em chapter 1 mcom

7/31/2019 EM Chapter 1 Mcom

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Entrepreneurial

Management

The EntrepreneurialPerspective


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Entrepreneur

Enterprendre French word- to undertake

One who innovates, raises money, assembles

inputs, chooses managers, sets organisation,with ability to identify them.

Visionary and intergrated peroson with

outstanding leadership qualities

Desire to excel

Priority to R&D


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Who is Entrepreneur

A person who has possession of new enterpriseventure or idea,

Assumes significant accountability for theinherent risks and outcomes.

Ambitious leader who combines land, labour &capital to often create & market new goods or

services Undertakes an enterprise especially,

intermediary between capital & labour.


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Term Entrepreneur

1. Small industrialists

2. Small business

3. Traders

4. Industrialists

Engaged in Manufacturing

Distribution

Service Founder-creator

Risk-taker


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Characteristics of Entrepreneur

Hard-work

Desire for high achievement

Highly optimistic

Independence

Foresight Good organiser

Innovative

Mental ability

Clear objectives

Business secrecy

Human relations abilityemotional stability,personal relationship, consideration, tactfulness

Communication ability

Technical knowledge

Motivator

Self-confidence

Long-term involvement High energy level.

Administrative ability

Organisational skills

Intelligence

Creativity

Persistent problem- solver Goal setter

Moderate risk taker


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Functions of an Entrepreneur

Idea generation & scanning of suitable idea

Determination of business objective

Product analysis & market research

Determination of form of ownership

Completion of promotional formalities

Raising necessary funds

Procuring machine and material Recruitment of men

Undertaking business organisation


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New concept of Entrepreneur

Perceives opportunities for profitableinvestments.

Explores prospects of starting manufacturing

enterprise. Obtains industrial licenses

Arranges initial capital

Provides personal guarantees to financial

institutions Meets shortfall of capital

Supplies technical know-how


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Indian Entrepreneur

Jamsetji Tata

Jamnalal Bajaj

Laxmanrao Kirloskar

Ghanshyamdas Birla

Visionaries, builders, thinkers, scientists


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Types of Entrepreneurs Innovative Entrepreneurs

New goods, new method of production, discovers new markets, reorgaises enterprise

Imitative Entrepreneurs Adopt innovations by innovating entrepreneurs.

Fabian entrepreneurs imitates only when, failure to do so will result in loss of relative position in enterprise

Drone Enterprise Refuse to adopt different opportunities or changes

Solo operators Work alone

Active partners Enterprise as joint venture

Inventors Interest in research & innovative activities

Challengers Enter because of challenges present in market

Buyers Buy ongoing ones

Lifetimes Family enterprise, business


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Key Element for Entrepreneurship

1. Innovation

2. Risk-taking

3. Vision

4. Organising skill Inter-related

Continuous process in business

Pursuit for operational excellence

Innovative technology Being responsive to market place


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Entrepreneurial Behaviour

Grasping opportunity

Take initiative

Solve problems creatively Managing autonomously

Responsibility & ownership

Seeing things through

Judgement to take calculated risk

Manage interdependence


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Entrepreneurial Attributes

Achievement Orientation & ambition

Self confidence & self esteem

PerseveranceAction orientation

Hard-working

Determination creativity


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Entrepreneurial Skills

Problem solving

Persuading

Negotiating Selling

Strategic thinking

Intuitive decision-making under uncertainty networking


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Intrapreneur

An Emerging groups of persons left bigcorporations & started their own small businessin America either because their ideas were notaccepted by their top bosses or because ideaswere innovative enough to offer ample scope ofmaking profit.These persons turned toentrepreneurs & achieved great success in their

new ventures. These entrepreneurs came to beknown as intrepreneur.


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Entrepreneur/Intrapreneur Independent

Raises funds on his own initiative

Takes profits of the business

Bears the full risk of business

Real owner of business

Operates from outside theorganisation

Converts the ideas of Intrapreneurinto viable opportunities

Semi-independent- on the owner

Depends upon the industry inwhich he works for gettingfinance

Does not take profit out ofinnovations but he can be

provided with a variety ofperquisite for their innovations

Bears the risk of the businesswhich is small part of the entirebusiness

Not the real owner of thebusiness, rather he works for thebusiness

Operates within the organisation

Takes responsibility of creatinginnovation of any kind from withinthe organisation


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Entrepreneurship

Is a process undertaken to augment hisbusiness interest

Is a composite skill, the resultant of a mix ofmany qualities and traits, include tangible factorsas imagination, readiness to take risk and bringtogether and put to use other factors ofproduction, capital, land, labour as alsointangible factors & to mobilise scientific andtechnological advances.


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Concept

Entrepreneur

Person

Entrepreneurship

Process of action

Enterprise

object


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Entrepreneurial Process

Leadership function which centres around dynamics ofentrepreneurial growth and change.

Stages

1. Change in socio economic environment leading tochanges in aspect of life creating needs for newgoods and services.

2. Starting new venture

3. Intrapreneurship extend entreprises through new

combination and exploiting new opportunities.4. Coordinating various activities to achieve

entrepreneurial goal.


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Entrepreneurial structure

Structure represents formal, official taskrelationship of people in entrepreneurialactivities.

Entrepreneurial activities policies,programmes, practices & measurement forinnovation & growth.

Planning, directing, controlling, marketing,leading, motivating , channelising activities

Entrepreneurial goal.


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Relationship

entrepreneur/entrepreneurship Person

Organiser

Innovator

Risk-bearer

Motivator Creator

Visualiser

Leader

Initiator

Technician

Decision maker Planner

administrator

Process

Organisation

Innovation

Risk-bearing

Motivation Creation

Vision

Leadership

initiative

Technology

Decision Planning

administration


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Entrepreneur/Manager

Motive to start venture

Status owner ofenterprise

Risk-bearing assumesall risks and uncertainty

Rewards profits

Innovations

Qualifications high

achievement motive,originality thinking,foresight, risk-bearing..

Motive is to renderservice

Service of enterprise

Does not bear any risk Salary certain and fixed

Only executes the plans.

Distinct qualifications-management theory &

practice


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Entrepreneurs + factors of

environment Socio-economic environment

Family background

Standard of education and technical knowledge Financial stability

Political stability and government policy

Caste and religious affiliation

Personality and personal skill

Achievement motivation


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Entrepreneurship - economic

development Promotes capital formation by mobilising idle saving

Large scale employment reduce unemployment (majorsocio-economic problem)

Balanced regional development Reduce the concentration of economic power

Effective resource mobilisation of capital and skill

Induces backward and forward linkages stimulatesprocess of economic development

Promotes country export An economy is the effect for which enterpreneurship is

the cause


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Characteristic of an ideal

entrepreneur Creativity

Innovation

Dynamism

Leadership

Team building

Achievement, motivation

Problem solving Goal orientation

Risk taking & decision making ability.


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Entrepreneurial skills

Technical skills

Behavioural skills

Conceptual skills

Economic business skills

Evaluating skills

Implementing skills


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Characteristics of intrapreneurial

environment Innovative ideas

Encourage experimentation

Initial opportunity parameter

Availability of resources Encourage team work

Evaluation

No force

Reward Alteration

Support of top management


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Intrapreneurial Qualities

Innovator

Visionary

Knowledgeable Flexibility

Encourage team work

Diplomatic

Open to discussion & idea

motivator


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Intrapreneurs characteristics

Self motivated

Self-confident & courageous

Freedom

Education

Systems


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Classification of Intrapreneur

Innovating, marketing, technical ,

manufacturing, financial service


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Nature & importance of

entrepreneurs For growth, on going basis

Rapid growth of employment & incomes


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Analysis of nature & importance of

entrepreneurs Entrepreneurial qualities innate

Enhanced by training, experience

Indispensable quality imagination Foresight

Delegation skill & organizational skills


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Entrepreneurial Functions

Product Development & organisation

structure

Carries activities of businessNew ideas, demand & exploit opportunities

Recognises commercial potential of

product or service, design operatingpolicies in marketing, production


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functions

1. Assumption of risk Assumes all risk of business problems

Taste of consumers, new inventions in market.

Reduce them by initiative, skill, good judgement

2. Business decision nature /type of business decide

Best prospects & produce..

3. Managerial functions Formulates production plan

Finance

Purchase of RM

Production facilities Sales management

Performs entrepreneurial function but different from managerial function.


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Decision Maker

Develop of organisation, relation withemployees/subordinates

Adequate financial resources

Good relation with existing & potential investors Determination of objective & if any changes

required

Use of efficient technological equipment

Develop market for products Good relation with public authorities & society


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Entrepreneurial decision

Despite recession, inflation, high rate of

interest, lack of infrastructure, economic

uncertainity etc. Stimulation for change comes from

negative force- disruption


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Women Entrepreneurs

US 25% of the business

1/3 in canada

1/5 France


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Women Entrepreneur

Retail trade, restaurants, hotel, education,

cultural, cleaning, insurance &

manufacturing.


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Leadership qualities

Accept challenges

Ambitious

Drive

Enthusiastic

Hardwork

Patience

Industrious Motivator

skilful

Unquenchable optimisim

Adventurous

Conscious

Determination to excel

Keenness to learn

Experienced

Intelligent Perseverance

studious


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importance

Generating employment in unorganised

sectors

Status of women


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Function & role of women

entrepreneur Prospectus of starting a new enterprise

New innovations or invitation of successful

one.

Undertaking risks & handling of economic

& non economic uncertainties

Co-ordination, administration & control

Supervision & provide leadership.


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Development of women

entrepreneurnew industrial policy

Product and process oriented courses.

Upliftment of status in economic and social

field.

Providing of credit facility with concession

terms and on priority basis.


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Common features of women

entrepreneurs in india Majority are married

Unmarried women face financial difficuties

Low income group

Small families women Lack vocational training

Economic necessity

Gender discrmination

Prefer diversification to specialisation

Security oriented > growth oriented

Stabilisation of income & minimisation of risk maximisation of

income


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Problems faced

Family responsibilities

Social attitude

Low mobility

High cost of production

Lack of education

Low need for achievement

Shortage of finance Inefficient arrangement for marketing and data

Shortage of raw materials

Stiff competition


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WOMEN ENTREPRENEURSHIP

DEFINED Definition

An enterprise owned and controlled by a women having a minimumfinancial interest of 51 per cent of the capital and giving at least 51per cent of the employment generated by the enterprise to women,

Government of India

A woman entrepreneur can be defined as a confident, innovative andcreative woman capable of achieving self economic independenceindividually or in collaboration, generates employment opportunitiesfor others through initiating, establishing and running the enterpriseby keeping pace with her personal, family and social life.

Kamal Singh


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Factors Influencing Women

Entrepreneurs Economic independence

Establishing their own creativity

Establishing their own identity Achievement of excellence

Building confidence

Developing risk-taking ability

Motivation

Equal status in society

Greater freedom and mobility


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Strategies for development of

women entrepreneurs. Education and awareness

Better time management

Set-up home based business

Efficient use of information techonology

Organise workshops and seminars

Group entrepreneurship

Simplified procedures Dispense collateral security

Finance cells


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Common Features of Women

Entrepreneurs in India Women with small families are more likely to become entrepreneurs. A majority of women entrepreneurs are married. Unmarried women face difficulties in getting financial support to launch their enterprises. Many women

entrepreneurs belong to the low-income group.

A large number of women with little or no education enter Into business without undergoing anytraining. Most of these practicing women entrepreneurs lack vocational education.

Working capital Is limited and profit margins are low.

Women from the low-income group exercise greater freedom in making the decision to start businessas compared to middle-class women who suffer from cultural constraints.

Many women become entrepreneurs out of economic necessity.

Womens hard work Is generally responsible for the launch and sustainability of the business.

Support systems do not effectively handle their important need for vision and confidence building andalso for developing better business orientation and skills.

Gender discrimination Is encountered at every stage of business development.

Women entrepreneurs are security oriented rather than growth oriented.

Women prefer diversification to specialization. Women prefer stabilization of income and minimization of risk over maximization of income.

Though the trend Is changing, It is not uncommon to find enterprises owned by women but run bymen.

In the field of technology women have made a conscious decision to set up technology-basedenterprises. Many have ventured Into hi-tech areas such as manufacturing solar thermals, vacuumreactors, television boosters, air compressors1 voltage stabilizers, and amplifiers as reflected Inthe data collected about women entrepreneurs. However, for most women their businesses remainmicro-enterprises.


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WOMEN ENTREPRENEURSHIP

ENVIRONMENT context of women entrepreneurship

development described in three different

spheres Micro sphere

Meso sphere

Macro sphere


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Meso sphere There are a large number of organisations involved inproviding support services to entrepreneurs. However, for

a variety of reasons, many of the organisations tend to actas barriers when it comes to providing assistance towomen entrepreneurs. In some cases this can beattributed to a lack of awareness about womens concernsand insensitivity towards gender issues. It is at the mesolevel that it is found that the lack of support for womenentrepreneurs by many of the organisations whichimplement poLicies and operational programmescontribute greatly to theircontinuing disempowerment.

The State might formulate gender progressive laws andpolicies, but the resistance offered by the bureaucracy,judiciary and other such official organisations, mighthinder the implementation of these measures.


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Macro sphere The macro environment within which women entrepreneurs

develop and grow comprises many interconnecting structures anddynamics,including laws and regulations, economy, internationaltrade, including market liberalisation and globalisation, availability offinance and credit, labour market, human capital resources,technology, physical infrastructure and natural resources.

This environment has an impact on all enterprises, large and small,

run by both women and men. There is much evidence to indicatethat women are more at a disadvantage than men in relation to theopportunities and barriers arising from these structures anddynamics. It is partly because womens ability to bargain in thelabour market, as in other arenas, is critically affected bypredominant gender ideology and practices. Bargaining takes placeover wages, conditions of work, and workers rights. Howeverwomens bargaining power in the work place, as compared to thatof men, is constrained not only by gender gaps in skills andeducation, but also by the employers assumption regarding theirabilities, work commitment, efficiency, and needs, which is furtherexacerbated by the unequal sharing of family responsibilities at themicro level. This contributes towards disempowermnent of women.


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STRATEGIES FOR THE DEVELOPMENT

OF WOMEN ENTREPRENEURS

In small and medium enterprises due to limited sources, majority of the functions haveto be performed by the owners themselves. In case of women entrepreneurs, theproblems get compounded because certain functions have gender dimensionsattached to them.

Domestic commitments and child-care support are the two main responsibilities of

women. This, along with the still narrow outlook of society in accepting woman as anentrepreneur makes her life more difficult. Some suggestions to meet these challengesand to encourage women entrepreneurship are given below.

To overcome the resistance from husband and members of the family at the time ofsetting up of their venture, prospective women entrepreneurs are advised to maintaintheir cool and persistently convince them, without confronting them, regarding thebenefits of setting up of an enterprise. The woman requires to have a strong will power

under the circumstances, The inflow of money will eventually solve this problem. Shouldering the dual responsibilities of an entrepreneur and a homemaker can be

effectively undertaken by a women entrepreneur through better time management. Themembers of the family can also be involved in the business. which will help in sharingthe burden of entrepreneurial work. Moreover, the women entrepreneur must try tomake her husband and children self-sufficient at home. With tact and diplomacy, sheshould solicit cooperation in running the enterprise from the family.

A t t h b i h h hild h t


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A women can start her business when herchildren are grown up enough totake care of their own small needs. This gives the women enough timeenough to manage her enterprise.

Women must acquire education and go through confidence-building trainingto get rid of the traditional feeling that they are inferior to men and are

dependent on men. For marketing her products, a women entrepreneur must establish her

credibility in terms of quality and competitiveness of product or service. Sheshould acquire relevant techniques and skills to win customers loyalty.Ecommerce businesses will also help greatly in this regard. For publicityand advertisement, the women entrepreneur can work on alternatives likecable TV, pamphlets, leaflets, slides in cinema halls, banners at strategic

locations, and so on. Effective and efficient use of information technology like the Internet can help

in assimilating information about the variety, range, and quality of saycompeting products, and publicity and marketing of products and services.

Workshop and seminars should be organised frequently for the officials offinancial and support agencies and for women entrepreneurs to make theirrelations more cordial.

Procedures for financial assistance by banks and government organisationsmust be simplified. Women inspectors, if available, should be asked toinspect women enterprises.

It has been observed, that there is a tendency to project a higher value ofsales, production, and profits in project reports to impress the bankers.Such a project profile is not appropriate from a financial management pointof view. So. women entrepreneurs need to undertake training in various

aspects of financial management to understand its finer implications.


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Since complicated and lengthy procedures make it difficult to acquire loansfrom government financial agencies and banks, it is suggested that womenentrepreneurs search for non-formal sources of finance like privatefinanciers, relatives, friends, and others.

Banks and financial institutions must maintain a minimum target of loan to be

disbursed to women entrepreneurs. Collateral security should bedispensed with in the case of women entrepreneurs because many womenhardly have any property or other assets in their name to keep asguarantee. Margin money for projects to be undertaken by womenentrepreneurs should not exceed 10 per cent. Subsidies should also hegiven to women entrepreneurs at the initial stage itself.

Women entrepreneurs should acquire relevant training in technology and in

details of their plant and machinery. They should be knowledgeable aboutthe functioning of machines and processes. They should be more assertivewith their employees. They should employ more women workers in theirenterprises. They must undergo training in management skills to handlehuman resources as well as training in effective communication skills andpractices and the legal aspects of running a business.

Group entrepreneurship is a viable option for the weaker sections of the

society and it helps woman to overcome their poverty. It empowers womenand provides the necessary confidence for entrepreneurship. Womensorganisations. womens cooperatives, and NGOs should be promoted toassist self- employment for poor women.


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Institutions supporting women

entrepreneurshipIn India are:

Consortium of Women Entrepreneurs of India (CWEI),

Federation of Indian Women Entrepreneurs (FIWE),

Federation of Ladies Organisation (FLO), Womens India Trust (WIT),

Central Bank of India Credit Schemes, National Bank for Agriculture and Rural Development (NABARD).

State Government Schemes for Development of Women and ChildrenIn Rural Areas (DWCRA).

Small Industries Development Bank of India (SIDBI),

Self-Employment Women Association (SEWA), Association of Women Entrepreneurs of Karnataka (AWAKE).


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International Entrepreneurship

Opportunities

International business means Cross borderbusiness translations International businessentails satisfying different needs or tastes or

preferences of people in different countries.

Thus, simple and common definition ofinternational business is that it is businessacross national borders. As includes exportsand import to goods and services orinternational sourcing of factors

BENEFITS OF INTERNATIONAL BUSINESS


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BENEFITS OF INTERNATIONAL BUSINESS

OPPORTUNITIES

Competing in the global marketplace benefits, such as.

I. Increased sales: The entrepreneur will attract new buyers and widen the customerbase. He may also import unique products that local customers can buy

2. Reduced cost: The entrepreneur may sell the goods at reduced price. Manufacturersin other countries can produce goods at a lower cost because of low labour cost oravailability of raw materials.

3 decreased dependence on current markets and suppliers: When the economicconditions of a country suddenly change workers. exports might help to sell theproducts and services abroad till the economy stabilize.

4. achieving higher rate of profit : When the domestic market do not provide a higher rateof profits, the entrepreneur can expand the operations to foreign countries wherethere is higher rate of profit

5. limited home market: Due to the size of population or due to lower purchasing power ofthe people etc.. size of the home market becomes limited. under such circumstancesentrepreneur has no option other than exports. Example European countries.

6. Severe competition in the domestic market: When there is severe competition from the

other competitors in the domestic country. it may not be possible to survive for a longperiod. The best option is to enter the new markets .

7,Availability of technology & managerial competence: When the availability oftechnology and managerial skills are lacking in some countries the entrepreneurprefers to so abroad to set that benefit

8, To increase market share: To larger companies expand their business operationabroad to increase the market share. Example Coca-cola. Pepsi. unilever etc.


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9. availability of raw material : One of the major reasonsfor attracting the companies from other countries is theavailability of raw-material abundantly in a countryExample: Minerals. Petroleum etc.

I0. availability of human Resources: When there isquality human resource available in a country at alesser cost, the entrepreneur prefers to start theoperations in that country Example: Software industry

II. Tarrifs and import quotas: Imports of productsdepends on the governments policies towards tariffs orduties and import quotas to reduce the competition tothe domestic companies from foreign companiesTherefore, there is an opportunity to the entrepreneurthe country where there is no such, restrictions.

12. Political stability There is bright businessopportunities in those countries where there isContinuation of same policies of the government. eventhere is change of political parties

MODES OF INTERNATIONAL


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MODES OF INTERNATIONAL

BUSINESS OPPORTUNITIES

International trade is one way the entrepreneur canbecome part of the global marketplace. he can export orimport the products or services

f


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Modes of international entrepreneurship opportunities.

A, General Classification

I Importing

2. Exporting

B. Non-equity Arrangements3, Licensing

4. Turn-Key Project

5.Management Contracts

C. Direct Foreign investment

6. Minority Interest

7. Majority Interest8. 100% ownership

9. Joint Ventures

D. Mergers & AcquisitionsHorizontal

Vertical

Product extensionDiversified activity

E. II. Using world wide web

F Other modes12. Strategic alliance

13. Third country location

14. Counter trade


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I. Importing:. import products due to reasonable priceand good quality.

to make their own products

2. Exporting:

Direct export

Indirect export


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Advantages: Licensing arrangement is an excellentmethod.

I. The process is loss risk.

2. Need not make an extensive capital investment.

3. Can generate savings in tariff and transportation cost.

4, Licensing is a more realistic means of expansion thanexporting. particularly for the high-tech firm

5, Access to the market is easier in comparison with equityinstruments.

6 Foreign governments are more likely to give theirpermission because technology is being brought into thecountry

7. There is potential for the licensees to become partnerand contributor in improving the learning curve oftechnology.


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Disadvantages:

I. It is possible the licensee will become a

competitor after the contract expires. honda is acompetitor of kinetic.

2. To fit the licensee market. the licensermust setthe licensee to meet contractual obligationsand adjust the products & services.

3. Conflicts and misunderstanding may occur.Therefore the entrepreneur must manage therelationships.

4. There may be a problem of integrity and

independence of both the licenser andlicensee.


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Entrepreneurial Development

Programme Designed to help strengthen & fulfill his

entrepreneurial motive,

Acquire skills & capabilities To develop first generation entrepreneurs

3 major variables location, target group,

and enterprise. Continuous process of training & motivating


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Objectives of EDP

To develop small & medium enterprise,

Encourage self- employment

To stimulate new ventures& encourage

expansion by special programme for rural

areas.

Create employment opportunities in

processing of indigenous raw material

Develop potential entrepreneurs and

upgrade managerial skills

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