Entrepreneurship

PM-2401
 ‘Entre’ means ‘between’ and ‘prendre’
means to take’ meaning people who take
‘risk’
 An inventor creates something new. An
entrepreneur assembles and then
integrates all resources needed-the
money, the people, the business model,
the strategy, the risk bearing ability-to
transform the invention into a viable
business.
Nature and Development
 Thomas Edison-Urban electric
illumination
 Opportunity
 Invented and established a company
Nature and Development
 Earliest Period - Marco Polo
 Go-between
 Loan at high interest rates –
 passive risks
 Middle ages – Someone who
managed large projects, with
virtually no risk for himself. e.g.
Clerics
Nature and Development
 17th Century – Risk for entrepreneurs
 Any loss/profits for the entrepreneurs
 John Law – a French entrepreneur
 Richard Cantillon- the founder of
entrepreneurship, defined the
entrepreneurs as risk-takers
 Buy at certain, but sell at uncertain
prices…….isn’t that risky?
Nature and development
 18th Century – a clear distinction
between capital seeker and
providers
 Edison and Whitney……
 18th Century – Andrew Carnegie
The function of the entrepreneur is to reform or
revolutionize the pattern of production by exploiting an
invention or, more generally, an untried technological
method of producing a new commodity or producing an old
one in a new way, opening a new source of supply of
materials, or new outlet for products by organizing a new
industry. Hisrich, p. 7
Defining entrepreneurship
 Economists define an entrepreneur
as someone who brings resources, such as land, labor,
materials, and combine them to enhance their value
through various transformation method while they also
bring about change, engender innovation and introduce
new ideas and orders…
 Whereas Entrepreneurship is defined as a
dynamic process of creating incremental
wealth.
So, it’s a process of creating something new, such as a
new business, by devoting the necessary time and efforts,
acquiring resources, taking the risks and also taking the
rewards!
Defining Entrepreneurship
 Four basic aspects of
entrepreneurs
1. Creation of a new venture
2. Investing necessary time and effort
3. Accepting associated risks!
4. Enjoying resulting rewards!
Why become an
Entrepreneur?
 To be your own boss
 Pursue your own idea
 Realize financial rewards
Characteristics of successful
entrepreneurs
 Passion for the business- You
believe that the business will
positively influence one’s life
 Product/Customer Focus
 Tenacity despite failure
 Execution Intelligence
Economic impact of Entrepreneurial
firms
 Entrepreneurial behaviour has a
strong impact on the strength and
stability of the economy
 Innovation is the process of creating something new,which
is central to entrepreneurial process
 Small entrepreneurial success are responsible for 67% of the
innovation in the United States and have been responsible for
the 95 % of radical innovations since world war II. Many
innovations help individuals and businesses work more smoothly
and efficiently
 Job Creation
 Globalization
The Entrepreneurial Process
 Deciding to become an entrepreneur
 Developing successful business
ideas
 Moving firm an idea to an
entrepreneurial firm
 Managing and growing the
entrepreneurial firm
 Decision o Developing Successful Business
become an ideas
entrepreneur
Introduction to Recognizing
Entrepreneurship opportunitie
s and
generating
ideas
Feasibility
analysis

Industry
and
Compettitor
Analysis
Developing
an effective
business
Model

The Entrepreneurial Process

 Managing and
Moving from an idea to an Entrepreneurial firm growing a
entrepreneurial
firm
Building a
New Venture
Unique Marketing
Team
Issues

Assessing
anew The importance of
venture’s intellectual
financial property
strength
and viability
Preparing for and
Preparing a evaluating the
proper challenges of
ethical and growth
legal Strategies for firm
foundation growth
Writing a
Business
Plan Getting
Financing Franchising
or Funding

The Entrepreneurial Process

The Makings of an
Entrepreneur
 Can you tolerate a high level of risk ?
 Are you an overachiever ?
 Are you willing to put in 10-12 hrs. ove an
extended period, including weekends to reach
your goals?
 Are you a self starter?
 Would you describe yourself as a good decision-
maker?
 Are you willing to put your personal funds at
risk?
 Do you have the commitment required to build a
business in the face of long hours and modest
odds of success?
Recognizing Opportunities and
Generating Ideas
OBSERVING TRENDS
Idea
 An idea is a thought, impression or notion. An
opportunity is an idea that has the qualities of
being attractive , durable and being timely and
is anchored in a product of service that creates
value for its buyers or end users.
 Not all ideas are opportunities
Ways of recognizing an opportunity

 Observing trends
 Solving a problem
 Economic
forces
•State of the Economy
•Level of the disposable income
•Consumer spending patterns

Social forces New

•Social and cultural trends Business Product or Service
•Demographic changes Opportunity Gap
Business,
•What people think is “in”
Difference between product
what’s available
Technological and what’s possible
and service
Advances ideas
•New Technologies
•Emerging Technologies
•New uses of old technologies

Political and
Regulatory
Changes
•New Changes in political arena
•New laws and regulations
Economic Forces
 Economic Forces affect consumer’s level of disposable
income. Individual sectors of the economy have a direct
impact on the consumer buying patterns..
1. E.g. Drop in interest rates leads to an increase in home
construction
2. Increase in number of women in workforce
3. Starting firms that help other firms control costs
Social Forces
 Social forces: Impact of social forces and the way they
affect trends i.e. new product, service and business ideas
1. Growth in fast food restaurants
2. Working parents
3. Invention of walkman
Technological Advances
 Creation of Cell phone
 E-commerce sites
The ultimate reason why most buy online is because they are
busy and prefer to shop when they have free time rather than
being restricted to traditional store hours
 Political Action and Regulatory Changes

 e.g. New laws create opportunities for entrepreneurs to start

firms which help them comply with these laws
 Global Political instability and the threat of terrorism have
resulted in many firms becoming more security conscious.
Companies need new products and service to protect their
physical assets and intellectual property as well as protect
their physical assets
 The backup data storage industry is expanding because of the
new trend in that firms now feel the need for their data to be
more protected than in the past
Solving a Problem
 Noticing a problem and finding a
way to solve it.
 Every problem is an opportunity in
disguise
 E.g. Anti-virus softwares etc.
 Successful entrepreneurs
 Prior experience in business helps you recognize
opportunities
 Entrepreneurial alertness-ability to notice things
 Social networks: people who build a substantial
social and professional contacts are exposed to
more opportunities and ideas than people with
sparse networks
 Creativity
 Creativity: Process of generating a useful idea
1. Preparation
2. Incubation
3. Insight
4. Evaluation
5. Elaboration is the stage in during which the creative idea is
put into a final form: the details are worked out, and the
idea is transformed something of value such as a new
product, service or business concept. In the case of a
business this is the point where a business plan is written.
 Success for an Entrepreneur

 The entrepreneur’s “secret” for creating value in the

marketplace is applying creativity and innovation to solve
problems and to exploit opportunities that people face
everyday.
 Creativity is the ability to develop new ideas and to
discover new ways of looking at problems and
opportunities.
 Innovation is the ability to apply creative solutions to
those problems and opportunities to enhance or to enrich
people’s lives/ entrepreneurship is the result of a
disciplined, systematic process of applying creativity and
innovation to needs an opportunities in the marketplace.
Methods of Generating Ideas
 Brainstorming: is targeted at s specific topic in which a
group of people come up with specific ideas. A flip chart can be
used to record ideas.
 Focus Groups:A gathering of 5-10 people who are
selected because of their relationship to the issue being
addressed
 Surveys: A method of gathering information from a sample
of individuals
 Other techniques: e.g. Customer Advisory Boards,
Some companies attend trade shows, conference and gatherings
of industry personnel and approach them as intelligence missions
to learn what their competitor is doing and to stimulate new
ideas
10 mental locks that limit
creativity
Business Model
 How an enterprise makes money ?
 Business Model is a summation of
core business decisions and trade
offs employed by a company to earn
a profit
Marketing Plan
MBA (Final Year)
25.02.09
The Process of Selecting a Target Market and
Positioning Strategy
Segmentating
the Market
What groups of customers in my
Market are similar enough that the
same product or service
will appeal to all of them
Selecting a Crafting a Unique
Target Market Positioning Strategy
Which specific What position will my firm
groups of customers occupy in the minds of
have I decided to target my customers (and potential
customers)
that will differentiate
it from all of my competitors
 The first step in selecting a target market is to
study the industry in which the firm tends to
compete and determine the different potential
target markets within that industry.
 This process is called market segmentation.
 Markets can be segmented in a number of ways
including product type, price point, an d
customers served.
 A firm typically has only enough resources to
target one market segment- at least initially.
 By focusing on a clearly defined market, a firm
can become expert in the market and by doing
so provide its customers high levels of value and
service.
 After a firm has selected its target market, the
next “step” is to establish a position within it
that differentiates it from its competitors.
 The term “ position” defines how it is situated
with respect to its competitors.
 From the marketing perspective, this translates
into the image of the way a firm wants to be
perceived by its customers.
 Importantly position answers the question , why
should someone in the target market buy our
good or service instead of our competitor.
Key Marketing Issues for New Ventures

 Selling Benefits Rather Than Features

 Establishing a Brand
 The four P’s of Marketing for New Ventures
 Product
 Price
 Promotion
 Place (for distribution)
 Many entrepreneurs make the mistake of
creating a strategy that focuses in the features
of the product, such as its technical merit. This
approach is usually less effective than a
campaign focusing on the benefits of owning the
product, such as convenience or being able to
keep better touch with family or friends.
Brand Value
 A company's brand is the set of attributes people
associate with it.
 A firm build a brand by having a meaning in the
customer's lives. It must create value.
 On a more practical level, brands are built
through advertising, public relations,
sponsorships, supporting social causes and good
performances.
 A firm’s marketing mix is a set of controllable,
tactical marketing tools that it uses to produce
the response it wants in its target market. Most
marketers organize their marketing mix around
the four P’s , product, price, promotion and
place(distribution).
 The product itself is a firm’s core product, such
as the CD that contains an anti virus program.
The actual product, which is what a customer
buys is ore encompassing. It may have five
characteristics: a quality level, features, design,
brand name and packaging.
Cost based pricing
 In cost based pricing the list price is
determined by adding a markup
percentage to the product's cost.
 In value based pricing, the list price
is determined by estimating what
the customer is willing to pay for a
product.