Entrepreneurship: - Books To Consult

Entrepreneurship
• Books to consult
• For 4 credit course
– Entrepreneurship in the new millennium by
• Kurkato & Hodgetts , Cengage Learning
– Entrepreneurship by Rajeev Roy , Oxford
– Presentation Topics by Students
• For 1 credit course
– Entrepreneurship & new venture creation by A Sahay
& V sharma
Email IDs
• FP1
• aaamir005@gmail.com
• Iipm.fp1@gmail.com
• Fp2
• Fp-2@yahoogroups.co.in
• Akhil.mahajanmailme@yahoo.in
• FP3
• iipmfp3@gmail.com
• nehavermaiipm@yahoo.com
Entrepreneurship
• Difference between small business owner
& an entrepreneur (students)
Entrepreneurship
• Difference between small business owner & an
entrepreneur
– Innovation
– Profitability
– Growth
– Take risks beyond security
– Have tremendous perseverance in pushing their idea
– Are looking for rapid growth and immediate profits
– May even seek sale of business for large capital gains
Entrepreneurship
• Some Trends in Research
– Venture financing has emerged as a major source of

funds (venture capital as well as angel capital financing)
– Intrapreneurship is gaining attention in organizations
– Entrepreneurial entry strategies have been identified

with common denominators, issues and tradeoffs
– Extensive research has been conducted on the

psychological aspects that can predict future success
Entrepreneurship
• Some Trends in research
– The risks and tradeoffs of an entrepreneurial career have been

studied extensively
– Women and minority entrepreneurs have mushroomed
– Entrepreneurial efforts have made major contributions to job

creation and innovation in the world economies
• New and small firms that have at least 20 % sales growth

every year (for five years), starting with a base of at least
$100000 has been termed as a GAZELLE
• Handout: Mythology associated with Gazelles
Entrepreneurship
• Reasons for growth of Entrepreneurship
(students)
Entrepreneurship
• Reasons for growth of Entrepreneurship
– Changing Industry Structure

– New Technologies (flexible specialization)
– Deregulation & Privatization
– Increasing demand for variety
– Emerging Services Sector (software services sector)
– Easier access to resources
– Return on Innovation (Strengthening IPR)
– Rising dissatisfaction at job
– Acceptance of ex-entrepreneurs in the job market
Entrepreneurship
• Role of Internet in Entrepreneurship
– Handout: Advantages and Challenges of E-
Commerce for Entrepreneurial Firms
Entrepreneurship
• Major contributions of Entrepreneurship
(students)
Entrepreneurship
• Major contributions of Entrepreneurship
– Job Creation
– Economic growth
– New Technologies, processes & business models
– Serving small markets (Focus)
Entrepreneurship
• Disadvantages of running your own business
(students)
Entrepreneurship
• Disadvantages of running your own business
– You are alone
– All decisions are yours
– All losses are yours
– You will need to put in long hours with no quick
results
– Lack of success affects self esteem
– Exiting the business is usually difficult
– Pressures will affect social and family life
Entrepreneurship
• Advantages of running your own business
(students)
Entrepreneurship
• Advantages of running your own business
– You are the boss

– All profits are yours
– You will experience a great variety of roles and tasks
– Increases self confidence
– Immensely satisfying
Entrepreneurship
• Types of Entrepreneurs (based on timing of venture creation)
– Early Starters, (bill gates, Steve jobs)
– Experienced (Narayanmurthy)
– Mature (CEOs, COOs, Ashok Sutta, Subrato Bagchi)
• Types of Entrepreneurs (based on socio cultural variables)
– First Generation (Dhirubhai ambani, naryanmurthy)
– Entrepreneurs from business families
– Minority entrepreneurs
Entrepreneurship
• Types of Entrepreneurs (based on Entrepreneurial activity)
– Novice
– Serial Entrepreneur
– Portfolio Entrepreneur
Entrepreneurship students
– Common causes of failure

• Lack of knowledge, skills & experience
• Govt policies change
• Funding
• Disagreement between Ent & VC
• Market acceptance
• Access to resources
• Competition
Entrepreneurship
• Common Causes of failures
– Lack of experienced management
– Shortage of skilled manpower
– Poor financial management (bad receivables, unproductive
investments,)
– Rapid growth (lack of cash kills)
– Lack of business linkages (vendors, customers)
– Weak Marketing efforts
– Weak Market research
– Short term outlook
Entrepreneurship
• Case 1.1
Entrepreneurship Evolution
• Myths or Facts!
– Entrepreneurs are Doers and not Thinkers (clear
cut business plans)
– Entrepreneurs are born, not made
– Entrepreneurs are always Inventors (Innovators yes)
– Entrepreneurs are Academic and Social Misfits

• All Entrepreneurs need is money to start
• Entrepreneurs experience high failure

rates (Corridor Principle: With every venture launched, new and
unintended opportunities arise, 3M’s Post it notes, Sivasankaran)
• Entrepreneurs are Extreme Risk Takers

(calculated risk)
• Handout: The E-Myth
Presentation Rules
• Each presentation will be of minimum 35 minutes and maximum 45
minutes
• Once topic and date is allocated no group can miss the presentation
without ensuring that some other group is replacing them for that
particular day. The group requesting for the change will lose 5
marks and the group accepting will gain 5 marks
• In case clause 2nd is not met that group will lose all marks
• The focus is on making sure that we understand what is being
presented. The class can ask any question anytime during the
presentation.
• The number and quality of questions asked constitute class
participation and will carry marks
• No questions asked would lead to zero marks for rest of the class
for that presentation
• A Theory of entrepreneurship is defined as a

verifiable and logically coherent formulation of
relationships, or underlying principles that either
explain entrepreneurship, predict entrepreneurial
activity or provide normative guidance (prescribe
right action in particular circumstances)
• Basic Approaches to Entrepreneurial Schools of thought
• Macro view
– Environmental School of thought
– Financial School of thought
– Displacement School of Thought
• Micro View
– People / Entrepreneurial Trait School of thought
– Venture opportunity school of thought
– Strategic Formulation of thought
• Macro View (based on external factors that relate to success or failure of
ventures)
– Environmental School
• Basically factors like institutions, values etc. influence people
in strengthening or weakening the desire to be an
entrepreneur
• Social environment i.e. influence of friends and relatives, or
Work environment will influence
– Financial/ Capital School
• This school focuses on possibilities of success in seeking
seed and growth capital
• Macro View (based on factors that relate to success or failure of ventures)
– Displacement School (negative connotation)

• It refers to the system making someone feel out of place and
getting him or her in feeling frustrated
– Political displacement (negative connotation)
– Cultural displacement (Muslims in Gujarat, minority businesses in
US)
– Economic displacement (job losses etc.)
• Micro View (based on factors that are specific to entrepreneurship)
– People / Entrepreneurial Trait School of thought
• This school believes that there are certain characteristics
that are common to successful entrepreneurs and if copied
would increase success chances (creativity, determination,
technical knowledge, perseverance etc.)
– The Venture Opportunity School
• Focuses on opportunity aspect of new venture, idea sources,
development of concepts, implementation of opportunities,
Creativity & market awareness are the key criterion
• Corridor principle: Preparation meeting opportunity equals
luck.
• Micro View (based on factors that are specific to entrepreneurship)
– The Strategic Formulation School

• Refers to planning process and identifying
• Unique markets (Mountain v/s Mountain gap strategies indicating major
markets as well as interstices of larger markets)
• Unique People (Great Chef strategies)
• Unique Products (Better widget strategies, innovations that encompass
new or existing markets)
• Unique Resources (Water Well strategies, gather or harness special
resources)
• Handout: Dot Com Evaporation

• Handout: hard lessons about Internet
HANDOUT :Patterns of Industry Evolution
• Another way to examine entrepreneurship is through a Process
Approach
– Integrative Approach (HANDOUT 3)
– Assessment Approach (HANDOUT 4)
– Multidimensional Approach (HANDOUT 5)

• Case Study 2.1
Corporate Entrepreneurship
• Corporate Entrepreneurship or Intrapreneurship
– A process whereby individual/s in an existing

organization create a new org or instigate renewal or
innovation within the organization
• Strategic renewal
• Innovation
• Corporate venturing
• Need for Intrapreneurship
• Need for Intrapreneurship
– Very high competitive intensity

– Losing bright people to self businesses (drivers are venture
capital & respect for entrepreneurship)
– Need to improve productivity & efficiency

– Downsizing of major corporations
– HANDOUT: Sources of and solutions to Obstacles in

Corporate venturing
• Factors prevalent in organizations that are
successful innovators (James Quinn)
– Atmosphere and Vision

– Orientation to the market
– Small, Flat organizations
– Interactive learning
– Skunkworks
• Reengineering Corporate thinking
– To assess your enterprise on encouraging
Intrapreneurship ask the following queries
• Does your company encourage self appointed intrapreneurs

• Does your company finds ways to retain intrapreneurs
• Are people in your company allowed to do the job in their
own way
• Has your company quick and informal ways to access the
resources to try new ideas
• Does your company tolerate mistakes
• Reengineering Corporate thinking
– To assess your enterprise on encouraging
Intrapreneurship ask the following queries
• Are people in your company open to new ideas or they

protect their turf
• Are intrapreneurs in your company forced to use internal
skills and resources or can they go outside for help
• Are employees allowed to take risks
• Gurgaon
– Handout: Objectives and Programs for Venture
Development
• 3M follows following rules for innovation
– Don’t kill a project (allowed 15% of time for unapproved projects)
– Tolerate failure and encourage plenty of
experimentation (target 25% of sales from products introduced in the
past 5 years)
– Keep Divisions small (as soon as it reaches $250 million, it is split up)
– Motivate the Champions (allowed to make their own group or
division)
– Stay close to the customer (involve customers in brainstorming
sessions)
– Share the wealth
• HANDOUT: Innovation inside IBM
• HANDOUT: The Champion Program at
Whirlpool
• Handout: Corporate Entrepreneurship at IBM
• Case Study: Southwest airlines

Entrepreneurial Individual
• Common Characteristics of Entrepreneurs (John Kao)
– Commitment, determination & perseverance
– Drive to achieve & grow
– Opportunity & Goal orientation
– Initiative & personal responsibility
– Persistent problem solving
– Realism & Sense of humor
– Seeking & using feedback
– Internal locus of control’ ???
– Calculated risk taking & risk seeking
– Low need for status & power ???
– Integrity & reliability
– Tolerance for ambiguity & failure
• Risks for Entrepreneurs
– Financial Risk
– Career Risk
– Family & Social Risk
– Psychic Risk
• Sources of Stress
– Loneliness
– Immersion in business
– People problems
– Need to Achieve
• Dangers of Inflated ego of an entrepreneur
– Overbearing need for control

– Sense of distrust
– Overriding desire for success
– Unrealistic optimism
• Case Situation: “Perseverance & Commitment

• Creative process for an entrepreneur (four
phases)
– Background of Knowledge accumulation

– The Incubation Process (why don’t you sleep over it)
– The Idea experience
– Evaluation & Implementation
• Can Creativity be developed?
– Handout: Developing creativity
• Some steps for developing creativity
– Developing a functional perspective (using knife
instead of a screw driver)
– Using your brains
• Left : Verbal, analytical, abstract, rational, logical,
linear
• Right: Non verbal, analogies, non rational, spatial,
Intuitive, Imaginative
• Some steps for developing creativity
– Eliminating Muddled Mind sets

• Security hunting
• Stereotyping
• Probability thinking
• Advantages of buying a business
• Disadvantages
• Innovation & Entrepreneur
– Innovation definition
• It is the specific function of entrepreneurship…….

It is the means by which the entrepreneur either
creates new wealth producing resources or
endows existing resources with enhanced potential
for creating wealth.
– Types of Innovation
• Invention , Totally new product, service, or process (light bulb, Tube
light)
• Extension New use or different application of existing product
• Duplication (walmart)
• Synthesis (Telemedicine)
– Sources of Innovation
• Unexpected occurrences (apple falling on Newton’s head)
• Incongruities (Fed express overnight delivery)
• Process need (time saving devices)
• Industry & market changes (New technologies & trends)
• Demographic changes (population getting older)
• Perceptual changes (health food)
• Knowledge based concepts (Tata Nano)
– Myths of Innovation
• Innovation is planned & predictable
• Creativity relies only on dreams & blue sky ideas
• Technology is the driving force of Innovation & success
– Principles of Innovation
• Be action oriented
• Make product/service simple
• Make product/ service customer based
• Start small
• Aim High
• Try/test/revise
• Learn from failures
– Handout : Five types of Innovators
– Case Study: Case 5.1
– Gurgaon
• Ethics & Entrepreneurs I (This topic is a self study
exercise)
– If I am operate within laws of land am I ethical?
– Are there any economic tradeoffs by being ethical
–
• SELF STUDY (Read page nos. 124 to 146 of
Kuratko & hodgetts
Opportunity Assessment
• Pitfalls in Selecting New Ventures
– Lack of objective evaluation
– No real insight into the market
– Inadequate understanding of Technical
requirements
– Poor financial understanding (usually less than half costs
estimated)
– Lack of Venture Uniqueness

– Ignorance of legal issues
• Handout: World Class Failures
• Critical factors for New Venture
Development (Pre startup & Startup phase)
– The relative uniqueness of venture
– Investment
– Growth of sales (how is the graph going to be) (Lifestyle
ventures, small profitable ventures, high growth ventures)
– Product (final) availability (bugs in software program)
– Customer Availability
• Handout : A New Venture Idea Checklist
• Why new ventures fail (Bruno, Leidecker & Harder)
– Product/market problems
• Poor timing, product design problem, Wrong distribution
strategy, single customer reliance,
– Financial difficulties
• Initial undercapitalization, High initial debt, relationship
problem between entrepreneur & venture capitalist
– Managerial problems
• Team problems, Human resource problems
• Handout: Types & Classes of First Year
problems
• Evaluation Process
– Handout : Asking the Right questions
– Case 7.1
Environmental Assessment
• Environmental Scanning
• Economic & Industry Environment (Macro View)
– Assessing the Economic Environment (handout Table 8.1)
– Questions that need to be asked
• What is the current state of the economy
• What is the condition of labor market
• Are the interest rates rising or stable
• How many firms are in this industry
• Do firms vary in size or they similar
• What is the geographic concentration of these firms
• Do the firms serve only domestic market or exports too
• What are the governmental regulations for this business
• Environmental Scanning
• Economic & Industry Environment
– Examining the industry
• Handout Figure 8.5 (Guide to using the Five forces model)
• Competitive analysis
– Handout Figure 8.6 (Competitive Profile Analysis)
– Some important steps
» Define the industry for the new venture
» Analyze the competition
» Determine the strengths & characteristics of suppliers
» Establish the value added measure of your venture
» Project the market size
• The Community Perspective (Micro view)
– Researching the Location
• Community Demographics
– Community size, residents purchasing power, educational
background, types of occupations, etc.
• Economic Base
• Population Trends
• Overall Business climate
– Handout: Evaluating Environmental Trends
– Case 8.2, Fp2
Entrepreneurial Ventures &
Marketing Research
• Some specific objectives of marketing research
– Where do potential customers go to purchase the

good/service you are planning
– Why do they go there
– What is the size of market
– How much your business can target
– What would be the right business promotion strategy
Marketing Research
• Marketing Research questions that you need
answers for
– Sales
• Do you know in detail about your competitor’s sales
performance by product type & territory wise
• Do you know which accounts are profitable
• Is your sales power planned to be deployed at the right
places
– Distribution
• Have you pre tested your product/service to gauge dealer’s
attitude towards it
Marketing Research
• Marketing Research questions that you need
answers for
– Market
• Do you know about the buying habits of your target market
• Do you know about the repeat purchase behavior
• Can you plot your sales month by month
– Product
• Have you tested the market acceptability of your offering
• Have you tested the price elasticity of your offering
– Advertising
• Is your advertising reaching the right target
• Is it more effective in comparison to your competitors
Marketing Research
• Inhibitors to marketing research
– Cost
– Complexity
– Irrelevancy (in the mind of entrepreneur)
Marketing Research
• 3 Marketing philosophies of entrepreneurs
– Production driven
– Sales driven
– Consumer driven
• Depends on
– Competitive pressure
– Entrepreneur’s background
– Short term focus
Marketing Research
• Entrepreneurs need to know distinctly their
offering type
– Convenience Goods
• Staple goods (food etc.) & Impulse goods
– Shopping goods (spend time on comparing prices & specs)
– Specialty Goods (customers make a special effort to find & purchase)
– Unsought Goods (encyclopedias etc.)
– New Products
– HANDOUT: COMPETITIVE INFORMATION
Marketing Research
• Marketing Stages for Growing Ventures
– Entrepreneurial Marketing
– Opportunistic Marketing
– Responsive marketing
– Diversified marketing
– HANDOUT : THE EVOLUTION OF MARKETING

FUNCTION
– CASE STUDY: DEALING WITH COMPETITION
Financial Analysis
• Understanding the Key financial statements
– The Balance Sheet has two parts (a snapshot of the business at the end of any
period)
• Financial resources owned by the firm , assets, tangible & intangible
• Claims against these resources , liabilities
– Creditors
– Owner’s equity
• Types of accounts
– Assets: Current assets, Fixed assets
– Liabilities: Current liabilities, Owner’s equity: Contributed capital,
retained earnings, common stock, preferred stock
– In case of dissolution creditors have the first stake, preferred stock
holders have the next claim and at last is the common stockholder’s
claim (Imp.)
• Assets = Liabilities + Owner’s Equity (Balance sheet equation)
Financial Analysis
• Income Statement
– Revenue
– Cost of goods sold
– Operating expenses : Selling expenses,
Administrative expenses, Financial Expense (Interest) &
Income Tax
–
Financial Analysis
• Cash Flow Statement
• It answers questions like
– How much cash did the firm generate from operations

– How did the firm finance fixed capital expenditures
– How much new debt did the firm add
– Was the cash from operations sufficient to finance
fixed assets
Financial Analysis
• Cash Flow Statement
• Statement of cash flow is broken down into
following activities
– Operating : cash generated from or used in the
course of business operations
– Investing : cash flow effects from long term investing
activities, plant & equipment
– Financing : cash flow effect of financing decisions of
the firm, interest payments etc.
Financial Analysis
• Capital Budgeting Methods
– Payback period Method : Length of time required to
pay back the original investment is the determining criterion
– Net Present Value Method : Works on the premise
that dollar today is worth more than a dollar in the future
– Internal rate of Return method
Business Plan
• Pitfalls in the planning exercise
– No Realistic Goals, lack of a timeframe, lack of action
steps (timetable with specific steps)
– Failure to anticipate Roadblocks (immersion in idea leads to lack of
objectivity, no contingency plans) (list possible obstacles & alternative solutions)
– No Commitment or Dedication (No personal investment, no risk taking)

– Lack of Demonstrated Experience (No business experience, no
experience in specific area of the venture) (have experience , hire specific skills)
– No Market Niche (Segment)

Business Plan
• Business Plan is the written document that details the
proposed venture
• It must describe
– Current status
– Expected Needs
– Projected results
• And it must cover the following aspects
– Project details
– Marketing
– R&D
– Manufacturing
– Management
– Critical risks
– Financing
– Milestones
– revenues
Business Plan
• Benefits of a Business Plan (Class to
attempt)
Business Plan
• Benefits of a Business Plan (last class’s
contribution)
– Provides Direction
– Financial Requirements become clearer
– Better risk projection
– Smooth running
– Positive motivation
– Vision & mission gets crystallized
– Can attract investors
– Better implementation
– Gaps may become visible
– Identify unanticipated impediments
Business Plan (BP)
• Benefits of a business plan
• Time, effort, research and discipline needed force the entrepreneur
to view the venture critically & objectively
• The competitive, economic and financial analyses subject
entrepreneur to scrutinize the basic assumptions
• BP quantifies objectives, providing measurable benchmarks for
comparing forecast with actual results
• It acts as a communication tool for outside financing resources
• It helps investors to understand
– Market potential & plans for securing a share of that
– The financial statements which illustrate the venture’s ability to service
debt and provide an adequate return on equity
– critical risks and contingency plans
– Individual entrepreneur’s planning & managerial ability
Business Plan
• Developing a Well Conceived Business Plan
– Who reads the plan (venture capitalists, bankers, lawyers, consultants)
• Five minute reading process of venture capitalists
– Look at the characteristics of venture & its industry
– Financial Structure of the plan (debt or equity)
– Balance sheet (liquidity)
– Quality of entrepreneurs
– USP of the venture
– Look at entire plan cursorily
Business Plan
• Putting the package together
– Appearance
• Neither sloppy, nor lavish
– Length
• 40- 50 pages max
– Executive Summary
• 2-3 pages having the current status, proposed products or
services, benefits to customers, financial forecasts, venture’s
objective in 3-5 years, amount of financing needed and how
the investor’s will benefit
– Table of Contents
– HANDOUT: Common Business Plan Phrases:
Statement versus Reality
Business Plan
• Guidelines for a business plan by experts
– Keep the plan short (max 50 pages)
– Orient the plan toward the Future (trends & forecasts of
opportunities for the use of the product & service)
– Avoid exaggeration (show best case, worst case & probable case scenarios)
– Highlight Critical Risks
– Evidence of an Effective Entrepreneurial team (skills of
each key person)
– Desist from Over-diversification

– Identify & defend target market segment
Business Plan
• Elements of a Business plan
– HANDOUT: Complete outline of a business

plan
– HANDOUT: Writing the Business Plan
– HANDOUT: Helpful hints for developing the
business plan
– Case 11.1
Entrepreneurial Organizations &
Legal Forms
• Three primary legal forms
– Sole Proprietorship
– Partnership
– Corporation (Pvt Ltd, Public Ltd)
Legal Forms
• Sole Proprietorships
• Advantages ???
Legal Forms
• Advantages
– Ease of formation
– Sole Ownership of profits
– Decision making & control
– Flexibility
– Relative Freedom from Govt. control
– Freedom from Corporate business taxes (taxed as individual tax
payers)
Legal Forms
• Disadvantages???
Legal Forms
• Disadvantages
– Unlimited Liability including personal assets
– Lack of continuity
– Less Available capital
– Obtaining long term debt relatively difficult
– Relatively limited viewpoint & experience
Legal Forms
• Partnerships
• Articles of partnership are usually executed and contain
– Name, purpose,
– Duration of agreement
– Character of partners (general or limited, active or silent)
– Contributions of partner
– Division of profits and losses
– Draws or salaries
– Death of a partner clauses
– Release of debts
– Business expenses handling
– Arbitration
– Etc.
–
Legal Forms
• Partnerships
• Advantages ???
Legal Forms
• Partnerships
• Advantages
– Ease of Formation
– Direct Rewards
– Growth & Performance facilitated (more capital & skills)
– Flexibility
– Relative freedom from Governmental control
Legal Forms
• Partnerships
• Disadvantages??
Legal Forms
• Partnerships
• Disadvantages
– Unlimited liability at least of one partner
– Lack of continuity
– Relative difficulty in getting large sums of capital
– Bound by the acts of just one partner (general, can sign any contracts
and obligations)
Legal Forms
• Partnership Success
– Partnership Attributes
• Commitment
• Coordination
• Trust & Interdependence
– Communication Behavior
• Quality
• Information Sharing & Participation
– Conflict Resolution Techniques
• Persuasion & Smoothing
• Arbitration & Joint Problem solving
Legal Forms
• Corporations
• A separate legal entity apart from the individuals
who own it
• Advantages ????
Legal Forms
Advantages
• Limited Liability
• Easy Transfer of ownership
• Unlimited life
• Relative ease of securing capital
• Increased ability & Expertise
Legal Forms
• Corporations
• Disadvantages ???
Legal Forms
• Corporations
• Disadvantages
– Activity Restrictions (Limited by Charter)
– Lack of participation for minority stockholders
– Regulation
– Organizing expenses
– Double taxation (on corporate profits as well as individual income)
Legal Forms
• Franchising (Franchisee & Franchisor, being shared for its
uniqueness, will be one of the earlier discussed forms)
• Advantages
– Training & Guidance
– Brand Name Appeal
– Proven Track Record
– Financial Assistance
Legal Forms
• Franchising
• Disadvantages
– Franchisee Fees
– Control exercised by the franchisor
– Unfulfilled promises by some franchisors
• Case 12.2
Legal Environment &
Entrepreneurship
• Entrepreneurs are not supposed to be lawyers
or have legal expertise but be sufficiently
knowledgeable about legal concepts that impact
businesses
• Review laws that relate to
– Inception of the venture
– Growth & continuity of the venture
Legal Environment &
Entrepreneurship
• Patents
– Processes, machines, plants, products, plants, chemical
compounds, & improvements in already existing items
– Protection for 14 years
– Temporary monopoly to encourage creation of new ideas
– Can sell, license etc.
• Copyright
– Protection of literary & artistic productions (60 years, proposed
for 70 years, might have already been done)
– Books, periodicals, dramas, music, art, motion
pictures, lectures, sound recording , computer
programs
– HANDOUT: Post Internet Copyright protection
Legal Environment &
Entrepreneurship
• Trademarks
– A distinctive name, mark, symbol, motto identified
with a company’s product (s)
– HANDOUT: Nike vs. Mike
Financial Sources for
Entrepreneurial Venture
• Debt vs. Equity
– Debt
• Repayment plus interest
– Equity
• Relinquishing control
– A mix of both
– Debt financing is usually necessary
• Working capital
• Long term debt (for property & equipment)
• Sources of Debt
– Banks
• Queries of the bank are
– What do you want money for
– How much you need
– When do you need it
– How long will you need it
– How will you repay the loan
• Trade credit
• Accounts Receivables factoring
• Finance companies
• Debt Financing
– Advantages???
– Disadvantages??
• Debt Financing
– Advantages
• No relinquishing of ownership
• More borrowing allows greater return on equity
– Disadvantages
• Regular interest payments are required
• Affects cash flow
• Decreases P&L
• Equity Financing
– Advantages
– Disadvantages
• Equity Financing
– No legal obligation for repayment or interest
payment
– Sharing of ownership & profits are the costs of
equity financing
– Can be raised
• Public stock offerings
• Private Placements
• Public offerings
– Advantages
– Disadvantages
• Public offerings
– Advantages
• Size of capital amount
• Liquidity of Owner’s stock
• Valuation gets easier
• Image
– Disadvantages
• Costs (accounting fees, legal fees, underwriting stock etc.)
• Disclosure Norms
• Requirements of paperwork
• Shareholder Pressure
• Some equity instruments
– Convertible Debentures (unsecured loans that can be converted
into stock)
– Preferred Stock (gives preferential treatment to investors in case of dissolution)

– Common Stock
– Private Placement
– Handout: GOING PUBLIC: THE ACID TEST (p421)

• Venture Capital market
– Offer following services
• Capital for start ups & expansion
• Market research & strategy for business that do
not have their own marketing depts..
• Management consulting, audit & evaluation
• Contacts with prospective customers, suppliers
• Establishing management & accounting controls
• Employee selection
• Venture Capital Myths
– Venture capital firms want to own control of your
company & tell you how to run the business
– VCs are satisfied with a reasonable return on
investments
– VCs are quick to invest ( 1 out of 100 that they see in a month)
– VCs are interested in backing new ideas/ high tech
inventions, management is secondary
– HANDOUT: Venture Capitalists’ Screening criteria
• Angel Investors
– Handout: Main differences between Angels & VCs
– Advantages??
– Disadvantages??
• Angel Investors
– Advantages
• Value adding
• Prefer start up & early stage
• Leveraging effect
– Disadvantages
• Little Follow on money
• Want a say in the firm
• No national reputation to leverage
Strategic Planning &
Entrepreneurship
• The need to shift from informal planning to a
formal systematic style is due to
– Degree of uncertainty
– Strength of competition
– Amount and type of experience
• Formal Planning
– Strategic
– Operational
Entrepreneurship
• Basic steps of Strategic planning
– Examine the internal & external environments of the
venture (strengths, weaknesses, opportunities,
threats)
– Formulate the venture’s long range and short range
strategies (mission, objectives, strategies, policies)
– Implement the strategic plan (programs, budgets,
procedures)
– Evaluate the performance of the strategy
– Take follow up action through continuous feedback
– HANDOUT: The Strategic Management Process
Entrepreneurship
• Five factors that influence strategic management
– Demand on Strategic Manager’s time
– Decision making speed (delegation demands)
– Environmental uncertainty
– Problems of Internal politics
– Entrepreneur’s vision
Entrepreneurship
• Lack of strategic planning is due to??
Entrepreneurship
• Lack of strategic planning is due to
– Time scarcity
– Lack of knowledge
– Lack of expertise/skills
– Lack of trust and openness
– Perception of high cost
Entrepreneurship
• Porter identified five fatal mistakes
entrepreneurs make in strategy implementation
– Misunderstanding industry attractiveness
– No real competitive advantage
– Pursuing an unattainable competitive position
– Compromising strategy for growth
– Failure to communicate the venture’s strategy to
employees
– HANDOUT: Objections to Planning
Entrepreneurship
• An entrepreneurial Strategy Matrix model (Sonfield
& Lussier)
– This model is based on Risk Vs. innovation
– HANDOUT: Figure 15.3
– HANDOUT: Figure 15.4
Students Presentations as part of
the course (TOPICS)
• Buying a business
• Exiting a business
• Human resource
• Growth strategies & Challenges of growth
• Creating a brand & other Cost effective
marketing activities
• Networking forms & entrepreneurship
• Family businesses

Entrepreneurship: - Books To Consult

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Entrepreneurship: - Books To Consult

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Entrepreneurship

– Venture financing has emerged as a major source of

– Intrapreneurship is gaining attention in organizations

– Entrepreneurial entry strategies have been identified

– Extensive research has been conducted on the

– The risks and tradeoffs of an entrepreneurial career have been

– Women and minority entrepreneurs have mushroomed

– Entrepreneurial efforts have made major contributions to job

• New and small firms that have at least 20 % sales growth

– Changing Industry Structure

– You are the boss

– Common causes of failure

– Entrepreneurs are born, not made

– Entrepreneurs are always Inventors (Innovators yes)

– Entrepreneurs are Academic and Social Misfits

• Entrepreneurs experience high failure

• Entrepreneurs are Extreme Risk Takers

• A Theory of entrepreneurship is defined as a

– Displacement School (negative connotation)

– The Strategic Formulation School

• Handout: Dot Com Evaporation

– Integrative Approach (HANDOUT 3)

– Assessment Approach (HANDOUT 4)

– Multidimensional Approach (HANDOUT 5)

– A process whereby individual/s in an existing

– Very high competitive intensity

– Need to improve productivity & efficiency

– HANDOUT: Sources of and solutions to Obstacles in

– Atmosphere and Vision

• Does your company encourage self appointed intrapreneurs

• Are people in your company open to new ideas or they

• Case Study: Southwest airlines

– Overbearing need for control

• Case Situation: “Perseverance & Commitment

– Background of Knowledge accumulation

– Eliminating Muddled Mind sets

• It is the specific function of entrepreneurship…….

– Lack of Venture Uniqueness

– Where do potential customers go to purchase the

– HANDOUT : THE EVOLUTION OF MARKETING

– How much cash did the firm generate from operations

– No Commitment or Dedication (No personal investment, no risk taking)

– No Market Niche (Segment)

– Desist from Over-diversification

– HANDOUT: Complete outline of a business

– Preferred Stock (gives preferential treatment to investors in case of dissolution)

– Handout: GOING PUBLIC: THE ACID TEST (p421)

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