Entrepreneurship: the process of starting a new business in response to opportunities
Self-employment: individuals who work for fixed fees in their own business
Why is entrepreneurship important:
 Innovation
 Economic growth
 Job creation
 Global entrepreneurship
The entrepreneurship process:
Explore the entrepreneurial context >>> Identify opportunities & comp advantage >> start the venture
>> manage the venture
What do entrepreneurs do ?
 Search for a change
 Create something new
 Research feasibility
 Launch and manage new ventures
Over half of new-venture start-ups fail in the first four years.
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To increase the possibility of success is to keep your day job and start the venture on the side.
 – Lets you test ideas with less pressure to make a living.
 – It’s a lower risk path with higher survival rates.
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Sources of opportunity:
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The unexpected
The unusual
The process need
Industry and market structures
Demographics(data relating to different groups in the population)
Changes in perception
New knowledge
When exploring idea sources, entrepreneurs should look for:
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Limitations of what is currently available
New and different approaches
Advantages and breakthroughs
Unfilled niches
Trends and changes
Evaluating Potential ideas:
Feasibility study: an analysis of the various aspects of a proposed entrepreneurial venture designed to
determine its feasibility
Competitors: type of products/services they offer.. strengths/weaknesses..
marketing/pricing/distribution..key differentiators
Financing:
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Venture capitalists: external equity financing provided by professionally managed pools of investor
money
Angel investors: a private investor who offers financial backing to an entrepreneurial venture in
return for equity in the venture
Initial public offering (IPO): the first public registration and sale of a company’s stock
Business plan
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Executive summary
Analysis of opportunity
Analysis of the context
Description of the business
Financial data and projections
Supporting documentation
Org design & structure:
Organizational entrepreneurial decisions revolve around six elements:
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work specialization : dividing work activities into separate job tasks
departmentalization: the basis by which jobs are grouped together ( Functional/
Geographical/Product/Process / Customer
chain of command
span of control: the number of employees a manager can efficiently and effectively manage
amount of centralization/decentralization
amount of formalization
What Entrepreneurs need to control ?
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Keep a close eye on the numbers: Monitor expenses, cash flow, inventory, etc.
Monitor the competition: Competitiveintelligenceiskeytolong-termsuccess.
Maintain regular contact with customers:Makesureyourcustomersarestill satisfied with your product.
Monitor employee performance :Areemployeescontinuingtoworkas expected. Do they need training?
Monitor employee workloads :Arekeypeopletryingtodotoomuch?
Five Exit Options
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Merger or acquisition
Selling to a friendly buyer
Initiate an IPO (Initial Public Offering)
Treat it as a cash cow
Liquidation
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Elements of Org design:
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Organizing: it’s a management function that involves arranging work to accomplish the organization’s goals
Organizational structure: the formal arrangement of jobs within an organization
Organizational chart: the visual representation of an organization’s structure
Organizational design: creating or changing an organization’s structure
Employee empowerment: giving employees more authority (power) to make decisions
Organizational structure
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Mechanistic organization: an organizational design that’s rigid and tightly controlled
Organic organization: an organizational design that’s highly adaptive and flexible
Types of Strategy:
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Innovation Strategy: emphasizes the introduction of New products. >>Organic
Cost-minimization Strategy: emphasizes tight cost controls, avoidance of unnecessary innovation or expenses,
and price cutting. >> Mechanistic
Imitation Strategy: seeks to move into new products only after their viability has been proven. >> Mechanistic
& Organic
Types of Structure:
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Simple (Formal)
Informal
Functional
Divisional
Matrix
Matrix Adv:
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Better cooperation across functions.
Improved decision making.
Increased flexibility
Better customer service.
Improved strategic management
Matrix Disadv
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Two-boss system - power struggles.
Two-boss system - can create task confusion and conflict in work priorities.
Team meetings are time consuming.
Team may develop “clicks / groups”
Different types of working schedules
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Compressed workweek
Flextime (flexible work hours)
Job sharing
Telecommuting
HRM Responsibilities
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Attracting a quality workforce • HR planning, recruitment, and selection
Developing a quality workforce Orientation, training, and appraisal.
Maintaining a quality workforce Career development, work-life balance, compensation and
benefits, employee retention and turnover, and labor-management relations.
HR planning: ensuring the right number of capable people in the right places and at the right times
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Two steps:
– Assessing current human resources
– Meeting future HR needs
What is the 1st thing you need to do when hiring ?
Job analysis : an assessment that defines jobs and the behaviors necessary to perform them
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– Job description: a statement that describes a job
– Job specifications: the minimum qualifications a person must possess to perform the job successfully
Six Steps for Selection :
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Completion of a formal application form.
Interviewing.
Testing. (intelligence // Aptitude // Attitude // Ability // Interest // Personality (Psychometric
Assessments)
Reference checks.
Physical examination. (Drug testing )
Final analysis and decision to hire or reject
How to succeed in a telephone interview
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Be prepared ahead of time.
Take the call in private.
Dress professionally.
Practice your interview voice.
Have reference materials handy.
Have a list of questions ready.
Ask what happens next.
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Orientation: introducing a new employee to the job and the organization
Work unit orientation: familiarizes employees with the goal of the work unit and their specific job
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Organization orientation: informs employees about the company’s goals, history, philosophy,
procedures and rules
Who should do the evaluation
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Immediate Superior.
Peers or co-workers.
Self-evaluation.
Immediate subordinates.
The 360-Degree Evaluations
Compensation and benefits
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Skill-based pay: rewards employees for the job skills they can demonstrate
Variable pay: compensation is related to performance
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Team : A group working together to achieve a shared purpose and hold themselves accountable for
performance results.
Teamwork: People actively working together to accomplish common goals
Benefits of a team:
Less stress // less fear of failure // share responsibility // share ideas // more creative ideas // sense of
accomplishment// reward and recognition
>>> increase productivity // increase employee morale // reduce cost// increase quality
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External conditions include:
 Organization's strategy
 Authority relationships
 Formal rules and regulations
 Availability of resources
 Employee selection criteria
Group member resources
 Knowledge
 Ability
 Skills
 Personality
Group Structure:
 Group Norms: agreeing on what is right and what is wrong.
 Group Cohesiveness: the degree the members are attracted to one another and share the
group’s goals
Group processes: Decision making
Advantages:
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Generate more complete information and knowledge
Increase acceptance of a solution
Disadvantages:
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 Take more time
 A dominant minority can influence outcome; groupthink
Group processes: Conflict management
Traditional view of conflict: The belief that all conflict is Harmful and must be avoided.
Human Relations view of conflict: The belief that conflict is a natural and inevitable outcome in any
group.
Interactionist view of conflict: The belief that conflict is not only a positive force in a group but that it is
absolutely necessary for a group to perform effectively.
Dimensions of Conflict Handling Intensions
Causes of conflict in a team
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Personality differences
Value differences
Differences in perspectives
Differences in Goals
Ambiguities about responsibilities
Six Steps to manage Team Conflict
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Clarify and identify the cause of conflict
Determine the common goal
Determine options
Determine and remove the barriers
Determine solution that everyone can accept
Acknowledge solution: win-win solution
Clear goals relevant skills mutual trust unified commitment
The shift from working alone to working on teams requires employees to:
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Cooperate with others.
Share information.
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Confront differences.
Overcome personal interests for the good of the Team
Chapter 14 Managing communication
Low channel richness: memos, letters
High channel richness: face to face and video conf
What are we trying to communicate: Persuade // inform // describe
Communication process model:
Modes of communication:
Oral // written // non verbal
Non verbal: body // voice // touch
Direction of commiunication: upwards // downwards // lateral (most difficult)
Communication practices that work:
 Be a good asker
 Make questions open ended
 Use the person name
 Listen
 Pay attention to non verbals
 Don’t communicate when angry
 Criticize the idea not the person
Barriers to communication
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Information overload: too much information
Filtering: making info to appear more favorable to the receiver
Jargon: terminology or technical language that groups use to communicate among themselves
Overcoming barriers
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Use feedback
Simplify language
Listen actively
Watch nonverbal cues
Chapter 15 behavior
Focus of Organizational behavior : individual / group/ org
Goals of Organizational behavior:
 Employee productivity high
 Job satisfaction high
 Org citizenship behaviour (OCB) high
 Absenteeism low
 Turnover low
 Counterproductive workplace behavior low
Myers-Briggs Type Indicator MBTI A personality test that taps four characteristics and classifies
people into one of 16 personality types.
E or I : extrovert vs introvert “E” are outgoing & sociable. “I” are quiet & shy.
S or N : sensing or Intuitive “S” are practical and prefer routine & order, focus on details. “N” look at the Big
picture.
T or F : thinking or feeling “T” use reason & logic to handle problems. “F” rely on their personal values & emotions.
J or P: Judging or Perceiving “J” want to control and prefer a structured world. “P” are flexible & spontaneous.
4 variables for individual behavior
1. Biographical characteristics (age not related to productivity and less likely to resign/ married less absent)
2. Ability (influences perf and satisfaction through the Ability-job fit)
3. Learning
4. Personality
How to get compatible fit?
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Effective selection process.
Promotion & Transfer decisions.
Fine-tuning the job to better match employee’s abilities.
Provide Training for employees.
Theories of Learning:
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Classical Conditioning. Like dog training
Operant conditioning like kids behave for a reward or avoid punish
Social learning through observation and direct experience
What can Managers do to improve their decision making ?
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Analyze the situation
Be aware of biases
Combine rational analysis with intuition
Don’t assume that your specific decision style is appropriate for every job
Use creativity-simulation techniques
Positive reinforcement: rewarding good behaviour
Negative reinforcement : removing a stimulus of bad behaviour
Equity theory
Individuals compare their job inputs and outcomes with those of others, and then respond so as to eliminate any
inequities.
Self-inside: An employee’s experiences in a different position inside his current organization.
• Self-outside: An employee’s experiences in a situation or position outside his organization.
• Other-inside: Another individual or group of individuals inside the employee’s organization.
• Other-outside: Another individual or group of individuals outside the employee’s organization
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Two sources of managerial power:
• Position power. • Personal power.
Position power
Based on a manager’s official status in the organization’s hierarchy of authority.
Sources of position power:
Reward power: Capability to offer something of value.
Coercive power: Capability to punish or withhold positive outcomes.
Legitimate power: The Legal power you earn by your Organizational position.
Personal Power
Based on the unique personal qualities that a person brings to the leadership situation
Sources of personal power:
Expert power: Capacity to influence others because of one’s knowledge and skills.
Referent power: Capacity to influence others because they admire you and want to identify positively with you
Leadership traits for success:
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Drive
Self-confidence
Creativity
Business knowledge
Motivation
Flexibility
Honesty and integrity
Types of leaders:
Charismatic Leader : enthusiastic, self-confident leader whose personality influence people to behave in
certain ways
Transactional: leaders who lead by using social exchanges (or transactions)
Transformational Leader : who stimulate and inspire (transform) followers to achieve extraordinary outcomes
Authentic leaders who know who they are, know what they believe in, and act on those values and beliefs
openly
Ethical Leader puts public safety ahead of profits, and creates a culture where employees feel that they should
do a better job.
Servant Leader go beyond their own self-interest and focus on helping followers grow and develop.
Sheep: don’t think critically /passive / just do the job
YES : not initiators // very aggressive in following // require inspiring leader
Alienated followers: critical / independent thinker /passive / may oppose leader
Effective followers: think for themselves / enthusiastic & energetic / solve problems on their
own // self starters
Survivors
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Active and thinkers sometimes.
Skilled in surviving changes.
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Controlling: Ensures that the right things happen, in the right way, at the right time.
Why it is important:
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Planning
Empowering employees
Protecting the workplace