Enterperneurship and Notes

enterprisership&8212MGT602 VU Table of Contents Lesson No. Title / meridianic 1 Introduction 2 The Nature and Importance of enterprisership 3 enterpriserial assist/ Start up 4 The enterpriserial and Intrapreneurial opinion 5 The entrepreneurial and Intrapreneurial Mind (Contd ) 6 The Entrepreneurial and Intrapreneurial Mind (Contd ) 7 The Entrepreneurial and Intrapreneurial Mind (Contd ) 8 The Individual Entrepreneur 9 The Individual Entrepreneur (Contd ) 10 The Individual Entrepreneur (Contd 11 global Entrepreneurial Opportunities 12 International Entrepreneurial Opportunities 13 International Entrepreneurial Opportunities (Contd ) 14 International Entrepreneurial Opportunities (Contd ) 15 International Entrepreneurial Opportunities (Contd ) 16 Creativity and demarcation composition 17 Creativity and the Business Idea 18 Legal Issues for the Entrepreneur 19 Legal Issues for Entrepreneur (Contd ) 20 Legal Issues for the Entrepreneur (Contd ) 21 Creating and Starting the Ven ture 22 Creating and Starting the Business Venture (Contd 23 Creating and Starting the Venture (Continued) 24 Creating and Starting the Business aim Continued) 25 The Marketing Plan 26 The Marketing Mix 27 The organisational Plan 28 The Organizational Plan (Continued) 29 The Organization Plan (Contd ) 30 The Financial Plan 31 The Financial Plan (Continued ) 32 Pro Forma Sources and Uses of Funds 33 Pro causea Sources and Uses of Funds 34 wedge Lending Decision 35 Sources of Capital 36 Sources of Capital (Contd ) 37 Capital Sources in Pakistan Preparing for the b ar-assed Venture Launch Early perplexity Decisions 38 (Contd ) P season No. 3 06 08 13 15 18 20 22 24 26 29 33 35 37 39 40 43 46 49 52 54 56 58 60 62 65 68 70 72 75 77 81 83 85 87 89 91 95 copyright virtual(prenominal) University of Pakistan 1 Entrepreneurship&8212MGT602 VU 39 Preparing for the New Venture Launch Early Manage custodyt Decisions (Contd ) 40 Preparing for the New Venture Launch Early Managework forcet Decisions (Contd ) 41 Preparing for the New Venture Launch Early Management Decisions (Contd ) 96 97 99 42 Preparing for the New Venture Launch Early Management Decisions (Contd ) 43 New Venture expansion Strategies and Issues 44 New Venture Expansion Strategies and Issues (Contd 45 Entrepreneurship and Pakistan 102 103 105 108 copyright realistic University of Pakistan 2 Entrepreneurship&8212MGT602 INTRODUCTION Lesson 01 cultivation OBJECTIVES 1. 2. 3. 4. 5. VU 1. To introduce the concept of entrepreneurship and its historical learning. 2. To apologise the entrepreneurial ending routine. 3. To cite the basic geeks of jut out-up perils. 4. To condone the individual(prenominal) credit line office of entrepreneurship in scotch delaying. 5. To discuss the morals and racial responsibility of entrepreneurs. NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP The term entrepreneur comes from the french and translates surrounded by-taker or go-between. Earliest Period In t his check the m whizzy item-by-item (forerunner of the effecting jacket cr proclaimist) entered into a contract with the go-between to sell his well be boastds. While the capitalist was a passive find be ber, the merchant bore all the physical and stimulated bumps. Middle Ages In this age the term entrepreneur was used to secernate twain an actor and a person who managed declamatory yieldion shake offs. In such(prenominal) intumescent crossingion projects, this person did non take whatever pre tiltinesss, managing the project with the re reference works provided. A typical entrepreneur was the cleric who managed architectural projects. seventh Century In the 17th century the entrepreneur was a person who entered into a contract with the g everywherenment to perform a do Richard Cantillon, a noned economist of the 1700s, break danceed theories of the entrepreneur and is regarded as the appointer of the term. He viewed the entrepreneur as a risk taker who buys at legitimate hurt and sells at an uncertain price, on that pointfore operating at a risk. eighteenth Century In the 18th century the person with capital was severalize from the match slight who compulsory capital. In other(a) words, entrepreneur was distinguished from the capital provider. hardly a(prenominal) of the inventions developed during this time as was the case with the inventions of Eli Whitney and Thomas Edison were unable to pay invention themselves. Both were capital users (entrepreneurs), non capital providers ( gage capitalists. ) Whitney used expropriated opinion poll property. Edison raised capital from private sources. A approximate capitalist is a maestro money manager who dupes risk coronations from a kitty of truth capital to obtain a high gear rate of return on investments. 19th and twentieth Centuries In the late 19th and early 20th centuries, entrepreneurs were viewed roughlyly from an sparing perspective.The entrepreneur contri alonees his decl atomic number 18 initiative, skill and ingenuity in planning, organizing and administering the enterprise, assuming the chance of issue and gain. Andrew Carnegie is one of the outgo examples of this definition, building the Ameri foot steel industry on of the wonders of industrial world, primarily through his combat rather than creativeness. In the middle of the 20th century, the notion of an entrepreneur as an innovator was progressed. right of first publication virtual(prenominal) University of Pakistan 3 Entrepreneurship&8212MGT602Innovation, the act of introducing some(prenominal)thing impudently, is one of the al close to difficult labor movements for the entrepreneur. VU Edward Harriman and John Pierpont Morgan argon examples of this type of entrepreneur. Edward reorganized the Ontario and southern railroad track through the northern pacific trust and john developed his large banking house by reorganizing and finance the nations industries. This clev erness to enclose is an instinct that distinguishes adult anthropoid beingnesss from other creatures and fecal matter be observed passim memorial. DEFINITION OF ENTREPRENEUR The concept of entrepreneurship from a personalised perspective has been explored in this century.This exploration is reflected in the following terce definitions of an entrepreneur In most all definitions of entrepreneurship, at that place is agreement that we be talking about a kind of behavior that includes 1. Initiative pickings 2. The organizing and reorganizing or hearty/economic mechanisms to turn resources and postal services to practical account. 3. The acceptance of risk or misad think. To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into combinations that steel their value longer than before, and one who introduces changes, insertions, and a saucily clubhouse.To a psychologist, such a person is typically driven by certain forces- th e destiny to obtain something, to experiment, to accomplish or perhaps to pretermit the authority of others. Entrepreneurship is the participating crop of creating incremental wealth. Our definition of entrepreneurship involves four aspects 1. Entrepreneurship involves the macrocosm process. 2. It requires the devotion of the infallible time and effort. 3. It involves assuming the necessary risks. 4. The give backs of being an entrepreneur be independence, personal satisf follow out, and monetary vantage.For the person who actually actuates his or her own melodic line there is a high pop offure rate cod to poor sales, intense competition, lack of capital or lack of managerial capacity. THE ENTR EPRENEURIAL DECISION PROCESS (Deciding to become an entrepreneur by leaving read activity ) M either individuals cast difficulty bringing their ideas to the market and creating everyplacebold back entrepreneurship and the actual entrepreneurial purposes move over result ed in several meg spick-and-span vocationes being lowered end-to-end the world.Although no one knows the exact come in in the United States. Indeed, millions of conjectures ar lay down despite recession, inflation, high amour order, and lack of infra structure, economic uncertainty and the high probability of failure The entrepreneurial decision process entails a movement from something to something a movement from a point life style to forming a refreshed enterprise. To leave-taking a present live-style to stimulate something saucily comes from a negative forcedisruption. many an(prenominal) companies atomic number 18 organize by hoi polloi who ease up retired, moved, or been fired. other arrest of disruption secure Virtual University of Pakistan 4 Entrepreneurship&8212MGT602 is completing an developmental full point. The decision to start a spick-and-span company occurs when an individual perceives that forming a peeled enterprise is both desirable and come-at-able. VU KEY terms uncovering innovations A parvenu crossway with some technological change Business morality The study of behavior and morals in a course concern organisation situation Desirability of rising venture geological geological formation Aspects of a situation that score it desirable to start a vernal company.Entrepreneur Individual who takes risks and starts something stark naked Entrepreneur as an innovator An individual developing something unique Entrepreneurial decision process Deciding to become an entrepreneur by leaving present activity Entrepreneurship Process of creating something parvenue and assuming the risks and rewards secure Virtual University of Pakistan 5 Entrepreneurship&8212MGT602 THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP Lesson 02 VU scholarship OBJECTIVES 1. To introduce the concept of entrepreneurship and its historical nurture. . To explain the entrepreneurial decision process. Desirability of New Venture Formation (Aspects of a situation that fix it desirable to start a natural company) The erudition that outset a in the altogether company is desirable results from an individuals assimilation, subculture, family, teachers and peers. American culture places a high value on being your own boss, being a get throughment and making money therefore, it is not surprising to find a high rate of company formation in the United States.On the other hand in some countries making money is not as valued and failure whitethorn be a disgrace. The rate of business formation in these countries is not as high. Many subcultures that shape value systems execute in spite of appearance a heathen framework. Studies indicate that a high pctage of founders of companies had fathers and/or mothers who valued independence. boost to form a company is too gained from teachers, who can significantly perceive individuals. An area having a si sensitivey educational base is too a requirement for entrepreneurial activity.Peers are key, also, as is an area with an entrepreneurial pool and peer-meeting place. Possibility of New Venture Formation (Factors making it possible to shit a new venture) Although the relish of new venture formation derived from the individuals culture, subculture, family, teachers and peers ineluctably to be present before any action is taken, the imprimatur feature necessary centers around this question What makes it possible to form a new company? Formal education nd previous business accommodate sex give a voltage entrepreneur the skills unavoidable to form and manage a new enterprise. Although educational systems are primal in providing the needed business intimacy, individual leave take to the woods to be more than sure-fire in forming in fields in which they rent worked. The government also contributes by providing the infrastructure to answer a new venture. The market essential be large enough and the entrepreneur must(prenominal) put one across the marketing know-how to put together the entire package. Finally, pecuniary resources must be readily easy.Although most start-up money comes from personal savings, credit, and friends, but there is frequently a need for additional capital. Riskcapital availability plays an essential role in the development and addition of entrepreneurial activity. Copyright Virtual University of Pakistan 6 Entrepreneurship&8212MGT602 VU KEY TERMS Foundation companies A type of company formed from look and development that ordinarily does not go public. Gazelles Very high stupefyth ventures. givement as an innovator A government active in commercializing engineering High- potency ventures.A venture that has high growth probable and therefore receives great investor intimacy Entrepreneurship Entrepreneurship at bottom an existing business structure Iterative synthesis The intersection of knowledge and social need that starts the product development process Lifestyle blotto A footling venture that reserves the owners and usually does not grow Ordinary innovation Z new product with wee technological change Possibility of new venture formation Factors making it possible to create a new venture Copyright Virtual University of Pakistan 7 Entrepreneurship&8212MGT602 entrepreneurial PROCESS/START UPS Lesson 03 LEARNING OBJECTIVES 1. To post the basic types of start-up ventures. 2. To explain the role of entrepreneurship in economic development 3. To discuss the ethics and racial responsibility of TYPES OF START-UPS Life-Style Firms A lifestyle firm exists primarily to support the owners and usually has little growth probability.This type of firm may grow after several years to 30 or 40 employees. Foundation Companies VU A type of company formed from research and development that usually does not go public. This firm can grow in five to ten years from 40 to cd employees. High-Potential Venture A venture has high growth emf and therefore receives great investor interest. The company may start out comparable a foundation company, but its growth is far more rapid. afterward five to ten years the company could employ around ergocalciferol employees.These firms are also called gazelles and are most heavy for the economic development of an area ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT The role of entrepreneurship in economic development involves initiating change in the structure of business and society. iodine theory of economic growth depicts innovation as the key, not barely in developing new products, but also in excite investment interest. The new capital created carrys the capacity for growth (supply side), and new spending utilizes the new capacity and output (demand side. In spite of the immensity of investment and innovation in the economic development of an area, there is still a lack of understanding of few factors which are as follows The product-evolution process is the process through which innovation d evelops and commercializes through entrepreneurial activity, which in turn stimulates economic growth. It begins with knowledge in the base technology and ends with products or services available in the marketplace. The detailed point in the process is the intersection of knowledge and a acknowledge social need, called the iterative synthesis.This point oftentimes fails to pullulate into a marketable innovation. Most innovations introduced in the market are intermediate innovations, with little uniqueness. Technological innovations refer to new products with significant technological advancements. Breakthrough innovations mean the development of new products with some technological change. Regardless of the train of uniqueness or technology, each innovation evolves into and develops towards commercialization through one of three mechanisms the government, entrepreneurship, or entrepreneurship.Entrepreneurship has assisted in revitalizing areas of the Copyright Virtual Uni versity of Pakistan 8 Entrepreneurship&8212MGT602 VU inner city. Individuals in inner-city areas can relate to the concept and see it as a possibility for changing their present situation. GOVERNMENT AS AN INNOVATOR A government active in commercializing technology is cognize as an innovative government. Commercializing technology is frequently called technology transfer. However, few inventions resulting from government-sponsored research have reached the commercial market.Most of the by-products from scientific research have little act to any social need. The government lacks the business skills needed for successful commercialization. Government bureaucracy and red tape also often inhibit the timely formation of the business. Recently, federal labs have been demand to commercialize some of their technology each year and some are providing entrepreneurial training Intrapreneurship Intrapreneurship refers to entrepreneurship within an existing constitution or business structur e. Existing businesses have the financial resources, business skills, and arketing and distribution system to commercialize innovation successfully. Often the bureaucratic structure, emphasis on short-term pro tote ups, and structured placement inhibit creativity. many corporations have tried to strand an Entrepreneurial spirit in their organization, some in the form of strategic business units (SBUs. ) Intrapreneurship can also noseband the opening move between science and the marketplace. It is the practice of using entrepreneurial skills without victorious on the risks or accountability associated with entrepreneurial activities.It is practiced by employees within an established organization using a systemized business model. Employees, perhaps set-aside(p) in a special project within a big firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon. Capturing the dynamic nature of entrepreneurial c are ( act things until successful, learning from failures, attempting to conserve resources, etc. ) adds to the potential of otherwise stable organizations without exposing those employees or self mployed people to the risks or accountability normally associated with entrepreneurial failure. Employee Intrapreneur An employee Intrapreneur is the person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organisational environs. Thus, Intrapreneurs are inside entrepreneurs who follow the goal of the organization. Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources, capabilities and security of the larger firm to draw upon.Capturing a little of the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc. ) adds to the potential of an otherwise static organizations without exposing those employees to the risks or accountability normally associated with entrepreneurial failure Entrepreneurship The third method for bridging the gap between the science and the marketplace is via Copyright Virtual University of Pakistan 9 Entrepreneurship&8212MGT602 VU entrepreneurship. Many entrepreneurs have difficult time bridging this gap and creating new ventures.They may often lack managerial skills, marketing capabilities, or financial resources. They frequently do not know how to interface with banks, suppliers, customers, and distributors. Yet, entrepreneurship is the most effective method for bridging the gap and creating new enterprises, these activities affect an areas economy by building the economic base and providing jobs. entrepreneurial CAREERS AND EDUCATION Since 1985 there has been an add-on interest in entrepreneurial lifes fostered by factors such as increase media coverage of entrepreneurs and employment sh ifts.A conceptual model for understanding entrepreneurial careers views the career stages as interacting with other stages and events in the individuals life, the life-cycle approach. This approach conceptualizes entrepreneurial careers in nine categories. 1. Educational milieu 2. The individuals nature 3. puerility family environment 4. physical exercise write up 5. Adult development history 6. Adult family/non-work history 7. Current work situation 8. The individuals current perspective 9.The current family situation Although there exist a common perception that entrepreneur are less educated than the worldwide population however studies have found entrepreneurs overall and young-bearing(prenominal) entrepreneurs in particular, are far more educated than the familiar population. However, this education sometimes does not develop the specific skills needed in the venture, especially for women entrepreneurs. puerility influences have been explored, particularly in toll of v alues and the individuals personality . The traits most frequently researched are the need for achievement, locus of nurse, risk-taking, and sexual activity identity.The research on the childhood family environment of the entrepreneur has had more certain(prenominal) results. Entrepreneurs range to have freelance(a) fathers, and many also have entrepreneurial mothers. The family plays an pregnant role in establishing the desirability of entrepreneurship as a career. Employment history also has an touch on entrepreneur careers in both positive and a negative sense. Entrepreneurs tend to have a high probability of success when the venture created is in their field of experience. Negative switching (such as dissatisfaction with various aspects of ones job) also come ons entrepreneurship.Although no definite research has been through with(p) on the adult development history of entrepreneurs, it appears to also affect entrepreneurs careers. Ones development history has somewha t more of an impact on women, since they tend to start businesses at a later(prenominal) stage in life. there is a lack of data on adult family/non-work history and the available data adds little understanding towards entrepreneurial career development. Entrepreneurs are known for their strong work values, their long workdays, and their applyling management style. They tend to fall in love with the organization and go away sacrifice almost Copyright Virtual University of Pakistan 10 Entrepreneurship&8212MGT602 VU anything in order for it to survive. While in college, few future entrepreneurs realize that they exit lease entrepreneurship as their major life goal. Relatively few individuals will start a business immediately after graduation. Entrepreneurship education is a truehearted growing area in colleges and universities. While the courses vary by university, there is a great commonality, especially in the initial few courses. The skills required by entrepreneurs can be c lassified in to three master(prenominal) areas 1.Technical skills involve such things as writing, listening, oral presentations, coaching, and proficient know-how. 2. Business management skills include those areas involved in starting, developing and managing any enterprise. 3. Personal entrepreneurial skills disaccordentiate an entrepreneur from a manager and include inner chasteness (discipline), risk taking, innovativeness, persistence, visionary lead, and being change oriented. These skills and objectives form the basis of the standard approach to an entrepreneurship curriculum.Today entrepreneurs are recognizing the need to learn some of the science of management in an MBA program in order to grow their businesses effectively in the global environment. ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEURS The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social responsibility. A managers attitudes concerning bodily responsibility tend to be appurtenant of laws and professional codes of ethics. Entrepreneurs have few reference persons, role models, and developed internal ethics codes.Entrepreneurs are sensitive to peers constrict and social norms in the community as tumesce as extorts from their companies. While ethics refers to the study of whatever is right and inviolable for humans, business ethics concerns itself with the investigation of business practices in light of human values. The word ethics stems from the Greek ethos, meaning custom and usage. Development of Our respectable Concepts Socrates, Plato, and Aristotle provide the earliest books dealing with ethical conceptions earlier writings involving moral codes can be found in both Judaism and Hinduism.American attitudes on ethics result from three principle influences Judeo-Christian heritage, a article of belief in individualism and opportunities based on ability rather than social status. Research on business ethics can be low-pitched down into four abundant classifications 1. Pedagogically-oriented inquiry 2. Theory-building without empirical testing 3. a posteriori research, measuring the attitudes and ethical beliefs of students and academic faculty 4.Empirical research within business environments THE FUTURE OF ENTREPRENE URSHIP In spite of the differences in definition of entrepreneurship, there are common aspects such as risk taking, creativity, independence, and rewards. Entrepreneurship is currently being embraced by educational institutions, governments, societies, and corporations. Schools are increasing their emphasis on entrepreneurship in terms of courses and academic research. In Europe many universities have started programs in entrepreneurship. There has also been an increase in academic research, endowed chairs and centers of Copyright Virtual University of Pakistan 11 Entrepreneurship&8212MGT602 VU entrepreneurial activity. Governments have also promoted the growth of entrepreneurship. Individ uals are encourage to form new businesses and provided tax incentives, roads, and a communications system to assuage this creative process. round state governments are developing strategies for fostering entrepreneurial activity. The venture capital industry has benefited from lowering of capital gains tax rates and more relaxed rules regarding pension fund investment. Societys support of entrepreneurship is little in providing motivation and public support.The media has played a powerful role in developing public support. Media coverage uplifts the image of the entrepreneur and growth companies. Articles have appeared in newspapers such as New York Times, The Wall highroad Journal, and the Washington Post. Business magazines such as Barrons, Business Week, Forbes, and Fortune have provided coverage. Magazines such as Black Enterprise, Entrepreneur, Inc. , and Venture focus on issues of the entrepreneurial process. Television on both a national and local train has highlighted entrepreneurship. Large companies will continue to have a special interest in Entrepreneurship in the future.The largest 15 companies account for over 20 percent of the organic U. S. research and development. Other companies will create more new businesses through Entrepreneurship. KEY TERMS Product-evolution process Process for developing and commercializing an innovation Risk taking Taking calculated chances in creating and running a venture. Technological innovation A new product with significant technological advancement Technology transfer Commercializing the technology in the laboratories into new products Copyright Virtual University of Pakistan 12 Entrepreneurship&8212MGT602THE entrepreneurial AND INTRAPRENEURIAL MIND LEARNING OBJECTIV ES 1. To explain the aspects of the entrepreneurial process. 2. To explain the differences between entrepreneurial and managerial vie areas. 3. To explain the organizational environment conducive for entrepreneurship. 4. To identify the p ublic characteristics of an Entrepreneur. 5. To explain the process of establishing entrepreneurship in an organization. VU Lesson 04 ENTREPR E NEURIAL PROCESS The entrepreneurial process involves finding, evaluating, and developing an chance by overcoming the strong forces that resist the world of something new.Phase 1 Identifying and Evaluating the Opportunity Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources are often fruitful, including consumers and business associates. Channel members of the distribution system-retailers, wholesalers or manufacturers reps-are also helpful. Technically-oriented individuals often identify business opportunities when working on other projects. Each hazard must be carefully screened and evaluated-this is the most critical element of the entrepreneurial process. . The evaluation process involves looking at b. The foot and distance of the luck c. Its real and perceived value d. Its risks and return. e. Its fit with the skills and goals of the entrepreneur f. Its differential advantage in its competitive environment It is important to understand the cause of the opportunity, as the resulting opportunity may have a different market size and time dimension. The market size and the length of the window of opportunity are the primarily bases for ascertain risks and rewards.The risks reflect the market, competition, technology, and kernel of capital involved. The arrive of capital forms the basis for the return and rewards. The return and reward of the present opportunity take to be viewed in light of any possible subsequent opportunities as well. The opportunity must fit the personal skills and goals of the entrepreneur. The entrepreneur must be able to put forth the necessary time and effort required for the venture to succeed. One must trust in the opportunity enough to make the necessary sacrifices.Opportunity analysis, or an opportunity assessment plan, should focu s on the opportunity and provide the basis to make the decision, including a. A translation of the product or service b. An assessment of the opportunity c. Assessment of the entrepreneur and the squad d. Specifications of all the activities and resources needed e. The source of capital to finance the initial venture The most difficult aspect of opportunity analysis is the assessment of the opportunity. Phase 2 Develop a Business Plan A good business plan must be developed in order to exploit the opportunity defined.A good business plan is important in developing the opportunity and in determining the resources required, obtaining those resources and successfully managing the venture. Copyright Virtual University of Pakistan 13 Entrepreneurship&8212MGT602 VU Phase 3 follow the Resources Required. Assessing the resources needed starts with an appraisal of the entrepreneurs present resources. Any resources that are critical must be distinguished from those that are just helpful. mete out must be taken not to underestimate the amount and manakin of resources needed. Acquiring needed resources, while giving up as little control as possible, is difficult.The entrepreneur should try to maintain as large an possession position as possible, particularly in the start-up stage. As the business develops, more silver will probably be needed, requiring more ownership be relinquished. Alternative resource suppliers should be identified, along with their needs and desires, in order to structure a deal with the lowest cost and loss of control. Phase 4 Manage the Enterprise. The entrepreneur must employ these resources through implementation of the business plan. This involves implementing a management structure, as well as identifying a control system.KEY TERMS Administrative domain The ways managers make decisions Business plan The description of the future direction of the business bodily culture The environment of a particular organization Entrepreneurial domain Th e ways entrepreneurs make decisions Entrepreneurial process The process through which a new venture is created by an entrepreneur Entrepreneurial culture The environment of an entrepreneurial-oriented organization Entrepreneurship Entrepreneurship within an existing business organization Opportunity appellative The process by which an entrepreneur comes up with the opportunity for a new venture Opportunity parameters Barriers to new product creation and development give management commitment Managers in an organization strongly supporting entrepreneurship tralatitious managers Managers in a non-entrepreneurial-oriented organization Window of opportunity The time s elucidate consonant available for creating the new venture Copyright Virtual University of Pakistan 14 Entrepreneurship&8212MGT602 VUTHE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued) Lesson 05 LEARNING OBJECTIVES 1. To explain the aspects of the entrepreneurial process. 2. To explain the differences between ent repreneurial and managerial domains. 3. To explain the organizational environment conducive for entrepreneurship. 4. To identify the superior general characteristics of an entrepreneur. 5. To explain the process of establishing entrepreneurship in an organization. MANAGERIAL VERSUS ENTREPRENEURIAL DECISION making The difference between the entrepreneurial and managerial styles involves five business dimensions. strategical Orientation The entrepreneurs strategic orientation depends on his or her perception of the opportunity.This orientation is most important when other opportunities have fall returns accompanied by rapid changes in technology, consumer economies, social values or political rules. When the use of planning systems is the strategic orientation, there is more pressure for the administrative domain to be operant. Commitment to Opportunity The entrepreneurial domainis pressured by the need for action and has a short time span in terms of opportunity commitment. The ad ministrative domain (the ways mangers make decisions) is not only slow to act on an opportunity, but the commitment is usually for a longer time span. Commitment of Resources An entrepreneur is used to having resources affiliated at periodic intervals, often based on certain tasks or objectives being reached.In acquiring these resources the entrepreneur is forced to achieve significant milestones using really few resources. In the administrative domain, the commitment of resources is for the total amount needed. Administrative-oriented individuals receive personal rewards by effectively administering the resources under their control. Control of Resources The executive director is rewarded by effective resource administration and has a drive to own or accumulate as many resources as possible. The entrepreneur, under pressure of limited resources, strives to rent resources on an as-needed basis. Managerial Structure In the administrative domain, the organizational structure is for malized and hierarchical in nature.The entrepreneur employs a flat organizational structure with informal ne dickensrks. CAUSES FOR RECENT INTEREST IN INTRAPRENEURSHIP Copyright Virtual University of Pakistan 15 Entrepreneurship&8212MGT602 VU Interest in intrapreneurship has resulted from events occurring on social, cultural, and business levels. There is an increasing interest in doing your own thing. Individuals frequently desire to create something of their own. They want responsibility and want more exemption in their organizations. Frustration can develop and result in the employee becoming less productive or leaving the organization. This has recently caused more discontent in structured organizations.When meaning is not provided within the organization, individuals often search for an institution, such as entrepreneurship, that will provide it. Intrapreneurship is one method for stimulating and capitalizing on those who think that something can be done differently and bette r, such as Xerox Corporations commitment to Xerox Technology Ventures. It is important to instill the intrapreneurial spirit in an organization in order to pioneer and grow. In a large organization problems occur that thwart creativity and innovation. This growth and diversity that can result are critical, since large corporations are more efficient in a competitive market than are small firms.The resistance against flexibility, growth, and diversification can be overcome by developing a spirit of entrepreneurship, called Intrapreneurship, within the existing organization. There are social, cultural, and business pressures for Entrepreneurship. Hyper competition has forced U. S. companies to focus on new product development and increased productivity. Reductions in large corporations mental faculty are being absorbed in the workforce, particularly in small businesses. Entrepreneurial endeavors consist of four key elements. 1. New business venturing refers to the creation of new business within an existing organization. 2. Organizational innovativeness refers to product and service innovation with an emphasis on development and innovation in technology. 3.Self-renewal reflects the renewing of organizations through the renewal of the key ideas on which they are built. 4. Proactiveness includes initiative and risk taking, as well as competitive aggressiveness KEY TERMS Administrative domain The ways managers make decisions Business plan The description of the future direction of the business Corporate culture The environment of a particular organization Entrepreneurial domain The ways entrepreneurs make decisions Entrepreneurial process The process through which a new venture is created by an entrepreneur Entrepreneurial culture The environment of an entrepreneurial-oriented organization Entrepreneurship Copyright Virtual University of Pakistan 16 Entrepreneurship&8212MGT602Entrepreneurship within an existing business organization Opportunity appointment T he process by which an entrepreneur comes up with the opportunity for a new venture Opportunity parameters Barriers to new product creation and development Top management commitment Managers in an organization strongly supporting Entrepreneurship traditionalistic managers Managers in a non-entrepreneurial-oriented organization Window of opportunity The time period available for creating the new venture VU Copyright Virtual University of Pakistan 17 Entrepreneurship&8212MGT602 VU THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued) Lesson 06 LEARNING OBJECTIVES 1. 2. 3. 4. 5. To explain the aspects of the entrepreneurial process. To explain the differences between entrepreneurial and managerial domains. To explain the organizational environment conducive for entrepreneurship. To identify the general characteristics of an entrepreneur. To explain the process of establishing entrepreneurship in an organization.CORPORATE VERSUS INTRAPRENEURIAL CULTURE Smaller, aggressive, entrepre neurial firms are developing more new products and becoming dominant in certain markets. Many companies are attempting to create the same spirit, culture, and rewards of entrepreneurship in their organizations. The typical corporate culture has a climate and reward system that favors conservative decision making. strain is on gathering large amounts of data as the basis for a rational decision. Risky decisions are often postponed until hard facts are collected or a consultant is hired. Often there are so many approvals required that no individual feels personally responsible for the project. The steer principles in a traditional corporate culture are 1. 2. 3. 4. 5. 6.Follow instructions given Do not make mistakes Do not fail Do not take initiative Stay within your sod and protect your backside This restrictive environment is not conducive to creativity, flexibility, and risk taking The guiding principles of intrapreneurs Aspects of an Entrepreneurial culture are quite different 1. 2. 3. 4. 5. Develop visions, goals, and action plans Be rewarded for actions taken Suggest, try, and experiment Create and develop Take responsibility and ownership There are differences in the norms of the two cultures. The traditional culture is hierarchical in nature, with established procedures, lines of authority, and control mechanisms. These support the present corporate culture, and do not encourage new venture creation.The culture of an intrapreneurial firm has a flat organizational structure with engagementing, teamwork, sponsors, and mentors. conterminous working relationships help establish an atmosphere or trust that facilitates acquirement of visions. Individuals make suggestions across functional areas, resulting in cross-fertilization of ideas. The two cultures evoke different types of individuals and management styles. Copyright Virtual University of Pakistan 18 Entrepreneurship&8212MGT602 VU Motivation handed-down managers are motivated primarily by promot ion and typical corporate rewards. Entrepreneurs and intrapreneurs thrive on independence and the ability to create.Intrapreneurs expect their cognitive process to be suitably rewarded. There are also time orientation differences. Managers emphasize the short run, entrepreneurs the long run, and intrapreneurs somewhere in between. Intrapreneurs use a shopping mall mode between delegation of managers and direct involvement of entrepreneurs. Entrepreneurs and intrapreneurs are break risk takers managers are much more cautious. Most entrepreneurs fail at least once, and Intrapreneurs learn to conceal risky projects from management until the last possible moment. Traditional managers tend to be most concerned about those at higher levels, entrepreneurs serve self and customers, and intrapreneurs add sponsors.CLIMATE FOR INTRAPRENEURSHIP In establishing an Intrapreneurial environment, certain factors and drawing cardship characteristics need to be present. The first of these is that the organization operates on the frontiers of technology. Since research and development are key sources for new product ideas, the firm must operate on the cutting edge of technology and encourage and supporting new ideas sort of of discouraging them. Second is experimentation, or trial and error, is encouraged. Successful new products usually do not appear fully developed instead they evolve. A company wanting to establish an intrapreneurial spirit has to establish an environment that allows mistakes and failures.Without the opportunity to fail, few corporate intrapreneurial ventures will be developed. Third an organization should make sure that there are no initial opportunity parameters, such as turf protection, inhibiting creativity in new product development. Fourth, the resources of the firm need to be available and easily accessible. Often, insufficient cash are allocated not to creating something new but instead to solving a problem that have an immediate effect on the bo ttom line. Some companies, such as Xerox, 3M, and AT&038T have established intermit venture capital areas for funding new internal ventures. Fifth a multidisciplinary team approach needs to be encouraged.One key to Intrapreneurial success is the being of skunkworks involving key people. Developing the needed team work for a new venture is further complicated by the fact that a team members promotion within the corporation is related to performance in the current position, not in the new venture. The corporate environment must establish a long time horizon for evaluating the success of the overall program. Sixth the spirit of intrapreneurship cannot be forced on individuals it must be voluntary. Most managers in a corporation are not capable of being successful intrapreneurs. Those who do emerge from this self pick process must be allowed the latitude to carry a project through to completion.An intrapreneur falls in love with the new venture and will do almost anything to ensure i ts success. The seventh characteristic is a reward system. The intrapreneur needs to be appropriately rewarded for the cleverness and effort expended on the new venture. An equity position in the new venture is one of the best motivational methods. Eight a corporate environment favorable for intrapreneurship has sponsors and champions passim the organization that supports the creative activity and resulting failures. Finally the intrapreneurial activity must be whole-heartedly supported by top management. Copyright Virtual University of Pakistan 19 Entrepreneurship&8212MGT602 VUTHE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued) Lesson 07 LEARNING OBJECTIVES 1. 2. 3. 4. 5. To explain the aspects of the entrepreneurial process. To explain the differences between entrepreneurial and managerial domains. To explain the organizational environment conducive for entrepreneurship. To identify the general characteristics of an Entrepreneur. To explain the process of establishing entr epreneurship in an organization. INTRAPRENEURIAL LEADERSHIP CHARACTERISTICS There are certain individual characteristics needed for a person to be successful Entrepreneurs, including 1. rationality the environment 2. Being visionary and flexible 3. Creating management options 4.Encourage teamwork while employing a multi-disciplined approach 5. Encouraging open discussion 6. Building a coalescency of supporters, and persisting An Entrepreneur needs to understand all aspects of the environment. Part of this ability is reflected in individuals level of creativity. Creativity tends to decrease with age and education. The individual must be creative and have a broad understanding of the internal and external environments of the corporation. The intrapreneurial person must be a visionary leader-a person who dreams great dreams. Leadership is the ability to dream great things and communicate them in a way that people say yes to being a part of the dream.To establish a successful new vent ure, the intrapreneurial leader must have a dream and overcome all obstacles to achieve it. The third necessary characteristic is that the intrapreneur must be flexible and create management options. An intrapreneur is open to and encourages change. By challenging the beliefs and assumptions of the corporation, an intrapreneur can create something new in the organization structure. He or she must possess the ability to encourage teamwork and use a multi-disciplined approach. Every new company formation requires a broad range of business skills. The intrapreneur must be a good diplomat to minimize disruption. Open discussion must be encouraged to develop a good team for creating something new.Many corporate managers have forgotten that frank, open discussion is part of the learning process. A successful venture can be formed only when the team feels the freedom to disagree and to critique an idea. The degree of openness among the team depends on the degree of openness of the intrapre neur. Openness leads to a strong coalition of supporters and encouragers. The intrapreneur must encourage each team member, particularly during hard times. A good intrapreneur makes everyone a hero. Only through persistence will a new venture be created and successful commercialization result. ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATION To establish an intrapreneurial environment, the organization must implement a procedure.This can be done internally, but it is easier to use an outsider to facilitate the process. This is particularly true when the environment is very traditional. There are some move involved in it. maltreat 1 The first step is to secure a commitment to intrapreneurship in the organization by top, upper, and middle management. Without top management commitment, the organization will never be able to make the necessary changes. Once top management has committed to intrapreneurship for a sufficient length of time, the concept is introduced throughout the organ ization. This is effectively accomplished through seminars. General guidelines need to be Copyright Virtual University of Pakistan 20 Entrepreneurship&8212MGT602 VU stablished for intrapreneurial venture development. Next, intrapreneurial leaders need to be identified, selected, and trained. flavor 2 Ideas and general interest areas should be identified, along with the amount of risk money that is available. The overall expectations and target results should be established, specifying time frame, profitability requirements, and impact of the organization. A mentor/sponsor system needs to be established. mensuration 3 A company needs to use technology to make itself faster and more flexible. Technology has allowed small companies to act like they are big ones. Large companies can use technology to make them reactive and flexible.Step 4 The organization can use a group of managers to train and component part their experiences with other members. These sessions should be conducted one day per month for a specified period of time. Information about intrapreneurship and about the companys specific activities should be well publicized. Step 5 The organization needs to develop ways to get closer to its customers by tapping the data base, hiring from smaller rivals, and helping the retailer. Step 6 An organization must learn to be more productive with fewer resources. With middle management cutbacks, more control has been given to lower levels of the organization. The span of control should be increased. Step 7 The organization needs to establish a strong support structure.Because they do not immediately affect the bottom line, intrapreneurial activities can be overlooked and receive little funding. These ventures require flexible, innovative behavior, with the intrapreneurs having total authority over expenditures and access to funds. Step 8 The support must involve trying the rewards to the performance of the intrapreneurial unit. This encourages team members t o work harder and compete more effectively. The equity subdivision of the compensation is particularly difficult to handle. Step 9 The organization needs to implement an evaluation system that allows successful units to expand and unsuccessful ones to be eliminated.PROBLEMS AND SUCCESSFUL EFFORTS Intrapreneurship, also called corporate venturing, is not without problems. One study found that new ventures started within a corporation performed worse than those started independently. Independent start-ups tend to outperform corporate start-ups. There are many examples of companies that have successfully implemented intrapreneurship. 3M allows employees to devote 15 percent of their time to independent projects. afterward failing to recognize the potential of Wozniaks personal computer, Hewlett-Packard has taken steps to take advantage of future opportunities. Even IBM has developed the independent business unit concept. The problems of ntrapreneurship are not insurmountable, and the concept can lead to new products, growth and the development of an entirely new corporate environment and culture. Copyright Virtual University of Pakistan 21 Entrepreneurship&8212MGT602 THE someone ENTREPRENEUR Lesson 08 LEARNING OBJECTIV ES 1. To identify some key entrepreneurial feelings and motivations. 2. To identify key elements in an entrepreneurs ground. 3. To discuss the importance of role models and support systems. 4. To identify the resemblingities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs. VU ENTREPR E NEURIAL FEELINGS There is no true entrepreneurial profile- entrepreneurs come from many educational backgrounds, family situations, and work experiences.A potential entrepreneur may presently be a nurse, secretary, conference line worker, sales person, mechanic, home maker, manager or engineer. A potential entrepreneur can be male or female and of any race or nationality. locale of Contr ol One concern people have when forming is whether they will be able to sustain the drive and energy required to form something new and to manage the new enterprise and make it grow. While research results are inconsistent, internal control seems to be a characteristic of entrepreneurs. Internal beliefs appear to differentiate entrepreneurs from the general public, but not from managers. Managers and entrepreneurs both have an internality tendency. Feelings about Independence and Need for Achievement.The entrepreneur also has the need for independence, to do things in his or her own way and time. Another controversial characteristic is the entrepreneurs need for achievement. McClelland specified three attributes as characteristics of entrepreneurs 1. Individual responsibility for solving problems and setting and achieving goals. 2. Moderate risk taking as a function of skill. 3. Knowledge of results of decision/task accomplishment. McClelland concluded that a high need for achieveme nt leads individuals to engage in entrepreneurial behavior, although other studies have been inconsistent. Risk Taking Risk taking seems a part of the entrepreneurial process.However, it has not yet been empirically established whether risk-taking is a distinguishing characteristics of entrepreneurs. ENTREPR E NEURIAL BACKGRO UND AND CHARACT E RIST ICS Only a few background characteristics have differentiated the entrepreneur from the general populace or managers. Childhood Family Environment The impact of birth order and social status has had conflicting research results. There is strong evidence that entrepreneurs, both male and female, tend to have self-employed or entrepreneurial fathers. Having a father who is self-employed provides a strong inspiration in the example of independence and flexibility of self-employment.This feeling of independence is often further enforced by an entrepreneurial mother. The overall parental Copyright Virtual University of Pakistan 22 Entreprene urship&8212MGT602 VU relationship may be the most important aspect of the childhood environment in establishing the desirability of entrepreneurial activity. Parents of entrepreneurs need to be supportive and encourage independence, achievement, and responsibility. This supportive relationship appears to be most important for females. Female entrepreneurs tend to grow up in middle- to upper-class environments, where families are child-centered, and are similar to their fathers in personality.KEY TERMS Departure points The activities occurring when the venture is started Inventor An individual who creates something new Locus of control An attribute indicating the sense of control that a person has over life Moral-support network Individuals who give psychological support to an entrepreneur Entrepreneurship MGT602 VU Copyright Virtual University of Pakistan 23 Entrepreneurship&8212MGT602 VU THE INDIVIDUAL ENTREPRENEUR (continued) Lesson 09 LEARNING OBJECTIVES 1. To identify some key entrepreneurial feelings and motivations. 2. To identify key elements in an entrepreneurs background. 3. To discuss the importance of role models and support systems. 4. To identify the similarities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs.ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS Education Education appears important in the upbringing of the entrepreneur, in the level of education obtained and in playing a major role in coping with problems. Although formal education is not necessary for starting a new business, it does provide a good background. In education, female entrepreneurs previously experienced some disadvantage, with few having degrees in engineering, science, or math. The ability to deal with people and communicate intelligibly in written and spoken work is also important. Personal determine Studies have failed to indicate that entrepreneurs can be differentiated on personal valued fr om managers, unsuccessful entrepreneurs, or the general public. Leadership, support, aggression, benevolence, conformity, creativity, veracity, and resource seeking may also be important.A successful entrepreneur is frequently characterized as a winner winning may be a prerequisite for his or her actually becoming one. Age Entrepreneurial age is the age of the entrepreneur reflected in the experience. Entrepreneurial experience is one of the best predictors of success. In chronological age, most entrepreneurs start their careers between ages 22 and 55. Earlier starts in an entrepreneurial career seem to be better than later ones. Generally, male entrepreneurs start their first venture in their early 30s, while women tend to do so in their middle 30s. Work History Dissatisfaction with ones job often motivates the launching of a new venture. Previous technical and industry experience is also important once the decision to start a business is made.Experience in the following areas is p articularly important financing product or service development manufacturing development of distribution conduct and preparation of a marketing plan. As the venture becomes established, managerial experience and skills become more important. Entrepreneurial experience becomes increasingly important as the complexity of the venture increases. MOTIVATION While motivations may vary, the reason cited most often for becoming an entrepreneur independence-not wants to work for anyone else. Other motivating factors differ between male and female entrepreneurs. Money is the second reason for mens starting a venture. Job satisfaction, achievement, opportunity, and money are the second order reasons for women. Copyright Virtual University of Pakistan 24 Entrepreneurship&8212MGT602 VUKEY TERMS Motivations That causes people to do something Need for achievement An individuals need to be recognized Need for independence. Being ones own boss-one of the strongest needs of an entrepreneur Professi onal-support network Individuals who help the entrepreneur in business activities Role models Individuals influencing an entrepreneurs career choice and style Social status The level at which an individual in viewed by society Work history The past work experiences of an individual Copyright Virtual University of Pakistan 25 Entrepreneurship&8212MGT602 VU THE INDIVIDUAL ENTREPRENEUR (continued) Lesson 10 LEARNING OBJECTIVES 1. To identify some key entrepreneurial feelings and motivations. 2.To identify key elements in an entrepreneurs background. 3. To discuss the importance of role models and support systems. 4. To identify the similarities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs. ROLE MODELS AND SUPPORT SYSTEMS One of the most important factors influencing entrepreneurs in their career choice is role models. Role models can be parents, relatives, or successful entrepreneurs in the community. Role mod els can also serve in a supportive capacity as mentors during and after the new venture is launched. This support system is most crucial during the start-up phase.It is important that an entrepreneur establish connections to support resources early in the venture formation process. As contacts expand they form a network with density (extensiveness of ties between two individuals) and centrality (the total distance of the entrepreneur to all other individuals. ) The strength of ties between the entrepreneur and any individual is dependent on the frequency, level, and reciprocity of the relationship. An informal network for moral and professional support benefits the entrepreneur. Moral-Support interlocking It is important for the entrepreneur to establish a moral support network of family and friends. Most entrepreneurs indicate that their spouses are their biggest supporters.Friends can provide advice that is more honest than that received from others, plus encouragement, understan ding, and assistance. Relatives can also be sources of moral support, particularly if they are also entrepreneurs. Professional-Support Network The entrepreneur also needs advice and counsel, which can be obtained from members of a professional support network. A mentor-protege relationship is an excellent way to secure the needed professional advice. The mentor is a coach, sounding board, and advocate. The individual selected needs to be an expert in the field. An entrepreneur can initiate the mentor-finding process by identifying and contacting a number of experts.The mentor should be periodically apprised of the progress of the business so that a relationship can gradually develop. Another source of advice is a network of business associates. Self-employed individuals who have experience in starting a business are good sources. Clients and buyers are also important as they provide word-of-mouth advertising. Suppliers are good components of the professional-support network-they he lp to establish credibility with creditors and customers, and provide good information on trends in the industry. Trade associations are good network additions, as they keep up with new developments and can provide overall industry data. Affiliations ith individuals developed in hobbies, sporting events, civic involvements and school alumni groups are excellent sources of referrals, advice, and information. Each entrepreneur needs to establish both a moral- and a professional-support network to share problems with and gain overall support. MALE VERSUS FEMALE ENTREPRENEURS Women are now starting new ventures at three times the rate of men. Women form over 70 Copyright Virtual University of Pakistan 26 Entrepreneurship&8212MGT602 VU percent of all new businesses. Women now own over 8. 5 million small businesses, an increase of over 45 percent since 1990. In some respects female entrepreneurs possess very different motivations, business skills, and occupational backgrounds.Factors in the start-up process for male and female entrepreneurs are different, especially in such areas as support systems, sources of funds, and problems. Men are motivated by the drive to control their own destinies. Women tend to be more motivated by the need for achievement arising from job thwarting. Departure points and reasons for starting the business are similar for both men and women. Both generally have a strong interest and experience in the area of their venture. For men, the transition to a new venture is easier when the venture is an outgrowth of a present job. Women often leave a previous occupation with a high level of frustration and enthusiasm for the new venture rather than experience.Start-Up Financing Males often have investors, bank loans, or personal loans in addition to personal funds as sources of startup capital. Women usually rely solely on personal assets or savings. Obtaining financing and lines of credit are major problems for women. Occupations Both groups te nd to have experience in the field of their ventures. Men more often have experience in manufacturing, finance, or technical areas. Most women usually have administrative experience, often in service-related fields. Personality Both men and women tend to be energetic, goal-oriented, and independent. Men are often more cocksure and less flexible and tolerant than women. Backgrounds The backgrounds of male and female entrepreneurs tend to be similar.Women are little older when they embark on their careers. Men often have studied in technical- or business-related areas, while women tend to have liberal arts education. Many women busi