entrpreneurship development
TRANSCRIPT
-
7/28/2019 Entrpreneurship Development
1/442
11
EntrepreneurshipDevelopment
CLASS: MBA
SEMESTER: IV
1
-
7/28/2019 Entrpreneurship Development
2/442
22
EntrepreneurshipDevelopment
UNIT - I Definition of Entrepreneur
Functions of an Entrepreneur
Entrepreneurial motivation and
Barriers Internal and External Factors Classification of
Entrepreneurship Theory of Entrepreneurship Concept of Entrepreneurship Development of
entrepreneurship Culture, stages in
entrepreneurial process. 2
-
7/28/2019 Entrpreneurship Development
3/442
33
Lecture
no
Contents (sub topics) Slide no
1 Definition of Entrepreneur 5-14
2 Functions of an Entrepreneur 16-19
3 Entrepreneurial motivation and Barriers 21-24
4 Internal and External Factors 26-305 Concept of Entrepreneurship 32-43
6 Classification of Entrepreneurship 45-46
7 Theory of Entrepreneurship 48-53
8 Theory of Entrepreneurship 55-59
9 Development of entrepreneurship culture 61-62
10 Stages in entrepreneurial process 64-70
FAQS, CASE STUDY & ASSIGNMENTS
72-83
LECTUREPLAN
Unit- I Sub: Entrepreneurship DevelopmentAcademic Consultant: Riju Agarwal
-
7/28/2019 Entrpreneurship Development
4/442
Lecture 1
4
-
7/28/2019 Entrpreneurship Development
5/442
5
Entrepreneur
Origin from French word-
EntreprendreMeaningTo undertake
Founded by a French economist in1725
Richard Cantillon
5
-
7/28/2019 Entrpreneurship Development
6/442
6
Definitions of Entrepreneur
1725 Richard Cantillon Risk taker
1800 JB Say Organizer 1934 JA Schumpeter Innovator(developing country)
Manager(developing countries) Peter Drucker Opportunity exploiter 1876 Francis A Walker Pioneer/ Captain of industry 1975 Albert Shapero Takes initiative, organizes &
accepts risks
1983 Gifford Pinchot Intrapreneur 1985 Robert Hisrich Creates something different
& of value, devotes time &effort, assumes risks &receives result
6
-
7/28/2019 Entrpreneurship Development
7/442
7
Richard Cantillon
Risk Taker-Buys at a certain price and sells at anuncertain price
7
-
7/28/2019 Entrpreneurship Development
8/442
8
JB Say
Organiser
The economic agent who unites all means of
Production, the labor force of one, thecapital and land of the other and by sellingthe product, he pay Interest on the Capital,Rent on the land and Wages to the labor and
what remains is his profits.
8
-
7/28/2019 Entrpreneurship Development
9/442
9
Francis A Walker
Pioneer
One who is endowed with more than
average capacities in the task of organizing& coordinating, and receives surplus rewardover and above the managerial wages forthem.
9
-
7/28/2019 Entrpreneurship Development
10/442
10
Joseph A Schumpeter
Innovator in an advanced economy
One who introduces something new in an
economy
Risktaker& Manager in developing economy
One who starts an industry, undertakes risks,bears uncertainties and also perform themanagerial functions of decision-making &coordination
10
-
7/28/2019 Entrpreneurship Development
11/442
11
Peter Drucker
Opportunity Exploiter
One who searches for change, responds to
it and exploits an opportunity.
11
-
7/28/2019 Entrpreneurship Development
12/442
12
Intrapreneur- Gifford Pinchot
An Entrepreneur within an alreadyestablished organisation.
An intrapreneur perceives and exploitsbusiness opportunities within an existingenterprise
He / she generally serves as the chiefexecutive of a semi-autonomous productdivision or subsidiary of a big organisation
12
-
7/28/2019 Entrpreneurship Development
13/442
13
Entrepreneur & Intrapreneur
Entrepreneur
Is an independentbusinessman
Himself / herself raisesthe required funds
Assumes the risks ofthe business enterprise
Intrapreneur
Works under the chiefexecutive
Uses the funds raisedby his company
May not be required tobear full risks of theenterprise
13
-
7/28/2019 Entrpreneurship Development
14/442
14
Entrepreneur and Manager
Entrepreneur
Always attempts tobring change, in other
words called innovation
Establishes newenterprise andundertakes risks
Mobilizes resources toinitiate change inproduction
Manager
Is concerned only withday-to-day affairs of a
going concern
Runs an establishedenterprise andundertakes no big risk
Involves combining andcoordinating resources
14
-
7/28/2019 Entrpreneurship Development
15/442
-
7/28/2019 Entrpreneurship Development
16/442
16
Functions of an Entrepreneur
Innovates
Bears Risk
Organization Building
16
-
7/28/2019 Entrpreneurship Development
17/442
17
Functions of an Entrepreneur
Innovation - Introduction of a new
product / new quality of an existing
product methods of production / distribution
new market
source of raw materials
form of organization
17
-
7/28/2019 Entrpreneurship Development
18/442
18
Functions of an Entrepreneur
Risk taking Assuming the responsibility for loss
that may arise due to unforeseencontingencies
Guaranteeing interest to creditors,wages to labour and rent to the
landlord In the end, whatever left isprofit, reward of taking risk or mighthave nothing left for him / her
18
-
7/28/2019 Entrpreneurship Development
19/442
19
Functions of an Entrepreneur
Organization Building Bring together factors of production:
Capital Interest
Land Rent
Labor - Wages
Organize them, performing planning, decisionmaking , coordinating and controlling functionsof manager
Determining the line of business, expansion andgrowth of the enterprise
19
-
7/28/2019 Entrpreneurship Development
20/442
Lecture 3
20
-
7/28/2019 Entrpreneurship Development
21/442
21
Key Motivators
Ambition- to make money & live a decentlifestyle
Need for Achievement
Past work experience Entrepreneurial education Economic condition Unemployment/ Dissatisfaction with
present job Independent lifestyles Internal locus of control- control one has
over his life
21
-
7/28/2019 Entrpreneurship Development
22/442
22
Key Motivators
Family background- successful entrepreneurs Compulsion- family business Social status- level at which an individual is
viewed by society Demographic and economic factors
Shift to a service economy
Technological advancements
E-Commerce and the World Wide Web International opportunities
22
-
7/28/2019 Entrpreneurship Development
23/442
23
Key Motivators
Support & assistance available from family,friends, government, financial institutions etc.
Governmental influence by Industrial Policy
creating basic facilities, utilities, services
providing incentives and concessions
Providing conducive Economic environmentavailability of Capital, Labor, Raw materials, Market
-
7/28/2019 Entrpreneurship Development
24/442
24
Key Barriers
Lack of Viable concept Lack of Market knowledge Lack of Seed-capital Lack of Business know-how Legal constraints & regulations- protectionism,
patents
Complacency- uncritically satisfied with oneself/ lack ofmotivation
Social Stigma- being unsucessful Insecurityfear of losing their economic assets Lack of technical skills Time presences and distractions
24
-
7/28/2019 Entrpreneurship Development
25/442
Lecture 4
25
-
7/28/2019 Entrpreneurship Development
26/442
Influence of External Environmental
Factors
1. Economic conditions
Economic environment exercises the mostdirect and immediate influence onentrepreneurship
The main economic factors are:
Capital
Labour
Raw materials
Market
-
7/28/2019 Entrpreneurship Development
27/442
2. Social factors
Legitimacy of entrepreneurship The social status of entrepreneurs is one of the most
important contents of entrepreneurial legitimacy
Social mobility Social mobility is crucial for entrepreneurial
emergence
Security If individuals are fearful of losing their economic
assets or of being subjected to various negativesanctions, they will not be inclined to increase theirinsecurity by behaving entrepreneurially
-
7/28/2019 Entrpreneurship Development
28/442
3. Governmental influence Government can promote entrepreneurship in
one way or the other through its clearlyexpressed Industrial Policy
By creating basic facilities, utilities, services and
by providing incentives and concessions,government can provide prospectiveentrepreneurs a facilitative socio-economicsetting
-
7/28/2019 Entrpreneurship Development
29/442
Influence of Internal Environmental
Factors
1. Psychological factors
Need achievement
If the average level of need achievement in a society is
relatively high, a high level entrepreneurship emerges
Withdrawal of status respect
Technological innovations are caused more by theculturally marginal persons than others
Internal locus of control- control one has over his life
Independent lifestyles
-
7/28/2019 Entrpreneurship Development
30/442
2. Personal factors Entrepreneurial education & Past
work experience Economic condition Unemployment/ Dissatisfaction with
present job
30
-
7/28/2019 Entrpreneurship Development
31/442
Lecture 5
31
-
7/28/2019 Entrpreneurship Development
32/442
32
Concept
Entrepreneur
Person who
Identifyopportunities
& exploit them
To create Value
Entrepreneur-ship
Process
Dynamic &
Continuous
Enterprise
Object
32
-
7/28/2019 Entrpreneurship Development
33/442
33
Who is an Entrepreneur?
A person who
1. Identifies opportunities in the marketplace.
2. Marshalls the resources required to pursue theseopportunities.
3. Employ the resources to Exploit theopportunities for long-term gains.
4. Creates a new business in the face of riskand uncertainty for the purpose of achievingprofit and growth
5. Creates Value for all stakeholders33
-
7/28/2019 Entrpreneurship Development
34/442
34
Who is an Entrepreneur ?
An individual: With certain qualities.
Who tries to create something new/Innovate.
Who builds an Organization- organizesfactors of production.
Who undertakes risk (involved in theestablishment and operation of a businessenterprise).
34
-
7/28/2019 Entrpreneurship Development
35/442
35
Characteristics of an Entrepreneur Ambitious Goal-oriented
Imaginative / Creative / Innovative
Visionary- can foresee future
Initiation / Risk taker / accepts challenges
Commitment/ Persistence / Tenacity / Determination /Perseverance / Endurance / Doggedness / Persuasion
Dedication / Hard worker/ Industrious Energetic / Drive
Self confident / Assertive
Flexibile / Adaptable
Skilled at organizing 35
-
7/28/2019 Entrpreneurship Development
36/442
36
Contd.
Watchdog for opportunities / Information seeker
Marshalling resources / Efficient monitoring
Intelligent- ability to acquire & apply knowledge & skill
Knowledgeable- information acquired throughexperience & education
Skillful- ability to do something well
Quality conscious / Efficiency lover
Leader
High Integrity
Emotional maturity & stability
Good judge of human nature
36
-
7/28/2019 Entrpreneurship Development
37/442
37
Entrepreneurial Process
1) Identify/Evaluate Opportunity
2) Develop Business Plan
3) Determine & marshal resourcesrequired
4) Manage The Enterprise effectively
5) Means value creation for all
stakeholders esp wealth for himself
-
7/28/2019 Entrpreneurship Development
38/442
38
Nature of Entrepreneurship
Economic activity Involves creation and operation of an enterprise
Is concerned with production and distribution of goods
Dynamic process Thrives on changes in environment
Flexibility is the hallmark
Creative activity
A creative response to changes in the environment Involves innovation / introduction of something new &
better- is a change agent
Purposeful activity Seeks to earn profits through satisfaction of needs
A goal-oriented activity 38
-
7/28/2019 Entrpreneurship Development
39/442
39
A function of risk-bearing Assumes uncertainty of future
In the pursuit of profits there is every possibility of loss
An organizing function Coordination/control of efforts of all engaged in
enterprise
Is an attempt at organization building
Gap filling function Gap between needs and available products gives birth
to entrepreneurship
Creation of new markets
39
-
7/28/2019 Entrpreneurship Development
40/442
40
Nine Deadly Mistakes of
Entrepreneurship1. Management incompetence
2. Lack of experience
3. Poor financial control
4. Failure to develop a strategic plan
5. Uncontrolled growth
-
7/28/2019 Entrpreneurship Development
41/442
41
Nine Deadly Mistakes of
Entrepreneurship(continued)
6. Poor location
7. Improper inventory control
8. Incorrect pricing
9. Inability to make theentrepreneurial transition
-
7/28/2019 Entrpreneurship Development
42/442
42
Role of Entrepreneurship in Economic
Development
Entrepreneurs serve as the catalysts in theprocess of industrialization and economic growth
The rate of economic progress depends upon itsrate of innovation which in turn depends upon theentrepreneurial talent in the population
Technical progress alone cannot lead toeconomic development, unless technologicalbreakthroughs are put to economic use byentrepreneurs
42
-
7/28/2019 Entrpreneurship Development
43/442
43
Entrepreneurs initiate and sustain theprocess of economic development by: Creat new enterprises that energize the economy
Rejuvenate established enterprises Capitalformation
Improvement in per capita income
Generation of employment
Balanced regional development Improvement in living standards
Economic independence
Backward and forward linkages
43
-
7/28/2019 Entrpreneurship Development
44/442
Lecture 6
44
-
7/28/2019 Entrpreneurship Development
45/442
45
Classification of Entrepreneurship
According to
Stage of economic development
Type of businessbusiness, trading,agricultural
Type of motivation- motivated, induced,spontaneous
Gender men, women
Areaurban, rural
45
-
7/28/2019 Entrpreneurship Development
46/442
46
Classificationaccording to stages of economic development,
by Clarence Danhof Innovating/ Creative Entrepreneurs
One who introduces newness into business Typical of developed countries
Imitative/ Adoptive Entrepreneurs One who adopts successful innovation Typical of under-developed countries
Fabian Entrepreneurs Are risk-averse, cautious & skeptical, adopts if inevitable,
as a last resort
Drone Entrepreneurs Refuses to adopt, One who would take the beaten path, no
matter what
46
-
7/28/2019 Entrpreneurship Development
47/442
Lecture 7
47
-
7/28/2019 Entrpreneurship Development
48/442
48
The Development ofEntrepreneurship Theory
18th Century
Richard Cantillon:Coins term
entrepreneur
(go-between orbetween taker)
Entrepreneur bearsrisks and plans,
supervises,organizes, andowns factors of
production
-
7/28/2019 Entrpreneurship Development
49/442
49
19th Century
Jean Baptiste Say:
Proposed that profitsfrom entrepreneurship
were separate fromprofits of capital
ownership
Distinction madebetween those whosupplied funds and
earned interest andthose who profited from
managerial abilities
-
7/28/2019 Entrpreneurship Development
50/442
50
20th Century
Joseph Schumpeter:
Described theentrepreneur as
someone who is aninnovator and someone
who creativelydestructs
Peter Drucker:
Described theentrepreneur assomeone who
maximizes opportunity
-
7/28/2019 Entrpreneurship Development
51/442
ECONOMIC VIEW OF
ENTREPRENEUR
To understand why there is a focus onpersonality rather than skills look at history ofentrepreneurship theory
nobody can hope to understand the economicphenomenon of anyepoch who has notadequate command of the historical facts(Schumpeter, 1934: 36)
French tradition - the Physiocrats Cantillon (1755) Foresight to assume uncertainty Reacts to profit opportunities Bears uncertainty
Brings about a balance between supplies &
-
7/28/2019 Entrpreneurship Development
52/442
ECONOMIC VIEW OF
ENTREPRENEUR
The Modern Austrian Tradition: Mainrepresentative Kirzner (1973)
The entrepreneur as a coordinating agent
who is capable of exploiting unnoticedopportunities due to his/her specialalertness.
Has knowledge not available to everybody
which leads to creative discoveries Facilitates exchange between suppliersand customers
Profit as reward for recognising a marketopportunity & acting as middleman
-
7/28/2019 Entrpreneurship Development
53/442
ECONOMIC VIEW OF
ENTREPRENEURS
Schumpeter (1934) Entrepreneur as innovator, creator and
catalyst for change
Only certain extraordinary people have theability to be entrepreneurs and they bringabout extraordinary events
Brings about change through introduction
of new technological process/product About dream/vision and impulse to fight Creative destruction of existing
combinations of resources
-
7/28/2019 Entrpreneurship Development
54/442
Lecture 8
54
-
7/28/2019 Entrpreneurship Development
55/442
PSYCHOLOGICAL PROFILING OF
ENTREPRENEUR
THE TRAIT APPROACH Need for Achievement
Locus of Control
Risk-taking Innovation and creativity
General Personality Scales
CONSTRUCTION OF THE TRAITAPPROACH Biased towards Western culture
Gender-biased,
Ethnocentric
-
7/28/2019 Entrpreneurship Development
56/442
PSYCHOLOGICAL PROFILING OF
ENTREPRENEUR
PSYCHOANALYTIC APPROACHES Conflicts, difficulties or losses in childhood,
motivates entrepreneurs to succeed
In particular absent father, poverty, illness etc
To think about developing entrepreneurship in thisway brings ethical questions to the fore
Criticised for only describing extremes and notaccounting for the majority of entrepreneurs
Variety of reasons behind set-up e.g. life-stylechoice, fulfilling dream, loss of long-termemployment etc.
-
7/28/2019 Entrpreneurship Development
57/442
PSYCHOLOGICAL PROFILING OF
ENTREPRENEUR
COGNITIVE STUDIES
Propose to focus on the behaviours ofentrepreneurs rather than their
personalities Entrepreneurs have certain heuristics,
schemas that allow him/her to examine theenvironment and find existing
opportunities (Mitchell, 2002)
However, now focus on special thinking
Still focuses on entrepreneur as having
special abilities rather than focusing onthe rocess of entre reneurshi
-
7/28/2019 Entrpreneurship Development
58/442
ENTREPRENEURSHIP AS
ACTION
A DIFFERENT APPROACH Psych studies treat entrepreneur as
disconnected from context
Individuals not distinct from theiractivities - they are part of and create thesystems within which they are situated
Focus on what the entrepreneur does,not who the entrepreneur is (Gartner, 1988)
This view leaves open the possibility ofdeveloping entrepreneurship inindividuals
Entrepreneurs made not born (Chell, 2001)
-
7/28/2019 Entrpreneurship Development
59/442
ENTREPRENEURSHIP AS
ACTION As a process, not an attribute of a person
(Stevenson and Jarillo, 1990)
An individual is not always
entrepreneurial, may be team-effort Necessity vs. opportunity
entrepreneurship
Innovations as a response to the need for
making un-programmed decisions Transcends the limits imposed by the
owner manager
Possible at any stage of the life cycle of abusiness enter rise Hand 2004
-
7/28/2019 Entrpreneurship Development
60/442
Lecture 9
60
-
7/28/2019 Entrpreneurship Development
61/442
61
The Cultural Diversity of
Entrepreneurship Young entrepreneurs Women
Minority-owned enterprises
Immigrant entrepreneurs Part-time entrepreneurs
Home-based businesses
Family businesses
Copreneurs
Corporate castoffs
Corporate dropouts
-
7/28/2019 Entrpreneurship Development
62/442
Cultural Norms/Values
Corporate IntrapreneurialFragmented Whole
Instruction Vision
Controlled In Control
Outer-Directed Inner-Directed
Alienation Responsibility
Chores Enthusiasm/Motivation
Defined Limits Space/Freedom
Interference Trust
Distrust Belief In People
Expendable Expandable
Limiting People Growing People
-
7/28/2019 Entrpreneurship Development
63/442
Lecture 10
63
-
7/28/2019 Entrpreneurship Development
64/442
Major Stages of Entrepreneurship
Converging on the idea
Business Plan
Business Formation
Growth/ exit
Going public
-
7/28/2019 Entrpreneurship Development
65/442
1. Converging on the idea
In many cases, the decision start abusiness precedes the idea
Many ideas fall by the way side, since theyare eithertechnically not feasible orfinancially not viable or both
So you need to do enough research toconverge on the idea Documentary
Experience
-
7/28/2019 Entrpreneurship Development
66/442
2.Business Plan Development
Four major elements:
New product/ service development
Business Model
Financial Model
Operating plan
-
7/28/2019 Entrpreneurship Development
67/442
3.Business Formation
Type of company: legal form,registration
Financing new product development: Family and friends
Govt grants
Non govt grants Angels
-
7/28/2019 Entrpreneurship Development
68/442
4.Growth/exit
Difference between life style and growthcompanies
Growth will require infusion of capital through internally generated
funds
Sometimes employment of venture capitalists
Passive investors
Growth will also require organization, astaught in business schools (Michael Dellstory)
-
7/28/2019 Entrpreneurship Development
69/442
Exit
Various reasons
Story ofLands End
-
7/28/2019 Entrpreneurship Development
70/442
5. Going Public
Initial Public Offering
Probably the point in time the entrepreneur extracts
the value of his/her efforts
-
7/28/2019 Entrpreneurship Development
71/442
7171
Questions
71
-
7/28/2019 Entrpreneurship Development
72/442
7272
FAQs
72
1. Who is an Entrepreneur?2. Enumerate & discuss the different theories of
Entrepreneurship.
3. Enumerate types of Entrepreneurship according to type of
business.4. Enumerate types of Entrepreneurs according to type of
motivation.
5. Enumerate types of Entrepreneurship according to stages
of Economic development.
6. Enumerate types of Entrepreneurship according to scale
of Operation.
7. Enumerate the qualities/ characteristics of a successful
Entrepreneur.
-
7/28/2019 Entrpreneurship Development
73/442
8. Discuss different barriers to entrepreneurship.
9. What do you understand by Intrapreneurship?
How does it differ from Entrepreneurship?
10.Differentiate entrepreneurs from managers.11.Discuss different functions/role of an
entrepreneur.
12.Who is an Adoptive entrepreneur?
13.Distinguish between Drone entrepreneur andFabian entrepreneur.
14.Describe the motivational forces that cause
entrepreneurial growth in a developing country.73
-
7/28/2019 Entrpreneurship Development
74/442
15. Innovation is the hallmark of Entrepreneurship.
Discuss.
16. Discuss the qualities or traits of a successful
entrepreneur?17. Developing countries need imitative rather than
innovative entrepreneurs. Justify.
18. Discuss the development of concept of
Entrepreneurship?
19. Whose theory of Entrepreneurship is suitable in
todays market Schumpeter or Drucker. Discuss
74
C St d M b i'
-
7/28/2019 Entrpreneurship Development
75/442
Case Study-Mumbai's
Dabbawalas
The Dabbawalas who provide a lunch delivery servicein Mumbai have been in the business for over 100years.
In 1998, Forbes Global magazine conducted ananalysis and gave them a Six Sigma rating ofefficiency.The case examines how the Dabbawalas operate. Itdescribes their delivery process and coding systemand how they work as one team to achieve a commongoal. The case also explores the future of theDabbawalas' service in light of the changingenvironment.
75
-
7/28/2019 Entrpreneurship Development
76/442
A Six Sigma Performance
Every day, battling the traffic and crowds of Mumbaicity, the Dabbawalas, also known as Tiffinwallahs,
unfailingly delivered thousands of dabbas to hungrypeople and later returned the empty dabbas towhere they came from. They delivered either home-cooked meals from clients' homes or lunches
ordered for a monthly fee, from women who cook attheir homes according to the clients' specifications.The service was used by both working people andschool children.
76
-
7/28/2019 Entrpreneurship Development
77/442
In 1998, Forbes Global magazine, conducted a qualityassurance study on the Dabbawalas' operations andgave it a Six Sigma efficiency rating of 99.999999; the
Dabbawalas made one error in six milliontransactions.
That put them on the list of Six Sigma ratedcompanies, along with multinationals like Motorolaand GE. Achieving this rating was no mean feat,
considering that the Dabbawalas did not use anytechnology or paperwork, and that most of them wereilliterate or semiliterate. Apart from Forbes, theDabbawalas have aroused the interest of many otherinternational organizations, media and academia. 77
-
7/28/2019 Entrpreneurship Development
78/442
Background Note The origin of the Dabbawalas' lunch delivery service dates
back to the 1890s during the British raj. At that time,
people from various communities migrated to Mumbai for
work. As there were no canteens or fast food centers then,if working people did not bring their lunch from home,
they had to go hungry and invariably, lunch would not be
ready when they left home for work.
Besides, different communities had different tastes andpreferences which could only be satisfied by a home-
cooked meal. Recognizing the need, Mahadeo Havaji
Bacche (Mahadeo), a migrant from North Maharashtra,
started the lunch delivery service.
-
7/28/2019 Entrpreneurship Development
79/442
For his enterprise, Mahadeo recruited youth
from the villages neighboring Mumbai, who were
involved in agricultural work. They were willing
to come as the income they got from agriculture
was not enough to support their large families,
and they had no education or skills to get work in
the city. The service started with about 100Dabbawalas and cost the client Rs.2 a month.
Gradually, the number of Dabbawalas increased
and the service continued even though the
founder was no more...79
-
7/28/2019 Entrpreneurship Development
80/442
Delivery System
The Dabbawala service was available wherever
the local trains ran in Mumbai as it was theirprimary mode of transportation. During the
delivery process, the dabbas changed hands at
least four times before they reached their
destination...
80
-
7/28/2019 Entrpreneurship Development
81/442
QUESTIONS FOR DISCUSSION
1. Discuss how an entrepreneurial venturestarts.
2. Give the reasons behind the success ofan enterprise. How a traditional businesscan survive threats from the externalenvironment through the years.
81
-
7/28/2019 Entrpreneurship Development
82/442
Assignment
Interview 5 entrepreneurs around your neighborhood or
city; At least one of the entrepreneurs should have a
physical shop. For example, they could be:
a. Providing shoe shine service
b. Selling knick-knacks to tourists
c. Selling books to cars waiting at intersections
Ask them the following questions:
a. How did they start this occupation?
b. Why are they doing what they are doing now (How
they identified the opportunity)?
c. Why do their customers buy from them (and not
somebod else ?
82
-
7/28/2019 Entrpreneurship Development
83/442
d. Do they have any plans to expand?
Make a report on
a. The different types of businesses you came across.
b. Their experiencewhere did you go, were there any
surprises, what were the stories you heard from these
entrepreneurs.
c. Key learnings from the project.
d. The issues that the entrepreneurs faced - do the you
agree that they are issues and whether you were able to
solve these issues or help the entrepreneurs to solve
them.83
-
7/28/2019 Entrpreneurship Development
84/442
ENTREPRENEURSHIP DEVELOPMENT
UNIT - II
Idea Generation.
Screening and Project Identification. Creative Performance. Feasibility Analysis: Economic,
Marketing, financial & Technical.
Project Planning. Project Evaluation, Monitoring &
Control.
Project Segmentation.
Creative Problem Solving: Heuristics,Brainstorming, Synectics, Value
Analysis, Innovation.
84
LECTUREPLAN
Unit- II Sub: Entrepreneurship DevelopmentAcademic Consultant: Gaurav Agrawal
-
7/28/2019 Entrpreneurship Development
85/442
Lectureno
Contents (sub topics) Slide no
1 Idea Generation 87-98
2 Screening and Project Identification 100-123
3 Creative Performance 124-142
4 Feasibility Analysis 144-158
5 Economic Analysis, Marketing Analysis 160-173
6 Financial and Technical Analysis 175-182
7 Project Planning: Evaluation, Monitoring & Control 184-193
8 Project Segmentation 195-2009 Creative Problem Solving 202-216
10 Techniques of Creative Problem Solving 218-233
FAQS, MCQs, CASE STUDY & ASSIGNMENTS 235
Academic Consultant: Gaurav Agrawal
85
-
7/28/2019 Entrpreneurship Development
86/442
Lecture 1
IDEA GENERATION
86
-
7/28/2019 Entrpreneurship Development
87/442
IDEA GENERATION
Entrepreneurs develop business ideas by:
Developing new products and services
Tapping new markets Formulating new methods of production
Identifying new raw materials
Developing new ways of organizingprocesses
-
7/28/2019 Entrpreneurship Development
88/442
SOURCES OF IDEAS
A business idea may be discoveredfrom the following sources:
Observing markets Prospective consumers
Developments in other nations.
Study of project profiles
Government organizations
Trade Fairs and Exhibitions
R i i O i i &
-
7/28/2019 Entrpreneurship Development
89/442
Recognizing Opportunities &
Generating Ideas
Idea is thought, impression, notion
Opportunity: favorable set of circumstances thatcreate need for product or servicee.g. Multiplex/ Amazon/ shopping malls
Opportunity has 4 essential qualities1. Attractive
2. Durable3.Timely4. Creates/adds value for buyer/user
R i i O t iti &
-
7/28/2019 Entrpreneurship Development
90/442
Recognizing Opportunities &
Generating Ideas
Observing/Study Trends
1. Economic factors
2. Social factors3. Technological Advances
4. Political Action/Regulatory statutes
R i i O t iti &
-
7/28/2019 Entrpreneurship Development
91/442
Recognizing Opportunities &
Generating Ideas
Economic Forces
Consumers level of disposable income
Interest rate changesMore women in workforce
Social Forces
Both parents working: fast foodPeople too busy: Sony Walkman
Life stress: spas, wellness clinics
R i i O t iti &
-
7/28/2019 Entrpreneurship Development
92/442
Recognizing Opportunities &
Generating Ideas1. Family & work patterns - dabbawallas
2. Aging of the population yoga n anti aging
3. Increasing diversity in the workplace - tabs
4. Globalization of industries Carre four, walmart5. Increased focus in health care & fitness sona
belts
6. Proliferation of computers & Internet online
shopping, airtel money7. Increase in numbers of cell phone users --
uninor
8. New forms of music & entertainment- ipods
-
7/28/2019 Entrpreneurship Development
93/442
R i i O t iti &
-
7/28/2019 Entrpreneurship Development
94/442
Recognizing Opportunities &
Generating Ideas
Solving a Problem
1. Observe people challenges -
datacard , cordless systems2. Look for problems debit cards
3. Listen to people complains cars/
activa4. Think of your own problems - thakur
R i i O t iti &
-
7/28/2019 Entrpreneurship Development
95/442
Recognizing Opportunities &
Generating Ideas
Personal characteristics foropportunity recognition clg cafe
1. Prior experience in an industry -sales
2. Entrepreneurial alertness/6th sense
3. Social networks -4. Creativity: preparation, incubation,
insight, evaluation, elaboration
-
7/28/2019 Entrpreneurship Development
96/442
Techniques in Generating Ideas
Brainstorming: generate ideas quickly,no analysis or decision making.
Enthusiasm, originality, lots of ideas Freewheeling, lively
No criticism allowed
Session moves quickly
Leapfrogging encouraged
-
7/28/2019 Entrpreneurship Development
97/442
Techniques in Generating Ideas
Focus groups
1. People selected are familiar with
issues2. Whats on customers mind
3. Conducted by trained moderator
4. Success depends on moderatorsability to ask questions and keep ontrack
-
7/28/2019 Entrpreneurship Development
98/442
Techniques in Generating Ideas
Surveys: gathering info from sampleof individuals
By phone, mail, online, in person Random portions of population
Customer Advisory Boards
-
7/28/2019 Entrpreneurship Development
99/442
Lecture 2
SCREENING AND PROJECT
IDENTIFICATION
99
-
7/28/2019 Entrpreneurship Development
100/442
PRE-IDENTIFICATION
Pre-Identification: Where do projects originate?
The pre-identification phase refersessentially to the less specific researchstudies and surveys that should form partof any system of planning.
It involves synthesizing, from national and
sectoral strategies and policies, projectideas which seem worthy of more in-depthinvestigation.
-
7/28/2019 Entrpreneurship Development
101/442
PRE-IDENTIFICATION
Pre-identification is thus an on-goingprocess involving reviewing,
inventorying, integrating andanalysis of strategies, policiesnatural resource data and socio-economic information.
-
7/28/2019 Entrpreneurship Development
102/442
Project Identification
Assuming that there is a reasonabledatabase and development strategies
and policies have been formulated insufficient detail to be operationallyuseful - how do we go aboutidentifying projects?
Two complementary approaches aresuggested:
-
7/28/2019 Entrpreneurship Development
103/442
Project Identification
(i) Find out what people want andsee how these ideas can be fitted into theschema of available resources, strategies
and policies, taking account of physical,human, institutional and financialconstraints; and
(ii) Examine existing situations inrespect of demand and supply of goodsand services and look at past trends andlikely future trends.
Project Identification: Screening
-
7/28/2019 Entrpreneurship Development
104/442
Project Identification: Screening
Project Ideas
Reasons for Rejection of a Project:
1) Inappropriate technology in relation to theprojects objectives or to local capabilities
2) Excessive risk3) Inadequate demand for the proposed
output or lack of comparative advantage
4) Inadequate raw materials or skills5) Overambitious design in relation toavailable financial resources
-
7/28/2019 Entrpreneurship Development
105/442
Project Screening
6)Excessive economic, social, orenvironmental costs relative to the
expected benefits7)Lack of commitment of the intended
beneficiaries or lack of political
support from key authorities
-
7/28/2019 Entrpreneurship Development
106/442
Project Identification: Pre-feasibility
Before time and resources are spent there is need todevelop some feel for whether a project is likely to befeasible.
A pre-feasibility analysis is necessary to serve as a
screening process This pre-feasibility analysis should result in a Project
Profile
The Project Profile defines:
the objectives of the project, identifies project output, inputs and constraints and makes a rough assessment of project costs and benefits.
The profile facilitates approval in principle by the relevantauthority and serves as a basis for detailed feasibility and projectpreparation.
-
7/28/2019 Entrpreneurship Development
107/442
Pre-feasibility study
Should be carried out in just enoughdetail to determine the broad
justification of the: Project idea The possible design alternatives to
be considered further
Reasons for the choices made orproposed
-
7/28/2019 Entrpreneurship Development
108/442
Pre-feasibility study
To permit a decision on the merits ofthe project idea, the study should
briefly examine: 1) The size and nature of the demand
for the product or service, and the
intended or expected beneficiarygroups or target areas
-
7/28/2019 Entrpreneurship Development
109/442
Pre-feasibility study
2) The alternative technical solutions orpackage available, with correspondingestimates of outputs, including
identification of technologies alreadylocated in local use and their potential forimprovement
3) The availability of the principal physicaland human resources and skills that willbe required
-
7/28/2019 Entrpreneurship Development
110/442
Pre-feasibility study
4) The magnitude of the costs both for theinitial investment and for continuedoperation
5) The magnitude of the financial andeconomic rates of return (whereapplicable)
6) Any institutional constraints or policyissues likely to have an important impacton the proposed project
-
7/28/2019 Entrpreneurship Development
111/442
The Project Identification Test
A project may be deemed to be ready fordetailed preparation when:
1) Majoroptions and alternatives havebeen identified and some initial choiceshave been made.
2) The principal institutional and policy
issues affecting project outcome havebeen identified and appear amenable tosolution.
-
7/28/2019 Entrpreneurship Development
112/442
The Project Identification Test
3) The project options selected arelikelyto be justified, given rough
estimates of the expected costs andbenefits
4) It appears that the project will have
adequate support both from thepolitical authorities and from theintended beneficiaries
-
7/28/2019 Entrpreneurship Development
113/442
The Project Identification Test
5) The prospects are reasonable thatadequate funding will be available
from domestic and if needed,external sources
6) A specific preparation program
has been established.
-
7/28/2019 Entrpreneurship Development
114/442
Project Preparation
Purpose and Scope:
The purpose of the feasibility studyis to: 1) provide decision-makerswith the basis for deciding whetherto proceed with theproject, and,
2) forchoosing the most desirable
option or alternative among the fewremaining.
-
7/28/2019 Entrpreneurship Development
115/442
Project Preparation
Purpose and Scope:
The purpose of the feasibility studyis to: 1) provide decision-makerswith the basis for deciding whetherto proceed with the project, and,
2) for choosing the most desirable
option or alternative among the fewremaining.
-
7/28/2019 Entrpreneurship Development
116/442
Purpose and Scope: Questions
1) Conform with the organizations objectives and
priorities?
2) Is the project technically sound, and is it the best of
the available technical alternatives? 4) Is the project administratively workable?
5) Is there adequate demand for the projects output?
6) Is the project economically justified and financially
viable?
7) Is the project compatible with the customs and
traditions of the beneficiaries?
8) Is the project environmentally sound?
j i
-
7/28/2019 Entrpreneurship Development
117/442
Project Preparation
Of primary importance in projectpreparation is a clear definition of projectobjectives.
These objectives must be specific (asopposed to broad statements of intention)if theirachievements are to be measured
at the end of the project and if projectpreparation is to proceed in a logicalfashion.
P j P i Obj i
-
7/28/2019 Entrpreneurship Development
118/442
Project Preparation: Objectives
Objectives should be SMART:
Specific
Measurable Achievable
Reasonable
Time bound
Obj i
-
7/28/2019 Entrpreneurship Development
119/442
Objectives
Defining Objectives:
1) An objective is the aim or goal of a
project, and describes the desiredstate which the project is expected toachieve/contribute to.
2) it provides the reason forundertaking the project
P j t P ti
-
7/28/2019 Entrpreneurship Development
120/442
Project Preparation
Once these objectives are defined, theconstraints to achieving them must beidentified.
Some of these constraints are removableby the project itself while others areexogenous and can only be tackled on a
global or national basis and not throughindividual projects.
Project Preparation: Data
-
7/28/2019 Entrpreneurship Development
121/442
Project Preparation: Data
Requirements
If a project shows merit, additional datawould be required during projectpreparation:
a) Detailed market studies b) Geological or environmental studies
c) Investigation of local sources of rawmaterial
d) Details of government regulations andpolicies
D t R i t
-
7/28/2019 Entrpreneurship Development
122/442
Data Requirements
f) Economic, social, or culturalcharacteristics of the people in theproject area
g) Availability of technical andmanagerial skills
h) Existing or potential sources of
local capacity for project preparationand implementation
P j t P ti
-
7/28/2019 Entrpreneurship Development
123/442
Project Preparation
Project feasibility involves five importantaspects:
Technical
Institutional Financial, Economic Social.
The project preparation process consistsof analyzing these five components anddesigning a feasible project.
-
7/28/2019 Entrpreneurship Development
124/442
Lecture 3
CREATIVE PERFORMANCE
124
Definition of Creativity
-
7/28/2019 Entrpreneurship Development
125/442
y
"Creativity is the ability to respond to all thatgoes on around us, to choose from thehundreds of possibilities of thought, feeling,action, and reaction that arise within us, andto put these together in a unique response,
expression, or message that carries moment,passion, and meaning.-Clarissa PinkolaEstes, Woman Who Run With the Wolves
Opening Our Minds: Perception,
-
7/28/2019 Entrpreneurship Development
126/442
p g p ,
Curiosity and Exploration
Imagine the familiar in a new light
Find links among unrelated phenomena Realize the impact of change
Accept new perspectives
Follow a broad and moving path
Exploring Creative Thinking
-
7/28/2019 Entrpreneurship Development
127/442
p g g
Techniques
Soft Thinking: metaphor, dream, play,intuition, ambiguous, fantasy,approximate humor
Hard Thinking: logic reason, work
adult, analysis, consistency, realityexact precision
Exploring Creative Thinking
-
7/28/2019 Entrpreneurship Development
128/442
p g g
Techniques
Visual Thinking Activities: Perceptual, imagery, daydreaming,
metaphoric, synectics, patterns
Idea Listing Activities:Attribute listing, morphological synthesis,
second best answer, checklist, justsuppose
E l i C ti Thi ki T h i
-
7/28/2019 Entrpreneurship Development
129/442
Exploring Creative Thinking Techniques
Writing Activities: Webbing, mapping, wet inking, reflection
writing, story starters
Group Interaction Activities: Simulation, role play, creative dramatics, six
hats, fish bowl, brainstorming, reversebrainstorming
Exploring Creative Thinking
-
7/28/2019 Entrpreneurship Development
130/442
p g g
Techniques
Process-Product Activities: Problem finding, problem defining,
problem-based learning
Removing Mental Locks
-
7/28/2019 Entrpreneurship Development
131/442
Idea Squelchers -Von Oechs Ten Blocks
The Right Answer
Thats Not Logical
Follow The Rules Be Practical
Play Is Frivolous
Dont Be Foolish
Avoid Ambiguity To Err Is Wrong
Im Not Creative Thats Not My Area
Examining Creativity in the Workplace
-
7/28/2019 Entrpreneurship Development
132/442
Examining Creativity in the Workplace
Supervisors that have higher creativityexpectations are observed rewardingcreativity, recognizing creative efforts,
allocating more resources, encouragingcollaboration and sharing, applyingcreative goal setting and modelingcreative behavior in their own work
Examining Creativity in the Workplace
-
7/28/2019 Entrpreneurship Development
133/442
Examining Creativity in the Workplace
Employees interpret meaning throughenvironmental cues and supervisors mustcommunicate through behavior.
Self-efficacy levels influence the extent towhich employees entertain creative activities,initiate creative acts, and sustain creativelevels in their work.
Supervisors must be aware of the impact andclearly state expectations to shape creativeeffort and manage the supervisor/employeerelationship.
Examining Creativity in the Workplace
-
7/28/2019 Entrpreneurship Development
134/442
Examining Creativity in the Workplace
Individuals often generalize their
relationships with direct reports tothe entire organization, thisperceived support of creativity has
even greater impact on theindividuals relationship to theorganization as a whole
Measuring Creativity
-
7/28/2019 Entrpreneurship Development
135/442
Measuring Creativity
Divergent Thinking Tests openended questions
Torrance Tests of Creative Thinking Guilford Tests
Personality & Biographical
Inventories perceptions, attitudes,values, interests, motivations
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
136/442
Personality Traits of the Creative Person
Self Actualized Creativity (Maslow) Perceive reality more accurately and
objectively; tolerate and even like
ambiguity; are not threatened by theunknown.Accept themselves, others, and human
nature.Are spontaneous, natural, genuine.Are problem-centered, non-egotistical;
have a philosophy of life and probably a
mission in life
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
137/442
Personality Traits of the Creative Person
Need some privacy and solitude morethan others do; are able to concentrateintensely.
Are independent, self-sufficient andautonomous; have less need for praiseor popularity.
Have capacity to appreciate again and
again simple and commonplaceexperiences; have zest in living, abilityto handle stress, high humor.
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
138/442
Personality Traits of the Creative Person
Have (and are aware of) their rich, alive,fulfilling peak experiences.
Have deep feelings of brotherhood with
all mankind; are benevolent, altruistic. Perceive reality more accurately and
objectively; tolerate and even likeambiguity; are not threatened by the
unknown.
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
139/442
Personality Traits of the Creative Person
Accept themselves, others, and humannature.
Are spontaneous, natural, genuine.
Are problem-centered, non-egotistical;have a philosophy of life and probably amission in life
Need some privacy and solitude morethan others do; are able to concentrateintensely.
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
140/442
Personality Traits of the Creative Person
Are independent, self-sufficient andautonomous; have less need for praiseor popularity.
Have capacity to appreciate again andagain simple and commonplaceexperiences; have zest in living, abilityto handle stress, high humor.
Have (and are aware of) their rich, alive,fulfilling peak experiences.
Have deep feelings of brotherhood withall mankind; are benevolent, altruistic.
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
141/442
Personality Traits of the Creative Person
Form strong friendship ties with relatively fewpeople; are capable of greater love.
Are democratic, unprejudiced in the deepest
possible sense.
Are strongly ethical and moral individual (notnecessarily conventional) ways; enjoy work in
achieving a goal as much as the goal itself;are patient, for the most part.
Personality Traits of the Creative Person
-
7/28/2019 Entrpreneurship Development
142/442
Personality Traits of the Creative Person
Have a more thoughtful, philosophical senseof humor that is constructive, not destructive.
Are creative, original inventive with a fresh,
nave, simple and direct way of looking at life;tend to do most things creatively but do notnecessarily possess great talent.
Are capable of detachment from their culture;can objectively compare cultures; can take orleave conventions.
-
7/28/2019 Entrpreneurship Development
143/442
Lecture 4
FEASIBILITY ANALYSIS
143
The Feasibility Study
-
7/28/2019 Entrpreneurship Development
144/442
The Feasibility Study
What is a feasibility study? What to study and conclude?
Types of feasibility Operational Technical Schedule
Economic
The Feasibility Study
-
7/28/2019 Entrpreneurship Development
145/442
The Feasibility Study
Quantifying benefits and costs
Payback analysis
Net Present Value Analysis Return on Investment Analysis
Comparing alternatives
Why a feasibility study?
-
7/28/2019 Entrpreneurship Development
146/442
Why a feasibility study?
Objectives of a feasibility study:
To find out if an information
system project can be done: ...is it possible?
...is it justified?
To suggest possible alternativesolutions.
Why a feasibility study?
-
7/28/2019 Entrpreneurship Development
147/442
Why a feasibility study?
What the alternatives are (so thata selection can be made insubsequent phases)
Whether there is a preferredalternative
Why a feasibility study?
-
7/28/2019 Entrpreneurship Development
148/442
Why a feasibility study?
To provide management withenough information to know:
Whether the project can be done
Whether the final product willbenefit its intended users
Why a feasibility study?
-
7/28/2019 Entrpreneurship Development
149/442
Why a feasibility study?
After a feasibility study, managementmakes a go/no-go decision.
A feasibility study is amanagement-oriented activity
Content of feasibility study
-
7/28/2019 Entrpreneurship Development
150/442
Content of feasibility study
Things to be studied in the feasibilitystudy: The present organizational system
users, policies, functions,objectives,...
Problems with the present system
inconsistencies, inadequacies infunctionality, performance,
Content of feasibility study
-
7/28/2019 Entrpreneurship Development
151/442
Content of feasibility study
Objectives and other requirementsfor the new system Which problems need to be
solved? What needs to change?
Constraints
including nonfunctionalrequirements on the system(preliminary pass)
Content of feasibility study
-
7/28/2019 Entrpreneurship Development
152/442
Content of feasibility study
Possible alternatives Sticking with the current system should
always be studied as one alternative Different business processes for solving the
problems Different levels/types of computerization for
the solutions Advantages and disadvantages of the
alternatives
Things to conclude: Feasibility of the project The preferred alternative.
Types of feasibility
-
7/28/2019 Entrpreneurship Development
153/442
Types of feasibility
Operational feasibility Explores the urgency of the
problem and the acceptability of
any solution: If the system is developed, will it
be used? Includes people-oriented and
social issues
Types of feasibility
-
7/28/2019 Entrpreneurship Development
154/442
Types of feasibility
internal issues: manpower problems labour objections manager resistance organizational conflicts and
policies
external issues: social acceptability legal aspects and government
regulations.
Types of feasibility
-
7/28/2019 Entrpreneurship Development
155/442
Types of feasibility
Technical feasibility Is the project feasibility within the
limits of current technology?
Does the technology exist at all? Is it available within given resource
constraints?
i.e. budget, schedule,
Types of feasibility
-
7/28/2019 Entrpreneurship Development
156/442
ypes o eas b ty
Schedule feasibility
Is it possible to build a solution intime to be useful:
What constraints are there onthe project schedule?
Can these constraints be
reasonably met?
Types of feasibility
-
7/28/2019 Entrpreneurship Development
157/442
yp y
Economic feasibility (Cost/BenefitsAnalysis) Is the project possible, given
resource constraints? What benefits will result from the
system?
Types of feasibility
-
7/28/2019 Entrpreneurship Development
158/442
yp y
Look for both tangible andintangible benefits
Quantify the benefits (e.g. cost
savings) What are the development and
operational costs? Are the benefits that will accrue
worth the costs?
-
7/28/2019 Entrpreneurship Development
159/442
Lecture 5
ECONOMIC AND MARKETING
ANALYSIS
159
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
160/442
y
To identify the financial riskassociated with the project
- how much will the system cost?- what benefits will the system
provide?
- is the proposed system cost-effective?
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
161/442
y
Economic feasibility analysis or cost-benefit analysis
- identify costs and benefits
- assign values to costs and benefits- determine cash flow- assess projects economic value> determine net present value (NPV)> determine return on investment (ROI)> calculate break-even point
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
162/442
Identify costs and benefits- development costs (these are one-off costs)
> e.g. salaries for project team, hardware and softwareexpenses,
consultant fees, training, office space and equipment- operational costs (these are ongoing costs)
> fixed : at regular intervals, at relatively fixed rates
-- e.g. lease payment, license payments> variable : occur in proportion to some usage factor
-- computer usage, consummable supplies
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
163/442
Identify costs and benefits- tangible benefits : can be easily quantified
> measured in terms of savings or profits> e.g. increased sales, reductions in staff, reductions in IT
costs- intangibles : difficult or impossible to quantify
> e.g. improved customer service, improved employeemorale
Assign values to costs and benefits- once the type of costs and benefits have been identifiedthey must be
assigned specific values- intangible costs should also be quantified if possible
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
164/442
Determine cash flow- a formal cost-benefit analysis usually contains costs andbenefitsover a selected number of years (3-5 years) to show cash flowover time
Determine net present value (NPV)- time value of money : one ringgit today is worth more than one
ringgit one year from now- NPV is used to compare the present value (PV) of future cashflowswith the investment outlay required to implement the project
- PV = Amount / (1 + interest rate)n- NPV = PV Benefit PV Costs
Economic Feasibility
-
7/28/2019 Entrpreneurship Development
165/442
Determine return of investment (ROI)- measure the average rate of return earned on the money
investedin the project
- a high ROI results when benefits for outweigh the costs- ROI = (Total benefit Total costs) / Total costs
Determine break-even point- this is a point in time at which the returns will match theamount
invested in the project
- the greater the time it takes to break-even, the riskier theproject
Measures of economic feasibility
-
7/28/2019 Entrpreneurship Development
166/442
y
Net present value: A measure over timeof the costs and benefits of the project.Their future values are discounted to
account for the time value of money. Break-even point: The time at which all
the costs of the system will have beenrecovered.
Return on investment: The ratio of thenet present value of the system to thenet present value of the costs.
Measures of economic feasibility
-
7/28/2019 Entrpreneurship Development
167/442
y
Present Value Formula
PV = FV / (1 + i )n
where
PV is the present value of a cost or benefitfor time period n.
FV is the future value of a cost or benefitin time period n.
i is the interest rate for discounting
future costs or benefits.1 / (1 + i ) n is the discount factor,
dependent only on i and n.
-
7/28/2019 Entrpreneurship Development
168/442
( 2.18 )
FIGURE 2.18
MARKET ANALYSIS
-
7/28/2019 Entrpreneurship Development
169/442
Industry Description
Industry Size
Industry status (growing, mature, in decline)
Growth potential Geographic locations
Trends and entry barriers
Profit potential
Sales patterns and gross margins
MARKET ANALYSIS
-
7/28/2019 Entrpreneurship Development
170/442
Target Market Primary target markets
Secondary markets
Demographics Customer needs analysis
Product/Service Differentiation
Unique features Potential for innovation
MARKET ANALYSIS
-
7/28/2019 Entrpreneurship Development
171/442
Competitors
Direct and indirect
Market share
Description
Strengths and weaknesses
Emerging
Substitute products
MARKET ANALYSIS
-
7/28/2019 Entrpreneurship Development
172/442
Competitive Advantage
Proprietary protection
Other competitive advantages
MARKET ANALYSIS
-
7/28/2019 Entrpreneurship Development
173/442
MARKETING PLAN
Pricing
Venture versus competitors
Value chain
Purpose of Marketing Plan
Target market Unique market niche
Business identity
Marketing Tools
Advertising & promotion
Media Plan
Uses and costs of specific marketing tools
Marketing Budget
Individual costs and total costs as a percentage of sales
-
7/28/2019 Entrpreneurship Development
174/442
Lecture 6
FINANCIAL AND TECHNICAL
ANALYSIS
174
Financial Feasibility Analysis
-
7/28/2019 Entrpreneurship Development
175/442
Total start-up cash needed
Financial performance of similar
businesses Overall Financial Attractiveness of
the proposed venture
Financial Feasibility Analysis
-
7/28/2019 Entrpreneurship Development
176/442
Estimated Total Project Cost
Funding Requirements
Financing Strategy and Structure Project Evaluation
FINANCIAL PLAN
-
7/28/2019 Entrpreneurship Development
177/442
Simple Profit and Loss Statement
Drive all financial assumptions fromexpected costs, not sales projections.
Try and avoid as many fixed costs aspossible. Outsource
CONTINGENCY PLAN
-
7/28/2019 Entrpreneurship Development
178/442
Deviations from the Original Plan andSolutions
DEAL STRUCTURE
-
7/28/2019 Entrpreneurship Development
179/442
Debt and/or Equity Funding Amounts
Projected Return on Investment
Technical Feasibility
-
7/28/2019 Entrpreneurship Development
180/442
The goal- to assess the extent to which the system can be
successfully designed, developed and installed
Technical risk analysis
- are the users and analysts familiar with the application?- is the organization familiar with the technology?- how large is the projects?- is the new system compatible with the organizationsexisting systems?
Technical Feasibility
-
7/28/2019 Entrpreneurship Development
181/442
Familiarity with the application- there is a greater risk if
> the analysts are unfamiliar with the application
-- they may misunderstood the users
-- they may miss opportunities for improvement> the users are unfamiliar with the application> the system is new
Familiarity with the technology
- there is a greater chance of risk if> the technology has not been used before> the technology is new
Technical Feasibility
-
7/28/2019 Entrpreneurship Development
182/442
Project size- the number of people, length of time to
complete, the number of distinct features
- there is a greater chance of risk if> the project is large> the project is highly integrated with other
system
Compatibility- new technology and applications must
integrate with the existing technology
-
7/28/2019 Entrpreneurship Development
183/442
Lecture 7
PROJECT PLANNING:
EVALUATION, MONITORING &
CONTROL
183
Project Planning
-
7/28/2019 Entrpreneurship Development
184/442
Guidelines for Project Plans. Use project plans to coordinate rather than to
control. Make use of different personalities within the
project environment. Preschedule frequent revisions to project plans. Empower workers to estimate their own work. Describe value-creating tasks rather than
activities.
Define specific and tangible milestones. Use check lists, matrices, and other supplements
to project plans.
Internal Factors
-
7/28/2019 Entrpreneurship Development
185/442
Infrastructure Project scope Labor relations
Project location Project leadership Organizational goal Management approach
Technical manpower supply Resource and capital availability
External Factors
-
7/28/2019 Entrpreneurship Development
186/442
Public needs
Market needs
National goals Industry stability
State of technology
Industrial competitors Government regulations
Components of Project Plan
-
7/28/2019 Entrpreneurship Development
187/442
Summary of Project Plan Objectives
Approach Policies and Procedures
Contractural Requirements (document problematicareas)
Project Schedule Resource Requirements Performance Measures
Contingency Plans
Tracking, Reporting, and
Project Development Lifecycle
-
7/28/2019 Entrpreneurship Development
188/442
Planning Phase
-
7/28/2019 Entrpreneurship Development
189/442
Define problem
Confirmproject feasibility
Produce project schedule
Staff the project
Launch the project
Analysis Phase
-
7/28/2019 Entrpreneurship Development
190/442
Gather information Problem Domain Application
Define system requirements
Build prototypes for discovery ofrequirements
Prioritize requirements
Generate and evaluate alternatives
Review recommendations with management
Design Phase
-
7/28/2019 Entrpreneurship Development
191/442
Design and integrate the network
Design the application architecture
Design the user interfaces
Design the system interfaces
Design and integrate the database
Prototype for design details
Design and integrate the system controls
Implementation Phase
-
7/28/2019 Entrpreneurship Development
192/442
Construct software components
Verify and test
Convert data
Train users and document the system
Install the system
Support Phase
-
7/28/2019 Entrpreneurship Development
193/442
Maintain the system
Enhance the system
Support the users Help desk
-
7/28/2019 Entrpreneurship Development
194/442
Lecture 8
PROJECT SEGMENTATION
194
Project Segmentation- Definition
-
7/28/2019 Entrpreneurship Development
195/442
The process of talking to totalheterogeneous market for productand dividing it into several sub-
markets or segments, each of whichtends to be homogeneous in allsignificant aspects.
W.J. Stanton
BENEFITS/PURPOSE OF MARKET
SEGMENTATION
-
7/28/2019 Entrpreneurship Development
196/442
to achieve a rapid growth rate.
To do better marketing job and make moreefficient use of marketing resources.
to fulfill the needs of a particular segment in a
better way. To design promotional devices that are
effective and also helps to evaluate theirresults.
To take appropriate decisions relating tointroduction of new products, promotion,distribution, pricing etc
MARKET SEGMENTATION
PROCEDURE
-
7/28/2019 Entrpreneurship Development
197/442
Step-I: Survey stage
Step-II: Analysis stage
Step-III: profiling stage
BASES FOR CONSUMER MARKET
SEGMENTATION
-
7/28/2019 Entrpreneurship Development
198/442
Consumer related segmentation
Demographic status
Geographic segmentation Psychographic segmentation
BASES FOR CONSUMER MARKET
SEGMENTATION
-
7/28/2019 Entrpreneurship Development
199/442
Product related/Behaviouralsegmentation
Occasion
Benefits
User status
Readiness stage Attitude towards the product
BASES FOR CONSUMER MARKET
SEGMENTATION
-
7/28/2019 Entrpreneurship Development
200/442
Loyalty status
Hard core loyals
Soft core loyals Shifting loyals
Switchers
-
7/28/2019 Entrpreneurship Development
201/442
Lecture 9
CREATIVE PROBLEM SOLVING
201
CREATIVE PROBLEM SOLVING
-
7/28/2019 Entrpreneurship Development
202/442
Creative problem solving is - lookingat the same thing as everyone elseand thinking something different.
CREATIVE PROBLEM SOLVING-
Process
-
7/28/2019 Entrpreneurship Development
203/442
Objective finding - define the problem area Fact finding - gather information Problem finding - define the problem
correctly Idea finding - generate solutions to the
problem Solution finding - evaluate and choose
between possible solutions Acceptance finding - implement the
chosen ideas correctly
OBJECTIVE FINDING
-
7/28/2019 Entrpreneurship Development
204/442
The objective finding stage essentially involvesdivergent thinking to generate a list of problems
Convergence is then used to identify the mostrelevant problem areas for further exploration
'Hits' and 'hotspots' are identified by questioning Ownership - is one motivated to solve it?
Priority - how important is the problem?
Critical nature - how urgent is it to solve this problem?
FACT FINDING
-
7/28/2019 Entrpreneurship Development
205/442
Next is the fact-finding stage, whereoverall comprehension of the problem isincreased by collection of relevantinformation
This also helps new ideas to be generated
'Hits' and 'hotspots' can assistconvergence
The previously identified problem(s) maynow be seen from a new perspective
PROBLEM FINDING
-
7/28/2019 Entrpreneurship Development
206/442
Problem-finding essentially uses theprevious stage 'hits' to identify themost productive problem definition
possible.
IDEA FINDING
-
7/28/2019 Entrpreneurship Development
207/442
Idea-finding helps to structure thesearch for potential solutions
Mainly divergent activity is used togenerate many ideas using a varietyof idea-generation aids
SOLUTION FINDING
-
7/28/2019 Entrpreneurship Development
208/442
Solution-finding is basically thechoice of ideas that can betransformed into workable solutions.
ACCEPTANCE FINDING
-
7/28/2019 Entrpreneurship Development
209/442
Acceptance-finding is primarily adivergent activity that helps to implementsolutions successfully, such as
Listing potential implementation obstacles andways to overcome them
Developing both preventive actions andcontingency plans
Generating an action plan to implement a solution
CREATIVE PROBLEM
SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
210/442
STEP 1. State what appearsto be the problem.
The real problem may not surface untilfacts have been gathered and analyzed.Therefore, start with what you assume
to be the problem, that can later beconfirmed or corrected.
CREATIVE PROBLEM
SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
211/442
STEP 2. Gather facts, feelingsand opinions. What happened? Where, when and how did it occur? What is its size, scope, and severity? Who and what is affected? Likely to happen again? Need to be corrected?
May need to assign priorities to criticalelements.
CREATIVE PROBLEM
SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
212/442
STEP 3. Restate the problem. The real facts help make this possible,
and provide supporting data.
The actual problem may, or may not bethe same as stated in Step 1.
CREATIVE PROBLEM SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
213/442
STEP 4. Identifyalternative solutions.
Generate ideas. Do noteliminate any possible
solutions until severalhave been discussed.
CREATIVE PROBLEM SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
214/442
STEP 5. Evaluate alternatives.
Which will provide the optimumsolution?
What are the risks?
Are costs in keeping with the
benefits?
Will the solution create newproblems?
CREATIVE PROBLEM SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
215/442
STEP 6. Implement thedecision!
Who must be involved?
To what extent?
How, when and where?
Who will the decision impact?
What might go wrong?
How will the results be reported
and verified?
CREATIVE PROBLEM
SOLVING PROCESS
-
7/28/2019 Entrpreneurship Development
216/442
STEP 7. Evaluate the results.
Test the solution against the desiredresults.
Make revisions if necessary.
-
7/28/2019 Entrpreneurship Development
217/442
Lecture 10
TECHNIQUES OF CREATIVE
PROBLEM SOLVING
217
TOOLS & TECHNIQUES
-
7/28/2019 Entrpreneurship Development
218/442
BRAINSTORMING
Purpose:
To generate a largenumber of ideas in ashort period of time.
BRAINSTORMING
-
7/28/2019 Entrpreneurship Development
219/442
Rules for Brainstorming:
The more ideas the better!
No discussion
No idea is a bad idea
Build on one anothers ideas
Display all ideas
BRAINSTORMING EXERCISE
-
7/28/2019 Entrpreneurship Development
220/442
Ideas: Freely record your ideas as they come to your mind.
How Do We Motivate Our LocalOptimist Club Members?
BRAINSTORMING
GUIDELINES
-
7/28/2019 Entrpreneurship Development
221/442
1. Practice question: How Do WeMotivate Our Local Optimist ClubMembers?
2. Clarify understanding. Once all theideas have been generated (it maytake approximately 5 to 6 minutes),review ideas offered.
RememberCreativeThinking
What did
you mean bythat?!!!
Re-state thequestion to keepthe process going
BRAINSTORMING
GUIDELINES
-
7/28/2019 Entrpreneurship Development
222/442
3. Combine items thatare similar and/or
eliminate duplicates.
4. Completion.
Letscombineideas!!!
Are wedone yet?
Heuristics In Decision Making
-
7/28/2019 Entrpreneurship Development
223/442
We all have rules of thumb that we relyon in making decisions. Another term forsuch rules is heuristics.
Heuristic search techniques follow aseries of steps based on rulesdeveloped by experience.
These searches can often providesolutions very close to those found byexhaustive search.
Advantages of Heuristics in Problem
Solving
-
7/28/2019 Entrpreneurship Development
224/442
Simple to understand
Easy to implement.
Requires less conception time. Requires less cognitive effort.
Can produce multiple solutions.
Appropriate Uses of Heuristics in
Problem Solving
-
7/28/2019 Entrpreneurship Development
225/442
Input data are inexact or limited.
High computation time for an optimalsolution.
Problems are solved frequently andrepeatedly.
Symbolic processing is involved.
A reliable, exact method is not available. Optimization is not economically feasible.
Traveling
-
7/28/2019 Entrpreneurship Development
226/442
g
Salesman
Problem
Cities to
Visit
Initial Heuristic SolutionRule: start at home, go to closest city
-
7/28/2019 Entrpreneurship Development
227/442
Modified Heuristic SolutionRule: no crossing any connection, no
backtracking
-
7/28/2019 Entrpreneurship Development
228/442
Heuristic Bias
-
7/28/2019 Entrpreneurship Development
229/442
Sometimes the use of heuristics can hamperfinding a solution. The four majorcategories of bias are:
1. Availability people tend to estimateprobability based on past experience,which may not be representative.
2. Adjustment and anchoring peopleoften pick a starting value and thenadjust up and down from it. They tend tounderestimate the need for adjustments.
Heuristic Bias (cont.)
-
7/28/2019 Entrpreneurship Development
230/442
Sometimes the use of heuristics can hamperfinding a solution. The four majorcategories of bias are:
3. Representativeness people tend tomisestimate probabilities of belonging toa group.
4. Motivational incentives often leaddecision makers to estimateprobabilities that do not reflect their truebeliefs.
Synectics
The process of generating novel alternatives
-
7/28/2019 Entrpreneurship Development
231/442
through role playing and fantasizing. Synectics (Gordon, 1961) is an approach to
creative thinking that depends onunderstanding together that which isapparently different. Its main tool is analogy or
metaphor. The approach, which is often usedby groups, can help students develop creativeresponses to problem solving, to retain newinformation, to assist in generating writing,and to explore social and disciplinaryproblems. It helps users break existing mindssets and internalize abstract concepts.Synectics can be used with all ages and workswell with those who withdraw from traditionalmethods (Couch, 1993).
Value Analysis
-
7/28/2019 Entrpreneurship Development
232/442
A team problem-solving system,developed at the General ElectricCompany in the late 1940s.
Its special power is a techniquecalled Function Analysis whichdramatically shifts the viewpoint of
the problem-solvers.
Key elements to the
Value Analysis process
-
7/28/2019 Entrpreneurship Development
233/442
FUNCTION ANALYSIS
FUNCTION-COST
FUNCTION-WORTH
CREATE BY FUNCTION
IMPLEMENTATION
THE JOB PLAN
THE TEAM OWNERSHIP
Questions
-
7/28/2019 Entrpreneurship Development
234/442
234
Questions
1. What do you understand by project? Discuss the elements
of a project.
-
7/28/2019 Entrpreneurship Development
235/442
2. Discuss in brief all stages in a project establishing
process.
3. Discuss the importance of feasibility study in project
development. Discuss the various types of studies under
feasibility study.
4. Discuss the importance of project evaluation, monitoring
& control in project formulation.
5. Explain the various techniques of creative problem
solving.235
ENTREPRENEURSHIP DEVELOPMENT
-
7/28/2019 Entrpreneurship Development
236/442
UNIT - III The nature of international
entrepreneurship.
Importance of international business to the
firm.
International versus domestics
entrepreneurship.
Stages of economic development.
Institutional support for new ventures.
Supporting organizations.
Incentives and facilities.
Financial institutions and Small Scale
Industries.
Government policies for SSIs.236
Lectureno
Contents (sub topics) Slide no
1 The nature of international entrepreneurship. 239-244
LECTUREPLAN Unit- III Sub: ENTREPRENEURSHIP DEVELOPMENTAcademic Consultant: Gaurav Agrawal
-
7/28/2019 Entrpreneurship Development
237/442
2 Importance of international business to the firm. 246-256
3 International versus domestics entrepreneurship 258-261
4 Stages of economic development 263-275
5 Supporting organizations 277-2826 Incentive and facilities. 284-292
7 Financial institutions and Small Scale Industries. 294-295
8 Financial institutions and Small Scale Industries 297-301
9 Government policies for SSIs. 303-306
10 Government policies for SSIs. 308-314
FAQS, MCQs, CASE STUDY & ASSIGNMENTS 316-320237
-
7/28/2019 Entrpreneurship Development
238/442
Lecture 1
The nature of international
entrepreneurship
238
Definition:
-
7/28/2019 Entrpreneurship Development
239/442
International entrepreneurship is theprocess of an entrepreneurconducting business activities
across national boundaries.
Nature of international entrepreneurship
-
7/28/2019 Entrpreneurship Development
240/442
Complex & diverse
Political
Cultural
Economic
technological
Nature of international entrepreneurship
-
7/28/2019 Entrpreneurship Development
241/442
World wide in scope
Resources
Market
Competition
Nature of international entrepreneurship
-
7/28/2019 Entrpreneurship Development
242/442
Multi displinary
Global challenges
Commercial risks
Political risks
Legal risks
Cargo risks Credit risks
Reasons for international entrepreneurship
-
7/28/2019 Entrpreneurship Development
243/442
To expand sales
Acquire resources
Diversify sources of sales and
supply Minimize risk
Expansion of technology
Liberalization of Cross-BorderMovements
Routes of international
entrepreneurship
-
7/28/2019 Entrpreneurship Development
244/442
Direct exporting Licensing Joint ventures Manufacturing Assembly operations Management contract Turn-key operations
Acquisitions & mergers Wholly owned subsidies
-
7/28/2019 Entrpreneurship Development
245/442
Lecture 2
Importance of international business
to the firm
245
Importance of international business
to the firm
-
7/28/2019 Entrpreneurship Development
246/442
International Entrepreneurship can
Fuel economic growth
Create employment
Generate prosperity for citizens
Importance of international business
to the firm
-
7/28/2019 Entrpreneurship Development
247/442
International business has becomeincreasingly important to firms of allsizes particularly today when every
firm is competing in ahypercompetitive global economy.
Importance of international business
to the firm
f
-
7/28/2019 Entrpreneurship Development
248/442
The successful entrepreneur will besomeone who fully understands howinternational business differs from
purely domestic business.
Importance of international business
to the firm
I i i t ti l b i
-
7/28/2019 Entrpreneurship Development
249/442
Is managing international businessdifferent from managing domesticbusiness?
What are the strategic issues to beresolved in international business
management?
Importance of international business
to the firm
Wh t th ti il bl f
-
7/28/2019 Entrpreneurship Development
250/442
What are the options available forengaging in international business?
How should one assess the decisionto enter into an international market?
Importance of international business
to the firm
I t f th N ti
-
7/28/2019 Entrpreneurship Development
251/442
Importance for the Nation:
Higher economic growth rate.
Reduction in annual rate of inflation.
Relieving the critical balance ofpayments.
Importance of international business
to the firm
R b ilt f i h
-
7/28/20