ENTREPRENEURSHIP

MANAGEMENT

Prof Bharat Nadkarni
Reference Books
Entrepreneurship by Hisrich & Peters
Entrepreneurship Management by P N Singh & J C Saboo
Entrepreneurial Management by R K Mittal
Entrepreneurship Development Programmes & Practices
by J S Saini
Entrepreneurship strategies and resources by Marc D
Dollinger
Indian Entrepreneurship its past and present by V
Chernovskaya

Entrepreneurship Management


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


Entrepreneurship Management

Decision Process for a potential entrepreneur

Change from present lifestyle
- Work Environment
- Disruption
Form new enterprise
Desirable Possible
- Cultural - Government
- Family - Background
- Teachers - Marketing
- Peers - Financing
- Role Models



Entrepreneurship Management
Origin & Development
Marco Polo as a Trader

Thomas Edison as an Inventor

Narayan Murthy / Shahnaz Huassain as Innovators

J N Tata & Dhirubhai Ambani as Visionaries

Venture Capital concept
The function of an entrepreneur is to reform or revolutionize
the pattern of production by exploiting an invention or more
generally an untried technological possibility for producing a
new commodity or producing an old one in a new way, opening
a new source of supply or a new outlet for products by re-
organizing a new industry.


Entrepreneurship Management

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.

WHAT THEN CAUSES A PERSON TO MAKE THIS DIFFICULT DECISION?
Entrepreneurship Management
Entrepreneurial Behaviour (EB) is a function of an
individuals personality characteristics and environmental
Factors. This could be represented as
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
impediments to entrepreneurial development.


Entrepreneurship Management
Case Study
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
Factors favouring Entrepreneurship
1. Growth of education science, technology & management
2. Developed infrastructure facilities
3. Financial assistance
4. Training facilities
5. Protective and promotional policies
6. Globalization
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.




Entrepreneurship Theories .... Contd.
7. 1964 : Peter Drucker Searches for change, responds to it and
exploits as opportunity. (Opportunity focused)
8. 1980 : Karl Vesper Behaviour perceptions Economists,
Psychologists, Businessmen, Politicians, (Environment)
9. 1983 : Gifford Pinchot Intrapreneur
10. 1985 : Robert Hisrich Creating something different with value,
devoting time and effort, assuming risks financial, psychic and
social, results rewards, satisfaction (Leadership & Vision)



Entrepreneurship Management
How entrepreneurship helps in economic
development
Employment Generation

Distribution of economic power

Optimum utilisation of regional resources

Meeting the demand gap by seizing appropriate
opportunity
Export potential

Regional development



Karl Vespers Theory
Entrepreneurship Management


Entrepreneurship Management

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 resources, reduce waste and
produces jobs for others.
Entrepreneurship & Leadership

MCCLELLANDS NEED THEORY OF
MOTIVATION
MCCLELLANDS NEED THEORY OF MOTIVATION

Three basic types of motivating needs

1] need for power

People with high need for power have a great concern for
exercising influence and control

They seek positions of leadership

Good conversationalists

Can be argumentative

Forceful, outspoken, hardheaded and demanding

Enjoy teaching and public speaking

MCCLELLANDS NEED THEORY OF MOTIVATION

2] need for affiliation

Derive pleasure from being loved and tend to avoid the pain
of being rejected by a social group

Concerned with maintaining pleasant social relationships

Enjoy sense of intimacy and understanding

Ready to console and help others in trouble

MCCLELLANDS NEED THEORY OF MOTIVATION

3] Need for achievement

Have an intense desire for success and an equally intense fear of
failure

Want to be challenged

Set moderately difficult goals for themselves

Take realistic approach to life

Would analyse and assess problems and take personal
responsibility of completing a job

Like specific and prompt feedback on how they are doing

MCCLELLANDS NEED THEORY OF MOTIVATION

How it applies to managers

Entrepreneurs : showed very high need for achievement ; fairly
high need for power ; low in their need for affiliation

In small companies/ Ventures : president/ entrepreneur has a very
high achievement motivation

In large companies :

CEO/ Entrepreneur tend to be average in achievement but
stronger in power and affiliation

Entrepreneurs: rated higher in achievement motivation
Entrepreneurship Management


Innovation and Entrepreneurship



Prof Bharat Nadkarni
Entrepreneurship Management

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