EntrepreneurshipDr. S.G. Rama RaoLecturerSchool of Management StudiesJNTUK, Kakinada
Sole Proprietorship• A business owned by a singleindividual that is not incorporated.• The life of the organization is limitedto the life of the individual whostarted it.
Partnership• A partnership exists when two or morepersons associate to conduct a non-corporatebusiness.• Partnerships may operate under differentdegrees of formality ranging from informal(oral understandings) to formal agreements.
Entrepreneur• One who starts his own, new and small business• Person who undertakes an enterprise withchances of profit or loss.• Entrepreneur is a person who undertakes abusiness activity of which he/she has nobackground and faces considerable risks in theprocess.• If either of the two elements, i.e., “nobackground” or “considerable risk” is missing inthe venture, it is no entrepreneurship.
• Peter F. Drucker defines an entrepreneur asone who always searches for change,responds to it and exploits it as anopportunity. Innovation is the basic tool ofentrepreneurs, the means by which theyexploit change as an opportunity for adifferent business or service.Entrepreneur
Famous Entrepreneurs in the WorldDonald Trump Bill GatesLarry Page Pierre OmidyarMark Zuckerberg
Who am I?What’s my Company?•Manhattan Real Estate Developer•Owns 3 Casinos, 6 Golf Courses•Star of TV Show, “The Apprentice”Famous EntrepreneursDonald TrumpOwner, The Trump Organization•Manhattan Real Estate Developer•Owns 3 Casinos, 6 Golf Courses•Star of TV Show, “The Apprentice”
Who am I?What’s my Company?•58 years old, Harvard University (not!)•Started his company at 20 years of ageFamous EntrepreneursBill GatesFounder & Chairman, Microsoft• 58 years old, Harvard University (not!)• One of the richest person in America• Started his company at 20 years of age
Who am I?What’s my Company?•40 years old, University of Michigan•Started his company at 28 years of ageFamous EntrepreneursLarry PageFounder & President, Google•40 years old, University of Michigan•Owner of top one web search engine•Started his company at 28 years of age
Who am I?What’s my Company?•46 years old, graduated Tufts University•Started his company at 28 years of ageFamous EntrepreneursPierre OmidyarFounder & Chairman, eBay•46 years old, Tufts University•Started his company at 28 years of age
Who am I?What’s my Company?•28 years old, Harvard University•Youngest billionaire ever•Started his company at 16 years of ageFamous EntrepreneursMark ZuckerbergFounder & CEO, Facebook•28 years old, Harvard University•Youngest billionaire ever•Started his company at 16 years of age
Entrepreneurship• It is a philosophy or process through which anentrepreneur seeks innovation andemployment.• It is the process of creating something differentwith value by devoting the necessary time andeffort, assuming the accompanying financial,psychic, social risks and receiving the resultingrewards of monetary and personal satisfactionand independence.
Concept of Entrepreneur• Entrepreneur as risk bearer• Entrepreneur as an organizer• Entrepreneur as an innovator– Introduction of new product in the market.– Use of new method of production, which is notyet tested.– Opening of new market.– Discovery of new source of raw materials.– Bringing out of new form of organisation.
Inventor and Innovator• An inventor is one who discovers newmethods and new materials.• An innovator utilizes inventions anddiscovers in order to make newcombinations.
Sam Walton (1918 – 1992)• He is the founder of Wal-Mart (the largestpublic corporation according to the ForbesGlobal 2000) and Sam’s Club.• Inspirational story: When he opened hisfirst store, his store always stayed openlater than the most other stores, especiallyduring Christmas season.
Colonel Sanders (1890 – 1980)• He is the founder of Kentucky FriedChicken (KFC) which is one of the largestfast food corporation in the world.• Inspirational story: In the age of 65 yearsold he tried to franchise his fried chickenreceipt to restaurant owners, he went doorto door by driving car. He got 1009 “No”answers before getting his first “Yes”answers from a restaurant owner whowanted to sell his fried chicken.
Thomas Alva Edison (1847 – 1931)• He is a famous inventor of light bulb,scientist, and businessman.• Inspirational story: He was failedmore than thousand times inexperiments while inventing lightbulb.
Henry Ford (1863 – 1947)• He is the founder of the Ford Motorcompany. As owner of the Ford MotorCompany, he became one of the richestand best-known people in the world.• Inspirational story: At 15 years old, heworked as a watch repairman. In 1891 hestarted his career as an engineer and hebuilt a company in 1899 which was notsuccessful. Finally Ford Motor Companywas built in 1903.
Warren Buffett (1930 – Present)• He is one of most successfulinvestor in the world. He is alsoone of the world’s richest person.• Inspirational story: When he was achild, he went door to door sellingweekly magazines, Coca Cola, andgum.
Michael Dell (1965 – Present)• He is the founder of Dell Inc. andone of the wealthiest people in theworld.• Inspirational story: He started hisbusiness idea in 1984 with just$1000 by providing affordablepersonal computers to collegestudents.
Ingvar Kamprad (1926 – Present)• He is the founder of IKEA (theworld’s largest furniture retailer) andone of the world’s richest men.• Inspirational story: He founded IKEAat age 17, he got the capital from areward that he received from hisfather for doing well in school.
Importance• Provides Self Employment for the entrepreneur• Entrepreneur can offer employment• Innovation and creativity• Unlimited income / higher retained income (Bill Gates,Tata, Ambani, etc.)• Results in wider distribution of wealth• Supports to economic growth of the country• Optimum utilization of resources• Research and development• Regional imbalances• Exploitation by monopolists
CharacteristicsCorecompetenciesEntrepreneurial activitiesInitiative Does things before asked for or forced to by eventsand acts to extend the business to new areas,products or services.PerceivingopportunitiesIdentifies business opportunities and mobilizesnecessary resources to make good an opportunity.InformationgatheringConsults experts for business and technical advice.Seeks information of client or supplier’s needs.Personally undertakes market research and makeuse of personal contacts or information networks toobtain useful information.Contd…
CorecompetenciesEntrepreneurial activitiesPersistence Takes repeated or different actions to overcomeobstacles.Concern forquality workStates desire to produce or sell a better qualityproduct or service. Compares his performancefavorably with that of others.Commitment tocontractualobligationsMakes a personal sacrifice or expands extraordinaryeffort to complete a job, accepts full responsibility incompleting a job contract on schedule, pitches inwith workers or work in their place to get the jobdone and shows utmost concern to satisfy thecustomer.Contd…Characteristics
CorecompetenciesEntrepreneurial activitiesEfficiencyorientationFinds ways and means to do things faster, better andeconomically.Planning Various inter-related jobs are synchronizedaccording to plan.Problem solving Conceives new ideas and finds innovative solutions.Self-confidence Makes decisions on his own and sticks to it in spiteof initial setbacks.Experience Possesses technical expertise in areas of business,finance, marketing, etc.Contd…Characteristics
CorecompetenciesEntrepreneurial activitiesSelf-critical Aware of personal limitations but tries to improveupon by learning from his past mistakes orexperiences of others and is never complacent withsuccess.Use of influencestrategiesDevelops business contacts, retains influentialpeople as agents and restricts dissemination ofinformation in his possession.Monitoring Develops a reporting system to ensure that work iscompleted and quality norms.Credibility Demonstrates honesty in dealing with employees,suppliers and customers even if it means a loss ofbusiness.CharacteristicsContd…
CorecompetenciesEntrepreneurial activitiesConcern foremployeewelfareExpresses concern for employees by respondingpromptly to their grievances.ImpersonalrelationshipPlaces long-term goodwill over short-term gain in abusiness relationship.Expansion ofcapital baseReinvests a greater portion of profits to expandcapital of the firm.Building productimageConcerned about the image of his products amongconsumers and does everything possible to establisha niche for his products in the market.Characteristics
• Need for Achievement• Risk taking• Organizing Skills• Perseverance• Hard Working• Self ConfidenceQualities of Entrepreneurship• Disciplined• Open Minded• Self Starter• Competitive• Creativity• Determination• Strong work ethic• Passion
Role of Entrepreneurship• Entrepreneurship promotes capital formationby mobilizing the idle saving of the public.• It provides immediate large-scaleemployment. Thus it helps to reduceunemployment in the country.• It provides balanced regional development.• It helps reduce the concentration of economicpower.
Role of Entrepreneurship• It stimulates the equitable redistribution of wealth,income and even political power in the interest of thecountry.• It encourages effective resources mobilization ofcapital and skill which might otherwise remainunutilized and idle.• It also induces backward and forward linkages whichstimulated the process of economic development inthe country.• It promotes country’s export trade i.e. an importantingredient for economic development.
What, then, are ethics?• A set of principles outlining a behavioral code thatlays out what is good and right or bad and wrong• May outline obligations and appropriate moralactions for both the individual and the organization• Ethics does not just apply to business• It may be difficult for individuals or groups in societyto agree upon what is right and wrong
Legal vs. Ethical• The law provides boundaries for definingwhat activities are illegal• The law, however, does not necessarilyoutline what is “ethical”
Ethics within businesses• Many businesses develop their own codesof ethics or conduct• These codes outline what employees areto do in order to carry out what thecompany sees as the “right thing to do” invarious circumstances
The “Ethics Check”1. Is it legal2. Is it balanced/fair/win-win3. How will it make you feel about yourself? will it make you feel proud? would you feel good if your decisionwas published in the localnewspaper? would you feel good if your familyknew about it?
Outline for a Code of EthicsOver all, a code of ethics should be a formal statement of abusiness’s values concerning ethics and social issues. Itcommonly speaks to acceptable norms of behavior, guided bysix areas of concern:1. Honesty: to be truthful in all your endeavors; to be honestand forthright with one another and with customers,communities, suppliers, and other stakeholders.2. Integrity: to say what you mean, to deliver what you promise,and to stand up for what is right.3. Respect: to treat others with dignity and fairness,appreciating the diversity of the people you deal with and theiruniqueness.
Outline for a Code of Ethics4. Trust: to build confidence through teamwork and open,honest communication.5. Responsibility: to speak up — without fear of retribution —and report concerns in the workplace and elsewhere, includingviolations of laws, regulations, and company policies.6. Citizenship: to obey all laws of the countries where you dobusiness and to improve the communities where you live andwork.
Being Socially Responsible• It is not enough to be ethical, or do the right thinganymore• Businesses are now expected to act in a sociallyresponsible manner – they need to be good citizensas well as give back to the societies (including global)in which they exist.• Can you think of a company that is sociallyresponsible?• There are financial benefits to being a “sociallyresponsible” company or organization. What mightsome be?
Movie – The Pursuit of HappinessThis film is based on a truestoryAs you watch the film, makenotes of how business manChris Gardner chooses to reachsuccess based on his ethics andhard work, rather than cuttingcorners and unethical actions.