THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND:ENTREPRENEURIAL PROCESS

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Entrepreneurship MGT602

Lesson 4

THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND

LEARNING OBJECTIVES

To explain the aspects of the entrepreneurial process.

To explain the differences between entrepreneurial and managerial domains.

To explain the organizational environment conducive for entrepreneurship.

To identify the general characteristics of an Entrepreneur.

To explain the process of establishing entrepreneurship in an organization.

ENTREPRENEURIAL PROCESS

The entrepreneurial process involves finding, evaluating, and developing an opportunity by overcoming

the strong forces that resist the creation of something new.

Phase 1: Identifying and Evaluating the Opportunity

Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources

are often fruitful, including consumers and business associates. Channel members of the distribution

system-retailers, wholesalers or manufacturer's reps-are also helpful. Technically-oriented individuals

often identify business opportunities when working on other projects. Each opportunity must be carefully

screened and evaluated-this is the most critical element of the entrepreneurial process.

The evaluation process involves looking at

The creation and length of the opportunity

Its real and perceived value

Its risks and return.

It's fit with the skills and goals of the entrepreneur

Its differential advantage in its competitive environment

It is important to understand the cause of the opportunity, as the resulting opportunity may have a

different market size and time dimension. The market size and the length of the window of opportunity

are the primarily bases for determining risks and rewards. The risks reflect the market, competition,

technology, and amount of capital involved. The amount of capital forms the basis for the return and

rewards. The return and reward of the present opportunity needs to be viewed in light of any possible

subsequent opportunities as well. The opportunity must fit the personal skills and goals of the

entrepreneur. The entrepreneur must be able to put forth the necessary time and effort required for the

venture to succeed. One must believe in the opportunity enough to make the necessary sacrifices.

Opportunity analysis, or an opportunity assessment plan, should focus on the opportunity and provide

the basis to make the decision, including:

a. A description of the product or service

b. An assessment of the opportunity

c. Assessment of the entrepreneur and the team

d. Specifications of all the activities and resources needed

e. The source of capital to finance the initial venture

The most difficult aspect of opportunity analysis is the assessment of the opportunity.

Entrepreneurship MGT602

Phase 2: Develop a Business Plan

A good business plan must be developed in order to exploit the opportunity defined. A good business

plan is important in developing the opportunity and in determining the resources required, obtaining

those resources and successfully managing the venture.

Phase 3: Determine the Resources Required.

Assessing the resources needed starts with an appraisal of the entrepreneur's present resources. Any

resources that are critical must be distinguished from those that are just helpful. Care must be taken not to

underestimate the amount and variety of resources needed. Acquiring needed resources, while giving up

as little control as possible, is difficult. The entrepreneur should try to maintain as large an ownership

position as possible, particularly in the start-up stage. As the business develops, more funds will probably

be needed, requiring more ownership be relinquished.

Alternative resource suppliers should be identified, along with their needs and desires, in order to

structure a deal with the lowest cost and loss of control.

Phase 4: Manage the Enterprise.

The entrepreneur must employ these resources through implementation of the business plan. This

involves implementing a management structure, as well as identifying a control system.

KEY TERMS

Administrative domain

The ways managers make decisions

Business plan

The description of the future direction of the business

Corporate culture

The environment of a particular organization

Entrepreneurial domain

The ways entrepreneurs make decisions

Entrepreneurial process

The process through which a new venture is created by an entrepreneur

Entrepreneurial culture

The environment of an entrepreneurial-oriented organization

Entrepreneurship

Entrepreneurship within an existing business organization

Opportunity identification

The process by which an entrepreneur comes up with the opportunity for a new venture

Opportunity parameters

Barriers to new product creation and development

Top management commitment

Managers in an organization strongly supporting entrepreneurship

Traditional managers

Managers in a non-entrepreneurial-oriented organization

Window of opportunity

The time period available for creating the new venture

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