Management and Entrepreneurship

Chapter 1:

How do we define Management?

The process of getting things done, effectively and efficiently

through and with other people.

- Efficiency – relationship between inputs and outputs

productively
- Effectiveness – achieve the goals and do it efficiently

Management process activities

- Planning – what is the goal and develop plans to achieve it.

- Organizing – determine what tasks have to done, who will do
it, how and where.
- Leading – directing the activities, motivating, select effective
communication, resolving conflicts.
- Controlling – comparing with goals and correcting significant
deviations.

What is Entrepreneurship?

Entrepreneurship is the process by which individuals pursue

opportunities without regard to resources they currently control.
Change an idea into a business.

*Opportunities: are external things that impact on your business

positively.

- Business: organization that provides products services.

- Entrepreneur: create and run a business
- Employee: works for the company and have low risk.

Key activities

- Identification and evaluation of the opportunity

- Development of the Business Plan
- Determination of the required resources
- Management of the resulting enterprise.

Chapter 2: Recognizing opportunities and generating

ideas

What is an opportunity?
An opportunity is a favorable set of circumstances that creates a need
for a new product, service or business.

4 essential qualities of an opportunity

Three ways to identify an opportunity

- Observing trends: Trends create opportunities, the most
important ones are:

 Economic forces:
Help determine areas that are ripe for new start-ups and
areas that start-ups should avoid.
Example: A weak economy favors start-us that help
consumers save money.

 Social forces:
Social trends alter how people and businesses behave and
set their priorities.
Example: Aging of the population, increasing diversity,
millennials workforce.

 Technological forces:
Advances in technology frequently create business
opportunities.
Examples: Computer industry, internet, digital
photography, etc.

 Political forces:
Global political instability and the threat of terrorism have
resulted in many firms becoming more security-conscious.
 Example: Evolv, an start-up that has assembled a
multidisciplinary team, they identify, invent, new
technologies to meet current terrorism.

- Solving a Problem: Identify problems sometimes involves

noticing a problem and finding a way to solve it.

- Finding Gaps in the Marketplace: gap in the marketplace is

often created when a product or service is needed by a specific
group of people.

Personal Characteristics of the Entrepreneur

- Prior Industry Experience

Studies shown that experience helps an entrepreneur recognize
business opportunities.

- Cognitive Factors
The opportunity recognition may be an innate skill or cognitive
process.
Entrepreneurs have a sixth sense that allows them to see
opportunities.

- Social Networks
Nature of Strong-Tie VS Weak Tie Relationships
 Strong tie are characterized by frequent interaction and form
between coworkers, friends, etc.
 Weak tie are characterized by infrequent interaction and
form between casual acquaintances.
 Is more likely that an entrepreneurship will get new business
idea through weak tie rather than strong tie relationships.
With the weak tie relationships one person may say
something to another that sparks a completely new idea.

- Creativity
Is the process of generating a novel or useful idea.
The creative process can be broken down into five stages:
Full view of the Opportunity recognition process

Connection between an awareness of emerging trends and the

personal characteristics of the entrepreneur.

Techniques of Generating Ideas

- Brainstorming
Process of generating several ideas about a specific topic.
Typically involves a group of people, and should be targeted.

- Focus Group
Involves a group of people who are familiar with a topic, brought
to respond to questions.
They work best as a follow-up to brainstorming, when the
general idea for a business has been formulated.

- Library and internet research

Observing trends of the online pharmacy

Economic factor:
More people more money because people have more facilities to buy
something where they aren’t well.
Political factor:
Being concern about banned medicine that can’t be sell.

Social factors:
Young people sometimes don’t want to go face to face and explain
their problems, so with the online one they don’t have to do it.

Technological factors:
More easy to have the product and to buy it.

Chapter 3: Acquiring information for a new venture

Why Failure?

Many entrepreneurs who found new ventures to develop products or

services.
They fail to acquire essential information before beginning.

Crucial information

- Marketing information
- Government regulations and policies
- Laws

Direct techniques

- Customer surveys

Potential customers compare your product with existing ones

Target group rates the product on a scale from low to high

Assume you know the dimensions customers use to evaluate products

- Perceptual mapping

This is a visual representation of where a brand, product, service

stands among competitors. Also called positional mapping.
 - Focus group

Group of 8 to 12 people similar to potential customers

Meet for one to two hours to describe their perceptions of and

reactions to relevant products

Identify key dimensions which focus group members perceive and

evaluate various products

Indirect techniques

Examine secondary data including

- Sales of competing products

- Demographic data
- Trends (economic, lifestyle, etc)

Government policies and regulations

- May make it harder or easier to start and run a new venture

- Gather relevant information on the government policies and

regulations that will affect a new business

Taxes

Reduction of Marginal Tax rates  Growth of new ventures

Tax incentives
 - Depreciation
- Location in certain geographic regions
- Renovation and improvement of older buildings
- Tax credits

Government policy

- Small Business Regulatory Enforcement Fairness Act

- Unfunded Mandates Reform Act
- Small Business Innovation Research (SBIR) program
- 8(a) Business Development Program
- Small Disadvantaged Businesses
- HubZone Empowerment Contracting Program

Health and Safety

- Occupational Safety and Health Act of 1970 (OSHA) requires

employers to
- Provide safe and healthy work environment
- Comply with specific standards
- Keep records of occupational injuries and illnesses

Discrimination

Title VII of the Civil Rights Act of 1964 prohibits employers from
basing employment decisions on race, color, religion, sex, or national
origin

Disabilities Act

- Protects persons with disabilities who are able to perform the

essential functions of the job
- Requires employers to provide reasonable accommodation for
such persons

SWOT analysis

- For entrepreneurs, this allows you to decide if your idea is really

worth pursuing
- It helps build your company by recognizing where you need
work and where you excel

Internal analysis

Strengths

- Characteristics of the business or a team that give it an

advantage over others in the industry.
- Positive tangible and intangible attributes, internal to an
organization.

- Beneficial aspects of the organization or the capabilities of an

organization, which includes human competencies, process
capabilities, financial resources, products and services,
customer goodwill and brand loyalty.

- Examples-Abundant financial resources, Well-known brand

name, Lower costs [raw materials or processes], Superior
management talent, Better marketing skills, Good distribution
skills, Committed employees.

Weaknesses

- Characteristics that place the firm at a disadvantage relative to

others.

- Weaknesses are the factors which do not meet the standards

we feel they should meet. However, weaknesses are
controllable. They must be minimized and eliminated.

- Examples -Limited financial resources, Weak spending on R & D,

Very narrow product line, Limited distribution, Higher costs, Out-
of-date products / technology, Weak market image, Poor
marketing skills, Limited management skills, Under-trained
employees.

External analysis

Opportunities

- Chances to make greater profits in the environment -External

attractive factors that represent the reason for an organization
to exist & develop.

- Organization should be careful and recognize the opportunities

and grasp them whenever they arise. Opportunities may arise
from market, competition, industry/government and technology.

- Examples-Rapid market growth, Rival firms are complacent,

Changing customer needs/tastes, New uses for product
discovered, Economic boom, Government deregulation, Sales
decline for a substitute product ..

Threats

SWOT Collegium Civitas

 - Strengths

Good location
Student clubs offer
Scholarships due to clubs
Flexible study programs
Few fields, well specialized

- Weaknesses

Not well known

Private and expensive
Communication + website
University campus is not very big
Few fields (communication + management + international
relations)

- Opportunities

International student are interested is CC because the location

People is more interested in international relations
Polish scholarships for international students
Poland is considered a safe country
Polish and Europe’s education system are well considered
outside Europe

- Threats

There are lot of universities on Warsaw and cheaper ones

Warsaw’s high prices (accommodation)
Not many English speakers in Poland
Next to Ukraine
Cultural differences  education, weather, etc.

5 forces of Porter

Threat of Subtitutes

Threat of new Entrants

If the firms are very profitable, it will enter more competitors

Barrier to entry
- Economies of scale
- Government and legal barriers
- Capital requirements
Rivalry among existing firms

Factors that determine the intensity of the rivalry

- Growth rate of an industry
- Level of fixed…

Bargaining Power of Suppliers

Suppliers can suppress the profitability by raising prices or reducing

quality of products.
…

Bargaining Power of Buyers

Buyers can suppress the profitability on the market if there is lot of

competitors.

Example – Sweet soda

5 forces model

Threat of substitutes

- There are substitutes on the industry, all the soda drinks that
can satisfied the same need as the soda (that can be refresh),
for example coca cola, pepsi, fanta or sprite.

Bargaining power of buyers

There are lot of competitors in the industry, so the power of the

buyers is so high, this can make people curious and want to try new
brands. But also, there is another part that people can be very loyal at
a brand more recognized like coca cola.
The price can be another factor to attribute the power to the buyers,
they can taste your brand depending on the price compared to the
competition.

Chapter 5: Writing a Business Plan

Guidelines for writing a Business Plan

Structure
- Conventional structure
- Demonstrate creativity apart of the basic structure
- Find easily critical information
…

Section 1: Executive summary

- Is a short overview of the entire business plan

- …

Section 2: Industry analysis

- Should begin by describing the industry the business will enter

in terms of size, growth rate, and sales projections.
- Example: Industry size, industry structure, nature of
participants, key success factors, industry trends, long term
prospects.
- …

Section 3: Company description

- Begins with a general description of the company

- Example: company descrption, company history, mission,
product and services, current status, legal status, key
partnerships
(we’re planning to do one man company)
- …

Section 4: Market analysis

- The market analysis breaks the industry into segments and

zeroes in on the specific segment (or target market) to which
the firm will try to appeal.
- Example: market segmentation, buyer behavior, competitor
analysis, estimate of the firm’s annual sales and market share.
- …

Section 5: The economics of the business

- Address the basic logic of how profits are earned in the business
and how many units of a business’s profits must be sold for the
business to “break even” (punto muerto) and then start earning
a profit.
- Example: Revenue and profit margins, fixed and variable costs,
operating leverage and its implications, start-up costs, break
even chart and calculations.
- …

Section 6: Marketing plan

- Focuses on how the business will market and sell its product of
service
 - Example: Marketing mix, marketing strategy, sales process,
sales tactics (how do we sell the strategy)
- Key insights: start by articulating its marketing strategy,
positioning, points of differentiation, and then how all these
aspects will be supported by price, promotional mix and
distribution strategy.
- Also discuss the company sales process.

Section 7: Product or service design and development plan

- If you’re developing a completely new product or service, you need to

include a section in your business plan that focuses on the status of your
development efforts.
- Example: Develoopment status and tasks, challenges and risks,
projected development costs, proprietary issues (patents, trademarks,
copyrights, licenses, brand names)
- …

Section 8: Operations plan

- How your business will be run and how your product and service will be
produced
- …

Section 9: Management Team and Company structure

- The management team of a new venture typically consists of the founder

or founders and handful of key management personnel.
- Example: Management team, board of directors and advisors, company
structure.
- …

Section 10: Overall Schedule

- A schedule has to show the major events required to launch the

business.
- The schedule should be in the format of milestones critical to the
business’s success.
- Example: Incorporating the venture, completion of prototypes, rental of
facilities, obtaining critical financing, starting production, obtaining the
first sale.
- Key insight: the schedule can be extremely helpful in convincing potential
investors that the management team is aware of what needs to take
place to…

Chapter 6: Building the New Venture’s Human

Resources
The management function that is concerned with getting, training,
motivating, and keeping competent employees.

- Balancing the supply of employees with the demand for

employees.
- Matching the talents and skills of employees with those required
by the organization
- Creating a working environment that fosters high employee
performance
- Meeting the pay and benefits needs of employees.

The strategic Human Resources Management Process

The Legal Environment of HRM

The impact of federal, state and local laws on HRM practices
- Affirmative action programs
- Programs that ensure that decisions and practices enhance the
employment, upgrading, and retention of members of protected
groups

Employment planning

The process by which management ensures it has the right number

and kinds of people in the right places at the right time, who are
capable of helping the organization achieve its goals

Steps in the planning process:

1- Assessing current human resources.
2- Assessing future human resources needs and developing a
program to meet those needs.

Employee Assessment

Human resource inventory report

- A report listing the name, education, training, prior employer,
languages spoken, and other information about each employee
in the organization

Job análisis
- An assessment of the kinds of skills, knowledge, and abilities
needed to successfully perform each job in an organization.

Job Analysis components

Job description
- A written statement of what a job holder does, how it is done,
and why it is done
- Tasks, duties and responsibilities that the job entails

Job specification
- A statement of the minimum acceptable qualifications that an
incumbent must possess to perform a given job successfully
- Knowledge, skills, and abilities required of the job holder

Recruitment and selection

Recruitment
- The process of locating, identifying, and attracting capable
applicants

Selection process
- The process of screening job applicants to ensure that the most
appropriate candidates are hired.
Recruiting Goals

To provide information that will attract a significant pool of qualified

candidates and discourage unqualified ones from applying.

Recruiting Sources

Sources should match the position to be filled.

The Internet is providing many new opportunities to recruit and

causing companies to revisit past recruiting practices.
- Sources:

Internal Searches

Organizations that promote from within identify current employees for

job openings:
- by having individuals bid for jobs
- by using their HR management system
- by utilizing employee referrals

Employee Referrals/ Recommendations

Current employees can be asked to recommend recruits.

Which include:
- the employee’s motivation to make a good recommendation
- the availability of accurate job information for the recruit
- Employee referrals tend to be more acceptable applicants, to be
more likely to accept an offer and to have a higher survival rate.

External Searches

Advertisements: Must decide type and location of ad, depending on

job; decide whether to focus on job (job description) or on applicant
(job specification).

Three factors influence the response rate:

- identification of the organization
- labor market conditions
- the degree to which specific requirements are listed.

Blind box ads don’t identify the organization.

Employment agencies:
- Public or state employment servicesfocus on helping
unemployed individuals with lower skill levels to find jobs.
- Private employment agenciesprovide more comprehensive
services and are perceived to offer positions and applicants of a
higher caliber.
- Fees may be paid by employer, employee or both.
Schools, colleges, and universities:
- May provide entry-level or experienced workers through their
placement services.
- May also help companies establish cooperative education
assignments and internships.

Professional organizations:
- Publish rosters of vacancies
- Placement services at meetings
- Control the supply of prospective applicants
Professional organizations also include labor unions.

Alternatives

Independent contractors
- Do specific work either on or off the company’s premises.
- Costs of regular employees (i.e. taxes and benefits costs) are
not incurred.

Selection Devices

Written tests
- Intelligence, aptitude, ability, and interest test batteries
Performance-simulation tests
- Selection devices that are based on actual job behaviors; work
sampling and assessment centers
Interviews
- Effective if conducted correctly
Realistic job preview (RJP)
- Providing positive and negative information about the job and
the company during the job interview

Employee orientation

Orientation
- The introduction of a new employee to the job and the
organization
Objectives of orientation
- To reduce the initial anxiety all new employees feel as they
begin a new job
- To familiarize new employees with the job, the work unit, and
the organization as a whole
- To facilitate the outsider–insider transition.

Training
Employee training
- A learning experience in that it seeks a relatively permanent
change in employees such that their ability to perform on the
job improves.
- Changing skills, knowledge, attitudes, or behavior.
- Changing what employees know, how they work; or their
attitudes toward their jobs, co-workers, managers, and the
organization.

Determining if training is needed

Typical Training Methods

On-the-Job Training Methods

- Job rotation
- Understudy assignments
Off-the-Job Training Methods
- Classroom lectures
- Films and videos
- Simulation exercises

Performance Management

Performance management system

 - A process of establishing performance standards and evaluating
performance in order to arrive at objective human resource
decisions and to provide documentation to support personnel
actions.

When Performance falls short

Performance impediments
- Mismatched skills
- Inadequate training
- Employee’s personal problems

Discipline
- Actions taken by a manager to enforce an organization’s
standards and regulations

Employee counseling
- A process designed to help employees overcome performance-
related problems

Compensations and Benefits

Compensation administration
- Determining a cost-effective pay structure that will attract and
retain competent employees, provide an incentive for them to
work hard, and ensure that pay levels will be perceived as fair.
Factors influencing pay levels
- Employee’s job
- Kind of business
- Environment surrounding the job
- Geographic location
- Employee performance levels and seniority.

Retention Strategies

Developing excellent reward systems

Building a high level of commitment and loyalty among employees

Pay for performance

- Merit pay plans

- Bonuses, awards, and stock options
- Team-based incentives
- Profit sharing
- Employee stock ownership plans