ENTERPRENEURSHIP

1. Session - 10
Managing Business

2. Creative: Involving creation or
invention; showing imagination and
originality (Oxford Dictionary)
Innovative: Introducing something
new (Oxford Dictionary)
Inventive: Making or Designing
something new (Oxford Dictionary)

3. Creativity
 Creativity is the engine of
invention and innovation
 The essence of creativity is
combining two or more ideas to
arrive at an entirely new one
 Creative ideas must add value

4. Creative Environment
(Triandis 1990)
 Permits people to work in areas of
their greatest interest.
 Encourages employees to have broad
contact with stimulating colleagues
 Allows taking moderate risks
 Tolerates some failures and non-
conformity
 Provides appropriate rewards and
recognition

5. Creative Person (Barron 1969)
 Conceptual Fluency (i.e. being able to
express ideas well and formulate the ideas as
one proceeds)
 The ability to produce a large number of
ideas quickly
 The ability to generate original and unusual
ideas
 The ability to separate source (who said it)
from content (what was said) in evaluating
information

6. Creative Person (contd.)
 The ability to stand out and be a little deviant
from others
 Interest in the problem one faces
 Perseverance in following problems wherever
they lead
 Suspension of judgment and no early
commitment
 The willingness to spend time analyzing and
exploring
 A genuine regard for intellectual and cognitive
matters

7. Gains of Creativity
 Produces greater quantities
 Improves efficiency
 Retain seeds
 Provides Opportunities for
combinations
 Increase potential for better decisions
 Reduces personal conflicts
 Increases group ownership

8. Innovation
What is Innovation?
 Specific Instrument of Entrepreneurship
 Purposeful & Organized Search for Change
 Analysis of Opportunities such Change might
offer
 New ways of delivering value to the customer

9. Purpose of Innovation
 Response to increased competitive
pressure
 Discontinuity
 Profitability
 Market Leadership

10. Principles of Innovation
 Innovation must be approached as a
discipline
 Innovation must be approached
comprehensively
 Innovation must include an
organized, systematic and continual
search for new opportunities

11. Principles of Innovation
(contd.)
 Innovation must involve everyone in
the organization
 Innovation must be customer- centered

12. “Innovation is – Doing Things
Better,
Doing Things Differently”

13. Types of Innovation
 Efficiency Innovation: Internally focused
 E volutionary Innovation: Incremental
Achievements
 Revolutionary Innovation: Externally
focused

14. Seeds of Innovation
 Creative Thinking
 Strategic Thinking
 Transformational Thinking

15. Elements of Innovation
 Creativity
 Strategy
 Implementation
 Profitability

16. Process of Innovation
 Selecting Innovation Goals
 Gathering Information
 Clarifying the Problem
 Seeking Ideas and Stimuli from around the
Organization
 Selecting Ideas Worth Exploring
 Developing an Innovation Road map
 Outlining the possible Plan
 Gaining Commitment
 Implementing the final Plan

17. “Great Ideas are not
innovative unless
they are successfully
Implemented”

18. Components of an Innovation
May never be developed into
marketable products
Invention
Has no
Instantaneous Scientific Adopting
commercial Discovery Innovation Invention
value
Market
Buying or Ignoring the Innovation

19. The Practices of
Entrepreneurship in a
New Venture
 The need for market focus
 Financialforesight
 Building a top management team
 Where can I contribute
 The need for outside advice

20. Refine / Modify
Gain Commitment
Possible Solutions/ Decision
Proposals Innovation
Idea Cycle Experimental
Development Action
Speculative Constructive
Exploration Review
Operational
Routine Cycle Known
Solutions
Procedures
Rules

22. Preparing for the
New Venture
Launch

23. Importance of recruiting and
motivating employees
 Establish procedures for hiring new
employees
 Options - advertising, using a network of
friends and business associates, and
contracting with a personnel agency
 Selection – ability and commitment
 Be a role model for the employees
 Offer continuous training and promotion
“People must realize their full potential”

24. Develop effective record
keeping and financial
controls (MIS)
 Tax planning
 Sales review
 Inventory control
 Performance appraisal
 Payment of government dues
“Systems are the building blocks”

25. Accounting – accrual versus cash
basis
Accrual method Cash method
Sales are accounted Sales are not counted
when sales are made. until cash is received.
Expenses are accounted Expenses are not
when they are actually counted until cash is
incurred actually paid out
“Projections may be deceptive”

26. Ratios can be used to assess
financial strengths and
weaknesses
 Liquidity ratios
 Current ratio
 Acid test ratio
 Activity ratios
 Average collection period
 Inventory turnover
 Leverage ratios
 Debt ratio
 Debt equity ratio
 Profitability ratios
 Net profit margin
 Return on investment
“Ratios can be accounting
jugglery”

27. Business is marketing
The early venture must have an
effective marketing plan because
marketing is “the engine that pulls the
entire train”
Marketing is business

28. To effectively promote the
new venture
 Develop awareness of the product or
service offered through publicity and
advertising
 publicity is free advertising provided by a
media outlet.
 Publicity introduces the company
 Advertising focuses on specific
customers
 Ad agencies provide promotional
services.


29. Avoid the “ Field of
Dreams.”
“If we build it, they will come.”–
Field of Dreams
NEWS FLASH: If you don’t
promote it, they aren’t
coming

30. Managing the
Growth

31. Growth is attitude
 Not all new ventures grow rapidly
 Many continue to exist at a
satisfying level of sales with little
or no growth.
 Entrepreneur’s interest and
market response to the product
dictate future growth.

32. Strategic skills needed to
effectively manage the
growth
 Good records and financial controls
 Management of the inventory
 Human relations
 New products and services
(innovation)
 Long term perspective of the venture

33. “An effective organization culture is
needed to meet the challenges of
business growth”
An owner should:
 Communicate
 Listen
 Delegate responsibility
 Provide feedback
 Train key employees

34. Long term Strategic Plan
 Restatement of the mission
 Long term goals and objectives
 Strategy formulation
 Strategic plan implementation
 Feedback and control

35. Customer
service/satisfaction
 Record and assess complaints and
comments from customers
 Plan regular meeting with staff members to
determine why the complaints are occurring
and what solutions can be enacted
 Focus groups can be used to monitor and
track customer satisfaction.
 Customer surveys enable the entrepreneur
to standardize measured responses
regarding service/satisfaction

36. Customer Relations
 The entrepreneur should have a
certain acceptable expectation
regarding service that, if not met,
should involve some consideration of
change. Entrepreneurs must be
people who care about their
customers and are willing to do
whatever it takes to ensure favourable
customer relations.

37. Expand the venture through:
 Expansion – horizontal/ vertical
 Diversification- related / unrelated
 Joint venture
 Acquisitions
 Mergers
 Leveraged buyouts
 Franchising
 Business process reengineering
 Global ancillarisation

38. Peter.F.Drucker’s tips for
growth-oriented enterprises
 The need for market focus
 Financial foresight
 Building a top management team
 Where can I contribute?
 The need for outside advice