Session -10

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ENTERPRENEURSHIP

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Session -10

  1. 1. Session - 10Managing Business
  2. 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. 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. 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. 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. 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. 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. 8. InnovationWhat 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. 9. Purpose of Innovation Response to increased competitive pressure Discontinuity Profitability Market Leadership
  10. 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. 11. Principles of Innovation (contd.) Innovation must involve everyone in the organization Innovation must be customer- centered
  12. 12. “Innovation is – Doing Things Better, Doing Things Differently”
  13. 13. Types of Innovation Efficiency Innovation: Internally focused E volutionary Innovation: Incremental Achievements Revolutionary Innovation: Externally focused
  14. 14. Seeds of Innovation Creative Thinking Strategic Thinking Transformational Thinking
  15. 15. Elements of Innovation Creativity Strategy Implementation Profitability
  16. 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. 17. “Great Ideas are not innovative unlessthey are successfully Implemented”
  18. 18. Components of an Innovation May never be developed into marketable products Invention Has noInstantaneous Scientific Adopting commercial Discovery Innovation Invention value Market Buying or Ignoring the Innovation
  19. 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. 20. Refine / Modify Gain CommitmentPossible Solutions/ Decision Proposals Innovation Idea Cycle Experimental Development ActionSpeculative ConstructiveExploration Review Operational Routine Cycle Known Solutions Procedures Rules
  21. 21. Preparing for theNew VentureLaunch
  22. 22. Importance of recruiting andmotivating 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”
  23. 23. Develop effective recordkeeping and financialcontrols (MIS) Tax planning Sales review Inventory control Performance appraisal Payment of government dues “Systems are the building blocks”
  24. 24. Accounting – accrual versus cash basis Accrual method Cash methodSales are accounted Sales are not countedwhen sales are made. until cash is received.Expenses are accounted Expenses are notwhen they are actually counted until cash isincurred actually paid out “Projections may be deceptive”
  25. 25. Ratios can be used to assessfinancial strengths andweaknesses 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”
  26. 26. Business is marketingThe early venture must have aneffective marketing plan becausemarketing is “the engine that pulls theentire train” Marketing is business
  27. 27. To effectively promote thenew 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. 
  28. 28. Avoid the “ Field ofDreams.”“If we build it, they will come.”– Field of DreamsNEWS FLASH: If you don’t promote it, they aren’t coming
  29. 29. Managing theGrowth
  30. 30. 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.
  31. 31. Strategic skills needed toeffectively manage thegrowth Good records and financial controls Management of the inventory Human relations New products and services (innovation) Long term perspective of the venture
  32. 32. “An effective organization culture isneeded to meet the challenges ofbusiness growth”An owner should: Communicate Listen Delegate responsibility Provide feedback Train key employees
  33. 33. Long term Strategic Plan Restatement of the mission Long term goals and objectives Strategy formulation Strategic plan implementation Feedback and control
  34. 34. Customerservice/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
  35. 35. 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.
  36. 36. Expand the venture through: Expansion – horizontal/ vertical Diversification- related / unrelated Joint venture Acquisitions Mergers Leveraged buyouts Franchising Business process reengineering Global ancillarisation
  37. 37. Peter.F.Drucker’s tips forgrowth-oriented enterprises The need for market focus Financial foresight Building a top management team Where can I contribute? The need for outside advice

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