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Entrepreneurship

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Entrepreneurship ­ MGT602
VU
Lesson 4
THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND
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 PROCESS
The entrepreneurial process involves finding, evaluating, and developing an opportunity by overcoming
the strong forces that resist the creation of something new.
Phase 1: Identifying and Evaluating the Opportunity
Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources
are often fruitful, including consumers and business associates. Channel members of the distribution
system-retailers, wholesalers or manufacturer's reps-are also helpful. Technically-oriented individuals
often identify business opportunities when working on other projects. Each opportunity must be carefully
screened and evaluated-this is the most critical element of the entrepreneurial process.
The evaluation process involves looking at
a.
The creation and length of the opportunity
b.
Its real and perceived value
c.
Its risks and return.
d.
It's fit with the skills and goals of the entrepreneur
e.
Its differential advantage in its competitive environment
f.
It is important to understand the cause of the opportunity, as the resulting opportunity may have a
different market size and time dimension. The market size and the length of the window of opportunity
are the primarily bases for determining risks and rewards. The risks reflect the market, competition,
technology, and amount of capital involved. The amount of capital forms the basis for the return and
rewards. The return and reward of the present opportunity needs to be viewed in light of any possible
subsequent opportunities as well. The opportunity must fit the personal skills and goals of the
entrepreneur. The entrepreneur must be able to put forth the necessary time and effort required for the
venture to succeed. One must believe in the opportunity enough to make the necessary sacrifices.
Opportunity analysis, or an opportunity assessment plan, should focus on the opportunity and provide
the basis to make the decision, including:
a. A description of the product or service
b. An assessment of the opportunity
c. Assessment of the entrepreneur and the team
d. Specifications of all the activities and resources needed
e. The source of capital to finance the initial venture
The most difficult aspect of opportunity analysis is the assessment of the opportunity.
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Entrepreneurship ­ MGT602
VU
Phase 2: Develop a Business Plan
A good business plan must be developed in order to exploit the opportunity defined. A good business
plan is important in developing the opportunity and in determining the resources required, obtaining
those resources and successfully managing the venture.
Phase 3: Determine the Resources Required.
Assessing the resources needed starts with an appraisal of the entrepreneur's present resources. Any
resources that are critical must be distinguished from those that are just helpful. Care must be taken not to
underestimate the amount and variety of resources needed. Acquiring needed resources, while giving up
as little control as possible, is difficult. The entrepreneur should try to maintain as large an ownership
position as possible, particularly in the start-up stage. As the business develops, more funds will probably
be needed, requiring more ownership be relinquished.
Alternative resource suppliers should be identified, along with their needs and desires, in order to
structure a deal with the lowest cost and loss of control.
Phase 4: Manage the Enterprise.
The entrepreneur must employ these resources through implementation of the business plan. This
involves implementing a management structure, as well as identifying a control system.
KEY TERMS
Administrative domain
The ways managers make decisions
Business plan
The description of the future direction of the business
Corporate culture
The environment of a particular organization
Entrepreneurial domain
The ways entrepreneurs make decisions
Entrepreneurial process
The process through which a new venture is created by an entrepreneur
Entrepreneurial culture
The environment of an entrepreneurial-oriented organization
Entrepreneurship
Entrepreneurship within an existing business organization
Opportunity identification
The process by which an entrepreneur comes up with the opportunity for a new venture
Opportunity parameters
Barriers to new product creation and development
Top management commitment
Managers in an organization strongly supporting entrepreneurship
Traditional managers
Managers in a non-entrepreneurial-oriented organization
Window of opportunity
The time period available for creating the new venture
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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