ImBA Sem1 Unit1 Intro to Entrepreneurship PDF

Introduction to Entrepreneurship Compiled by: Prof. Pavan Dhodia  Concept, Definition & Types of Entrepreneurship Theories of Entrepreneurship Skills of Entrepreneur Entrepreneur vs Manager Entrepreneur vs Intrapreneur ...

Introduction to Entrepreneurship Compiled by: Prof. Pavan Dhodia  Concept, Definition & Types of Entrepreneurship Theories of Entrepreneurship Skills of Entrepreneur Entrepreneur vs Manager Entrepreneur vs Intrapreneur  Concept & Definition Entrepreneur: The word “entrepreneur‟ is derived from the French word “entreprendre‟ which means “to undertake‟. The term entrepreneur was first brought up by Richard Cantillon, a French baker in 18th Century to mean, “A person who is uncertainty bearer”. Richard Cantillon was the first person who used the term entrepreneur for economic activities. J.B.Say another Frenchman, expanded Cantillon‟s ideas and said that entrepreneur is “an organizer who combines various factors of production to produce a socially viable product”.  Concept & Definition Entrepreneurs are a specialised group of persons who undertake the risk and deal with uncertainty. Entrepreneur is the economic functionary who undertakes responsibility which cannot be insured. -F.H.Knight Entrepreneur is one who endowed with more than average capacities in the task of organising and co-ordinating the factors of production i.e, land, labour, capital and enterprise. Entrepreneur is a pioneer, a leader and captain of the firm. Hence, profit, the entrepreneur gets depends upon his efficiency and superior talent. -F.A. Walker An entrepreneur is one who always searches for change, responds to it and exploits it as an opportunity. Innovation is considered as an instrument of entrepreneurship. An entrepreneur innovates and creates resources because there is no such thing as resource until somebody finds a use for something and endows economic value to it. Innovation is being presented as a discipline, capable of being learnt and capable of being practised. -Peter F.Drucker  Concept & Definition An entrepreneur is the agent who buys means of production at certain prices in order to combine into a product that he is going to sell at prices that are uncertain at the moment at which he commits himself to his costs. -Richard Cantillon An entrepreneur is the economic agent who unites all means of production, the labour, the capital or land and who finds the value of product which results from their employment, the reconstruction of the entire capital that he utilises and the value of wages, the interest and the rent that he pays as well as profit belonging to himself. -J.B.Say Entrepreneur is one who seeks to reform or revolutionise the pattern of production by exploiting an innovation or more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of material or a new outlet of products. -Joseph Schumpeter  Concept & Definition Peter F. Drucker opines that a) An entrepreneur must be an innovator as well as a leader. b) He must be capable of analysing the opportunities and exploit them successfully. c) He should innovate for the present period but not the future. d) Innovation must be very simple to understand, otherwise, it may not give the desired results. e) Entrepreneur must possess the knowledge, diligence, persistence and commitment to innovation. f) He need not be the owner of the business. g) He must mobilize resources and allocate them to make a commercial gain from the opportunities identified.  THEORIES OF ENTREPRENEURSHIP  Economic Theory This theory suggests that entrepreneurs are motivated by economic factors such as profit maximization, cost minimization, and market opportunities. Entrepreneurs are seen as rational individuals who make decisions based on economic calculations. Key Concepts: Profit Motive: Entrepreneurs are driven by the potential for financial gain. Market Efficiency: Entrepreneurs help correct market inefficiencies by providing new products or services. Example: Uber founders saw an opportunity to improve Dara Khosrowshahi the efficiency of taxi services by using a smartphone app. Present CEO Their venture aimed to maximize profits and improve customer convenience in the transportation sector.  Psychological Theory This theory focuses on the personal traits and psychological attributes of entrepreneurs, such as risk-taking propensity, need for achievement, and internal locus of control. Entrepreneurs are often seen as individuals with a unique mindset and psychological drive. Key Concepts: Need for Achievement: Entrepreneurs often have a strong desire to accomplish goals and succeed. Risk-Taking: They are generally more willing to take risks compared to others. Elon Musk Example: Elon Musk demonstrates psychological traits CEO like high risk tolerance and a strong drive for achievement. His ventures, such as Tesla and SpaceX, showcase how personal traits can lead to groundbreaking innovations.  Sociological Theory Sociological theories examine how social factors influence entrepreneurship. This includes the impact of social networks, cultural norms, and societal values on entrepreneurial activity. Key Concepts: Social Networks: Entrepreneurs often leverage their social connections for support and resources. Cultural Context: Societal norms and values can affect entrepreneurial opportunities and behaviors. Example: Facebook was initially developed by Mark Zuckerberg to connect college students. The cultural context of university networks and peer interactions played a significant role in its early growth and adoption Mark Zuckerberg - CEO  Resource-Based Theory This theory emphasizes the importance of leveraging unique resources and capabilities. Key Concepts: Unique Resources: Successful entrepreneurs often utilize distinctive resources like technology, capital, or expertise. Competitive Advantage: These resources provide an edge over competitors. Example: Apple Inc. utilized its unique design capabilities and brand strength to differentiate itself in the technology market. Steve Jobs’s focus on innovation and design was a Tim Cook key resource for Apple’s success CEO  Opportunity Theory This theory posits that entrepreneurship is driven by the identification and exploitation of opportunities in the market. Entrepreneurs are seen as individuals who recognize gaps or needs and act to address them. Key Concepts: Opportunity Recognition: Entrepreneurs spot gaps in the market and create solutions. Value Creation: Exploiting these opportunities adds value to the market. Example: Zoom Founder(s): Eric Yuan Opportunity Identified: Eric Yuan saw an opportunity in Eric Yuan the growing need for reliable, high-quality video CEO conferencing solutions. He identified that existing platforms were often complex and lacked sufficient video quality and reliability.  Innovation Theory This theory, associated with Joseph Schumpeter, emphasizes the role of innovation in entrepreneurship. Entrepreneurs are viewed as innovators who disrupt existing markets and create new ones through novel products, services, or processes. Key Concepts: Disruptive Innovation: Entrepreneurs introduce new ideas that disrupt existing markets. Creative Thinking: Innovation often stems from creative problem-solving. Ted Sarandos CEO Example: Netflix revolutionized the way people consume media by introducing a subscription-based streaming service. This innovation disrupted the traditional video rental industry. TYPES OF ENTREPRENEURSHIP Small Business Entrepreneurship- These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber, electrician, etc. These people run or own their own business and hire family members or local employee. For them, the profit would be able to feed their family and not making 100 million business or taking over an industry. They fund their business by taking small business loans or loans from friends and family. Scalable Startup Entrepreneurship- This start-up entrepreneur starts a business knowing that their vision can change the world. They attract investors who think and encourage people who think out of the box. The research focuses on a scalable business and experimental models, so, they hire the best and the brightest employees. They require more venture capital to fuel and back their project or business. TYPES OF ENTREPRENEURSHIP Large Company Entrepreneurship- These huge companies have defined life-cycle. Most of these companies grow and sustain by offering new and innovative products that revolve around their main products. The change in technology, customer preferences, new competition, etc., build pressure for large companies to create an innovative product and sell it to the new set of customers in the new market. To cope with the rapid technological changes, the existing organisations either buy innovation enterprises or attempt to construct the product internally. Social Entrepreneurship- This type of entrepreneurship focuses on producing product and services that resolve social needs and problems. Their only motto and goal is to work for society and not make any profits.  SKILLS OF ENTREPRENEURSHIP 1. Leadership Description: The ability to inspire, motivate, and guide a team toward achieving business goals. Key Aspects: Vision setting, team management, decision-making, and conflict resolution. 2. Strategic Thinking Description: The capacity to plan long-term goals and devise strategies to achieve them. Key Aspects: Market analysis, competitive strategy, goal setting, and resource allocation. 3. Financial Management Description: Understanding and managing the financial aspects of a business. Key Aspects: Budgeting, financial forecasting, accounting, cash flow management, and investment strategies. 4. Marketing and Sales Description: Skills to promote and sell products or services effectively. Key Aspects: Market research, branding, digital marketing, sales techniques, and customer relationship management. 5. Innovation and Creativity Description: The ability to generate new ideas and approaches to solve problems or capitalize on opportunities. Key Aspects: Product development, process improvement, and creative problem-solving. 6. Networking Description: Building and maintaining professional relationships that can support and grow the business. Key Aspects: Relationship building, communication, and leveraging connections for opportunities and resources. 7. Risk Management Description: Identifying, assessing, and mitigating risks associated with business operations. Key Aspects: Risk assessment, contingency planning, and problem-solving. 8. Operations Management Description: Overseeing and improving the daily operations of a business. Key Aspects: Process optimization, supply chain management, quality control, and efficiency improvements. 9. Adaptability Description: The ability to adjust strategies and approaches in response to changing circumstances or feedback. Key Aspects: Flexibility, resilience, and open-mindedness. 10. Customer Focus Description: Understanding and meeting the needs and preferences of customers. Key Aspects: Customer service, feedback collection, and product/service enhancement based on customer input. 11. Negotiation Description: The ability to reach agreements that are favorable to the business while maintaining good relationships. Key Aspects: Persuasion, compromise, and contract management. 12. Time Management Description: Efficiently managing time and prioritizing tasks to maximize productivity. Key Aspects: Planning, scheduling, and delegating tasks effectively. 13. Technical Skills Description: Specific knowledge related to the industry or sector in which the business operates. Key Aspects: Industry-specific knowledge, software proficiency, and technical problem-solving. 14. Communication Skills Description: The ability to convey information clearly and effectively, both verbally and in writing. Key Aspects: Public speaking, presentations, and written communication. 15. Problem-Solving Description: Identifying problems and finding effective solutions quickly and efficiently. Key Aspects: Analytical thinking, creativity, and decision-making. 16. Self-Motivation Description: The drive to pursue goals and persist through challenges without external encouragement. Key Aspects: Goal setting, perseverance, and personal discipline. ENTREPRENEUR VS MANAGER BASIS ENTREPRENEUR MANAGER Managers enter established Entrepreneurs create and start Origin businesses to maintain and businesses. improve operations. Entrepreneurs are responsible Managers work to mitigate Risk for the strategic direction and risks within an established vision of the company. business. Entrepreneurs are responsible Managers focus on the Responsibility for the strategic direction and execution of these strategies vision of the company. and day-to-day operations. Entrepreneurs are known for Managers, however, often their innovative thinking and Innovation focus on improving efficiency ability to identify new within existing frameworks opportunities ENTREPRENEUR VS MANAGER BASIS ENTREPRENEUR MANAGER Managers are usually employees Entrepreneurs typically own the and do not bear the financial Ownership business and bear the financial risk, though they might hold risks. shares or other incentives. Entrepreneurs are responsible Managers, however, are tasked Resource for securing resources (like with efficiently utilizing these Allocation funding) needed for the resources to achieve the business. company’s goals. Managers, on the other hand, Entrepreneurs often make make decisions within the decisions based on their vision framework set by the business Decision-Making and long-term goals for the and primarily focused on company. They have the operational efficiency and freedom to take calculated risks. effectiveness. ENTREPRENEUR VS INTRAPRENEUR Entrepreneur Intrapreneur Meaning An entrepreneur is an individual Intrapreneur is an individual having a new and exclusive idea having entrepreneurial skills who to establish something new. works at a previously established company. Motive An entrepreneur’s motive is to An intrapreneur’s motive is to bring change to the world. grow the business and make it better. Nature Entrepreneurs are innovative in Intrapreneurs are innovative in nature. nature but less than entrepreneurs. Risk Factor Entrepreneurs are willing to take Intrapreneurs are willing to take risks. risks but less than entrepreneurs. ENTREPRENEUR VS INTRAPRENEUR Entrepreneur Intrapreneur Goals Entrepreneurs focus on Intrapreneur’s goals are to get long-term profits. appraisals, appreciation, and promotions. Competition Entrepreneurs face low Intrapreneur faces high competition for their business. competition in the market. Position Entrepreneurs are founders of Intrapreneurs are employees a company. of a company. Approach to Entrepreneurs operate Intrapreneurs use Operate activities using innovative entrepreneurial skills. methods.  CASE STUDIES 1. Airbnb: Disrupting the Hospitality Industry Explore how Airbnb transformed the traditional hospitality industry by leveraging the sharing economy. Analyze its business model, growth strategies, and the challenges it faced, including regulatory issues and competition. Innovation in business models, scaling strategies, market disruption, and regulatory challenges. 2. Uber: The Rise of the Ride-Sharing Giant Examine Uber's journey from a small startup to a global leader in ride-sharing. Focus on its growth strategies, technological innovations, and the controversies it faced, such as regulatory battles and labor issues. Disruption in traditional industries, the role of technology in scaling businesses, and managing rapid growth. 3. Tesla: Revolutionizing the Auto Industry Analyze how Tesla, led by Elon Musk, has impacted the automotive industry with its focus on electric vehicles and sustainable energy. Investigate its innovation strategies, marketing approaches, and the challenges it has faced. Innovation in product development, brand positioning, and overcoming industry challenges.  CASE STUDIES 4. Spotify: Changing the Music Industry Explore Spotify's impact on the music industry through its streaming service. Discuss its business model, user acquisition strategies, and the challenges of licensing and competition. Digital disruption, customer acquisition, and managing partnerships. 5. Warby Parker: Disrupting the Eyewear Market Review how Warby Parker changed the eyewear industry with its direct-to-consumer model and online sales approach. Analyze its marketing strategies, supply chain management, and social responsibility initiatives. E-commerce strategies, direct-to-consumer models, and integrating social responsibility. 6. Amazon: From Online Bookstore to Global E-commerce Leader Examine Amazon's evolution from a bookstore to a global e-commerce and technology giant. Focus on its diversification strategies, logistical innovations, and market expansion. Business diversification, logistics optimization, and strategic expansion.  CASE STUDIES 7. Dropbox: Growth through User Engagement Analyze Dropbox's growth from a startup to a leading cloud storage provider. Discuss its user acquisition strategies, product development, and the challenges of scaling a tech company. User engagement, scaling strategies, and product iteration. 8. Zara: The Fast Fashion Revolution Explore how Zara, part of Inditex, transformed the fashion industry with its fast fashion model. Focus on its supply chain management, inventory control, and marketing strategies. Fast fashion dynamics, supply chain efficiency, and market responsiveness. 9. Ben & Jerry’s: Social Entrepreneurship and Branding Review how Ben & Jerry’s combines business success with social activism. Examine its business model, branding strategies, and commitment to social causes. Integrating social responsibility with business, branding, and consumer engagement. 10. Beyond Meat: Disrupting the Food Industry Analyze Beyond Meat’s approach to creating plant-based meat alternatives and its impact on the food industry. Discuss its innovation in product development, market strategy, and consumer adoption. Product innovation, market disruption, and managing growth in a niche market. DOUBT SESSION ?????