sybms sem 3

1. BUSINESS PLANNING AND ENTREPRENEURIAL
MANAGEMENT
SYBMS
Semester 3

2. UNIT-1
• Foundations of Entrepreneurship Development
• Theories of Entrepreneurship
• External influences on Entrepreneurship Development

3. WHO IS AN ENTREPRENEUR?
• An entrepreneur is an individual who, rather than working as an employee, runs a small
business and assumes all the risks and rewards of a given business venture, idea, or good or
service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of
new ideas and business processes.

4. ENTREPRENEURSHIP
• The activity of setting up a business or businesses, taking on financial risks in the hope of profit.
• The capacity and willingness to develop, organize and manage a business venture along with any
of its risks in order to make a profit.
• According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily
motivated by profit but regard it as a standard for measuring achievement or success.

5. Sachin Bansal and Binny Bansal
They worked for Amazon.com, and left to
create their new company incorporated in
October 2007 as Flipkart Online Services Pvt.
Ltd.

6. NEED OF ENTREPRENEURSHIP DEVELOPMENT
• Creation of Employment Opportunities: EDP’s enable prospective entrepreneurs in the setting up of their own units,
thus enabling them to get self employment. Several schemes like Nehru Rozgar Yojna, National Rural Employment
Programme (NREP), Integrated Rural Development Programme (IRDP) etc. have been initiated by the government, of
India in this direction.
• Capital Formation: Entrepreneur as an organizer of factors of production employs his own as well as borrowed
resources for the setting up of his enterprise. Entrepreneur mobilizes idle savings of the public and put them to productive
use. Various development banks like ICICI, IFCI, IDBI; SFCs, SIDCs take initiative in promoting entrepreneurship
through assistance to various agencies involved in EDP and by providing financial assistance to new entrepreneurs.
• Use of Local Resource: Alert entrepreneurs seize the opportunity and exploit it in the best interests of the area and
industry.
• Improvement in per Capital . More enterprises will lead to more production, employment and generation of wealth in
the form of goods and services. It will result in the increase in the overall productivity and per capita income in the
country.

7. • Improvement in the Standard of Living: Entrepreneurs by adopting latest innovations help in
the production of wide variety of goods & services.
• By making efficient use of the resources, they start producing more of better quality and that too
at lower costs.
• This enable them to ensure easy availability of better quality products at lower prices to the
consumers which result in the improvement in the standard of living of the people.

8. SIGNIFICANCE OF GROWTH OF ENTREPRENEURIAL
ACTIVITIES
• Development of managerial capabilities:The biggest significance of entrepreneurship lies in the fact that it helps in
identifying and developing managerial capabilities of entrepreneurs. An entrepreneur studies a problem, identifies its
alternatives, compares the alternatives in terms of cost and benefits implications, and finally chooses the best alternative..
• Creation of organisations:Entrepreneurship results into creation of organisations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards achievement of objectives through
managerial skills.
• Improving standards of living:.Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls,
etc. are pointers to the rising living standards of people, and all this is due to the efforts of entrepreneurs.
• Means of economic development:Entrepreneurship involves creation and use of innovative ideas, maximisation of
output from given resources, development of managerial skills, etc., and all these factors are so essential for the
economic development of a country.

9. CHARACTERISTICS OF AN ENTREPRENEUR
• Self-Motivated: An entrepreneur is intrinsically motivated as there is typically no financial reward in the beginning stages
of starting a business. Rather than wait for progress and success, an entrepreneur takes whatever action is necessary to
facilitate these things.
• Leadership skills: All companies experience ups and downs, and an entrepreneur must have the ability to motivate his
employees to work together toward their goals, which requires earning their trust and respect. Entrepreneurs must also
have excellent communication skills as they will work with a variety of types of personalities in dealing with employees,
clients and investors.
• Risk-takers:Risk is inherent when starting a business. This requires possessing well-developed decision-making skills,
even in the face of failure, as well as being flexible enough to alter methods when things to not go as planned.
• Innovative: The ability to not only come up with new ideas but develop and improve them as the business grows is an
essential characteristic of a good entrepreneur. These individuals are constantly scrutinizing their products, services and
business model in an effort to find ways to improve.
• EthicalEntrepreneurs: Although some new business owners may experience immediate success through cheating or
lying, in the long run, clients and investors will lose interest in doing business with an entrepreneur who lacks credibility.

10. Qualities of
entrepreneur
Risk-taker
Self
disciplined
Decisive
and action
oriented
Persistence
Integrity
Ethical

11. THEORIES OF ENTREPRENEURSHIP
Innovation theoryJoseph Schumpeter
Theory of high achievementMC Clelland
X-Efficiency theoryHarvey Leibenstein
Theory of social changeEverett Hagen

12. THEORY OF INNOVATION
According to Joseph Schumpeter ,economic development “is spontaneous and discontinuous change in the channels of the
circular flow, disturbance of equilibrium, which forever alters and displaces the equilibrium state previously existing”
Development consists in the carrying out of new combinations for which possibilities exist in the stationary state. New
combinations come about in the form of INNOVATIONS.
An innovations may consist of:
 The introduction of a new product
 The introduction of new method of production
 The opening up of a new market
 The conquest of a new source of raw materials
 The carrying out of a new organization of any industry like the creation of monopoly
According to Schumpeter ,it is the introduction of new product and the continual improvements in the existing ones that
lead to development.

13. McClelland’s need theory is closely associated with learning
theory, because he believed that needs are learned or acquired by
the kinds of events people experience in their environment and
culture.
His theory focused on Murray’s three needs: achievement, power,
and affiliations. In the literature, these three needs are abbreviated
as “n Ach”, “n Pow”, and “n Aff” respectively.
As regards the above three needs, McClelland holds the view that
all three needs may simultaneously be acting on an individual. But,
in case of an entrepreneur, the high need for achievement is found
dominating one.
Theory of High Achievement

14. • The individual with high levels of need achievement is a potential entrepreneur. The specific characteristics of a high achiever
(entrepreneur) can be summarized as follows:
• (i) They set moderate realistic and attainable goals for them.
• (ii) They take calculated risks.
• (iii) They prefer situations wherein they can take personal responsibility for solving problems.
• (iv) They need concrete feedback on how well they are doing.
• (v) Their need for achievement exist not merely for the sake of economic rewards or social recognition rather personal accomplishment is
intrinsically more satisfying to them.
• According to McClelland, motivation, abilities and congenial environment, all combine to promote entrepreneurship. Since entrepreneurial
motivation and abilities are long run sociological issues; he opined it is better to make political, Social and economic environments
congenial for the growth of entrepreneurship in underdeveloped and developing countries.

15. LEIBENSTEIN’S X EFFICIENCY THEORY
• X-efficiency is the degree of ineffiency in the use of resources in the wrong way, within the firm for productive
potential.
• The entrepreneur has to complete the production efficiently with proper inputs and improve flow of information
in market by gap filling in the economy
• HOW IT WORKS (EXAMPLE):
• Economist Harvey Leibenstein, a Harvard professor who studied the psychological aspects of economics, first
used the term.
• His theory was that when companies aren't very competitive, their workers don't behave as efficiently. For
example, let's say that companies A, B, and C together own about 90% of the market for widgets. They are large
companies that compete fiercely on price and service. Company D is a tiny company that is also trying to sell
widgets, but it is not doing so profitably.
• Despite the fact that the market for widgets is competitive, Company D isn't much of a competitor and the
employees know that.
• According to the theory, the employees don't work as hard at Company D because of this. They know that being
more efficient won't make a difference. That is, their x-efficiency falls.

16. • X-efficiency arises either because the firm’s resources are used in the wrong way or because they are wasted, that
is, not used at all.
• Leibenstein identifies two main roles for the entrepreneur:
• (i) a gapfiller
• (ii) an input completer.
• These functions arise from the basic assumptions of X-efficiency theory. Thus it is clear that “if not all factors of
production are marketed or if there are imperfections in markets, the entrepreneur has to fill the gaps in the market.
To put the enterprise in motion, the entrepreneur should fill enough of gaps.”
• The second role is input completion, which involves making available inputs that improve the efficiency of
existing production methods or facilitate the introduction of new ones. The role of the entrepreneur is to improve
the flow of information in the market.

17. THEORY OF SOCIAL CHANGE
• Hagen has attributed the withdrawal of status respect of a group to genesis of entrepreneurship.
• Hagen considers the withdrawal of status, of respect, as the trigger mechanism for changes in personality
formation. Status withdrawal occurs when members of some social group perceive that their purposes and values
in life are not respected by the groups in the society they respect, and whose esteem they value.
• Hagen postulates four types of events which can produce status withdrawal:
• Displacement of a traditional elite group from its previous status by another traditional supply physical force.
• Denigration of valued symbols through some change in the attitude of the superior group.
• Inconsistency of status symbols with a changing’ distribution of economic power.
• Non-acceptance of expected status on migration to a new society.

18. EXTERNAL INFLUENCES ON ENTREPRENEURSHIP DEVELOPMENT
• Capital
• Labour
• Raw material,
• Market
Economical
• Social norms and values
• Role model
• Social pressure
• Respect and status
• Security
Social
• Need achievement
• Withdrawal of social statusPersonal

19. ECONOMICAL FACTORS
• Capital: Availability of capital helps an entrepreneur to bring together the land of one, machine of
another and raw material of yet another to combine them to produce goods.Therefore, capital is
regarded as lubricant to the production process. Basically, capital is the life blood of any activity. If
capital is available, people who have innovative ideas would like to put them into reality.
• Labour : The quality and quantity of labour is another factor which influences the emergence of
entrepreneurship. Availability of labour makes entrepreneurship attractive. More than abundantly
available labour, the presence of skilled labour force is very important because such a workforce is
generally less mobile than other resources.This is why one finds textile units and machine tools
manufacturing industries concentrated in certain cities like Coimbatore, Tiruppur, Ludhiana, Rajkot,
Baroda, etc. just because of availability of skilled labour force required for such units.

20. • Raw material: In the absence of raw materials, neither any enterprise can be established nor an
entrepreneur can emerge. In some cases technological innovations can compensate for raw
material inadequacies. The supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favourable these conditions
are, the more likely is the raw material to have its influence on entrepreneurial emergence.
• Market : It is the market that fetches revenue for any business. If sufficient market is not there,
people will naturally hesitate to do business in a sector where there is no market. In addition to
market opportunities, it is equally important to ensure future market opportunities for the
emergence of entrepreneurial activities

21. SOCIAL FACTORS
• Social norms and values: If the society has an open and flexible approach towards various types
of jobs and works, then people will feel free to do whatever they like and even go in for
innovation and creativity. When there is more openness and flexibility, entrepreneurship will not
only emerge but also thrive.
• Role models : Societies that celebrate entrepreneurship and felicitate successful entrepreneurs in
a way encourage many future generations to take up entrepreneurial activities. This is because
successful businessmen prove to be role models for the society at large. For instance, states like
Gujarat, Maharashtra and to some extent Tamil Nadu and Haryana have experienced better
industrial development as a result of higher concentration of entrepreneurs.

22. • Social pressure: If a society is orthodox, close and imposes a lot of restrictions, then it is likely to backfire.
Because of negative pressure, more number of people would like to become entrepreneurs as a means of
improving their status. It has been noticed that where people were marginalised, they became entrepreneurs just to
prove their abilities and establish an identity in the society.
• Respect and Status: If societies accord recognition and respect to people who dare to do something different and
creative, it proves to be an encouragement for others to do something enterprising. Therein lies the emergence of
entrepreneurship. Societies where there is respect and recognition for people to do something different are more
likely to see the development of entrepreneurial activities.
• Security: One school of thought is of the view that people are more prone to take entrepreneurial risks in secure
social environments. On the other hand, there are others who argue that entrepreneurship will more likely emerge
if there are turbulent conditions. In both cases, there is scope for entrepreneurship development.

23. PERSONAL FACTORS
• Need Achievement: According to David McClelland’s theory of need achievement, a
constellation of personality characteristics which are indicative of high need achievement is the
major determinant of entrepreneurship development. Therefore, if the average level of need
achievement in a society is relatively high, one would expect a relatively high amount of
entrepreneurship development in that society
• Withdrawal of Status Respect: E.E. Hagen attributed the withdrawal of status respect of a
group to the genesis of entrepreneurship

24. ROLE OF ENTREPRENEURIAL CULTURE IN ENTREPRENEURSHIP
DEVELOPMENT
• Culture can be defined as the mix of norms, values and beliefs that are shared by a particular community [be it a
business community, a cultural (or ethnic) community, a country, or a geographical region].
• The hard aspects of culture apply to entrepreneurship because without them, an entrepreneurial culture would not
develop into a tangible act.
• According to David Mc Clelland (1961), an entrepreneur is a dynamic person who takes calculated risks. This
definition has a behaviourist orientation.
• Fillion (1990) defines the entrepreneur as someone who imagines, develops and realises a vision. In economic
terms, one may define an entrepreneur as someone who combines resources in such a way as to add value.
• Having reviewed the characteristics of entrepreneurs, one is tempted to conclude that an entrepreneur is a product of
his/her particular environment. Several authors have shown that entrepreneurs reflect the characteristics of the time
and place where they have evolved (Toulouse, 1990).
• The cultures, the needs and the habits of a particular country or region shape the behaviour of entrepreneurs.
Obviously enough, with the falling of frontiers (both geographical and psychological) entrepreneurs exert an
influence that goes far beyond their own countries and/or regions.

25. PROMOTING AN ENTREPRENEURIAL CULTURE
• Identification and promotion of Role Models: Women entrepreneurs, for example the ladies who lost their jobs in the textile sector and created ‘Charmin Sud’,
a rural women entrepreneur partnership. They came on television to explain how being laid off from an ailing textile industry was for them a blessing in disguise.
It allowed them to unveil their entrepreneurial potential and leadership abilities.
• Role of media: For instance, in the promotion of Entrepreneurship as a business model. Until recently, the local TV ran a weekly documentary: ‘Portrait d’Elle’,
in which a local women entrepreneur was portrayed as to her new place in society as an economic (and social) agent. Similarly, a few newspapers reserve a page
regularly to promote entrepreneurial initiatives.
• The Education system: Entrepreneurship modules in the curriculum at different levels. Entrepreneurship education is now beginning to be anchored in tertiary
education curricula. We have now moved past the old paradigm whereby entrepreneurship was to be taught only in Business faculties. An IT student, a Fashion &
Design student and all the others in fact, need to know the basic business and entrepreneurship skills that are required to start a business or to act
entrepreneurially, to lead and innovate in their employer organisations.
• Period of Incubation:. What is truly beneficial for culture change is a planned process that uses all the avenues mentioned in this section over a longer period
with set objectives and performance targets. In Finland, entrepreneurship and entrepreneurial culture developed as a result of a planned ‘Entrepreneurship
decade’, that is, ten years of cultural change. This can take the form of entrepreneurship education starting at primary or secondary education level, targeting rural
women with a Microcredit scheme and so on.
• Participation of leaders (political, business, opinion): Political and religious leaders to promote entrepreneurship as a solution to current economic problems.
As mentioned earlier under ‘leadership’, a strong, charismatic leadership is required to transform a community. To change the mentality from ‘qualifying to get a
government job’ to ‘taking charge of oneself by being self employed’ requires psychological ‘push’ that can be facilitated by people who can influence the
community. The first people to come to our mind are the political, social and religious leaders.

26. Sangeeta Shah and Neela Chitre were very close friends since school days,accompanying each other not only to the library but also
to health gym every evening.In fact, there would always be a competitive spirit among both of them whileexercising in the gym
and it was not co—incidental that both matched each other’scapability in every respect. It was during one such chore that it
emerged that both of them had a common pursuit of setting down with a venture associated with health fitness. Simultaneously,
it was the time when average individual was becoming health conscious and almost every third individual was either a member of
a club or was involved in personal discipline of exercise. Even corporates were promoting healthconsciousness in their employees,
offering gymnasium membership or housing afitness centre within the premises.Sangeeta and Neela have now started puffing their
heads together and are inthe process of conceiving a business plan in context of a pursuit in the field of health fitness. When the
idea was discussed by both with their parents, it wascounselled that a fitness centre with a beauty saloon along with a facility for
stress management could be the right combination.However, it was apparent that the project would involve a capital outlay
of nothing less than 1.5 to 2 crores. Fortunately Sangeeta has almost been offered a place by her uncle at Andheri in his new
residential building, on lease, and family and relatives may garner a maximum of 75 lakhs, but balance would have to beraised
from other sources.
You are now required to help Sangeeta and Neela to address the following area:
(a)How to prepare a business plan for their idea?
(b)What sources of finance can they explore?
(c)How can they carry out staffing of their venture? Do you envisage any training needs?
(d)Design a Marketing Strategy for the venture
Case study

27. UNIT 2
Intrapreneur –Concept and Development of Intrapreneurship
Women Entrepreneur – concept, development and problems faced by Women Entrepreneurs,
Development of Women Entrepreneurs with reference to Self Help Group
Social entrepreneurship–concept, development of Social entrepreneurship in India. Importance
and Social responsibility of NGO’s.
 Entrepreneurial development Program (EDP)– concept, factor influencing EDP.
Option available to Entrepreneur. (Ancillarisation, BPO, Franchise, M&A)

28. INTRAPRENEUR
• An intrapreneur is an employee who is given the authority and support to create a new product
without having to be concerned about whether or not the product will actually become a source of
revenue for the company.

29. ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATION
Step 1
• The first step is to secure a commitment to intrapreneurship in the organization by top, upper, and
middle management.
• Without top management commitment, the organization will never be able to make the necessary
changes.
• Once top management has committed to intrapreneurship for a sufficient length of time, the concept is
introduced throughout the organization.
• This is effectively accomplished through seminars.
• General guidelines need to be established for intrapreneurial venture development. Next,
intrapreneurial leaders need to be identified, selected, and trained.

30. Step 2
• Ideas and general interest areas should be identified, along with the amount of risk money
that is available.
• The overall expectations and target results should be established, specifying time frame,
profitability requirements, and impact of the organization.
• A mentor/sponsor system needs to be established.

31. Step 3
• A company needs to use technology to make itself faster and more flexible.
• Technology has allowed small companies to act like they are big ones.
• Large companies can use technology to make them responsive and flexible.

32. Step 4
• The organization can use a group of managers to train and share their experiences with other
members.
• These sessions should be conducted one day per month for a specified period of time.
Information about intrapreneurship and about the company’s specific activities should be well
publicized.

33. • Step 5: The organization needs to develop ways to get closer to its customers by tapping the data
base, hiring from smaller rivals, and helping the retailer.
• Step 6: An organization must learn to be more productive with fewer resources. With middle
management cutbacks, more control has been given to lower levels of the organization. The span
of control should be increased.

34. • Step 7: The organization needs to establish a strong support structure. Because they do not
immediately affect the bottom line, intrapreneurial activities can be overlooked and receive little
funding. These ventures require flexible, innovative behavior, with the intrapreneurs having total
authority over expenditures and access to funds.
• Step 8: The support must involve trying the rewards to the performance of the intrapreneurial
unit. This encourages team members to work harder and compete more effectively. The equity
portion of the compensation is particularly difficult to handle.
• Step 9: The organization needs to implement an evaluation system that allows successful units to
expand and unsuccessful ones to be eliminated.

35. EXAMPLES OF
INTRAPRENEURS
Facebook
Idea: Originally called the “awesome button,” the Facebook
Like button was first prototyped in one of Facebook’s
infamous hack-a-thons.
Benefit: Facebook has never released statistics based on the
like rate and certain time frames. But to all of us in the
computer using world it is pretty evident how the invention of
the like button affects us on a daily basis. Companies like
Facebook, who are constantly innovating and changing, are
some of the most successful out there.

36. SONY
Idea: Ken Kutaragi, a relatively junior Sony Employee, spent
hours tinkering with his daughters Nintendo to make it more
powerful and user friendly. What came from his work is one
of the most recognizable brands in the world today, The Sony
Playstation.
Benefit: Many Sony bosses were outraged at his work,
thinking that gaming is a complete waste of time. Luckily
someone in a senior position saw the value in the product and
thankfully so, because now Sony is one of the world leaders in
the prosperous gaming industry. This shows that company
leaders should always be open to innovation—no matter how
farfetched and pointless it may seem.

37. Basis for comparison Entrepreneur Intrapreneur
Meaning Entrepreneur refers to a person who set up his
own business with a new idea or concept.
Intrapreneur refers to an employee
of the organization who is in charge
of undertaking innovations in
product, service, process etc.
Approach Intuitive Restorative
Resources Uses own resources Use resources provided by company
Capital Raised by him Financed by company
Enterprise Newly established An existing one
Dependency Independent Dependent
Risk Borne by the entrepreneur himself. Taken by the company.
Works for Creating a leading position in the market. Change and renew the existing
organizational system and culture.
Difference between Entrepreneur and Intrapreneur