DEVELOPING NEW BUSINESS IDEAS

ENTREPRENURSHIP
What is Business?

Businesses are everywhere. They are the units that perform most of the economic activity in our
economy. Most businesses exist to generate a profit. There are some businesses that exist to
perform a function other than profit, such as cooperatives and non-profit organisations. The
traditional definition of a business is an entity that brings together time, effort and capital in order
to produce a profit.

The Organized efforts of enterprises to supply consumers with goods and services.

Production or Purchase and Sale of goods or Services with the object of earning profit.

Business means exchange of goods and services for profit.

Who is an ENTREPRENEUR?

 It is a type of personality who is willing to take upon her or him a new venture or
enterprise and accepts full responsibility for the outcome.
 An entrepreneur is a person who has possession over a new company, enterprise or
venture and undertaking full responsibility for the inherent risks and the outcome.
 An individual who accepts financial risks and undertakes new financial ventures.
 Bears risk, Unites various factors of production to exploit the perceived
opportunities in order to evoke DEMAND, Create WEALTH and EMPLOYMENT
 According to Miller one who is able to begin, sustain and when necessary, effectively
and efficiently dissolve business entity.

MEANING OF ENTREPRENEURSHIP
Process of action an entrepreneur undertakes to establish his enterprise.

MEANING OF ENTERPRISE
Business Organization that is formed and which provides Goods and services, Creates jobs,
Contributes to national income, exports and overall economic development.
ENTREPRENIAL QUALITIES
Successful entrepreneurs show

Determination to take control and take things happen – even after setback

Initiative: Entrepreneurs are self-starters. They take the first step and are able to work
independently without any one telling what to do.

A willingness to take calculated risks and live with possibility of business failure.

An ability to take decision between alternative options. They have good judgement.

A good power of persuasion E.g. they can persuade customers to buy their products and
suppliers to deliver goods on time and at competitive price.

Leadership a vision where the business can be and how it can achieve success.

Good luck E.g. by launching the right product at the right time and avoiding recession.

CHARACTERISTICS OF AN ENTRPRENEUR
 PLANNER
 RISK BEARER
 OPPORTUNITY EXPLORER
 SELF CONFIDENCE
 MOTIVATOR

WHO IS A GOOD ENTREPRENEUR?

A Good entrepreneur should take calculated risk, weighing up the potential risks and
rewards. Moreover, he is interested to launch new ideas in response to changing consumer
tastes or attitudes. He accepts that the early days of a new business may be very tough, so
try to spend as little as possible.

WHO IS A BAD ENTREPRENEUR?

A bad entrepreneur simply ignores risk- assume that their own charisma/skill will guarantee
success, rush to bring in something new or make huge changes. He trusts that things will go
as planned; spend freely at the start as they’re sure the cash will start flowing tomorrow.
WHO IS NOT AN ENTREPRENEUR?

A Person who is very cautious-never wants to take any risks. He assumes that things are the
way they have to be and self content. He likes to be sure next month’s cheque – and the
one after ...........until retirement.

What motivates entrepreneurs?

1. Profit Motive

2. Non Profit Motive (Social responsibility)

3. Ethical Stance.

SIGNIFICANCE OF PROFIT
The Excess of Revenue Over Expenses is known as PROFIT

 Meet The Needs Of Business Man And His Family

 Survival Of Business
 Growth and Expansion By Reinvesting
 Meet Other Objectives Of Business
 Measuring The Success Of A Business

NON PROFIT MOTIVES

The motives which are related to social obligations. Some of the entrepreneurs serve the
society without expecting any benefit. They are not concern about profit but service
oriented.

SIGNIFICANCE OF NON PROFIT MOTIVES

 To supply of desired quality of products/services at reasonable prices.
 To avoid anti social and unfair trade practices to earn profits.
 To generate employment
 To control poverty and pollution
 To contribute to general welfare of the society
USEFULNESS OF NON-PROFIT MOTIVE

 Creation Of Better Social Environment Benefits Both Society and Business

 Social Involvement Creates A Favorable Image For The Company
 Business Has The Resources To Help Social Problems
 Business and Society Are Interdependent
 Social involvement Discourages Additional Govt. Intervention.

DISADVANTAGES OF NON PROFIT MOTIVE

 Maximize Its Profits Failed
 Social Involvement Leads to Higher Price
 Social Involvement Reduces Economic Efficiency
 Social Activities Reduce The International Competitiveness
 Directors Are Responsible To Shareholders
 Business People Lack The Social Skills To Deal With The Problems Of Society

ETHICAL STANCE
Ethics are principles that should underpin decision making. It is about the principles of right
and wrong accepted by individuals or social groups. Some entrepreneurs motivated by
moral principles to start up a business.

SIGNIFICANCE OF ETHICAL STANCE

 To Adopt Honest Way To Earn Profit

 To Sell Genuine Goods And Services

 To Pay Taxes Honestly

 Not To Cause Harm To Others To Earn Profits

 To Provide Good Working Environment

 To Protect The Consumer From False Goods And Services

 To Help The Nation To Build Up Prosperity

 To Meet The Public Expectation

SOME UNETHICAL ISSUES AT ORGANIZATION LEVEL
 Child Labour

 Not Paying Wages And Other Benefits

 Unfriendly HR Policies

 Damaging The Environment

 Violate Laws

 Corruption

 Money Laundering

 Insider Trading

 Monopoly

UNETHICAL ISSUES AT INDUSTRY LEVEL

 Mobile Phones With High Radiation

 Refrigerator That Damage Green House

 Paying Low Wages To Women Workers

 Cutting Safety Expenditure Level

How Is Management Different From

Leadership?
Management is generally defined as the art and science of getting things
done through others. This definition emphasizes that a manager plans and
guides the work of other people. Some (cynical) individuals think that this
means managers don’t have any work to do themselves

ROLE OF MANAGEMENT
Management is responsible to -

 Setting Objectives And Planning

 Organising Resources To Achieve Objectives

  Communicating And Motivating The Staff

 Coordinating Activities

 Measuring And Controlling Performance

LEADERSHIP
Leadership is a process by which a person influences others to accomplish an objective and
directs the organization in a way that makes it more cohesive and coherent.

Leadership is a process whereby an individual influences a group of individuals to achieve a

common goal. Influencing Others To Achieve Desired Aims And Objectives Leadership
Depends On Three Things viz. Individual, Followers And Condition

CHARACTERISTICS OF GOOD LEADERS

 Natural Confidence And Desire To Succeed

 Ability To Think Creatively And Encourage Others To Do So

 Talented In Multiple Disciplines And Handle Such Discussions

 Skill To Identify The Key Issue And Isolate Other Issues

LEADERSHIP STYLES, FEATURES, DRAW BACKS AND APPLICATIONS

No. Style Features Draw backs Applications.

1 Autocratic -Leaders Take All Decisions De motivates Some Staff -Used In Military/Defence/Police
-Gives Little Information To Staff Who Want To Take -For Crisis In Business
-Supervise Closely Responsibility -Accidents
-One Way Communication - Suggestions Are Not
Accepted

2 Democratic -Participation All -Time Consuming -In Political Parties

-Full Involvement In Decision -Delay Will Affect Business -In Production Process
-Power Given At Bottom -Some Issues/Secrets -Applicable To Experienced Staff
-Two Way Communication cannot Be Discussed -To Introduce New Ideas And Changes
-Staff Gets Full Information Eg. New Product

3 Paternalistic -Do Things Best For Staff -Some Experienced -Applied When Workers Are Not
-No True Participation Workers Are Not Satisfied Experienced
-Managers Want To Take Care Of As There Is No Power -Managers Think That They Know
Staff And Make Happy Delegated The Best

4 Laissez -Stafff Has The Liberty To Work -No Staff Structure -Suitable For Creative Jobs And Research
Faire -Less Control -No Direction For Work Work
-Full Delegation -No Monitoring -When Managers Are Busy or Lazy
-When Tight Rules Are Not Applied
Formal Leader: They are appointed to position within hierarchy in the
organisation in the organisation structure

Informal Leader: They may exercise appreciable influence within a work group.

TYPES OF LEADERSHIP STYLE

 Autocratic Style

 Paternalistic Style

 Democratic Style

AUTOCRATIC STYLE

Authoritarian (autocratic)

I want both of you to. . .v

Autocratic leader means autocratic as tyrannical, despotic, domineering and having

unlimited power and authority. Therefore, an autocratic leadership style is one who
leads as a tyrant with absolute power and ruling "with an iron fist."

Autocratic leaders can enjoy control over the decision making. Pass decision down
to the hierarchy, employees are afraid when they make mistakes. Employees
depend on the leader for almost all decisions.
ADVANTAGES

 Quick Decision

 Strong Motivation And Satisfaction To The Leader

 It Can Be Successful Where Subordinates Are Reluctant To Take Initiative

 Decisions And Direction Of Business Will Be Consistent

DISADVANTAGES

 It Leads To Frustration, Low Morale And Conflict Which Affect Organisational

Efficiency

 Subordinates Highly Dependent Upon Leaders

 Supervision Needed

 Afraid Of Leader’s Power

 Workers Feel Harassed And Disturbed

PATERNALISTIC STYLE

Leadership style in which a male leader uses his power to control, protect,
punish, and reward in return for obedience and loyalty from his
employees, followers, or subordinates.

 They Are Autocratic In Nature With Friendly Face

 Decision May Well Be Taken In The Best Interest Of The Business

 He Behaves Like Head Of The Family

 Employees Are Loyal To Leaders

 Resulting Low Labour Turnover

 Leaders Make Decision But May Consult

ADVANTAGES
 Can Get Loyalty

 Low Labour Turnover

 It Emphasis On Social Need

 Good Working condition

 Fringe Benefits

 Welfare Facilities And Services

DISADVANTAGES
 Employees May Resent The Leader’s Gratitude In Industrial Organisation

 Little Opportunity To Exercise Initiative To Grow And Realize Their Full Potential

 Groups Will Become Dependent

 They May Become Dissatisfied With Leader

 It Is Similar To Autocratic

 It Will Not Allow Subordinate To Take Decisions

DEMOCRATIC STYLE OF LEADERSHIP

Participative (democratic)
The democratic leader makes decisions by consulting his team, whilst still maintaining
control of the group. The democratic leader allows his team to decide how the task will be
tackled and who will perform which task.

The democratic leader can be seen in two lights:

A good democratic leader encourages participation and delegates wisely, but never loses
sight of the fact that he bears the crucial responsibility of leadership. He values group
discussion and input from his team and can be seen as drawing from a pool of his team
members' strong points in order to obtain the best performance from his team. He motivates
his team by empowering them to direct themselves, and guides them with a loose reign.

 Leaders Encourage- All Employees To Participate In Decision Making

 Formal Discussion

 Leaders must possess good communication skill

ADVANTAGES
 It Reduces Resistance To Change And Increases Acceptance Of New Ideas

 It Improves Attitudes Of Employees Towards Their Job And The Organisation

 It Increases Cooperation Between Management And Workers

 It Improves Employees Morale And Reduces Grievances

DISADVANTAGES

 Delay In Decision Making

 It May Be Covertly To Manipulate Employees

 Participation Will Not Be Meaningful Unless Employees Understand The Problems Of

Organisation

 It May Not Be Liked By People Who Want Minimum Interaction With Superiors
WHICH IS THE BEST LEADERSHIP STYLE FOR BUSINESS SUCCESS?

It depends on

1. Skill And Experience Of Workers

2. Willingness To Take Responsibilities

3. Time Available For Consultation

4. Organisational Culture

5. Personality Traits, Skill, Experience And Attitude Of Manager

6. Type Of Situation

MC GREGOR THEORY X AND Y

(MOTIVATION VS LEADERSHIP)
THEORY X

MEANING OF THEORY X

Two distinct sets of assumptions that managers, in general, have about

their employees and which often turn out to be self-fulfilling prophesies.
Theory-X assumptions are: (1) most people dislike work and will avoid it
to the extent possible, therefore (2) they must be continually coerced,
controlled, and threatened with punishment to get the work done, and
that (3) they have little or no ambition, prefer to avoid responsibility, and
choose security above everything else. Theory-Y assumptions are: (1)
physical and mental effort are natural and most people (depending on the
work environment) find work to be a source of satisfaction, (2) they
generally, on their own motivation, exercise self-control, self-direction,
creativity, and ingenuity in pursuit of individual and collective (company)
goals, (3) they either seek responsibility or learn to accept it willingly, and
that (4) their full potential is not tapped in most organizations. These
assumptions serve as powerful behavioral models reflected in the way an
organization is structured. Management that believes in theory-X
assumptions, creates stick-and-carrot approach based firms with
restrictive discipline and pervasive controls. Theory-Y believers create
trust based firms with empowered employees. These concepts were
introduced by the US college-administrator and professor Douglas
McGregor (1906-64) in his 1960 book 'The Human Side Of Eenterprise.

 Theory X is similar to Taylor’s view of people at work.

 It assumes that people are lazy

 If we accepted this assumption, then the only way to get work from the
employees using strict control

 Method is to use coercion-punishment (Rules are broken or targets not

achieved). This is often known as ‘STICK’ Approach

 ‘CARROT’ may more suitable. People have to be persuaded to carry out

tasks by promises or rewards.

THEORY X ASSUMPTION ARE

 Workers Are Motivated By Money

 Workers Are Lazy, Careless And Dislike The Work

 Workers Are Selfish, Ignore The Needs Of Organisations

 Workers Avoid Responsibility And Lack Ambition

 Workers Need To Be Controlled And Directed By Management

 Managers Has To Force Them To Work

 THEORY Y

MEANING OF THEORY Y
Theory-Y assumptions are: (1) physical and mental effort are natural and
most people (depending on the work environment) find work to be a
source of satisfaction, (2) they generally, on their own motivation,
exercise self-control, self-direction, creativity, and ingenuity in pursuit of
individual and collective (company) goals, (3) they either seek
responsibility or learn to accept it willingly, and that (4) their full potential
is not tapped in most organizations. These assumptions serve as powerful
behavioral models reflected in the way an organization is structured.
Management that believes in theory-X assumptions, creates stick-and-
carrot approach based firms with restrictive discipline and pervasive
controls. Theory-Y believers create trust based firms with empowered
employees. These concepts were introduced by the US college-
administrator and professor Douglas McGregor (1906-64) in his 1960
book 'The Human Side Of Enterprise’.

This Theory Is Supported By Maslow’s Hierarchy Theory and Similar to Human

Relations School of Elton Mayo. People Are Responsible, Committed And Enjoy
Having Control Over Work. Most People, Given The Opportunity, Will Get Involved
In Work And Contribute Towards The Solution Problem That May Arise.

ASSUMPTION OF THEORY Y
 Workers Are Enjoy Work And Efforts At Work Are Natural To Them

 If Motivated, Workers Can Organize Themselves And Take Responsibility

 Workers Have Many Different Needs Which Motivate Them

 Poor Performance Is Due To Poor Management

IMPLICATION TO X & Y EMPLOYEES

 ADVANTAGES:

1. Managers Can Take The Decision According To X And Y

2. Competition between X & Y Employees Increases Overall Efficiency

3. Management Control Can Be Possible

DISADVANTAGES
 Employees Dislike The Discrimination Of X & Y

 Conflicts Between Y And X Employees

 Management Will Be Biased To Favour Y Employees

Factors to Be Considered In Choosing the Style X or Y

 Organisation Structure, Size And Span Of Control (small/large, or tall/flat)

 The Current Situation (routine, crisis)

 Culture ( conventional, modern )

 Task Involved ( research /design/production/sales)

 Skill Set Of Employees (highly skilled)

 Size Of Group ( individual, team, group, crowd )

 Personality Trait Of Leaders And Managers ( arrogant, assertive, pessimistic )

 Time Line For Completion ( limited, long, unlimited)

Conclusion
Business managers assume that they are closer to theory Y than theory X. But Test
Managers attitude theory X. Many managers they themselves like theory Y but
workers are closer to Theory X.