Management Team

Obtain Financing Attract Equity Investment Attract Key Managers and Employees

Obtain Contracts
Create Joint Ventures, Mergers, Acquisitions

What is included in a Feasibility Study Report?

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A feasibility study report should be completed in all respective manners, containing detailed analysis of all best possible factors on date. Operational Feasibility Will it work? how? Technical Feasibility Can it be built? how? Marketing Feasibility Can we market the product? how? Economic Feasibility Will it make economic sense if it works and is built? how? Will it generate profits? how? Financial Feasibility How to arrange required fund?

What is included in a Business Plan?

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A Business Plan should be brief, concise & straight to the point. Main Requirements May Include Industry Description Market Size Customer Base Competitive Advantage Business Location Three years of Financial Projections Monthly Tracking of First Year Financials Management Experience and Profile Personal Statement of Affairs Other Sources of Cash, if any

Feasibility Study Vs. Business Plan

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Feasibility study (after idea generation) answers the bottom line questionIs this venture going to make money? Feasibility study outlines and analyzes several alternatives or methods of achieving business success. Feasibility study is conducted before a business plan.

Business plan is prepared only after the venture has been deemed to be feasible.

Business plan deals with only one alternative or scenario that is determined to be the best alternative.
Business plan considers the management sidegoals and objectives of the planned business venture.

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Contents of Business Plan

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Feasibility Study

Business Plan

Starting the Venture

Success Quality work of feasibility study and business plan

Poor

Failure

Good

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Success

Good

Poor

Quality work of feasibility study and business plan

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ENTREPRENEURIAL FINANCE

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Venture capital

Long term equity finance Investing as opposed to banks who lend Looking for high gains Accepting high risks Can be involved in management of the invested firm Venture capital investment is illiquid

Structure of VCs

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Mostly funds Charge about 2% + success fee Also companies Limited partnerships

VC : Advantages Entrepreneurs point of view No fixed expense of debt servicing Financial flexibility Sharing of risk

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Value added investing Attracting talent Networking with service providers/suppliers Accessing markets Enhanced credibility with lenders

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VC : Disadvantages Entrepreneurs point of view

Dilution of shareholding Increased 3rd party governance Increased controls Increased commitment to stated strategy

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Types of VC

Early stage financing Seed capital or pre-start up or R&D Start up financing Second round financing Later stage financing Expansion Replacement Turnaround

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Valuation exercise
Entrepreneur Vs Venture capitalist

1. 2. 3. 4.

5.

Get rid of scamsters Hygiene factors beware of things that can shut down a business Growth & industry considerations Due diligence - Physical evaluation - Calling in the experts Monetize value

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Agreement particulars
(between Entrepreneur and VC)

Amount and terms of investment. Dividend policy. Composition of the board of directors. Reporting - management reports, monthly accounts, annual budgets. Liquidity (exit) plans. Rights of sale Warranties. Matters requiring venture capitalist approval

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Problems

Locating players Concerns regarding exchange of info Larger companies look equally attractive with lesser risk Even listed securities are giving great returns

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Financial Institutes
Banks

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Note 1: How Banks cover risks

Collateral (Security/ Guarantee) Internal incl. a/c receivable External Personal guarantees Debt covenants (Agreement/ Contract) Short maturity debt

Note 2: Managing banks

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Complete paperwork in time Submit financial statements as scheduled Route all transactions through bank Ask for extras free drafts, alerts, etc Exude confidence and well being Transmit good news Be proactive about inspections

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Remember !!! Cash is king

Can result form unplanned success Is usually due to lack of planning or tardiness in collections Dissatisfaction among suppliers Higher costs Lower quality Dissatisfied (worried) employees High bad debts migration of customers

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Discussion in the Class Room/ Assignments

1. 2. 3. 4. 5.

Break-Even Analysis RGUMY Credit Guarantee Scheme Credit Guarantee Fund Trust for Micro and Small Enterprises Financing through Banks to Entrepreneurs

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NETWORKING

Entrepreneurial Opportunity Recognition Process

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Education

Prior knowledge of market & Consumer Problems

Experience

Entrepreneurial Alertness

OUTCOME Successful Opportunity Recognition

Personal Experience

Work Experience

Networks

Networking How to maintain? 1. 2. 3. 4. 5. 6. Diary (Most Important) Electronic Diary Software with PC/ Laptop Social Websites Phone Contacts Emails Addresses

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Categories
1. 2. 3. 4. 5. Business Wise Alphabetically Place/ City Closeness Utilities

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Buying a Business

Advantages

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Easier to start Established customer base Established supplier network Goodwill exists Equipment already installed Free advice from previous owner No scouting for locations, land deals, etc Presence of experienced employees Revenue starts sooner Banks may be more willing to lend Inventory in place (with past records) Possibility of phasing payments to previous owner

Disadvantages

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Existing bad reputation is now yours Equipment may be outdated You may end up paying high Location may stink Contractual relationships may be unfavourable You inherit bad employees The business / industry may be dying

How to Proceed???

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Visit the business Visit again Find out why is the owner selling Go to competitors, customers, suppliers

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Items to be investigated

Capital equipment Accounts receivable Contracts Customer lists Employees Statutory dues Other liabilities Licenses and permits History (partnerships / bankruptcies)

Valuation
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Asset appraisal Replacement value Market value Book value Future earning capitalization Adding a continuing value of the firm to it

Purchase could be by Assets purchasing or Stocks purchasing

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Buying a Franchise

Advantages
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Reduction of risk Turnkey operations Standardized products and systems Standardized finance & a/c systems Collective buying power Supervision & consulting readily available National & local advertising Point-of-sale advertising Uniform packaging Ongoing R & D Financial assistance?????? Site selection guidance Obviously.an established Brand Sales and marketing assistance Training Assistance to acquire certifications

Items to investigate

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Is the product / industry growing, stable or on the decline Local demographics Traffic / city planning variables (in case of retail outlets)

Investigate the franchisor

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Market share of franchisor Market share growth Reputation of franchisor How long has it been in business Lawsuits (particularly from franchisees) Structure of company

Note 1: Ask about other franchisees

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How many are there Where are they located What is the average topline / bottomline Failure rate Current expansion plans Any guaranteed territories Master franchisees

Note 2: Ask other franchisees

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Is it a good deal? Why / why not? What is the real profit Relationship with franchisor Are you happy with the support What is lacking Competition Seasonality of business

What to keep in mind

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What goods & services are to be bought from franchisor - optional? alternatives? Training and its costs On-site management help and its cost Franchise fee fixed / floating / installments Royalty payments Ongoing charges for advertising Other fees (site location fee, accounting fee, upgrade fee) What fees are refundable and when (while opting out) Legal / arbitration clauses Actual cost of starting operations Can you sell your franchise Will the franchisor repurchase it Renewal rights after franchise expires Options on new franchises being offered Right to transfer to children etc Restrictions on setting up competing businesses now or later

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EXITING a BUSINESS

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Discussion in the Class Room

1. PLC 2. ILC 3. BCG Matrix

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Retrenchment Strategies

May be required when,,, Poor Management Fund Problems Making Obsolescence Unfeasible improvements Level of Competition Local Environment

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1. Turnaround
Contraction Stop the Bleeding Consolidation Minimize Overheads (Admin, Factory, WH, SR and Transportation)

2. Captive to become captive company to other profit making companies 3. Sellout/ Divestment Fully/ Partially 4. Bankruptcy/ Liquidation Role of SICA/ BIFR

Note: SICA (Sick Industrial Companies Act)

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Committee of Experts (Chairman: Shri T. Tiwari), Objective to examine and recommend about remedies for industrial sickness. Based upon the recommendations, GOI introduced special legislation, Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) commonly known as the SICA. Main objective of SICA is to determine sickness and expedite the revival of potentially viable units or closure of unviable units In continuation, The Board of experts named the Board for Industrial and Financial Reconstruction (BIFR) was set up in January, 1987 and functional with effect from 15th May 1987. Appellate Authority for Industrial and Financial Reconstruction (AAIRFR) was constituted in April 1987. Besides public and private sectors, Government companies were brought under the purview of SICA in 1991

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FAMILY BUSINESS

Entrepreneur - Professional

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Entrepreneur

Professional

Entrepreneurship

Professionalism

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Looking for? Priorities!

Skill

Money

Quality Entrepreneur Time Professional

Major Need to go for consultants and outside professionals

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1. Clients educational foundation is inadequate 2. Focusing on board-related issues only 3. Failure to manage expectations 4. Difficulties in driving the process 5. Lacking skills to manage client resistance 6. Dual relationships (Family and Business) 7. Lacking in Various business needs 8. Lagging achievements

Challenge to Professionals

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Promotion of new identity and character What actions professionals take? What people care about? What we offer them? What breakdowns we resolve? social responsibility, user centered, avoiding responsibility Exchange of knowledge Developing certification criteria, codes of ethics, accreditation standards

and disciplinary actions. Introducing guides such as codifying teaching method and providing guide on safe and reliable software. Ensuring professional practice along side conceptual principles Providing standards of professional competence at various levels Learning and connecting professionals with customers

Importance of Professionals

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It is specially in family business.

It is more in demand in medium to large scale organization. Time is much important.

Only expert domain is required.

Most competitive and intense environment.

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Elements of Family Business

1. Family 2. Ownership 3. Management

A. What is a family?

B. What do you mean by ownership?

C. Who are the people in management?

These three elements are related as,

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Ownership

Management

Family

Life Cycle in Family Business

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Ownership
Owners Life Cycle

Management
Firms Life Cycle Industry Life Cycle Employees Life Cycle

Family
Families Life Cycle

With Goals of these elements, Core in between

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Corporate Goals

Personal Goals (owners)

Leadership Culture Boards of Directors Life Cycles Processes Ethics

Family Goals

Board of Directors
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Selection and Authority

Ownership

Management
Board of Directors

Family

Potential Participation

Note 1. Requirement in family business

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Understanding and respect for leadership: a willingness to be led; a problem-solving mentality. A respect for individual differences and for freedom of choice. A willingness to seek help outside the family. A sense of responsibility for family matters. A respect for different generations without either needing the approval of the other. A strong tradition of moral and ethical values. A shared vision.

Note 2. Requirement of family success

AIBS

A Family Community -- a roundtable to be seen and heard.

Understanding that maintaining a family is hard work, and a commitment to all family members to do it.
Straightforward communication. Consensus. A sense of responsibility for family matters. A respect for different generations without either needing the approval of the other.

A strong tradition of moral and ethical values.

A shared vision.

AIBS

Thank You

AIBS