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Entrepreneurship

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Entrepreneurship ­ MGT602
VU
Lesson 7
THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued...)
LEARNING OBJECTIVES
1.
To explain the aspects of the entrepreneurial process.
2.
To explain the differences between entrepreneurial and managerial domains.
3.
To explain the organizational environment conducive for entrepreneurship.
4.
To identify the general characteristics of an Entrepreneur.
5.
To explain the process of establishing entrepreneurship in an organization.
ENTREPRENEURIAL LEADERSHIP CHARACTERISTICS
There are certain individual characteristics needed for a person to be successful Entrepreneurs, including:
1. Understanding the environment
2. Being visionary and flexible
3. Creating management options
4. Encourage teamwork while employing a multi-disciplined approach
5. Encouraging open discussion
6. Building a coalition of supporters, and persisting
An Entrepreneur needs to understand all aspects of the environment. Part of this ability is reflected in
individual's level of creativity. Creativity tends to decrease with age and education. The individual must be
creative and have a broad understanding of the internal and external environments of the corporation
The Entrepreneurial person must be a visionary leader-a person who dreams great dreams. Leadership is
the ability to dream great things and communicate them in a way that people say yes to being a part of the
dream. To establish a successful new venture, the Entrepreneurial leader must have a dream and overcome
all obstacles to achieve it.
The third necessary characteristic is that the Entrepreneur must be flexible and create management options.
An Entrepreneur is open to and encourages change. By challenging the beliefs and assumptions of the
corporation, an Entrepreneur can create something new in the organization structure. He or she must
possess the ability to encourage teamwork and use a multi-disciplined approach.
Every new company formation requires a broad range of business skills. The Entrepreneur must be a good
diplomat to minimize disruption. Open discussion must be encouraged to develop a good team for creating
something new. Many corporate managers have forgotten that frank, open discussion is part of the learning
process. A successful venture can be formed only when the team feels the freedom to disagree and to
critique an idea. The degree of openness among the team depends on the degree of openness of the
Entrepreneur. Openness leads to a strong coalition of supporters and encouragers.
The Entrepreneur must encourage each team member, particularly during hard times. A good Entrepreneur
makes everyone a hero. Only through persistence will a new venture be created and successful
commercialization result.
ESTABLISHING ENTREPRENEURSHIP IN THE ORGANIZATION
To establish an Entrepreneurial environment, the organization must implement a procedure. This can be
done internally, but it is easier to use an outsider to facilitate the process. This is particularly true when the
environment is very traditional. There are some steps involved in it.
Step 1: The first step is to secure a commitment to entrepreneurship in the organization by top, upper, and
middle management. Without top management commitment, the organization will never be able to
make the necessary changes. Once top management has committed to entrepreneurship for a sufficient
length of time, the concept is introduced throughout the organization. This is effectively accomplished
through seminars. General guidelines need to be established for Entrepreneurial venture development.
Next, Entrepreneurial leaders need to be identified, selected, and trained.
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Entrepreneurship ­ MGT602
VU
Step 2: Ideas and general interest areas should be identified, along with the amount of risk money that is
available. The overall expectations and target results should be established, specifying time frame,
profitability requirements, and impact of the organization. A mentor/sponsor system needs to be
established.
Step 3: A company needs to use technology to make itself faster and more flexible. Technology has
allowed small companies to act like they are big ones. Large companies can use technology to make them
responsive and flexible.
Step 4: The organization can use a group of managers to train and share their experiences with other
members. These sessions should be conducted one day per month for a specified period of time.
Information about entrepreneurship and about the company's specific activities should be well publicized.
Step 5: The organization needs to develop ways to get closer to its customers by tapping the data base,
hiring from smaller rivals, and helping the retailer.
Step 6: An organization must learn to be more productive with fewer resources. With middle management
cutbacks, more control has been given to lower levels of the organization. The span of control should be
increased.
Step 7: The organization needs to establish a strong support structure. Because they do not immediately
affect the bottom line, Entrepreneurial activities can be overlooked and receive little funding. These
ventures require flexible, innovative behavior, with the Entrepreneurs having total authority over ex-
penditures and access to funds.
Step 8: The support must involve tying the rewards to the performance of the Entrepreneurial unit. This
encourages team members to work harder and compete more effectively. The equity portion of the
compensation is particularly difficult to handle.
Step 9: The organization needs to implement an evaluation system that allows successful units to expand
and unsuccessful ones to be eliminated.
PROBLEMS AND SUCCESSFUL EFFORTS
Entrepreneurship, also called corporate venturing, is not without problems. One study found that new
ventures started within a corporation performed worse than those started independently. Independent
start-ups tend to outperform corporate start-ups.
There are many examples of companies that have successfully implemented entrepreneurship. 3M allows
employees to devote 15 percent of their time to independent projects. After failing to recognize the
potential of Wozniak's personal computer, Hewlett-Packard has taken steps to take advantage of future
opportunities. Even IBM has developed the independent business unit concept.
The problems of entrepreneurship are not insurmountable, and the concept can lead to new products,
growth and the development of an entirely new corporate environment and culture.
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Table of Contents:
  1. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:DEFINITION OF ENTREPRENEUR
  2. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:Possibility of New Venture Formation
  3. ENTREPRENEURIAL PROCESS/START UPS:GOVERNMENT AS AN INNOVATOR
  4. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND:ENTREPRENEURIAL PROCESS
  5. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…)
  6. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):CLIMATE FOR ENTREPRENEURSHIP
  7. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):PROBLEMS AND SUCCESSFUL EFFORTS
  8. THE INDIVIDUAL ENTREPRENEUR:ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS
  9. THE INDIVIDUAL ENTREPRENEUR (continued…):Personal Values, Work History, MOTIVATION
  10. THE INDIVIDUAL ENTREPRENEUR (continued…):ROLE MODELS AND SUPPORT SYSTEMS
  11. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES:INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES, Minority interests
  12. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):DIRECT FOREIGN INVESTMENT
  13. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):BARRIERS TO INTERNATIONAL TRADE
  14. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):ENTREPRENEURIAL PARTNERING
  15. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):SOURCES OF NEW IDEAS
  16. CREATIVITY AND THE BUSINESS IDEA:METHODS OF GENERATING NEW IDEAS, CREATIVE PROBLEM SOLVING
  17. CREATIVITY AND THE BUSINESS IDEA:PRODUCT PLANNING AND DEVELOPMENT PROCESS
  18. LEGAL ISSUES FOR THE ENTREPRENEUR:NEED FOR A LAWYER, PATENTS
  19. LEGAL ISSUES FOR THE ENTREPRENEUR:TRADEMARKS, LICENSING
  20. LEGAL ISSUES FOR THE ENTREPRENEURS:PRODUCT SAFETY AND LIABILITY, INSURANCE
  21. CREATING AND STARTING THE VENTURE:WHAT IS THE BUSINESS PLAN, PRESENTING THE PLAN
  22. CREATING AND STARTING THE VENTURE (Continued….):WRITING THE BUSINESS PLAN
  23. CREATING AND STARTING THE VENTURE (Continued….):
  24. CREATING AND STARTING THE VENTURE (Continued….):WHY SOME BUSINESS PLANS FAIL, MARKETING PLAN
  25. THE MARKETING PLAN:MARKET RESEARCH FOR THE NEW VENTURE
  26. THE MARKETING MIX:STEPS IN PREPARING THE MARKETING PLAN
  27. THE ORGANIZATIONAL PLAN:DEVELOPING THE MANAGEMENT TEAM, LEGAL FORMS OF BUSINESS
  28. THE ORGANIZATIONAL PLAN (Continued….)
  29. THE ORGANIZATIONAL PLAN (Continued….):THE LIMITED LIABILITY COMPANY
  30. THE FINANCIAL PLAN:OPERATING AND CAPITAL BUDGETS
  31. THE FINANCIAL PLAN (Continued….):PRO FORMA INCOME STATEMENTS, PRO FORMA CASH FLOW
  32. PRO FORMA SOURCES AND USES OF FUNDS:PERSONAL FUNDS, FAMILY AND FRIENDS
  33. PRO FORMA SOURCES AND USES OF FUNDS:COMMERCIAL BANKS
  34. BANK LENDING DECISIONS:SMALL BUSINESS ADMINISTRATION LOANS
  35. SOURCES OF CAPITAL:GOVERNMENT GRANTS
  36. SOURCES OF CAPITAL:PRIVATE PLACEMENT, BOOTSTRAP FINANCING
  37. CAPITAL SOURCES IN PAKISTAN:PROVINCIAL LEVEL INSTITUTIONS, FINANCIAL INSTITUTIONS
  38. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  39. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  40. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  41. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  42. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  43. NEW VENTURE EXPANSION STRATEGIES AND ISSUES:JOINT VENTURES, ACQUISITIONS
  44. NEW VENTURE EXPANSION STRATEGIES AND ISSUES (Continued….):DETERMINING THE PRICE FOR AN ACQUISITION
  45. ENTREPRENEURSHIP & PAKISTAN:GENDER DEVELOPMENT STATUS WOMAN AS AN ENTREPRENEUR IN PAKISTAN