Chapter 1.1 - Entrepreneurship Overview

8/2/2019 Chapter 1.1 - Entrepreneurship Overview

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Entrepreneurship

Overview

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Definition

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Word Entrepreneur is derived from the

French word entreprende, which meansto undertake.

Webster dictionary explains that the termentrepreneur is applicable to one whoorganizes, manages and assumes the

risks of a business or enterprise.

This Irish economist Richard Cantillion(1680-1734) defined an entrepreneur assomeone who takes the risk of runningan enterprise by paying a certain price

for securing and using resources tomake a product and reselling theproduct for an uncertain price.


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Drivers of Change

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Democracy Web Browsing

Work-Flow Software

Open Sourcing

Outsourcing

Off-Shoring

Supply Chaining

In-Sourcing Informing

Wi-Fi, VOIP


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Entrepreneurship - Innovation

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The term innovation derivesfrom the Latin innovatio.

The central meaning ofinnovation thus relates torenewal or improvement, with

novelty being a consequenceof this improvement.

On a lower level, innovationcan be seen as a change in

the thought process for doingsomething, or the usefulapplication of inventions ordiscoveries


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Definition

Technological innovations are defined as new productsand processes and major technological modifications toproducts and processes. An innovation is consideredperformed if it is introduced to the market (productinnovation) or implemented in the production process

(process innovation). Innovation includes manyresearch, technological, organizational, financial andcommercial activities.

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Source of Innovation

Innovationbegins with the generation of new ideas.The ability to generate new and useful ideas istermed creativity.

Creativity is defined as the ability to produce work that isuseful and novel.

Novel work must be different from work that has been previouslyproduced and surprising in that this it is not simply the nextlogical step in a series of known solutions

Creativity

Ideas

Innovation

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Reasons For Growth Of Entrepreneurship

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Industry Structure

Technology Innovation Privatization

Formation of New Business Communities (Priceline, Alibaba,Snapdeal etc.)

Increasing Demand for Variety

Services Sector Govt. Incentives and Subsidies

Increasing Flow of Information

Easier Access to Resources

Entrepreneurial Education

Return on Innovation IPR Protection Entrepreneur as a Hero

High Regards for Self-Employment

Rising Dissatisfaction at Job


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Running Your Own Business Pros and

Cons

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Pros: You are the boss All profits are yours Multi-Tasking Exposure Increases Self-Confidence Satisfaction from Success, Innovation, Growth

Cons: Single Headed All success and failures are yours Dissatisfaction Work-Life Balance Failure adds to lower Self-Esteem Exiting is not an easy


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Entrepreneur - Characteristics

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Commitment andDetermination

Leadership

Opportunity Obsession

Tolerance of risk, ambiguityand uncertainty

Creativity, self-reliance andability to adapt

Motivation to excel


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Entrepreneur Skills

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Creativity and Opportunity Evaluation

Real-Time Strategy and Decision Making Comfort with change and chaos

Teamwork

Selling, Negotiation and Motivation through influence and persuasion

Oral and Written communication

Basics of start-up finance, accounting and law Attitudinal adjustments:

Comfortable with lifestyle changes Willingness to break, bend, stretch

Patience to start from the scratch

Prepared to make rivals Comfortable with confrontations

Dealing with failure

Willingness to learn


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Types of Entrepreneurs

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Early Starters individuals with little or no-work experience Experienced Associated with family businesses Mature Worked in the corporate and left their jobs at CXOs

level and starting their venture Socio-Cultural Variables

First Generation Entrepreneurs With no past business

experience Entrepreneurs from business families Minority Entrepreneurs Small ethnic groups that have

traditionally not ventured into business Women Entrepreneurs

Serial Entrepreneurs Devoted time to one venture but ultimatelylands up starting many. Once the business is established they loseinterest and think of selling and moving on

Portfolio Entrepreneur Starts and runs number of businesses


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GEM Report 2010

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GEM Methodology

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Starting with just 10 developed countries in 1999, GEMhas grown to include over 80 economies during thecourse of these 12 years. In 2010, over 175,000 peoplewere surveyed in 59 economies. These 59 economiesrepresent not only the largest sample yet, but also the

most geographically and economically diverse groupsurveyed.

The 2010 survey shows that, in the economies analyzed,some 110 million people between 18 and 64 years oldwere actively engaged in starting a business. Another

140 million were running new businesses they startedless than 3 years earlier. Taken together, some 250million were involved in what GEM defines as early-stageentrepreneurial activity.


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Age Distribution of Entrepreneurs by

Geographic region

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A. M. Murugappa Chettiar, founder of the Murugappa Group

Aditya Jha, Canadian entrepreneur, philanthropist and philosopher; Active in Canadian public affairsAnant Koppar, founder, and former president, of Kshema TechnologiesAnant Tripathi, founder, and CEO, of Maffick Consultancy Services (www.maffickcs.com)Brijmohan Lall Munjal (1923- ), founder of The Hero Group, which owns Hero MotorsCapt. G. R. Gopinath, founder of Air Deccan, vice-chairman of Kingfisher RedDhirubhai Ambani (19332002), founder of Reliance IndustriesG. Kuppuswamy Naidu, founder of Lakshmi MillsGhanshyam Das Birla (18941983), prominent member of the Birla familyJ. C. Mahindra, co-founder of the Mahindra GroupJ.R.D. Tata, founder of Air India and Chairman of the Tata Group for 52 years.

Jamsetji Tata (18391904), pioneering Indian industrialist, founder of the Tata Group of companiesK. C. Mahindra, co-founder of the Mahindra GroupKarsanbhai Patel (1945- ), founder of the Nirma GroupKasturbhai Lalbhai (18941980), textile baron, founder of Arvind MillsKiran Mazumdar-Shaw (1953- ), founder of Biocon, the first biotechnology company in IndiaN. R. Narayana Murthy (1946- ), co-founder of Infosys TechnologiesRaj Anand (1982-), founder of the Kwiqq and winner of Business Week Europe's Young Entrepreneur 2007Ramji Raghavan (1958- ), Social Entrepreneur, founder of Agastya International FoundationSabeer Bhatia (1968- ), co-founder of Hotmail

Sam Pitroda (1942- ), inventor, entrepreneur, policymakerSubhash Chandra (1950- ), chairman of the Essel Group, launched Zee TV, the first Hindi satellite television channelSuhas Gopinath (1986- ), notable for founding Globals Inc., an Information Technology (IT) company, at age 14Sunil Mittal (1957- ), chairman and managing director of Bharti EnterprisesT. V. Sundaram Iyengar (18771955), founder of the TVS GroupVenkat Rangan, Founder of Yodlee.com and Vice Chancellor of Amrita UniversityVijay Mallya (b. 1955), chairman of the United Breweries Group and Kingfisher Airlines, member of the upper house of the IndianParliament, and owner of several sports franchises and teams {Bangalore Royal Challengers}Vishal Gondal (b. 1976), founder of IndiagamesVivin Varghese Meleadan (b. 1988), co-founder of MVS Info Tech

Top Indian Entrepreneurs (Source-

Wikipedia)


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Entrepreneurial Failure

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Lack of Experienced Management Less Domain Knowledge Lesser Trained and Experienced Manpower Poor Financial Management Rapid Growth

Lack of Business Linkages Weak Marketing Efforts Lack of Information Incorrect Pricing

Lack of Control on Inventory Poor Monitoring Controls Organization Culture Short Term Outlook


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Businesses Founded Vs. Alive

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Proposed chart is from

the book Illusions ofEntrepreneurship: TheCostly Myths thatEntrepreneurs,Investors, and Policy

Makers Live By. Thedata come from aspecial tabulation by theBureau of the Censusproduced for the Office

of Advocacy of the U.S.Small BusinessAdministration.
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Failure Stastitics

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Instead, 67% of new ventures are successful after fouryears, says a study that contradicts the widely held beliefthat 90% of start-ups fail in year one.

The study of 12,185 companies found that 17% werewrongly considered failures because they had closed.Instead, owners deemed them successful, and closedthem after retiring or selling

He says many would-be entrepreneurs are scared by the

90% failure number, and that the new research couldencourage would-be entrepreneurs at a critical time.

Entrepreneurship, which leads to the small businessesthat create most new jobs, is hitting speed bumps. Theshare of all U.S. Workers who are self employed hit 50-year lows during much of last year.

Venture capitalists have cut investments in start-ups

since the technology bust and the stock market's swoon.Ventures most likely to survive begin with: v More than$50,000 in capital. Many companies fail becausefounders don't start with enough to cover expenses whilethey build revenue.


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Discussion ? Next Class

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Discussion?

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Documents

Chapter 1.1 - Entrepreneurship Overview