Entrepreneurship Chap 2

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Chapter 2

Chapter 2 The Entrepreneurial and

The Entrepreneurial and

Intrapreneurial Mind

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Chapter Learning Objectives

•• To explain the aspects of the entrepreneurialTo explain the aspects of the entrepreneurial process

process

•• To explain the differences between theTo explain the differences between the entrepreneurial and managerial domain entrepreneurial and managerial domain

•• To explain the orTo explain the organizational environmentganizational environment conducive to intrapreneurship

conducive to intrapreneurship

•• To explain the general characteristics of anTo explain the general characteristics of an intrapreneur

intrapreneur

•• To explain the process of establishingTo explain the process of establishing intrapreneurship in an organization intrapreneurship in an organization

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The Entrepreneurial Process

The Entrepreneurial process has the following

four steps.

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Step 1. Identify and Evaluate

the Opportunity

Some sources for new opportunities are:

•• Consumers and business associates

Consumers and business associates

•• Members of the distribution system

Members of the distribution system

•• Technical people

Technical people

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Step 1. Identify and Evaluate

the Opportunity (Contd.)

•• Evaluation allows the entrepreneur to do a

Evaluation allows the entrepreneur to do a

risk-return assessment to find out if the

return is worth the risk.

•• Cause of opportunity maybe:

Cause of opportunity maybe:

–

– Technological changeTechnological change –

– Market shiftMarket shift –

– GovernmentGovernment –

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Step 1. Identify and Evaluate

the Opportunity (Contd.)

•• Market size and the length of the window-

Market size and the length of the

window-of-opportunity form the primary basis for

of-opportunity form the primary basis for

determining risks and rewards.

–

– Risks reflect the market, competition,Risks reflect the market, competition,

technology, and amount of capital involved. technology, and amount of capital involved. –

– The amount of capital forms the basis for theThe amount of capital forms the basis for the return and rewards.

return and rewards. –

– Follow on products become very important for Follow on products become very important for a firm expanding or diversifying

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Step1. Identify and Evaluate

the Opportunity (Contd.)

•• Finally the opportunity must fit the personal

Finally the opportunity must fit the personal

skills and goals of the entrepreneur

•• Opportunity Analysis is not a business plan,

Opportunity Analysis is not a business plan,

it is typically:

–

– Shorter Shorter –

– Focus on the opportunity not the entire ventureFocus on the opportunity not the entire venture –

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Step1. Identify and Evaluate

the Opportunity (Contd.)

•• Opportunity Analysis involves answering

Opportunity Analysis involves answering

the following questions:

–

– What market need does it satisfy?What market need does it satisfy? –

– Your personal observations regarding the need?Your personal observations regarding the need? –

– What social condition underlies the marketWhat social condition underlies the market need?

need? –

– What market research data describes this need?What market research data describes this need? –

– What patents might be available to fulfill thisWhat patents might be available to fulfill this need

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Step 1. Identify and Evaluate

the Opportunity (Contd.)

-- WWhhaat ct coommppeettiittiioon en exxiisstts is in tn thhe me maarrkkeett?? -- HHoow w wwoouulld yd yoou du deessccrriibbe e bbeehhaavviioor or of f tthhee competition?

competition?

-- WhWhaat dt dooees ts thhe ie intnteernrnaattiioonanal ml maarkrkeet lt loook ok lliikkee?? -- WhWhaat dt dooees ts thhe ie intnteernrnaattiioonanal cl coommppeettiittiioon ln looook k like

like

-- WWhheerre e iis s tthhe e mmoonneey y tto o bbe e mmaadde e iin n tthhiiss opportunity?

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Step 2. Develop the Business

Plan

•• Covered in greater detail in Chapter 7.

Covered in greater detail in Chapter 7.

Consists of the following:

Title Page

Executive Summary

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Step 2. Develop the Business

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Appendices (Exhibits)

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Step 3. Determine the

Resources Required

•• Evaluate the available resources

Evaluate the available resources

•• Critical resources must be distinguished

Critical resources must be distinguished

from the helpful resources

•• How the resources will be acquired

How the resources will be acquired

•• Alternative suppliers along with their needs

Alternative suppliers along with their needs

should be identified

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Step 4. Manage the Enterprise

•• Implement a management style.

Implement a management style.

•• Determine the key variables for success.

Determine the key variables for success.

•• Control system must be identified.

Control system must be identified.

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Managerial Versus

Entrepreneurial Decision Making

•• Strategic Orientation:

Strategic Orientation:

–

– Entrepreneur makes rapid changes keepingEntrepreneur makes rapid changes keeping environment in consideration.

environment in consideration.

–

– In larger organizations with planning sysIn larger organizations with planning systemstems in place this is not so easy.

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Managerial Versus Entrepreneurial

Decision Making (Contd.)

•• Commitm

Commitment to

ent to Opportunity

Opportunity

–

– Entrepreneur is pressured by the short termEntrepreneur is pressured by the short term decision window

decision window

–

– Managers are not only slow Managers are not only slow in taking decisionsin taking decisions but once decisions are made they are long

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Managerial Versus Entrepreneurial

Decision Making (Contd.)

•• Commitm

Commitment of

ent of Resources

Resources

–

– Entrepreneur commits resources on a need basisEntrepreneur commits resources on a need basis

–

– Managers tend to commit the full amount of Managers tend to commit the full amount of resources required before start up

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Managerial Versus Entrepreneurial

Decision Making (Contd.)

•• Control of Resources

Control of Resources

–

– Entrepreneur tries to use rented resources wereEntrepreneur tries to use rented resources were possible as he has difficulty in obtaining

possible as he has difficulty in obtaining resources, he tends to have multi uses

resources, he tends to have multi uses for thefor the same resources.

same resources. –

– Manager tends to accumulate resources as it is aManager tends to accumulate resources as it is a source of power for him

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Managerial Versus Entrepreneurial

Decision Making (Contd.)

•• Management Structure

Management Structure

–

– Entrepreneur tends to have a flat organizationEntrepreneur tends to have a flat organization as it allows him greater degree of control

as it allows him greater degree of control –

– Managers tend to follow a Managers tend to follow a formalizedformalized hierarchical structure as they know this hierarchical structure as they know this consolidates their power

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Intrapreneurship

••

_Entrepreneu

_{Entrepreneurship within}

_{rship within an}

_an

organization is called

Intrapreneurship

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Corporate Versus Intrapreneurial Culture

•• Corporate CultureCorporate Culture •• Favors ConservatismFavors Conservatism •• Data back upData back up

•• Adhere to instructionsAdhere to instructions •• Do not make mistakesDo not make mistakes

•• Do no take initiative, waitDo no take initiative, wait for instructions

for instructions

•• Stay in our own turf Stay in our own turf •• Protect your backsideProtect your backside

•• Intra CultureIntra Culture •• Develop visionDevelop vision

•• Goals and action plansGoals and action plans •• Rewarded for actionsRewarded for actions

taken taken

•• Suggest, try andSuggest, try and experiment

experiment

•• Create and developCreate and develop regardless of area regardless of area

•• Take responsibility andTake responsibility and ownership

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How Intrapreneurial Climate

can be Developed

•• Organization operates on frontiers of

Organization operates on frontiers of

technology

•• New ideas encouraged

New ideas encouraged

•• Trial and error encouraged

Trial and error encouraged

•• Failure allowed

Failure allowed

•• No opportunity parameters

No opportunity parameters

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How Intrapreneurial Climate

can be Developed (Contd.)

•• Multidiscipline teamwork approach

Multidiscipline teamwork approach

•• Long time horizon

Long time horizon

•• Volunteer Program

Volunteer Program

•• Appropriate reward system

Appropriate reward system

•• Sponsors and champions available

Sponsors and champions available

•• Support of top management

Support of top management

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Intrapreneuri

Intrapreneurial

al Leadership

Leadership

Characteristics

•• Understands the environment

Understands the environment

•• Visionary and flexible

Visionary and flexible

•• Creates management options

Creates management options

•• Encourages teamwork

Encourages teamwork

•• Builds a coalition of supporters

Builds a coalition of supporters

•• Persists

Persists

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Establishing

Establishing Intrapreneu

Intrapreneurship

rship

in the Organization

1.

1. SSececurure e ttop op mmaananagegemmenent t ccomommmititmmeentnt 2.

2. IdIdeaeas as and nd gegeneneraral al arereas as ththat at totop mp mananagagememenent it iss willing to support must be identified

willing to support must be identified 3.

3. CoCommpapany ny neneededs ts to uo use se tetechchnonolology gy to to mamake ke ititseself lf more flexible

more flexible 4.

4. UsUse e grgrououps ps of of ininteterereststed ed mmananagagerers s to to trtraiainn employees.

employees. 5.

5. OOrgrgananiizazatitioons ns neneeeds ds to to geget ct cllososeer tr to io itsts customers

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Establishing

Establishing Intrapreneu

Intrapreneurship

rship

in the Organization (contd.)

1.

1. OrOrgaganinizazatitionons ns neeeeds ds to to leleararn n to to do do mmorore e wiwithth fewer resources.

fewer resources. 2.

2. StStrorong ng susupppporort st sysystetem m neneededs ts to o be be dedevevelolopepedd 3.

3. ReRewawardrds ms musust tt tieied td to po pererfoformrmanance ce of of ththe te teaeamm 4.

4. EvEvalaluauatition on sysyststem em ththat at alallolows ws susuccccesessfsfulul

intrapreneurial units to expand while it allows intrapreneurial units to expand while it allows the unsuccessful ones to close down.

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