Week #2

The Entrepreneurial and

Entrepreneurial Mind

Hisrich
Peters

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Shepherd
Table 1.1 - Aspects of the
Entrepreneurial Process

2-2
The Entrepreneurial Process

 Opportunity identification - The process

by which an entrepreneur comes up with
the opportunity for a new venture.
 Market size and the length of the window
of opportunity are the primary bases for
determining risks and rewards.
 Window of opportunity - The time period
available for creating the new venture.
 Business plan - The description of the
future direction of the business.
2-3
Managerial Versus Entrepreneurial
Decision Making
 Entrepreneurial management is distinct
from traditional management in terms of:
 Strategic orientation.
 Commitment to opportunity.
 Commitment of resources.
 Control of resources.
 Management structure.
 Reward philosophy.
 Growth orientation.
 Entrepreneurial culture.

2-4
Table 2.1 – Distinguishing Entrepreneurially
from Traditionally Managed Firms

2-5
Managerial Versus Entrepreneurial
Decision Making
Strategic orientation and Commitment to
opportunity:
 refers to those factors that are inputs into the
formulation of the firms strategy.
 Strategy of entrepreneurial management is
driven by presence or generation of
opportunities for new entry and is less
concerned about resources that May be
required to pursue such opportunities.
 Acquiring resources are secondary step for
entrepreneurial managed firm and thinking of
discovered opportunities.
2-6
Managerial Versus Entrepreneurial
Decision Making
 Only those opportunities that can pursued
effectively using existing resources are
considered appropriate domain of further
strategic thinking.

 Entrepreneurship and strategy both are

thinking about the future of the firm.

2-7
Managerial Versus Entrepreneurial
Decision Making
 Commitment of resources and Control
of resources:
 Entrepenurer still care about resources. They focus
on opportunity as well minimal usage of
resources. Eg; entrepreneurially managed firms
may test the by becoming small amount of
recourses at minimal risk. This small
incremental process of resources commitment
provides flexibility to change direction.
 On the other hand traditional managed firm use
the resources on the large scale.

2-8
Managerial Versus Entrepreneurial
Decision Making
 Entrepreneurially and traditionally managed
firms differ in their control of resources.
 Entrepreneurially managed firms are less
concerned about ownership of resources
and more concerned about having access
towards that resources eg; skills,
intellectual capital.

2-9
Managerial Versus Entrepreneurial
Decision Making
 Management structure and Reward
philosophy:
 Entrepreneurial orientation towards management
structure is organic (unrefined).
 Organizational structure have layers of beurecracy
between top management and customer.
 Entrepreneurial firms take quick actions on the
basis of the information taken from external
environment.
 They use internal and external networks of
communication which provide information for the
exploitation of opportunities.
2-10
Management structure and
Reward philosophy:
 There are clear roles in entrepreneurial
firm.
 Firm are organized not only in structure but
also by their reward philosophy.

2-11
Managerial Versus Entrepreneurial
Decision Making
Growth orientation and Entrepreneurial
culture:
 Entrepreneurial orientation towards growth is great
desire to expand the size of the firm at rapid
pace. Where as traditionally managed firms prefer
slow and steady pace.
 Entrepreneurial orientation towards culture
encourages employees to generate ideas,
experiments, and in other tasks that might
produce creative output Where as traditionally
managed firms has interest in new ideas but
revolve around control resources.
2-12
Managerial Versus Entrepreneurial
Decision Making (cont.)
 Causes for Interest in Corporate
Entrepreneurship
 Increasing interest in “doing your own thing”
and doing it on one’s terms.
 New search for meaning and impatience has
caused more discontent in structured
organizations.
 Organizations are encouraging corporate
entrepreneurship i.e. stimulating, and
capitalizing on, employees who think that
something can be done differently and better.

2-13
Establishing Corporate
Entrepreneurship in the Organization
 Step one:
 Secure a commitment to corporate
entrepreneurship in the organization by top,
upper, and middle management levels.
 Establish initial framework and embrace the
concept.
 Identify, select, and train corporate
entrepreneurs.

2-14
Establishing Corporate Entrepreneurship in
the Organization (cont.)

 Step two:
 Identify ideas and areas that top management
is interested in supporting.
 Identify amount of risk money available to
develop the concept.
 Establish overall program expectations and
target results of each corporate venture.
 Establish mentor/sponsor system.
 Step three:
 Use of technology to ensure organizational
flexibility.
2-15
Establishing Corporate Entrepreneurship in
the Organization (cont.)

 Step four:
 Identify interested managers to train
employees and share their experiences.
 Step five:
 Develop ways for the organization to get closer
to its customers.
 Step six:
 Learn to be more productive with fewer
resources.

2-16
Establishing Corporate Entrepreneurship in
the Organization (cont.)

 Step seven:
 Establish a strong support structure for
corporate entrepreneurship.
 Step eight:
 Tie rewards to the performance of the
entrepreneurial unit.
 Finally:
 Implement an evaluation system that allows
successful entrepreneurial units to expand and
unsuccessful ones to be eliminated.

2-17
Managerial Versus Entrepreneurial
Decision Making (cont.)
 Corporate entrepreneurship is most strongly
reflected in the following endeavors:
 New business venturing (corporate venturing) - The
creation of a new business within an existing
organization.
 Innovativeness - Product and service innovation, with
emphasis on development and innovation in
technology.
 Self-renewal - Transformation through renewal of the
key ideas on which an organization is built.
 Proactiveness - Includes initiative, risk taking,
competitive aggressiveness, and boldness.

2-18
Establishing Corporate Entrepreneurship in
the Organization (cont.)

 Problems and Successful Efforts

 A study found that new ventures started within
a corporation performed worse than those
started independently by entrepreneurs.
 Reasons cited:
 Corporation’s difficulty in maintaining a long-term
commitment.
 A lack of freedom to make autonomous decisions.
 A constrained environment.
 On average, independent start-ups become:
 Profitable twice as fast.
 End up twice as profitable.
2-19
Establishing Corporate Entrepreneurship in
the Organization (cont.)
 Companies that have adopted their own version
of the implementation process to launch new
ventures successfully:
 Minnesota Mining and Manufacturing (3M).
 Hewlett-Packard (HP).
 IBM.

2-20