Entrepreneurs

Entrepreneurs

Characteristics of
Entrepreneurs
David McClelland describes the entrepreneur as
having a dominant psychological drive to achieve
following is the brief summary of entrepreneurial
personality.
Desire for responsibility
Preference for moderate risk
Confidence in personal success
Desire for immediate feedback
High level of energy
Skill at organizing
Value of achievement over money

More Characteristic of Successful

Entrepreneur
Proactive
Initiative
Assertiveness
Achievement Orientation
Sees acts on opportunities
efficiency orientation
concern for high quality work
Systematic planning
Monitoring
Commitment to Others
Commitment to work contract
Recognizing the importance of business relationship

Potential Drawbacks of
Entrepreneurship
Uncertainty of income
Risk of losing your entire invested
capital
Lower quality of life until the
business gets established
Complete responsibility

Factors influencing business failure

or success

Business cycles
Inflation
Interest rates
Access to capital
Government regulation

Specific reasons for business failure

Management incompetence
Lack of experience
Poor financial control
Lack of capital
Lax customer credit
Overinvesting in fixed assets
Failure to plan
Lack of strategic plan
Unplanned expansion
Inappropriate location
Lack of inventory control
Improper attitude

How to avoid pitfalls

Know business in depth

Plan
Understand financial statements
Manage financial resources
Seek professional assistance
Keep in tune with yourself

According to John Kao

Entrepreneurship is the attempts to create
values recognition of business opportunity, the
management of risk-taking appropriate to the
opportunity and through the communicative and
management skills to mobilize human financial
and material resources necessarily to bring a
project to fruition.
This definition recognizes that entrepreneurship
involves the fusion of capital technology and
human talent to complete a project successfully
and with reasonable degree of risk

According to John Kao

According to Kao, the most successful
entrepreneur is one who adapts himself to the
changing needs of the environment and makes it
hospitable for the growth of his business
enterprise.
This ECO (Entrepreneurship, creativity ad
organization) analysis frame work developed and
conceptualized by John J. Kao contributes a great
deal to the emergence as well as sustenance of
entrepreneurship and entrepreneurial talent in
the prevailing business environment.

Joseph Schumpeter
Entrepreneurship as defined essentially
consists in doing things that are not
generally done in the ordinary course of
business routine. It is an innovative function.
It is a leadership rather than an ownership.
He emphasized on the innovation process to
be undertaken by the entrepreneur.
Entrepreneur is required to gather resources,
organize talent and provide leadership to
make the business a commercial success.

According to Peter f. Drucker

Innovations is the specific tool of entrepreneurs,
the means by which they exploit changes as an
opportunity for a different business or a different
service. It is capable of being presented as a
discipline, capable of being learned and practiced.
Entrepreneurs need to search purposefully for the
sources of innovation, the changes and their
symptoms that indicate opportunities for
successful innovation. And they need to know and
apply the principles of successful innovations.

According to Peter f. Drucker

Entrepreneurship occurs when
resources are redirected to
progressive opportunities not used to
ensure administrative efficiency. He
further states that entrepreneurship
is not natural : it is not creative it is
work it requires entrepreneurial
management

In the words of B. Higgins

Entrepreneurship is meant the function of
seeking investment and production opportunity,
organizing an enterprise to undertake a new
production process, raising capital, hiring labour,
arranging the supply of raw materials, finding
site, introducing a new technique, discovering
new sources of raw materials and selecting top
managers for day to day operations of the
enterprise. This definition highlights risk-taking,
innovating and resource organizing aspects of
entrepreneurship.

Entrepreneur-EntrepreneurshipEnterprise
Entrepreneurship refers to an action
process of entrepreneur towards
establishing an enterprise. It is a
creative and innovative process and
adapting response to environment

Intra-preneurship
Intra-preneurship is concerned with innovation
that leads to new corporate divisions or
subsidiary venture in established larger firms.In
practice, corporate entrepreneurship is referred
as intra-preneurship. In corporate firm,
innovative employees disrupt the company in
constructive ways to instigate new products or
services
There is no assumption of personal risk, no
assumption of profit and no assumption of loss

Creativity
Creativity is the development of
ideas about product ,practices
,services and procedures that are
novel and potentially useful to the
organization

Innovation
Innovation is the implementation of
new ideas at the individual , group
and organization level

Creative Process
Three steps:
Generation of ideas-the generation of ideas in an
organization depends first and foremost on the flow
of people and information between the firm and its
environment. It is greatly stimulated by external
contacts.
Idea development-It is dependent on the
organizational structure ,culture and processes
within the organization
Implementation- this stage consist of those steps
that bring a solution or invention to the
marketplace.

Forms of Creativity
Creative Representation-it needs intimate
knowledge of whatever is sought to be
represented and also a freshness of perspective
Abstract and inferential creativity-the capacity
to transform a mess into a logical structure or
design is needed the most for this sort of
creativity(What-If)
Elaborative creativity-it deals with the process
of flushing out imaginatively an insight or an
abstraction or an inspired ideas. it requires
strength in associative thinking

Types of Creative Thinking

Convergent thinking
It consist of those abilities, which
helped a person get to the right
solution in problem that had one
right solution
Mechanism
Clarificatory- analytical-Synthesis
aiding-optimizing

Types of Creative Thinking

Divergent Thinking
It is and imaginative phase of
creative thinking. it is undertaking
search solutions that may involve
substantial departures from beaten
track . it involves using approaches
and perspectives that may be
uncommon or unusual, often
resulting in a variety of solutions .

Techniques
Brain Storming
Attribute analysis
Synectics-using a variety of
analogies in problem solving like
direct , personal , fantasy &symbolic
Checklist of questions

Process of creative problem

solving
Preparation-familiarizes himself with the
problem and require detailed analysis through
known procedures
Incubation- the process of thinking about a
problem subconsciously while being involved in
other activities
Illumination-it is the state of inspiration and
often accompanied by two distinct and vivid
impressions
Verification-it is an evolution or verification of
perspective solution

Creative Performance

Release of inner tension

Intrinsic satisfaction
Human necessity
Urge for creating original

Developing Organizational
Creativity and Innovation

Develop an acceptance of change

Encourage new ideas
Permit more interaction
Tolerance Failure
Provide clear objectives and freedom
to achieve them
Offer recognition

Strategic Management
Strategic Management the process of
developing a game plan it guide a
company as it strive to accomplish its
vision , mission, goal, and objectives and
to keep it from straying off course
Competitive Advantage-The aggregation
of factors that sets a small business apart
from its competitors and gives it a unique
position in the market superior to its
competition.

Competitive Advantage
Intellectual Capital-a key source of a
companys competitive advantage
that comprises
Human capital
Structural capital
Customer capital
Core Competencies-a unique set of
capabilities that a company develops in
key operational areas that allow it to
vault past competitors.

The Strategic management

procedure for small business
The Strategic management procedure for small business
should include the following features
Use relatively short planning horizon
Be informal and not overly structured
Encourage the participation of employees and outside parties to
improve the reliability and creativity of the resulting plan
Do not begin with setting objectives because extensive objective
setting early on may interfere with the creativity process of
strategic management
Maintain flexibility, competitive conditions change too rapidly for
any plan to be considered permanent
Focus on strategic thinking-linking long term goals to day-to-day
operation
Let planning be an ongoing process because business and the
competitive environment in which they operate constantly change

The Strategic Management

Process
Develop a clear vision and translate it into
meaningful mission statement
It is an expression of what an entrepreneur stands for and believes in.
it answer the question where are we going
Provides direction
Determine decisions
Motivate people

Mission Statement
An enduring declaration of a companys purpose that addresses the first
question of any business venture : what business am I in?
Elements
Purpose of the company : What are we in business to accomplish?
Business we are in : How are we going to accomplish that purpose?
Values of the company : What principles and beliefs from the foundation of the
way we do business?

The Strategic Management

Process
Assess the Companys Strength
and Weaknesses

Strength-positive internal factors that a company can use to

accomplish its mission , goals , and objectives. Eg. Special skill
or knowledge , a positive public image , an experienced sales
force , an established base of loyal customers , etc.
Weaknesses-negative internal factors that inhibit the
accomplishment of a companys mission , goals , and
objectives. Eg. A lack of capital , a shortage of skilled workers ,
the inability to master technology , and an inferior location etc.
The key to build a successful strategy is using the companys
underlying strength as its foundation and matching those
strengths against competitors weaknesses.

The Strategic Management Process

Scan the Environment for
Significant Opportunities and
threats facing the Business

Opportunities-positive external options that a firm can

exploit to accomplish its mission , goals , and objectives.
Eg.
Threats- negative external forces that inhibit a companys
ability to achieve it mission, goals , and objectives . Eg. A
government mandate regulating a business activity , an
economic recession , rising interest rates , technological
advances making a companys product obsolete
,competitors entering the local market etc.

The Strategic Management Process

Identify the key factors for
success in the Business

Key Success factor-the factor determine a companys ability

to compete successfully in industry
Based on cost factors-manufacturing cost per unit ,
distribution cost per unit , or development cost per unit.
Some are less tangible and less obvious but are just as
important , such as superior product quality , solid
relationships with dependable suppliers , superior customer
service , a highly trained and knowledgeable sales force ,
prime store locations , readily available customer credit ,
and many others

The Strategic Management Process

Analyze the Competition
Competitive intelligence program- it involves taking information
from the public domain , adding it to what you know about your
company and your industry , and looking for patterns
Avoid surprises from existing competitors new strategies and
tactics
Identifying potential new competitors
Improving reaction time to competitors actions
Anticipating rivals next moves
Competitor Analysis-Entrepreneurs should monitor closely the
actions of their direct competitors , maintain a solid grasp of where
their significant competitors are heading , and spend only minimal
resources tracking their indirect competitors
Direct Competitors offer the same products and services , and
customers often some of the same product

The Strategic Management Process

Competitive Profile matrix allows owners to
evaluate their firms against the major competitor
using the key success factor for that market
segment
The first step is to list the key success factor
identified in the strategic planning process and to
attach weights to them reflecting their relative
importance(weights in this matrix sum add up to
1.00)
The next step is to identify the companys major
competitors and to rate each one ( your company)
on each of key factors.

The Strategic Management Process

Knowledge Management the practice of gathering ,
organizing , and disseminating the collective wisdom
and experience of a companys employee for the
purpose of strengthening its competitive position.
The first step in creating a KM program is to take an
inventory of the special knowledge a company
possesses that gives it a competitive advantage. This
involves assessing the knowledge bank that employees
at all level of the organization have complied over time
the second step is to organize the essential knowledge
and disseminate it throughout the company to those
who need it.

The Strategic Management Process

Create Company Goals and Objectives

Goals-the broad long range attributes a business seeks to

accomplish , they tend to be general and sometimes even abstract.
Do you want to boost your market share? Does your cash balance
need strengthening? Do you want to develop new products or
services?
Objectives-more specific targets of performance , commonly
addressing areas such as profitability , productivity , growth, and other
key aspects of a business. Characteristics:
Specific
measurable
assignable
realistic, yet challenging
timely
written down

The Strategic Management Process

Formulate strategic options and select
the appropriate strategies

A Strategy is a road map of the actions an entrepreneur draws up to

achieve a companys mission , goals and objectives. In other words , the
mission , goals and objectives spell out the ends , and the strategy
defines the means for reaching them.
Three basic strategies are:
Cost leadership- a strategy in which a company strives to be the lowestcost producer relative to its competitors in the industry
Differentiation- a strategy in which a company seeks to build customer
loyalty by positioning its goods or services in a unique or different fashion.
Focus- a strategy in which a company selects one or more market
segments , identifies customers special needs , wants , and interests and
approaches them with a good or service designed to excel in meeting
those needs , wants , and interests.

The Strategic Options

COMPETITIVE ADVANTAGE

TARGET
MARKET

Uniqueness
perceived by
the customer

Low cost
position

Industry

Differentiation

Low cost

niche

Differentiation
focus

Cost focus

The Strategy in action

Responding quickly to customers needs
Remaining flexible and willing to change
Constantly searching for new , emerging market
segments
Building and defending market niches
Erecting switching costs through personal
service and loyalty
Remaining entrepreneurial and willing to take
risks and act with lightning speed
Constantly innovating

The Strategic Management Process

Translate Strategic Plan into
Action Plans

Implementing a strategy successfully requires both a

process that fits a companys culture and the right people
committed to making that process works.
To make their strategic plans workable , entrepreneurs
should divide them into projects , carefully defining each
one by the following
Purpose-what to accomplish?
Scope-which areas will be involved?
Contribution-how does it relate to other projects and
strategic plan?
Resource requirements-what resources are needed?
Timing-which schedules and deadlines will ensure project

The Strategic Management Process

Establish Accurate Controls

The most commonly used indicators of a companys

performance are financial measures
To judge the effectiveness of their strategies, many
companies are developing a balances scorecard, a set of
multidimensional measurement that a unique to a company
and that incorporate both financial and operational
measures to give managers a quick yet comprehensive
picture of a companys overall performance.

The Strategic Management Process

Establish Accurate Controls
Balance Scorecard

Customer Perspective : how do customer see us?-time, quality,

performance, service
Internal business perspective : at what must we excel?
Customer satisfaction and retention , company effectiveness and
efficiency ( quality , productivity ,costs, and others that
employees directly influence)
Innovation and learning perspective : can we continue to
improve and create value?- ability to l innovate , learn and
improvement
Financial perspective : how do we look to shareholders?
Measures focus on profitability , growth and shareholder
value(break financial goals into three categories : survival ,
success and growth).