MST 111 CONCEPT OF ENTREPRENEURSHIP Introduction to Business

MST 111 “CONCEPT OF ENTREPRENEURSHIP” Introduction to Business

Entrepreneurship n Entrepreneurship is that ability in which an individual tries to find the opportunity, take risk and avail these opportunities.

Who are Entrepreneurs n People have more entrepreneurial abilities who: Have aspiration (ambition). n Are more strategic (planned). n Have the vision (dream). n

Characteristics of Entrepreneurs n Resourcefulness n Abilities n Concern of being good.

Entrepreneurial Characteristics n Personal Interest n Interest for their own development. n Customer Relationship n Long term relations with the customers. n Desire to establish own business. n Need of control. n Ability to deal with uncertainties.

Business Plan n A document which contains the objectives of the business and the ways to achieve these objectives.

Components of Business Plan n There are two situations: n Buying a business. n Starting from the scratch. n Objectives of the business. n Marketing Components. n Financial Components.

Components of Business Plan started from scratch n Objectives of the business: n Name of the business. n Name should indicate the type of business. n Name should be simple. n Uniqueness of name. n Legal considerations: n n Avoid the names not encouraged by the law. e. g. National Heroes, religious personalities etc. Location of the business.

Components of Business Plan started from scratch n Marketing Part: n Who will be the customers of the business? n Where are they located? n What would customers like to pay for the product or service? n What are the benefits, the customers are expecting from the product or service?

Components of Business Plan started from scratch n Marketing Part: n Analysis of competitors: n n n What is the nature of competition in the market? Who are the competitors of the business? How product of the business is different from product of the competitors?

Components of Business Plan started from scratch n Promotional Part n How will the message of the business be promoted in the general public? n How will the business be launched?

Components of Business Plan started from scratch n Financial Part n What will be the investment of the business and how much should be borrowed? n What are going to be expected revenues in a given period of time? n What would be the expected expenses of the business in a given period of time? n What would be net income or net profit in a given period of time? n Is the business feasible or not?

Components of Business Plan started from scratch n Administrative Part n What would be the structure to handle the business?

Franchising n An agreement between two parties in which one party passes on the rights to the other party. n “A contractual license granted by one person (the franchisor) to another (the franchisee). ” n Example: n Transcom Foods Ltd n Product: 1. 2. n Kentucky Fried Chicken (KFC) Pizza Hut, Transcom Electronics Ltd. n Product: Samsung, Wirlpool, Philips

n Rights include: n Right to use the trade mark. n Right to use the name. n Right to use systems, methods and researches. n Right to use packing material.

Parties to Franchise agreement n There are two parties: n Franchiser n Franchisee n Franchiser is one who sells the rights to franchisee.

Advantages of Franchising n Franchiser gets a huge amount of money from franchisee without doing anything. n Franchisee gets access to big business. n Failure rate of franchise business is lower than any other business. n Franchisee uses world wide tested brand tested procedures, that is why failure rate is lower in this type of business.

Advantages of Franchising n Franchiser provides guidance to franchisee in all affairs of the business. n Choice of location n Franchiser is always there to support the franchisee in all kinds of matters.

Disadvantages of Franchising n High cost. n Proportionate profit is given to franchiser by franchisee every year. n There are too many restrictions from franchiser on the franchisee.

New Trends in the Business n E-Commerce or E-Business n Using internet for marketing products. n Women in business n So many women have come in so many areas of business. n Business will be better displayed, well mannered staff, more knowledge of the needs of customers and more market oriented.

New Trends in the Business n Global opportunities n People have the awareness of global market. n Internet has played major role in accessing global markets. n In Bangladesh, people got huge success globally but could not make a brand name in global market.

Factors for lower failure rate n Government’s preferences and priorities. n Government is convinced to support corporate sector. n Businesses are now being set up on more professional grounds. n Support from financial institutions. n General economy of the country. n People are acquiring professional knowledge about business.

Factors for lower failure rate n Government has developed many training centre to train people related to business. n Skills development. n Institutions to develop man power.

Causes of Failure in Business n People are not capable of handling business. n Some people are not capable enough to know markets. n People should try to learn the abilities to run the business. n People do not have experience required for a business.

Causes of Failure in Business n We need to have control over: n Production Process n Cost n Wastage n Complaint handling n Quality n Insufficient capital n Bad Luck n National Disaster

Reasons for Success in Business (controllable factors) n Hard work n Dedication and Commitment n Response of Market n Competence – The ability to work n Knowledge of Market n Knowledge of Product n Knowledge of Systems

Reasons for Success in Business (uncontrollable factors) n Luck and Act of God n Law of Government n Law related to health n Climate change n Disaster

Joint Venture n Two or more people or organizations join hands and decide to do a business. n Advantage of Joint Venture Combination of skills and abilities. n Provide opportunities to acquire new expertise n Allow to enter in new geographic markets n gain new technological knowledge n Sharing of specialized staff and technology n sharing of risks n

Example: Dhaka, Bangladesh, September 27, 2012 - Honda Motor Co. , Ltd. today signed a joint venture agreement with Bangladesh Steel and Engineering Corporation (BSEC) to establish a motorcycle production and sales joint venture company before the end of 2012, to deliver Honda products with speed, affordability and low CO 2 emissions and enhance customer satisfaction and efficiency in Bangladesh where further market expansion is expected.

Strategic Alliance n Two or more than two organizations collaborate for mutual profit. n Decision involved in Strategic Alliance Profit Sharing n Client Handling Example: Dhaka, June 18, 2001–The high ended n quality promotional product took a significant step forward today as Axis Bangladesh and Promoedge announced a strategic alliance based on a shared vision for unified promotional product supply and support.

Merger n Two or more organizations combine together and form a new organization. n Sanofi-aventis completes merger in Bangladesh n Sanofi-aventis Bangladesh Ltd is the new entity that has been formed following the amalgamation of three leading pharmaceutical companies -- Aventis Ltd, Fisons (Bangladesh) Ltd and Hoechst Marion Roussel Ltd, says a press release. n The name of the newly amalgamated company has been registered with the Registrar of Joint Stock Companies and Firms on January 31, 2008.

Acquisition n One business acquires the other business. n Advantages of Acquisition n Expansion of size n To reduce competition

n Bharti explores another acquisition in Bangladesh n Indian telecom giant Bharti Airtel is exploring another acquisition in Bangladesh after acquiring a 70 percent stake in Warid telecom, an Indian newspaper reported. Source: Wednesday, February 24, 2010, Daily Star News