Entrepreneurship Development and Management

By Dr Gyan Prakash
HMCI-101
Entrepreneurship
 Introduction to Entrepreneurship
• Entrepreneurship: The capacity and willingness to develop, organize and
manage a business venture along with any of its risks in order to make a
profit. The people who create these businesses are called entrepreneurs.

• Entrepreneur: An entrepreneur is someone who develops a business model,

acquires the necessary physical and human capital to start a new venture, and
operationalizes it and is responsible for its success or failure.

• Entrepreneurship has been described 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"
 Difference between An Industrialist,
Businessman And An Entrepreneur
• An Industrialist is the one owning or engaged in the management of an
industry. Originally, it meant someone who manufactured goods that were
not from agriculture, craft(i.e. skill), or commerce.
• Businessman or business person is one who works in commerce.
Commerce is the exchange of goods or service often on a large scale.
An entrepreneur is one who sets up a business or businesses, taking on
financial risks in the hope of profit.
• An overlap in meaning is sometimes observed, for example, an
entrepreneur may be a businessman, an industrialist may be a businessman
and an industrialist is a very influential entrepreneur. However, each is
different and they are not mutually exclusive but they can overlap.
 Entrepreneurship Categories
There are four broad categories of entrepreneurship:
a) Entrepreneurship by Chance: Opportunity was offered to him/her. No
doubt this category of entrepreneurs displayed ability in taking risks,
creating the enterprise and growing it, providing job opportunities,
creating wealth etc.
b) Entrepreneurship by Need: Because of variety of reasons, people may
or may not find enough opportunity to work in large enterprises. So to
support themselves and family an individual start small businesses,
small scale unit, shop, kirana store etc.
c) Entrepreneurship by Choice: In this case, personal interest and passion
of the entrepreneur that enables the identification of an opportunity and
conjuring up a compelling idea to explore it.
d) Entrepreneurship by Force: Where people are pushed into the practice
of entrepreneurship by force. i.e., without any deep personal interest.
These are the entrepreneurs who are second generation owners of
businesses.
 Myths concerning entrepreneurship
1. Entrepreneurship is all about Passion: It is all about passion for something is a
myth widely accepted. True, entrepreneurship is chosen as a route fuelled by
passion. But it is not only the passion aspect that is at work.

2. Entrepreneurship is a sure way to Riches:

3. Entrepreneurship succeeds with Financial Backing:

4. Entrepreneurship is for the Money Class:

5. Entrepreneurship is for Influential People:

6. Depends only on the Entrepreneur for Success:

 Entrepreneurship’s Challenges
• Lack of Effective Support: Entrepreneurship operates in its own ecosystem
having a number of players who play their individual part.
• Inadequate incubation facilities: Business incubation programs are often
sponsored by private companies or municipal entities and public institutions,
such as colleges and universities. Their goal is to help create and grow young
businesses by providing them with necessary support and financial and
technical services. But there is a lack of these facilities or not available in the
society.
• Education and Training: Access to education about entrepreneurship for
aspiring entrepreneurs is limited. Due to unavailability of information on local
issues and nuances, entrepreneurs in the Indian context find little benefits.
• Mentoring and Coaching: Mentoring or coaching should come from the
existing or successful entrepreneurships. The motive for this activity should not
be monetary gain but rather contribution to a social good.
• Infrastructure Challenges:

• Cultural Bottlenecks:

• Regulatory Challenges:

• High entry barrier to working with Government:

• Entrepreneurial opportunities
• Those situations in which new goods, services, raw materials, and
organizing methods can be introduced and sold at greater than their
cost of production.

• Entrepreneurial Action
• Action through the creation of new products/ processes and/or the
entry into new markets, which may occur through a newly created
organization or within an established organization
 How Entrepreneurs Think
• Entrepreneurs think differently from non-entrepreneurs. Moreover, an
entrepreneur in a particular situation may think differently from when
faced with some other task or decision environment. Entrepreneurs
must often make decisions in highly uncertain environments where the
stakes are high, time pressures are immense, and there is considerable
emotional investment. We all think differently in these strained
environments than we do when the nature of a problem is well
understood and we have time and rational procedures at hand to solve
it. Given the nature of an entrepreneur’s decision-making
environment, he or she must sometimes (1) think structurally, (2)
engage in bricolage, (3) effectuate, and (4) cognitively adapt.
1. Think Structurally
Forming opportunity beliefs often requires creative mental leaps. These creative
mental leaps are launched from a source—one’s existing knowledge. In the case of
entrepreneurial opportunities, an example of a creative mental leap is from
knowledge about existing markets to a new technology that could lead to
products/services that satisfy that market.
• Superficial Similarities
Exist when the basic (relatively easy to observe) elements of the technology
resemble (match) the basic (relatively easy to observe) elements of the market.
• Structural Similarities
Exist when the underlying mechanisms of the technology resemble (or match) the
underlying mechanisms of the market
3. Bricolage
Entrepreneurs often lack resources. As a result, they either seek resources from
others to provide the “slack” necessary to experiment and generate entrepreneurial
opportunities or they engage in bricolage. By bricolage we mean that some
entrepreneurs make “do by applying combinations of the resources at hand to new
problems and opportunities.
3. Effectuation
• As potential business leaders, you are trained to think rationally and
perhaps admonished if you do not. This admonishment might be
appropriate given the nature of the task, but it appears that there is an
alternate way of thinking that entrepreneurs sometimes use, especially
when thinking about opportunities.

• 3.1Causal Process
A process that starts with a desired outcome and focuses on the means to
generate that outcome.
3.2 Effectuation Process
• A process that starts with what one has (who they are, what they know, and whom they
know) and selects among possible outcomes.
• Given a product or a service, Kotler suggests the following procedure for bringing the
product/service to market (note that Kotler assumes the market exists):
1. Analyze long-run opportunities in the market.
2. Research and select target markets.
3. Identify segmentation variables and segment the market.
4. Develop profiles of resulting segments.
5. Evaluate the attractiveness of each segment.
6. Select the target segment(s).
7. Identify possible positioning concepts for each target segment.
8. Select, develop, and communicate the chosen positioning concept.
9. Design marketing strategies.
10. Plan marketing programs.
11. Organize, implement, and control marketing effort.
4. Cognitive Adaptability
Describes the extent to which entrepreneurs are dynamic, flexible, self-
regulating, and engaged in the process of generating multiple decision
frameworks focused on sensing and processing changes in their
environments and then acting on them.
 Pitfalls in Entrepreneurship Practice:
• Search for the ideal solution: A typical problem that entrepreneur face is in
trying to present the ideal solution. A product that would give the most ideal
results, but commercially producing it may not be practical, may not be needed
by the society, or the market may not find users at the price point.

• Lack of sound cash management: Wonderful businesses may die a premature

death if there is no focus on cash management.

• Lack of transition to institution building: Due to many reasons like wrong

investment decisions, lack of focus, leadership issues, etc… the enterprise is not
allowing to grow beyond a certain point.

• Harmful effect of inflated egos: Entrepreneurial mind need to be more mature

and balanced to understand the importance of human capital.
 Impact of Entrepreneurship
Entrepreneurship and Social economic Development:

a) Creation of the enterprise solves one of the basic needs of society:

b) Employment generation:

c) Also the development of the society:

d) Strengthen the economic condition of the society and the nation:

Impact on Larger Firms

 Why become an Entrepreneur?
Based on the study of successful entrepreneurs in the past, a few strong reasons
become the basis for today’s young minds to consider taking entrepreneurship
as a career option.

a) Fulfilment: A strong sense of fulfilment of seeing something that they want

to do strongly is one of the main reasons why entrepreneurship may be
considered.
b) Wealth creation: Creating wealth and value are their change agents. In the
process of creation of Infosys, it is widely shared information that more
than 400 initial employees turned millionaire after Infosys went public
c) A sense of achievement: A strong sense of achievement and working very
hard to make it possible is another reason why entrepreneurs choose this
different path. E.g. recognition.
• Independence and freedom: An entrepreneur is one who typically does
not want to adhere to somebody else’s requirement. They create their
own rule, their own enterprise ion their own world. That gives a great
sense of freedom and independence at work.

• Application of Multiple skills: Today most corporation hire people and

then train them for certain specific skills. All large corporations expect
a lot of their employees to be specialists rather than generalists. But
entrepreneurs typically are people who are more generalists than
specialist.
Traits of an entrepreneur
What are the characteristic of Entrepreneur?
 Characteristic of Entrepreneurs

1) Entrepreneurs are people who have the ability to take risks:

2) They are self driven with high energy levels:
3) They have a great amount of self confidence and self esteem
4) They have great survival instincts and adaptability: They are the people
who are very adaptive and flexible.
5) Entrepreneurs are great at networking:
6) They have a positive attitude towards failure:
7) Entrepreneurs are driven by strong desire: Desire is the strong and
burning need to achieve something
8) Entrepreneurs work under constraints but never accept constraints:
Instead of blaming the situation they try to identify the innovative ways
in which they can overcome the problem.
9) Entrepreneurs are typically multi-skilled:

10) Entrepreneurs are very optimistic:

 Types of Entrepreneurs
Entrepreneurship theory and practices ( a journal) in 2001, they divided
entrepreneurs into five types:
1) A Nascent entrepreneur is an individual, who is involved in the process of
starting up right from the conceptualizing part.
2) A Novice entrepreneur is one who has no prior business ownership
experience, but wishes to start a business for the first time.
3) A Habitual entrepreneur is one who has prior business ownership experience.
4) A Serial entrepreneur is one who has started and run businesses in the past,
has run it successfully or closed it down, has either successfully sold it off to
another person or logically brought it to an end.
5) Portfolio entrepreneur is one who retains the original business and builds a
portfolio of additional businesses around it, either through purchasing or
starting up related or new businesses.