ENTREPRENEURSHIP &

FAMILY BUSINESS
MANAGEMENT
SESSION 1
GROUP 6
Evolution of Entrepreneurship
• The word entrepreneur is derived from the French word entreprendre,
meaning “to undertake”.
• The entrepreneur is one who undertakes to organize, manage and
assume the risk of a business .

• Today, Entrepreneur is an innovator who recognizes and seizes

opportunities
converts opportunities into marketable ideas
adds value through time, effort, money, skills
assume risk of the competitive marketplace to implement these ideas
and realizes rewards from these.
• 18th Century – Entrepreneurship was introduced by
economists as a topic of discussion and analysis.
• 19th Century- It continued to attract the interest of
economists.
• 20th Century- The word entrepreneurship was closely
linked with free enterprise and capitalism.
-recognized that entrepreneurs serve as
agents of change ; Provide creative ideas for business
enterprise and help in growth and become profitable.
• 21st Century- Entrepreneurs are considered as heroes of free enterprise
-Entrepreneurship is a dynamic process of vision, change, and
creation.
Myths of Entrepreneurship
Myth 1 : Entrepreneurs Are Doers , Not Thinkers

• Reality: Although entrepreneurs are action oriented,

but they are also a thinkers
• They make careful plan & strategy.
• Entrepreneur will try to come out with alternative
action towards a solution.
• In the era of globalization & hyper-competition,
entrepreneurs need to be good thinkers.
Myth 2: Entrepreneurs are born, not made

• The idea that the characteristics of entrepreneurs cannot be taught or

learned. Entrepreneurs are born with special traits or characteristics.
• Traits such as include aggressiveness, initiative, drive, a willingness to
take risks, analytical ability, and skill in human relations.
• Reality: Like all disciplines, entrepreneurship has models, processes,
and case studies that allow the traits to be acquired through learning.
• Reality: Research has proven that entrepreneurs can be produced, and
it is not limited to certain race, group or individuals.
Myth 3: Entrepreneurs are always inventors

• Not all inventors are entrepreneurs.

• Reality: Many successful entrepreneurs are not inventors, but rather
use creative ideas in doing something. They will modify & innovate to
suit the market demand
Myth 4: Entrepreneurs are academic and
social misfits
• This myth results from people who have started successful enterprises
after dropping out of school or quitting a job
• Long time ago, educational and social organisations did not recognise
the entrepreneur
• Reality: The entrepreneur is now viewed as a highly educated
professional, who is well versed and sociable with excellent
communication skills, and strives in economic development of the
community & the country.
Myth 5: Entrepreneurs must fit the "profile"

• Many books & articles have presented checklists of characteristics of

the successful entrepreneur
• Reality: It is not necessary for the individual to have ALL the
characteristics, as described previously, to become a success (only
some will do).
Myth 6: All Entrepreneurs Need Is Money

• Every biz. venture needs capital to survive

• Large number of business failures occur because of lack of financing
• Failure due to lack of financing indicates other problems
• Managerial incompetence;Lack of financial understanding; Poor
investments; Poor planning; Reality: Money is a resource, not the
ultimate objective.
Myth 7: All Entrepreneurs Need Is Luck
• Being in the right place at the right time is always an advantage
• "Luck" happens when preparation meets opportunity
• What appears to be lucky could really be several other factors
a. Preparation & hard works
b. Determination
c. Desire
d. Knowledge
e. Innovativeness
Myth 8: Ignorance is bliss for an entrepreneur
• The myth that too much planning and evaluating will give rise
to problems. In the competitive world of business, which
demanded detailed planning & preparation, entrepreneur should
be equipped with solid knowledge and strategies, which would
be keys to success.
• Reality: Careful planning- Not ignorance is regarded as
beneficial, since Key success factors are;
• a. ability to identify strengths and weaknesses of a venture
b. Setting up clear timetables with contingencies for handling
problems
• c. Minimizing problems through careful strategy
formulation
• - Careful planning is the mark of an accomplished
entrepreneur
Myth 9: Entrepreneurs seek success but
experience high failure rates.

• Many entrepreneurs suffer a number of failures before they are

successful
• Failure can teach many lessons to those who are willing to learn and
failure often leads to future success
Myth 10: Entrepreneurs are extreme risk takers
(gamblers)
• The concept of risk is a major element in the entrepreneurship process
• While it may appear that an entrepreneur is "gambling" on a wild
chance, the fact is that the entrepreneur is usually working on a
moderate or "calculated" risk
• Reality: Most successful entrepreneurs work hard through planning &
preparation to minimize the risk involved.
Recent Trends in Research & Education
1. The entrepreneurial and managerial domains are not mutually
exclusive but overlap to a certain extent.
2. Venture financing, including both venture capital and angel capital
financing as well as other innovative financing techniques,
emerged in the 1990s with unprecedented strength.
3. Intrapreneurship (that is, entrepreneurship within large
organizations) and the need for entrepreneurial cultures have
gained much attention during the past few years.
4. Entrepreneurial entry strategies have been identified that show
some important common denominators, issues, and trade-offs.
Recent Trends in Research & Education
5. The great variety among types of entrepreneurs and the methods
they have used to achieve success have motivated research on the
psychological aspects that can predict future success
6. The risks and trade-offs of an entrepreneurial career have been
subject of keen research interest.
7. Women and minority entrepreneurs have emerged in
unprecedented numbers.
8. The entrepreneurial spirit is universal.
The age of “Gazelles”
A “gazelle” is a business establishment with at
least 20% sales growth every year (for five years),
starting with a base of at least $100,000.

• Gazelles are leaders in innovation.

• Gazelles produce twice as many product
innovations per employee as do larger firms.
Internet & Ecommerce
Smaller ventures use the Internet for a variety of operations, including
customer-based identification, advertising, consumer sales, business-to-
business transactions, e-mail, and private internal networks for employees.
E-commerce is the new wave in transacting business.
Advantages:
• Ability of small firms to compete with other companies both locally and
nationally.
• Convenient and easy way of doing business transactions.
Challenges:
• Avoiding being a victim of fraudulent activities online.
• Handling the costs required to maintain
the site.
APPROACHES TO ENTREPRENEURSHIP
• Schools of Thought Approach
• Process Approaches
• Integrative Approach
• Entrepreneurial Assessment Approach
• Multidimensional Approach
Schools of Thought Approach
Macro View
• The macro view presents a broad array of factors that relate to
success and failure in contemporary entrepreneurship ventures
• Includes external processes which are beyond the control of the
entrepreneur
• Three schools of thought breaks down the macro view –
1. Environmental School of thought
2. Financial School of Thought
3. Displacement School of Thought
1. Environmental School of Thought
• Deals with external factors that affect a potential entrepreneur's
lifestyle which can be positive or negative forces
• Focus on institutions, values and morals which grouped together
forms a sociopolitical environmental framework that strongly
influences development of entrepreneurs

• Another factor that affect the potential development of an

entrepreneur is their social group i.e. atmosphere of friends and
family can influence the desire to become an entrepreneur
2.Financial/Capital School of Thought
• Capital Seeking process - Deals with seed and growth capital
• This school of thought views the entrepreneurial venture from a
financial management standpoint
3. Displacement School of Thought
• Focuses on the negative side of group phenomena, in which someone feels
out of place
• It holds that the group hinders a person from advancing or eliminates
certain critical factors needed for that person to advance
• The frustrated person will be projected into entrepreneurial pursuit out of
his or her motivations to succeed
• There are three types of displacement –
i. Political displacement : This is caused by factors ranging from an
entire political regime that rejects free enterprise to governmental
policies and regulations that limit or redirect certain industries
( Contd )
ii. Cultural Displacement : Deals with social groups precluded
from professional fields. E.g. Ethnic background,religion,race etc. This
experience is highly likely to turn various individuals from standard
business professions to entrepreneurship
iii. Economic Displacement : Concerned with economic variation of
recession and depression such as job loss,capital shrinkage or “bad
times”.
THE MICRO VIEW OF ENTREPRENEURSHIP
• Examines the factors that are specific to entrepreneurship and are
part of internal locus of control.
• The potential entrepreneur has the ability to direct or adjust the
outcome of each major influence.
The Entrepreneurial Trait School of Thought
• This approach focuses on researches about successful entrepreneurs
and recognizing similar traits and characteristic that if copied could
increase success opportunities for the emulators. They believe that
certain attributes are usually exhibited by entrepreneurs (creativity,
determination etc.).
• The influences of family and education are also examined.
• Some researchers argue that educational involvement challenges
entrepreneurial nature and kills creativity. The family development is
considered very important in the creation of entrepreneur; certain
traits established and supported early in life will lead eventually to
entrepreneurial success
The Venture Opportunity School of Thought
• Opportunity aspect of venture development is the main focus in this
school of thought and the interest areas are the search for idea
sources, the development of concepts, and the importance of
venture opportunities.
• Developing the right idea at the right time for the right market niche
is extremely important for the entrepreneurial success
• creativity and market awareness are viewed as essential.
The Strategic Formulation School of Thought
• This approach emphasizes the planning process in successful venture
development. The effective venture formations are constructed by
unique markets, unique people, unique products,or unique resources.
Each of these unique aspects has its own strategy
• Unique markets – Identifying major market segments and also the
interstice markets emerging from larger markets
• Unique people – Great chef strategy; Venture is built around the skills
of one or more individual.
• Unique product – Better widget strategy; mainly refers to innovations
that encompass new or existing market.
• Unique resources – Water well strategy; ability to gather or harness
resources (land, capital, labor, raw materials) in the long run.
PROCESS APPROACHES
What is process approach?
• A way to examine the activities involved in entrepreneurship is done
through a process approach.
• The process approach emphasizes the actions of the entrepreneurs
rather than their personalities and traits
TYPES OF PROCESS APPROACHES
• INTEGRATIVE APPROACH
• ENTREPRENEURIAL ASSESSMENT APPROACH
• MULTIDIMENSIONAL APPROACH
INTEGRATIVE APPROACH
• Model is built around the concepts of input to the
entrepreneurial process and outcomes from the
entrepreneurial process.
The input component focuses on the entrepreneurial process itself
and identifies 5 key elements that contribute to the process.

1) ENVIRONMENTAL OPPORTUNITIES
 Demographic change, development of a new technology,
modification to current regulations.
2) INDIVIDUAL ENTREPRENEUR
 Person who assumes the personal responsibility for conceptualizing
and implementing a new venture
3) ORGANIZATIONAL CONTEXT
 Implementing this business concept would require some
organizational context which can range from sole proprietorship
run out of entrepreneur’s home or a franchise of some national
chain to an autonomous business unit with a large corporation.
4) UNIQUE BUSINESS CONCEPTS
 Assess and acquire necessary resources
5) RESOURCES
 Wide variety of financial and non financial resources are required
on an ongoing basis which are the key elements. These are
combined throughout the entrepreneurial process.

 The model only provides a fairly comprehensive picture regarding

the nature of entrepreneurship but can also be applied in different
levels.
Eg :- The model describes the phenomenon of entrepreneurship in
both the independent startup company and within a department,
division or strategic business unit of a large corporation..
ENTREPRENEURIAL ASSESSMENT APPROACH
• Model developed by Robert C Ronstadt.
• The model stresses making assessments qualitatively,
quantitatively, strategically and ethically in regard to
the entrepreneur, the venture and the environment.
• To examine entrepreneurship, the results of these
assessments must be compared to the stage of the
entrepreneurial career-early, midcareer, or late.
• Ronsdadt termed this process “the entrepreneurial
perspective”.
Multidimensional approach
In this view entrepreneurship is a complex , multidimensional framework that
emphasizes 4 elements:

1)The individual
2)The environment
3)The organization
4)The process
1) The individual

• Need for achievement

• Locus of control
• Risk-taking propensity
• Job satisfaction
• Previous work experience
• Age
• education
2) The environment

• Venture capital availability

• Presence of experienced entrepreneurs
• Technically skilled labor force
• Accessibility of suppliers
• Accessibility of customers or new markets
• Government influences
• Accessibility of transportation
• Living conditions
3)The organization

• Type of firm
• Entrepreneurial environment
• Partners
• New product or service
• Geographical transfer
• Licensing
• Supply shortage
• Franchise entry
4)The process

• Locating business opportunity

• Accumulating resources
• Marketing products and services
• Producing the product
• Responding to government and society
INTRAPRENEURSHIP
• It is the act of behaving like an entrepreneur while working within an organization
• They are usually highly self motivated, proactive and action oriented people
• They take an initiative within the boundaries of an organization
• Create or develop entrepreneurship spirit within an organization
• Allowing an atmosphere of innovation to prosper
KEY CONCEPTS
ENTREPRENEURSHIP
• It is the process of designing, launching and running a new business
• Entrepreneurship has been defined as :the capacity and willingness to
develop, organize and manage a business venture along with any of its
risks in order to make a profit”
• Risk factors involved are:
Lack of funding
Bad business
An economic crisis
Lack of market demand
Entrepreneur: A person who sets up a business or businesses taking
upon financial risks in hope of profit

Entrepreneurial management: Management practices in which an

entrepreneur fulfils and achieves various objectives and mission of his
business