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MANAGEMENT
Prof Bharat Nadkarni
Entrepreneurship Management
Reference Books
Entrepreneurship Management
Entrepreneurial Traits
Need for achievement
High level of motivation
Creative / Innovative
Moderate risk taker
Agility / quickness in analysing and picking
up opportunities
Self Confidence
Excellent Leadership Qualities
Good business acumen
Independence of thought & action
Flexible/ Ready to change
Resilience
Entrepreneurship Management
Who is an Entrepreneur
Entrepreneur, a french word literally translated means go
between.
Oxford Dictionary defines it as a person who organizes a
commercial undertaking involving personal financial risk.
An Entrepreneur is one who organizes and operates an
enterprise for personal gain. He pays current prices for the
materials consumed in the business, for the use of the land, for
the personal services he employs and for the capital he
requires. He contributes his own initiative, skill and ingenuity
in planning, organizing and administering the enterprise. He
also assumes the chance of loss and gain consequent to
unforeseen and uncontrollable circumstances. The net residue
of the annual receipts of the enterprise after all costs have been
paid, he retains for himself.
Entrepreneurship : Definition
Entrepreneurship is the process of creating something different
with value by devoting the necessary time and effort, assuming
the accompanying financial, psychic, social risks and receiving
the resulting rewards of monetary and personal satisfaction and
independence.
Points to note
1.
Creating something different with value
2.
Devoting necessary time & effort
3.
Assuming accompanying financial, psychic and social risks
4.
Receiving resulting rewards Monetary, Personal satisfaction, independence
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Possible
- Cultural
- Government
- Work Environment
- Family
- Background
- Disruption
- Teachers
- Marketing
- Peers
- Financing
- Role Models
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Challenges Involved
Person who actually starts his/ her own business,
the experience is filled with enthusiasm,
frustration, anxiety and hard work. There is a high
failure rate due to:
External Factors
Inflation, recession, lack of infrastructure,
corruption,
economic & political uncertainty,
Intense competition.
Internal Factors
Lack of capital, poor sales, lack of managerial
ability.
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EB = f (P,E)
where
P = Personality characteristics
E = Environmental factors, such as
Social/ psychological factors including family, peer
group, formal and informal association etc
Financial
Material availability
Technology availability/ applicability
These environmental factors could be either
nurturant or
Case Study
Entrepreneurship Management
Working for oneself is better than working for somebody else was
clearly driven home by one of the American Professors at the
seminar held at Taj in 1980s. We were discussing a case on
entrepreneurship. He asked Ashish, my teammate, How much profit
your company is making?
It made about Rs 1,00,00,000 ( One Crore) last year, Ashish
replied.
How many managers are there in your company. The American
Professor asked.
Ten, Ashish replied.
How much each of the managers are getting. The Professor asked.
They are all getting different salaries but on an average they are
getting around Rs 30,000 a year, Ashish replied. That incident
happened 30 years back.
Entrepreneurship Management
That means that the managers together are getting ten times Rs
30,000 i.e. Rs 300,000 per year. And because of your managerial
capability the company is making Rs One Crore. That makes
managers take away is only 3 per cent. Are you not being exploited?
Why dont you make Rs Ten lakhs as your share, yourself? That is
10 per cent. Why do you allow your managerial capabilities to be
exploited by others? Why dont you exploit it yourself? the
Professor went on. Ashish had no reply. Neither had we.
But this case does give us a fodder to think.
1.Fantasy stage
2.Tentative decision making stage
3.Stage of exploration and preparation for the decision
4.Commitment and Stability stage
Advantages of Entrepreneurship
To an Individual
1. Self Employment
2. Employment for near & dear
3. Prolonged career for next generations
4. Innovation & Creativity
5. Unlimited income/ higher retained income
6. Freedom to use own ideas
7. Independence
8. Satisfaction
Advantages of Entrepreneurship
To the Nation
1. Provides larger employment
2. Results in wider distribution of wealth
3. Mobilises local resources, skills and savings
4. Accelerates the pace of economic development
5. Stimulates innovation & efficiency.
6. Competition
Entrepreneurship Theories
1. 1600 : French verb Go between or To undertake
2. 1700 : Person bearing Risks of Profit in a fixed price contract
3. 1725 : Richard Cantillon Person bearing risks is different from
capital supplier (Risk)
4. 1803 : J B Say Shifts economic resources out of an area of
lower into an area of higher productivity & greater yields (Value
Addition)
5. 1934 : Joseph Schumpeter Innovation is the sole cause of profit.
6. 1961 : David McClelland Need for Achievement N Ach factor highly motivated, energetic, moderate risk taker.
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Employment Generation
Regional development
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Entrepreneur to an economist
One who brings resources, labor, material and
other assets into combinations that make their
value greater than before and also one who
introduces changes, innovations and a new order.
Entrepreneur to a psychologist
One who is typically driven by certain forces
need to obtain or attain something, to experiment,
to accomplish or perhaps to escape authority of
others.
Entrepreneur to a businessman
One who appears as a threat and an aggressive
competitor OR an ally, a source of supply, a
customer or someone who creates wealth for
others as well, who finds better ways to utilize
Want to be challenged
People with high need for power have a great concern for
exercising influence and control
Good conversationalists
Can be argumentative
Derive pleasure from being loved and tend to avoid the pain
of being rejected by a social group
In large companies :
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Breaking of the Circular Flow
Schumpeters Model
Profits caused by a particular innovation tends to be competed away
as other imitate and adapt that. But if the entrepreneur comes out
with another innovation at that time when the favourable effects of
the former innovation are dying out, he will make profits again.
Therefore, as long as innovation exist, profits continue to arise out
of them. According to Schumpeter, Innovation is the sole cause of
Profit.
Entrepreneurship Management
Thank You