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MODULE 1

ENTREPRENEURIAL
OPPORTUNITY

Entrepreneurs

opportunities

are individuals who recognize


where

other

see

chaos

or

confusion.
They are aggressive catalyst for change within

the market place.


They challenge the

create the future

unknown and continuously

The word entrepreneur is derived from the French word

Entreprende which means to undertake


The Webster dictionary explains that the term entrepreneur is

applicable to one who organizes, manages and assumes


the risks of a business or enterprise
The Irish economist Richard Cantillion defined entrepreneur

as 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
Joseph Schumpeter defines entrepreneur as An innovator

playing the role of a dynamic businessman adding


material growth to economic development

Peter

f Drucker defines entrepreneurship as

Entrepreneurship is neither a science nor an


art. It is a practice. It has as a knowledge
base. Knowledge in entrepreneurship

is a

means to an end. It is not just about making


money. It is about imagination, flexibility,
creativity,

willingness

conceptually,

readiness

to

to

think

take

risks,

ability to mobilize agents of production


and

capacity

opportunity.

It

to

see

change

is

also

about

as

an

marrying

Distinction between
Motive
Status
Risk bearing
Rewards
Innovation

Qualification

Entrepreneur
Manager
Is to start venture Is to render
service
Owner
Servant
Assumes all risk
Assumes no risk
Entitled to
Entitled to salary
profit(uncertain)
He is a change
Executes ideas
agent
given by
entrepreneur
High
Distinct
achievement
qualifications are
motive;
needed
originality of

The myths of entrepreneurship


Entrepreneurs are doers, Not Thinkers
Entrepreneurs tend toward action, they are also

thinkers
They are often very methodical people who plan

their moves carefully- business plans


Entrepreneurs are Born, Not Made
Characteristics

of

entrepreneurs

cannot

be

taught or learned, that they innate traits one


must be born with has long been prevalent

Entrepreneurs are always inventors


Many

inventors

are

also

entrepreneurs,

numerous entrepreneurs encompass all sorts of


innovative activity.
Entrepreneurs

are

academic

and

social

misfits
Today the entrepreneur is considered a hero-

socially, economically and academically.


No longer a misfit, the entrepreneur is now

viewed as a professional.

Entrepreneurs must fit the profile


A standard entrepreneurial profile is hard to

compile.
The environment, the venture itself , and the

entrepreneur have interactive effects, which


result in many different types of profiles.
All Entrepreneurs need is money
Having money is not the only bulwark against

failure

All Entrepreneurs need is luck


Being at the right place at the right time is always an

advantage.
Luck happens when preparation meets opportunity
Ignorance is bliss for Entrepreneurs
Too much planning and evaluation lead to constant

problems that over analysis leads to paralysis- does


not hold up in todays competitive markets
Entrepreneurs

seek success but experience

high failure rates


Entrepreneurs are extreme risk takers.

why start a business


Control
You do not like to have a boss
Make your own decisions
Own business gives you greater opportunity to

exercise your own free will


The idea
One

great

idea

or

revolutionize the world

product

that

will

Flexibility
Want a schedule that allows you work when you

want to and spend time with your family


Running your own business does give you the

flexibility

Money
Oldest and the most common reason
Most of the wealthy people have got

their

money through business, either by starting one


or by inheriting one.
Not everybody who starts a business ends up

being wealthy
Achieve success very late in life- it is not them

but their children who will enjoy the fruits of


their labour.

List of advantages and disadvantages of running your


Advantages
Disadvantages
own business
You are the boss
You are alone
All profits are yours
All losses are yours
There will be great variety
All decisions are yours
in roles and tasks
Increases self confidence
Work may not be
satisfying
Work can be very satisfying You will need to put in
long hours
Success will give you
Lack of success will affect
immense satisfaction
the self esteem
Exiting the business is
difficult
Pressures will affect

Entrepreneurship and the Economy


Entrepreneurial

firm are not just money-making

ventures for their promoters


The positive impact of entrepreneurial firms is seen

throughout the economy and society


Major contributions of entrepreneurial firm
Job creation:
New ventures are always hungry for quality man
power
Economic growth
High growth rate in the whole economy

New technology
Entrepreneurial firm are usually faster to come to
the market with radical new technologies.
Serving small markets
Large firms do not find it profitable to serve small
populations
Entrepreneurial firm serve an invaluable role by
providing
customers

specialized

products

to

niche

Common

characteristics

associated

with

entrepreneurs
Commitment,

Determination,

and

Perseverance
Sheer determination and an firm commitment to

succeed often win out against odds that many


people would consider impossible.
Drive to achieve
Entrepreneurs are self starters who appear to

others to be internally driven by a strong desire


to

compete,

to

excel

against

self-imposed

Opportunity orientation
Successful

growth-minded

entrepreneurs

focus

on

opportunity rather than on resources, structure and


strategy.
They know when to say NO

Initiative and responsibility


Entrepreneurs actively seek and take initiative
They willingly put themselves in situations where they are

personally responsible for the success or failure of


operation
They like to take the initiative in solving problem or in

filling a vacuum where no leadership exists

Persistent problem solving


Entrepreneurs are not intimated by difficult situations.

Seeking feedback
They have strong desire to know how well they are

doing and how they might improve their performance


Internal locus of control
They do not believe the success or failure of their

venture will be governed by fate, luck or similar forces.


They believe their accomplishments and setbacks are

within their own control and influence and they can


affect the outcome of their actions

Tolerance for ambiguity


Start-up

entrepreneurs

compounded

by

face

constant

uncertainty

changes

that

introduce ambiguity and stress into every aspect


of enterprise
Calculated risk taking
Successful

entrepreneurs are not gamblers.

When they decide to participate in a venture,


they do so in a very calculated, carefully
thought-out manner

Integrity and reliability


Integrity and reliability are the glue and fiber that bind

successful personal and business relationships and make


them endure.
Investors, partners, customers and creditors alike value

these attributes highly


Tolerance for failure
Entrepreneurs use failure as a learning experience.
The most effective entrepreneurs are realistic enough to

expect such difficulties


Many of them believe they learn more from their early

failures than their early success

High energy level


The

extraordinary

workloads

and

the

stressful

demands entrepreneurs face a premium on energy


Creativity and innovativeness
Creativity

was once regarded as an exclusively

inherited trait
Vision
Entrepreneurs know where they want to go.

Self-confidence and optimism


Entrepreneurs often face major obstacles, their belief

in their ability seldom wavers.

Independence
The

desire for independence is a driving force

behind contemporary entrepreneurs


Their

frustration with the bureaucratic systems,

coupled with a sincere commitment to make


difference adds up to an independent personality
trying to accomplish tasks his or her own way.
Team building
Most successful entrepreneurs have highly qualified,

well motivated teams that handle the venture


growth and development

Reasons for growth of entrepreneurship


New technologies
Increasing demand for variety
Services sector-increase in per capita income

leads to greater share of the services sector in


the national economy.
High regards for self employment
Rising dissatisfaction at job
Government incentives and subsidies
Increasing flow of information

Easier access to resources


Entrepreneurial education
Return on innovation
Entrepreneur as a hero
Acceptance of Ex- entrepreneurs in the job

market

Entrepreneurial Failure
Lack of experienced management
Few trained or experienced manpower
Poor financial management
Rapid growth
Lack of business linkages
Weak marketing efforts
Lack of information

Incorrect pricing
Improper inventory control
Short term outlook

Entrepreneurial failure
Lack of experienced management
The management team is very new to this role
The entrepreneur and top management usually

have no prior record of being in charge of the


fortunes of a whole company
No previous track record

Few trained or experienced manpower


Shortage of skilled and experienced manpower

is faced by new venture


Most people prefer to work in well established

enterprises or a company which has a good


track record
This will lead to low productivity and low quality

of output

Poor financial management


Operational issues keep an entrepreneur busy

and as a result FM is likely to be neglected


Rapid growth
Higher

growth

means

greater

stress

on

production facilities, manpower and marketing


channels.
Capital shortage

Lack of business linkages


Existing

working relationships with vendors,

customers, and others is a huge advantage to


established businesses.
Weak marketing efforts
Entrepreneurial firms are very reluctant to spend

on marketing efforts
Investing in a marketing campaign is not going

to give you assured returns and the link between


the marketing expenditure and the sales is not

Lack of information
Large

corporations

is

far

superior

to

that

available to new small entrepreneurial ventures.


There is a cost to information and small ventures

may not be able to invest so much in getting


high quality information

Incorrect pricing
The price is most likely close to that of the

competition and takes care of costs leaving a


modest it seemingly generous margin
Improper inventory control
Production can be halted due to insufficient

inventory, whereas excess inventory can lead to


wastages and damages

Short- term outlook


The management and employees of the venture

focus on surviving the immediate crisis and the


long term vision and strategy of the firm are
soon forgotten

Functions of entrepreneur
1. Idea generation: idea generation can be possible

through the vision, insight, observation, experience,


education, training, and exposure of the entrepreneur.
. Generate as many ideas as he can for the purpose of

selecting the best business opportunities which can be


subsequently be taken up by him.
2. Determination of objectives: entrepreneur should
be very much clear about the following things

The nature of business

The type of business

3. Raising funds:
All the activities of a business depends upon the

finance & its proper management. It is the


responsibility of the entrepreneur to raise funds
internally as well as externally.
4. Procurement of raw materials
Entrepreneur has to identify the cheap & regular

sources of supply of RM, which will help him to


reduce the cost of production and face the
competition boldly

5. Procurement of machinery:
While

procuring

the

machineries,

he

should

specify the following details:


A) The details of technology
B) Installed capacity of the machine
C) Names of the manufacturers and suppliers
D) Whether the machines are indigenously made

or foreign made
E) After- sales services facilities
F) Warranty period of the machineries

6. Market research
MR is the systematic collection of data regarding

the product which the entrepreneur wants to


manufacture.
Entrepreneur has to undertake MR persistently

in order to know the details of the intending


product, i.e the demand for the product, the
supply of product, the price of the product, the
size of the customers, etc. while starting an
enterprise

7. Determination of form of enterprise


Entrepreneur has to decide the form enterprise based

upon the nature of the product, volume of investment,


nature of activities, types of products, quality of
products, quality of HR, etc.
Sole proprietorship, partnership, joint stock company

8. Recruitment of man power


A) Estimating man power need of the organisation
B) Laying down of selection procedure
C) Devising scheme of compensation
D) Laying down the rules of training and development

9. Implementation of the project


The identified project is to be implemented in a

time- bound manner.


Avoid cost and time overrun as well as

competition.

The entrepreneurial process


Decision to become an entrepreneur
People become their to be their own bosses, to

pursue their ideas and realize financial rewards


A triggering events prompts an individual to

become an entrepreneur

Developing successful business ideas


Developing a successful business idea includes

opportunity

recognition,

feasibility

analysis,

writing a business plan, industry analysis and


the development of an effective business model
Moving from an idea to an entrepreneurial firm
Turning an idea into reality is to prepare a proper

ethical and legal foundation for a firm including


selecting
ownership

an

appropriate

form

of

business

Managing and growing an entrepreneurial firm


All firms must be managed and grown properly

to

ensure

their

ongoing

success-marketing

issues facing entrepreneurial firms- selecting an


appropriate target market, building a brand and
the 4Ps

Types of start-up firms


Salary- substitute firms
Are small firms that yield a level of income for

their owner or owners that is similar to what they


would earn when working for an employer.
Dry cleaners, convenience stores, restaurants,

accounting firms, retail stores and hairstyling


salon
Majority of small businesses fit into this category
Salary-

substitute firms offer common, easily

available products or services to customers that

Lifestyle firms
Provide their owner or owners their opportunity

to pursue a particular lifestyle and earn a living


while doing so.
Lifestyle

firms

include

ski

instructors,

tour

guides.
These are not innovative
Growth rate is also slow
They

promote a particular sport, hobby or

pastime and may employ only the owner or just


a handful of people

Entrepreneurial firms
Brings new products and services to market

by creating and seizing then seizing the


opportunities.
Apple, Google, eBay

Creativity
Creativity is the process of generating a novel or useful idea.
Opportunity recognition may be, at least in part, a creative

process.
For an individual, the creative process can be broken down into

five stages

Five-Steps to Generating
Creative Ideas

Preparation
Preparation is the background, experience and

knowledge that an entrepreneur brings to the


opportunity recognition process
Studies shows that 50-90 percent of start- up

ideas

emerge

from

persons

prior

work

experience
Incubation
It is the stage during which a person considers an

idea or thinks about a problem

Insight
Insight is the flash of recognition- when a solution

to a problem is seen or an idea is born. It is


sometimes called as eureka experience.
In

business context- this is the moment an

entrepreneur recognizes an opportunity.


Sometimes this experience pushes the process

forward and sometimes it prompts an individual


to return to the potential for an opportunity but
may feel that more knowledge and thought is
required before pursuing it.

Evaluation
This is the stage of creative process during which

an idea is subjected to scrutiny and analyzed for


its viability.
Evaluation is particularly challenging stage of the

creative

process

because

it

requires

an

entrepreneur to take a candid look at the viability


of an idea

Elaboration
This is the stage during which the creative idea is

put into a final form


The details are worked out and the idea is

transformed into something of value, such as


new product, service or business concept

Encouraging and protecting new ideas


Establishing a focal point for ideas
Some firms meet the challenge of encouraging,

collecting and evaluating ideas by designating a


specific person to screen and track them.
Another approach is to establish idea bank, which

is the physical or digital repository for storing


ideas
Example: password-protected location on a firms

intranet i.e is available only to qualified employees

It may have file for ideas that are being actively

contemplated and a file for inactive ideas


Other firms do not have idea banks but instead

encourage employees to keep journals of their


ideas.

Encouraging creativity at firm level:


Innovation refers to the successful introduction

of new outcomes by a firm


Creativity is the process of generating a novel or

useful idea but does not require implementation


Creativity is the raw materials that goes into

innovation

Creativity enhancers
Organizational level
Elevating creativitys importance throughout the

organisation
Offering tangible rewards
Investing

in resources that help employees

sharpen their creative skills


Hiring

people different from those currently

working in the company

Individual supervisory level


Listening attentively in order to acknowledge

and provide early support


Dealing with employees as equals to show that

status isnt very important


Speculating, being open and building on others

ideas
Protecting people who make honest mistakes

and are willing to learn from them

Protecting Ideas From Being Lost or Stolen


Intellectual property
Is

any product of a human intellect that is

intangible but has a value in the market


Step 1
The idea should be put in a tangible form such as

entered into a physical idea logbook or saved on


a computer disk, and the date the idea was first
thought of should be entered
Make all entries in ink and have them witnessed

Step 2
The idea should be secured. This may seem

like an obvious step, but is often overlooked.


Password protected- computer network

Step 3
Avoid

making an inadvertent or voluntary

disclosure of an idea, in a manner that forfeits


the right to claim exclusive rights to it.

Changing Demographics of Entrepreneurs


Women Entrepreneurs
Minority Entrepreneurs
Senior Entrepreneurs
Young Entrepreneurs