Entrepreneurship Chap 2

Chapter 2 The Entrepreneurial and Intrapreneurial Mind

Chapter Learning Objectives • To explain the aspects of the entrepreneurial  process • To explain the differences between the entrepreneurial and managerial domain • To explain the organizational or ganizational environment conducive to intrapreneurship • To explain the general characteristics of an intrapreneur  • To explain the process of establishing intrapreneurship in an organization

The Entrepreneurial Process The Entrepreneurial process has the following four steps. 2. Ident entificat cation and and eva evalluat uation 3. Deve Devellopm opment ent of the bus busines inesss plan plan 4. Dete Determ rmin inat atio ion n of the the requ requir ired ed reso resour urce cess 5. Mana Manage gem ment ent of the the resu result ltan antt ente enterp rpri rise se

Step 1. Identify and Evaluate the Opportunity Some sources for new opportunities are: • Consumers and business associates • Members of the distribution system • Technical people

Step 1. Identify and Evaluate the Opportunity (Contd.) • Evaluation allows the entrepreneur to do a risk-return assessment to find out if the return is worth the risk. • Cause of opportunity maybe:  –  Technological change  –  Market shift  –  Government  –  Competition

Step 1. Identify and Evaluate the Opportunity (Contd.) • Market size and the length of the windowof-opportunity form the primary basis for  determining risks and rewards.  –  Risks reflect the market, competition, technology, and amount of capital involved.  –  The amount of capital forms the basis for the return and rewards.  –  Follow on products become very important for  a firm expanding or diversifying

Step1. Identify and Evaluate the Opportunity (Contd.) • Finally the opportunity must fit the personal skills and goals of the entrepreneur  • Opportunity Analysis is not a business plan, it is typically:  –  Shorter   –  Focus on the opportunity not the entire venture  –  Provide basis for deciding to act or not

Step1. Identify and Evaluate the Opportunity (Contd.) • Opportunity Analysis involves answering the following questions:  –  What market need does it satisfy?  –  Your personal observations regarding the need?  –  What social condition underlies the market need?  –  What market research data describes this need?  –  What patents might be available to fulfill this need

Step 1. Identify and Evaluate the Opportunity (Contd.) -

What co competition ex exists in in th the ma market?

- How would yo you de describe behavior of of the competition? -

Wha What do does th the int inteerna rnational nal ma marke rket lo look like?

- Wha What do does th the int inteerna rnational nal co competition lo look  like - Where is the money to be made in this opportunity?

Step 2. Develop the Business Plan • Covered in greater detail in Chapter 7. Consists of the following: Title Page Table of Contents Executive Summary 1.0

Description of Business

2.0

Description of Industry

Step 2. Develop the Business Plan 3.0

Marketing Plan

4.0

Financial Plan

5.0

Production Plan

6.0

Organization Plan

7.0

Operational Plan

8.0

Summary

Appendices (Exhibits)

Step 3. Determine the Resources Required • Evaluate the available resources • Critical resources must be distinguished from the helpful resources • How the resources will be acquired • Alternative suppliers along with their needs should be identified

Step 4. Manage the Enterprise • Implement a management style. • Determine the key variables for success. • Control system must be identified.

Managerial Versus Entrepreneurial Decision Making • Strategic Orientation:  –  Entrepreneur makes rapid changes keeping environment in consideration.  –  In larger organizations with planning systems sys tems in place this is not so easy.

Managerial Versus Entrepreneurial Decision Making (Contd.) • Commitment Commitment to Opportunity  –  Entrepreneur is pressured by the short term decision window  –  Managers are not only slow in taking decisions  but once decisions are made they are long term.

Managerial Versus Entrepreneurial Decision Making (Contd.) • Commitment Commitment of Resources  –  Entrepreneur commits resources on a need basis  –  Managers tend to commit the full amount of  resources required before start up

Managerial Versus Entrepreneurial Decision Making (Contd.) • Control of Resources  –  Entrepreneur tries to use rented resources were  possible as he has difficulty in obtaining resources, he tends to have multi uses for the same resources.  –  Manager tends to accumulate resources as it is a source of power for him

Managerial Versus Entrepreneurial Decision Making (Contd.) • Management Structure  –  Entrepreneur tends to have a flat organization as it allows him greater degree of control  –  Managers tend to follow a formalized hierarchical structure as they know this consolidates their power 

Intrapreneurship

• Entrepreneurship Entrepreneurship within an organization is called Intrapreneurship

Corporate Versus Intrapreneurial Culture • Corporate Culture

• Intra Culture

• • • • •

• Develop vision • Goals and action plans • Rewarded for actions taken • Suggest, try and experiment • Create and develop regardless of area • Take responsibility and ownership

Favors Conservatism Data back up Adhere to instructions Do not make mistakes Do no take initiative, wait for instructions • Stay in our own turf  • Protect your backside

How Intrapreneurial Climate can be Developed • Organization operates on frontiers of  technology •  New ideas encouraged • Trial and error encouraged • Failure allowed •  No opportunity parameters • Resources available and accessible

How Intrapreneurial Climate can be Developed (Contd.) • Multidiscipline teamwork approach • Long time horizon • Volunteer Program • Appropriate reward system • Sponsors and champions available • Support of top management

Intrapreneurial Intrapreneurial Leadership Characteristics • Understands the environment • Visionary and flexible • Creates management options • Encourages teamwork  • Builds a coalition of supporters • Persists

Establishing Intrapreneurship Intrapreneurship in the Organization 1. 2. 3. 4. 5.

Secur ecuree top manage nagem ment ent comm ommitm itment Idea Ideass and and gene genera rall are areas as that that top top man manag agem emen entt is is willing to support must be identified Com Company pany need needss to to use use tech techno nolo logy gy to make make itse itself  lf  more flexible Use Use grou groups ps of inte intere rest sted ed manag anager erss to trai train n employees. Organ rganiizati zatio ons nee needs to get get cl close oser to to its its customers

Establishing Intrapreneurship Intrapreneurship in the Organization (contd.) 1.

Orga Organi niza zati tion onss nee needs ds to lear learn n to do more ore with with fewer resources.

2.

Stro Strong ng supp suppor ortt sys syste tem m need needss to to be deve develo lope ped d

3.

Rewa Reward rdss mus mustt tie tied d to to per perfo form rman ance ce of the the tea team m

4.

Eval Evalua uati tion on syst system em that that allo allows ws succ succes essf sful ul intrapreneurial units to expand while it allows the unsuccessful ones to close down.

END OF CHAPTER 2