UNIT IEntrepreneurial Management and EntrepreneursProf. G. Surender ReddyDirector, EDC, SNIST

Management• Management is the process of reaching organizational goals by

working with people and other resources. Another definition could be – knowing what you want people to do, and then getting them to do it the best way. Managers must concentrate on reaching organizational goals, and they should use their resources to accomplish those goals.

• For many years the management process has been divided into principles, sometimes called functions. The four functions are: planning, organizing, influencing, and controlling. Some people use decision making as a fifth principle, but decision making can be seen as part of the planning process. Also, some use leading instead of influencing, but the term influencing is better. These management principles are universal and applicable to all types of businesses and organizations.

Four Principles of Management• Planning – determining the organization’s goals and deciding how best to achieve

them. Planning involves choosing tasks that must be performed and how and when they will be performed. Decision making is also included with planning because it involves selecting the best course of action to achieve success.

• Organizing - assigning tasks to various individuals or groups; puts plan into action. People are given work assignments that contribute to achieving the goals. Organizing involves using your resources appropriately to reach the organization’s goals. Organizing is the primary way managers activate their plans.

• Influencing – guiding the activities of the organization’s members. Over the years, influencing has been referred to as motivating, directing, or leading. One way to influence people is through effective communication.

• Controlling – in the context of management, controlling is making things happen as planned. Controlling is the continuing process of monitoring the progress being made by your workers. Managers must make sure that the organization is performing as planned and will accomplish its goals. Controlling involves gathering information and measuring performance.

MEANING OF ENTREPRENEURSHIP• Entrepreneurship is the capacity and willingness to

develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses.

• Entrepreneurship combined with land, labor, natural resources and capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace.

Meaning (Contd.)• Jean-Baptiste Say, the French economist who is

credited with coining the word Entrepreneur around 1800, defined an entrepreneur thus: “Entrepreneurs shift economic resources from an area of lower productivity into an area of higher productivity and greater yield.”

• So, entrepreneur is actually from a French word, whose rough translation is supposed to be “undertaker” or “adventurer”, and has come to mean more commonly “one who attempts to profit by taking risk and initiative.”

Meaning (Contd.)Joseph Schumpeter (1883–1950), an economist, defined an entrepreneur as one who introduces something new in the economy:• A new method of production• A new or improved product• New sources of inputs, or• New markets, and the like.

Management Guru Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity.

Resources + Entrepreneur = Results

ENTREPRENEURIAL MANAGEMENT (EM)Managing a new venture differs from managing an existing operation along five key management issues:•Strategic orientation•Commitment to opportunity•Commitment of resources•Control of resources•Management structure

Vital Management Issues in EM• What is this venture about? (mission and values

statement)• Where should it go? (goals and objectives)• How will it get there? (growth strategy)• What does it need to get there? (people and

resources)• What structure is best? (organizational capabilities)• How much money does it need and when?

(financing strategy)• How will it recognize the final destination? (vision of

success)

ADVANTAGES OF BEING AN ENTREPRENEUR•Often people do not feel fully compensated

for the work they do. Becoming an entrepreneur means you can reap the benefits of all your hard work.

•Having control over your work schedule means that you can choose when to take time off and work the schedule that suits you best.

(Contd.)

Advantages (Contd.)•Entrepreneurs are able to make all of the

decisions relating to their company themselves; they have complete control. This allows for a huge degree of independence and a chance to shape one’s own career.

•Becoming an entrepreneur is a very exciting time, from the idea and start-up to the development and realisation of the product or service.

Advantages (Contd.)The advantages can be said to be:•Create their own destiny •Make a difference •Reach their full potential •Generate impressive profits •Contribute to society and be recognized

for their efforts •Do what they enjoy and have fun at it!

DISADVANTAGES OF BEING AN ENTREPRENEUR• Becoming an entrepreneur means you have to leave

behind the security of having a paycheck each month.

• Although entrepreneurs benefit from a flexible schedule they often have to work very long hours particularly in the start-up phase. Furthermore entrepreneurs’ work schedules are never predictable and they must deal with emergencies that may occur at any time.

(Contd.)

Disadvantages (Contd.)•Being responsible for all decisions can be

quite stressful and handling such responsibility can be difficult.

•There is also great risk attached to entrepreneurship. The success or failure of the business rests with the entrepreneur.

Disadvantages (Contd.)The disadvantages can be said to be:•Uncertainty of income –”The entrepreneur is

the last one to be paid.” •Risk of losing their entire investment •Long hours and hard work •Lower quality of life until the business gets

established •High levels of stress •Complete responsibility •Discouragement

FACTORS FEEDING THE ENTREPRENEURIAL FIREThe rapid increase in entrepreneurs has been a result of: • Considering entrepreneurs as heroes• Entrepreneurial education • Demographic and economic factors • Shift to a service economy • Technological advancements• Independent lifestyles • Commerce and the Internet • Additional international opportunities

Riddle for the Day

•I’m tall when I’m young and I’m short when I’m old. What am I?

Answer to the Riddle

•A candle

A Brain Teaser for You

•If an electric train is travelling south, which way is the smoke going?

Answer to the Brain Teaser

•There is no smoke, it’s an electric train!

Thought for the Day

“If you want to be an entrepreneur, it's not a job, it's a lifestyle. It defines you. Forget about vacations, about going home at 6 pm - last thing at night you'll send emails, first thing in the morning you'll read emails, and you'll wake up in the middle of the night. But it's hugely rewarding as you're fulfilling something for yourself.”

- Niklas Zennstrom

Assignment #1

•How important is management as a factor of production?