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ENTREPRENEURIAL OPPORTUNITYMODULE 1Entrepreneurs are individuals who recognize opportunities where other see chaos or confusion.They are aggressive catalyst for change within the market place.They challenge the unknown and continuously create the future

The word entrepreneur is derived from the French word Entreprende which means to undertakeThe Webster dictionary explains that the term entrepreneur is applicable to one who organizes, manages and assumes the risks of a business or enterpriseThe 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 priceJoseph Schumpeter defines entrepreneur as An innovator playing the role of a dynamic businessman adding material growth to economic developmentPeter 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 to think conceptually, readiness to take risks, ability to mobilize agents of production and capacity to see change as an opportunity. It is also about marrying passion and process with a good dose of perseverance.Vasant desai4Entrepreneur ManagerMotiveIs to start ventureIs to render serviceStatusOwnerServantRisk bearingAssumes all riskAssumes no riskRewardsEntitled to profit(uncertain)Entitled to salaryInnovation He is a change agentExecutes ideas given by entrepreneurQualificationHigh achievement motive; originality of thinking; foresight; risk bearing abilityDistinct qualifications are needed

Distinction betweentive5The myths of entrepreneurshipEntrepreneurs are doers, Not ThinkersEntrepreneurs tend toward action, they are also thinkersThey are often very methodical people who plan their moves carefully- business plansEntrepreneurs are Born, Not MadeCharacteristics of entrepreneurs cannot be taught or learned, that they innate traits one must be born with has long been prevalent

KURATKO6Entrepreneurs are always inventorsMany inventors are also entrepreneurs, numerous entrepreneurs encompass all sorts of innovative activity. Entrepreneurs are academic and social misfitsToday 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 profileA 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 moneyHaving money is not the only bulwark against failure

All Entrepreneurs need is luckBeing at the right place at the right time is always an advantage.Luck happens when preparation meets opportunityIgnorance is bliss for EntrepreneursToo 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 ratesEntrepreneurs are extreme risk takers.why start a businessControlYou do not like to have a bossMake your own decisionsOwn business gives you greater opportunity to exercise your own free will The ideaOne great idea or a product that will revolutionize the world

FlexibilityWant a schedule that allows you work when you want to and spend time with your familyRunning your own business does give you the flexibility

MoneyOldest and the most common reasonMost 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 wealthyAchieve 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 own business

Advantages Disadvantages You are the bossYou are aloneAll profits are yoursAll losses are yoursThere will be great variety in roles and tasksAll decisions are yoursIncreases self confidenceWork may not be satisfyingWork can be very satisfyingYou will need to put in long hoursSuccess will give you immense satisfactionLack of success will affect the self esteemExiting the business is difficult

Pressures will affect social and family lifeEntrepreneurship and the EconomyEntrepreneurial firm are not just money-making ventures for their promotersThe positive impact of entrepreneurial firms is seen throughout the economy and societyMajor contributions of entrepreneurial firm Job creation: New ventures are always hungry for quality man powerEconomic growthHigh growth rate in the whole economy

New technologyEntrepreneurial firm are usually faster to come to the market with radical new technologies.Serving small marketsLarge firms do not find it profitable to serve small populationsEntrepreneurial firm serve an invaluable role by providing specialized products to niche customersCommon characteristics associated with entrepreneursCommitment, Determination, and PerseveranceSheer determination and an firm commitment to succeed often win out against odds that many people would consider impossible.Drive to achieveEntrepreneurs are self starters who appear to others to be internally driven by a strong desire to compete, to excel against self-imposed standards, and to pursue and attain challenging goals

Opportunity orientationSuccessful growth-minded entrepreneurs focus on opportunity rather than on resources, structure and strategy.They know when to say NOInitiative and responsibilityEntrepreneurs actively seek and take initiativeThey willingly put themselves in situations where they are personally responsible for the success or failure of operationThey like to take the initiative in solving problem or in filling a vacuum where no leadership exists

Persistent problem solvingEntrepreneurs are not intimated by difficult situations.Seeking feedbackThey have strong desire to know how well they are doing and how they might improve their performanceInternal locus of controlThey 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 actionsTolerance for ambiguityStart-up entrepreneurs face uncertainty compounded by constant changes that introduce ambiguity and stress into every aspect of enterpriseCalculated risk takingSuccessful 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 reliabilityIntegrity 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 highlyTolerance for failureEntrepreneurs use failure as a learning experience.The most effective entrepreneurs are realistic enough to expect such difficultiesMany of them believe they learn more from their early failures than their early successHigh energy levelThe extraordinary workloads and the stressful demands entrepreneurs face a premium on energyCreativity and innovativenessCreativity was once regarded as an exclusively inherited traitVisionEntrepreneurs know where they want to go.Self-confidence and optimismEntrepreneurs often face major obstacles, their belief in their ability seldom wavers.IndependenceThe desire for independence is a driving force behind contemporary entrepreneursTheir 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 buildingMost successful entrepreneurs have highly qualified, well motivated teams that handle the venture growth and developmentReasons for growth of entrepreneurshipNew technologiesIncreasing demand for varietyServices sector-increase in per capita income leads to greater share of the services sector in the national economy.High regards for self employmentRising dissatisfaction at jobGovernment incentives and subsidiesIncreasing flow of information

Easier access to resourcesEntrepreneurial educationReturn on innovationEntrepreneur as a heroAcceptance of Ex- entrepreneurs in the job market

Entrepreneurial FailureLack of experienced managementFew trained or experienced manpowerPoor financial managementRapid growthLack of business linkagesWeak marketing effortsLack of informationIncorrect pricingImproper inventory controlShort term outlookEntrepreneurial failureLack of experienced managementThe management team is very new to this roleThe entrepreneur and top management usually have no prior record of being in charge of the fortunes of a whole companyNo previous track record

Sanjeev roy27Few trained or experienced manpowerShortage of skilled and experienced manpower is faced by new ventureMost people prefer to work in well established enterprises or a company which has a good track recordThis will lead to low productivity and low quality of output

Poor financial managementOperational issues keep an entrepreneur busy and as a result FM is likely to be neglectedRapid growthHigher growth means greater stress on production facilities, manpower and marketing channels.Capital shortage

Lack of business linkagesExisting 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 effortsInvesting in a marketing campaign is not going to give you assured returns and the link between the marketing expenditure and the sales is not very easy to establishLack of informationLarge 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 pricingThe price is most likely close to that of the competition and takes care of costs leaving a modest it seemingly generous marginImproper inventory controlProduction can be halted due to insufficient inventory, whereas excess inventory can lead to wastages and damages 32Short- term outlookThe 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 entrepreneurIdea 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 thingsThe nature of businessThe type of business

Vasant desai- 91343. 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 materialsEntrepreneur 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:The details of technologyInstalled capacity of the machineNames of the manufacturers and suppliers Whether the machines are indigenously made or foreign madeAfter- sales services facilitiesWarranty period of the machineries

6. Market researchMR 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 enterpriseEntrepreneur 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 company8. Recruitment of man powerEstimating man power need of the organisationLaying down of selection procedureDevising scheme of compensationLaying down the rules of training and development 9. Implementation of the projectThe identified project is to be implemented in a time- bound manner.Avoid cost and time overrun as well as competition.The entrepreneurial processDecision to become an entrepreneurPeople become their to be their own bosses, to pursue their ideas and realize financial rewardsA triggering events prompts an individual to become an entrepreneur Developing successful business ideasDeveloping a successful business idea includes opportunity recognition, feasibility analysis, writing a business plan, industry analysis and the development of an effective business modelMoving from an idea to an entrepreneurial firmTurning an idea into reality is to prepare a proper ethical and legal foundation for a firm including selecting an appropriate form of business ownershipManaging and growing an entrepreneurial firmAll 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 firmsSalary- substitute firmsAre 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 categorySalary- substitute firms offer common, easily available products or services to customers that are not particularly innovative.

Lifestyle firmsProvide 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 innovativeGrowth rate is also slowThey promote a particular sport, hobby or pastime and may employ only the owner or just a handful of peopleEntrepreneurial firmsBrings new products and services to market by creating and seizing then seizing the opportunities.Apple, Google, eBay CreativityCreativity 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

PreparationPreparation is the background, experience and knowledge that an entrepreneur brings to the opportunity recognition processStudies shows that 50-90 percent of start- up ideas emerge from a persons prior work experienceIncubationIt is the stage during which a person considers an idea or thinks about a problem

InsightInsight 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.EvaluationThis 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 ideaElaborationThis is the stage during which the creative idea is put into a final formThe details are worked out and the idea is transformed into something of value, such as new product, service or business conceptEncouraging and protecting new ideasEstablishing a focal point for ideasSome 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 ideasExample: 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 ideasOther 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 firmCreativity is the process of generating a novel or useful idea but does not require implementationCreativity is the raw materials that goes into innovation

53Creativity enhancersOrganizational levelElevating creativitys importance throughout the organisationOffering tangible rewardsInvesting in resources that help employees sharpen their creative skillsHiring people different from those currently working in the company

Individual supervisory levelListening attentively in order to acknowledge and provide early supportDealing with employees as equals to show that status isnt very importantSpeculating, being open and building on others ideasProtecting people who make honest mistakes and are willing to learn from themProtecting Ideas From Being Lost or StolenIntellectual property Is any product of a human intellect that is intangible but has a value in the market Step 1The 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 enteredMake all entries in ink and have them witnessed

Step 2The idea should be secured. This may seem like an obvious step, but is often overlooked.Password protected- computer network

Step 3Avoid making an inadvertent or voluntary disclosure of an idea, in a manner that forfeits the right to claim exclusive rights to it.

57Changing Demographics of EntrepreneursWomen EntrepreneursMinority EntrepreneursSenior EntrepreneursYoung Entrepreneurs