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Chapter-2.pptx

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Chapter-2.pptx

  1. 1. Corporate Entrepreneurship Chapter 2
  2. 2. Causes for Interest in Corporate Entrepreneurship • Interest in entrepreneurship within established businesses has intensified due to events occurring on: • Social. • Cultural. • Business levels. • Social reasons: • Increasing interest in “doing your own thing” and doing it on one’s terms. • New search for meaning and impatience involved, causes more discontent in structured organizations.
  3. 3. Corporate Entrepreneurship (1of 5) • Resistance against flexibility, growth, and diversification can, in part, be overcome by developing a spirit of entrepreneurship within the existing organization. • A method of stimulating, and capitalizing on, individuals in an organization who think that something can be done differently and better. • Example: WIPRO, Airtel • Corporate entrepreneurship: Entrepreneurial action within an establish organization.
  4. 4. Corporate Entrepreneurship (2 of 5) • Increase in corporate entrepreneurship reflects an increase in social, cultural, and business pressures. • Hyper competition has forced companies to have an increased interest in certain areas: • New product development. • Diversification. • Increased productivity. • Decreasing costs by methods such as reducing the company’s labor force.
  5. 5. Corporate Entrepreneurship (3 of 5) • Corporate Entrepreneurship is mostly reflected in entrepreneurial activities as well as top management orientations in organizations. These endeavours consists of the following four key elements- 1. New business venturing 2. Innovativeness 3. Self-renewal 4. Proactiveness.
  6. 6. Corporate Entrepreneurship (4 of 5) • New business venturing (sometimes called corporate venturing) refers to the creation of a new business within an existing organization. These entrepreneurial activities consist of creating something new of value either by redefining the company’s current products or services, developing new markets, or forming more formally autonomous or semiautonomous units or firms. Formations of new corporate ventures are the most salient manifestations of corporate entrepreneurship. Ex- Lux body wash. All time laddu mini pack. • Organizational innovativeness refers to product and service innovation, with an emphasis on development and innovation in technology. It includes new product development, product improvements, and new production methods and procedures. Ex- Brac Bank by bkash.
  7. 7. • Self-renewal is the transformation of an organization through the renewal of the key ideas on which it is built. It has strategic and organizational change connotations and includes a redefinition of the business concept, reorganization, and the introduction of system-wide changes to increase innovation. Ex- Netflix. • Proactiveness includes initiative and risk taking, as well as competitive aggressiveness and boldness, which are particularly reflected in the orientations and activities of top management. A proactive organization tends to take risks by conducting experiments; it also takes initiative and is bold and aggressive in pursuing opportunities. Organizations with this proactive spirit attempt to lead rather than follow competitors in such key business areas as the introduction of new products or services, operating technologies, and administrative techniques. Ex- Facebook, Amazon. Corporate Entrepreneurship (5 of 5)
  8. 8. Managerial Versus Entrepreneurial Decision Making • Entrepreneurial management is distinct from traditional management in terms of eight dimensions: • Strategic orientation. • Commitment to opportunity. • Commitment of resources. • Control of resources. • Management structure. • Reward philosophy. • Growth orientation. • Entrepreneurial culture.
  9. 9. Distinguishing Entrepreneurially from Traditionally Managed Firms
  10. 10. Strategic Orientation and Commitment to Opportunity • Strategic orientation: Refers to factors that are inputs into the formulation of the firm’s strategy. • Strategy of entrepreneurial management: • Driven by presence or generation of opportunities for new entry. • Less concerned about resources required to pursue such opportunities. • Entrepreneurially managed firms: • Committed to taking action on potential opportunities. • Able to pursue opportunities rapidly. • Can commit resources from a particular opportunity and do so rapidly.
  11. 11. Commitment of Resources and Control of Resources • Resources: • Resources are more towards the firm minimizing resources required in pursuit of a particular opportunity. • Smaller sunk costs help stop entrepreneurially managed firms from becoming entrenched with a particular course of action. • Control of resources: • Less concerned about ownership of resources and more concerned about having access to others’ resources.
  12. 12. Management Structure • An entrepreneurially managed firm’s structure is organic. • Few Layers of bureaucracy between top management and customer. • Multiple informal networks. • Structured to make use of internal and external Networks.
  13. 13. Reward Philosophy • Focused on pursuing opportunities for new entry that represent new value for the firm. • Rewards based on employees’ contribution toward discovery/generation and exploitation of opportunities. • Employees have freedom to experiment with potential opportunities and are rewarded accordingly. • Organizational culture encourages employees to generate ideas, experiment, and engage in other tasks to produce creative output.
  14. 14. Climate for Corporate Entrepreneurship • Organization operates on frontiers of technology. • New ideas encouraged. First • Trial and error encouraged. • Failures allowed. Second • No opportunity parameters. Third • Resources available and accessible. Fourth • Multidiscipline teamwork approach. • Long time horizon. Fifth • Volunteer program. Sixth • Appropriate reward system. Seventh • Sponsors and champions available. Eighth • Support of top management. Ninth
  15. 15. Leadership Characteristics of Corporate Entrepreneurs • Understands the environment. • Reflected in individual’s level of creativity. • Visionary and flexible. • Creates management options. • Encourages teamwork. • Encourages open discussion. • Builds a coalition of supporters. • Persistence.
  16. 16. Establishing Corporate Entrepreneurship in the Organization (1of 3) • 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.
  17. 17. Establishing Corporate Entrepreneurship in the Organization (2 of 3) • 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. • Step Four: Managers who will train employees as well as share their experiences.
  18. 18. Establishing Corporate Entrepreneurship in the Organization (3 of 3) • Step Five: • Develop ways for organization to get closer to its customers. • Step Six: • Learn to be more productive with fewer resources. • Step Seven: • Establish a strong support structure for corporate entrepreneurship. • Step Eight: • Involve tying 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.
  19. 19. Problems and Successful Efforts (1 of 2) • 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.
  20. 20. Problems and Successful Efforts (2 of 2) • On average, independents become: • Profitable twice as fast. • End up twice as profitable. • Examples of 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.

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