ENTREPRENEURSHIP DEVELOPMENT AND MANAGEMENT List …

ENTREPRENEURSHIP DEVELOPMENT AND MANAGEMENT

List of Contents

1.Introduction

Concept /Meaning and its need-Qualities and functions of entrepreneur and barriers in

entrepreneurship- Sole proprietorship and partnership forms of business organisations

-Schemes of assistance by entrepreneurial support agencies at National, State, District level: NSIC, NRDC, DC: MSME, SIDBI, NABARD, Commercial Banks, SFC’s

TCO, KVIB, DIC, Technology Business Incubator (TBI) and Science and Technology Entrepreneur Parks (STEP).

2. Market Survey and Opportunity Identification Scanning of business environment- Salient features of National and State industrial policies and resultant business opportunities-Types and conduct of market survey Assessment of demand and supply in potential areas of growth-Identifying business opportunity-Considerations in product selection 3 Project report Preparation 4 Introduction to Management 5 Leadership and Motivation 6 Management Scope in Different Areas 7 Miscellaneous Topics CRM , TQM

1 Unit

1.1Entrepreneurship

• Entrepreneurship is the act of being an entrepreneur, who starts any economic activity

for being self-employed.

• Entrepreneurship is the ―process of the entrepreneur‖. It is an attempt to create value

through recognition of business opportunity. It is basically communicative and

management functions to mobilize financial and material resources.

• The entrepreneurial activity is governed by varying combination of socio-economic, psychological, cultural and other factors: Caste/religion, Family background, Level of education, Level of perception, Occupational background, Migratory character, Entry into entrepreneurship, Nature of enterprise, Investment capacity and Ambition/moderation.

1.2Entrepreneur

• An entrepreneur is defined as ―person in effective control of commercial

undertaking; one who undertakes a business or an enterprise‖. • Entrepreneur is an innovative person who maximizes his profits by following new

strategies or venturing into new products or services. Entrepreneur should have

• Disciplined • Confident with the knowledge • Open Minded • Competitive • Creativity • Strong people skills

1.3 Entrepreneurial Characteristics Being an entrepreneur requires specific characteristics and skills that are often achieved

through education, hard work, and planning.

Risk Taker Businesses face risk. Entrepreneurs minimize risk through research, planning, and

skill development.

Perceptive Entrepreneurs view problems as opportunities and challenges.

Curious Entrepreneurs like to know how things work. They take the time and initiative to pursue

the unknown Imaginative Entrepreneurs are creative - They imagine solutions to problems that encourage them to create

new products and generate ideas.

Persistent True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal with money,

family, or stress problems. But they still stick to their dreams of seeing the venture succeed.

Goal-setting

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Entrepreneurs are motivated by the excitement of staring a new business. Once achieved, they seek out new goals or ventures to try. Hardworking Entrepreneurs need a great deal of energy to see a venture start and succeed. Yet

they are not deterred by the long hours to achieve their goal.

Self-confident Entrepreneurs believe in themselves. Their self-confidence takes care of any

doubts they may have.

Flexible Entrepreneurs must be flexible in order to adapt to changing trends, markets, technologies, rules, and economic environments. Independent An entrepreneur’s desire for control and the ability to make decisions often makes it difficult for them to work in a controlled environment

1.4 Need for entrepreneurship

• Increases national production • Balanced area development • Dispersal of economic power

• Reinvestment of profit for the welfare of the area of profit generation • Development is a function of motivation and human resource

• Entrepreneurial awareness 1.5 Sole proprietors hip • Sole proprietorshipThe sole proprietorship is the simplest business form under which one

can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, such as Nancy's Nail Salon. The fictitious name is simply a trade name-- it does not create a legal entity separate from the sole proprietor owner.

• The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure local

licenses, and the sole proprietor is ready for business. A distinct disadvantage, however, is that the owner of a sole proprietorship remains personally liable for all the business's debts. So, if a sole proprietor business runs into financial trouble, creditors

can bring lawsuits against the business owner. If such suits are successful, the owner will have to pay the business debts with his or her own money.

• The owner of a sole proprietorship typically signs contracts in his or her own name, because

the sole proprietorship has no separate identity under the law. The sole proprietor owner will

typically have customers write checks in the owner's name, even if the business uses a fictitious name. Sole proprietor owners can, and often do, commingle

personal and business property and funds, something that partnerships, LLCs and corporations cannot do. Sole proprietorships often have their bank accounts in the name of

the owner. Sole proprietors need not observe formalities such as voting and meetings

associated with the more complex business forms. Sole proprietorships can bring lawsuits (and can be sued) using the name of the sole proprietor owner. Many businesses begin as sole proprietorships and graduate to more complex business forms as the business

develops.

Because a sole proprietorship is indistinguishable from its owner, sole proprietorship taxation is quite simple. The income earned by a sole proprietorship is income earned by its owner. A sole proprietor reports the sole proprietorship income and/or losses and

expenses by filling out and filing a Schedule C, along with the standard Form 1040. Your profits and losses are first recorded on a tax form called Schedule C, which is filed along with your 1040. Then the "bottom-line amount" from Schedule C is transferred to your personal tax return. This aspect is attractive because business losses you suffer may offset income earned from other sources.

• As a sole proprietor, you must also file a Schedule SE with Form 1040. You use Schedule SE to calculate how much self-employment tax you owe. You need not pay

unemployment tax on yourself, although you must pay unemployment tax on any employees of the business. Of course, you won't enjoy unemployment benefits should the business suffer.

• Sole proprietors are personally liable for all debts of a sole proprietorship business. Let's examine this more closely because the potential liability can be alarming. Assume that a

sole proprietor borrows money to operate but the business loses its major customer, goes out of business, and is unable to repay the loan. The sole proprietor is liable for the amount of the loan, which can potentially consume all her personal assets.

• Imagine an even worse scenario: The sole proprietor (or even one her employees) is involved in a business-related accident in which someone is injured or killed. The resulting

negligence case can be brought against the sole proprietor owner and against her personal

assets, such as her bank account, her retirement accounts, and even her home. • Consider the preceding paragraphs carefully before selecting a sole proprietorship as your

business form. Accidents do happen, and businesses go out of business all the time. Any sole proprietorship that suffers such an unfortunate circumstance is likely to quickly become a nightmare for its owner.

• If a sole proprietor is wronged by another party, he can bring a lawsuit in his own name.

Conversely, if a corporation or LLC is wronged by another party, the entity must bring its claim under the name of the company.

• The advantages of a sole proprietorship include: • •

Owners can establish a sole proprietorship instantly, easily and inexpensively. Sole proprietorships carry little, if any, ongoing formalities.

• A sole proprietor need not pay unemployment tax on himself or herself (although he or

• •

she must pay unemployment tax on employees).

Owners may freely mix business or personal assets.

The disadvantages of a sole proprietorship include: • Owners are subject to unlimited personal liability for the debts, losses and liabilities of

the business. • Owners cannot raise capital by selling an interest in the business. • Sole proprietorships rarely survive the death or incapacity of their owners and so do

not retain value. • One of the great features of a sole proprietorship is the simplicity of formation. Little

more than buying and selling goods or services is needed. In fact, no formal filing or

event is required to form a sole proprietorship; it is a status that arises automatically from one's business activity.

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1.6 Entrepreneurial support agencies

• National Small Industries Corporation Limited (NSIC) is a Mini Ratna PSU

established by the Government of India in 1955. It falls under Ministry of Micro,

Small & Medium Enterprises of India. NSIC is the nodal office for several schemes of Ministry of MSME such as Performance & Credit Rating, Single Point Registration, MSME Databank, National SC ST Hub, etc.

• Government of India to promote small and budding entrepreneurs of post independent India, decided to establish a government agency which can mediate and provide help to small scale industries (SSI).

• National Research Development Corporation (NRDC) was established in 1953 by the

Government of India, with the primary objective to promote, develop and commercialize the technologies / know-how / inventions / patents / processes emanating from various national R&D institutions / Universities and is presently working under the administrative control of the Dept. of Scientific & Industrial Research, Ministry of Science & Technology

• National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India, headquartered at Mumbai with regional offices all over India. The Bank has been entrusted with "matters concerning policy, planning

and operations in the field of credit for agriculture and other economic activities in rural

areas in India". NABARD is active in developing financial inclusion policy.

• The Khadi and Village Industries Commission (KVIC) is a statutory body formed by the Government of India, under the Act of Parliament, 'Khadi and Village Industries

Commission Act of 1956'. It is an apex organisation under the Ministry of Micro, Small and Medium Enterprises, with regard to khadi and village industries within India, which seeks to - "plan, promote, facilitate, organis and assist in the establishment and development of khadi and village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary

• The Technology Business Incubator TBI-NITC was set up by the National Institute of

Technology Calicut and is located at Kettangal, in Kozhikode district, India. It is supported by the National Science and Technology Entrepreneurship Development Board(NSTEDB), Department of Science & Technology, Govt. of India, to incubate start-up industries in information technology (IT) and electronics.

• Science & Technology Entrepreneurs Park (STEP) Programme was initiated to

provide a re-orientation in the approach to innovation and entrepreneurship involving education, training, research, finance, management and the government. A STEP creates

the necessary climate for innovation, information exchange, sharing of experience and facilities and opening new avenues for students, teachers, researchers and industrial managers to grow in a trans-disciplinary culture

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Multiple Choice Questions

What is an entrepreneur?

A. Someone who invests time and money to start a business. B. Someone who makes a lot of money. C. Someone who takes a risk to make a profit. D. Both A & C.

2. Define Free Enterprise: A. A business taking a risk to make a profit.

B. A program administered by the Government. C. People in business trying to make a profit. D. A business adventure or undertaking.

3. Capital is:

A. Money available to invest. B. Prohibitive cost of entry. C. A guarantee that a company will be successful. D. A & B.

4. The following are included in a business plan A. Financial information, production plans, personnel policies. B. Goals of the business and how they will be achieved.

C. A step by step plan for the success of your business. D. All of the above.

5. Quality Control is defined as: A. How many & what types of people are shopping at a store. B. Tells you what the customer will buy C. Tells you how much the customer will pay for the product. D. All of the above.

6. A market survey is important because it tells you: A. How many & what types of people are shopping at a store. B. Tells you what the customer will buy. C. Tells you how much the customer will pay for the product. D. All of the above.

7. Making a purchase you had not planned is called: A. Consumer shopping.

B. A warranty. C. Impulse buying. D. Comparison shopping.

8. Product planning tells you: A. Where you will produce your product.

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B. Cost to produce your product. C. Your Net profit D. Total revenues

9. Cost per serving means: A. How much it will cost to produce one recipe

B. How much it will cost to produce what you sell in one day. C. How much it will cost to make ―One.‖

D. How much it will cost to make one batch.

10. What makes a good advertisement? (Choose the best combination) A. Color, Attracts attention, ingredients in product. B. Name of product, price, location, attractive. C. Easy to read, price, color, location, why customers should buy it.

D. Nutritional information, price, color, where to buy it, easy to read. 11. What things could you change to adjust your profit? A. Price. B. Number. C. Less expensive supply sources. D. All of the above.

Short/ long Answer Questions

Q1 Define Entrepreneurship

Q2 Define Entrepreneur

Q3 Explain Characteristisc and need of entrepreneurship.

Q4 Write names of entrepreneurial supporting agencies

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2 Market surveys

Introduction

• Market surveys are a way in which companies obtain information about their customers and non-customer consumers or businesses, and how these customers or consumers

view a company's products and services versus competitive products. Market surveys

can be either qualitative or quantitative. Qualitative surveys are used for obtaining

information on a small scale while quantitative surveys are more predictable across the

general population.

2.1 Types of Market-Survey Techniques

• Focus groups are a qualitative market-survey technique. A company may interview customers from various demographic groups based on age, income or sex.

• One-on-one market surveys, another qualitative market-survey technique, are

typically used for introducing new products.

• Many surveys are conducted over the phone, such as customer-satisfaction surveys. Customer-satisfaction surveys measure satisfaction levels of customers with regard to the company's products, service, prices and other key attributes

A company may use a mail-in survey to determine why some customers have stopped purchasing their products Software companies sometimes use this quantitative market-

survey technique

Online surveys often appear on company websites in the form of a pop-up. These market-survey techniques can be activated at any time to start collecting demographic information or

virtually any information for which a company is searching. The survey can then be terminated once enough questionnaires are completed. Online surveys can be unpredictable at times because there is no control over the type of person who responds.

2.2 Supply And Demand

• In the context of supply and demand discussions, demand refers to the quantity of a good that is desired by buyers. An important distinction to make is the difference between demand and the quantity demanded. The quantity demanded refers to the specific amount of that product that buyers are willing to buy at a given price. This

relationship between price and the quantity of product demanded at that price is defined as the demand relationship

• Supply is defined as the total quantity of a product or service that the marketplace can

offer. The quantity supplied is the amount of a product/service that suppliers are willing to supply at a given price. This relationship between price and the amount of a good/service supplied is known as the supply relationship.

• When thinking about demand and supply together, the supply relationship and demand relationship basically mirror each other at equilibrium. At equilibrium, the quantity supplied and quantity demanded intersect and are equal.

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2.3 Preliminary Project Report

• The project preliminary report describes your progress so far. It should form the basis of your final report. The preliminary report should include:

• Problem: A clear description of the problem you are addressing. This should be more

refined and persuasive than the version in your original proposal.

• Related work: A good summary and analysis of the work relevant to your

project. Everything you describe should be related directly to your project:

– Why is it relevant? (Don't assume the reader can read your mind.)

– If it attempts to solve a similar problem, why is it not a satisfactory solution?

– What ideas in the other project can be applied to your project?

• If there is related work you have not yet studied, list that in the related work section along with your plans for learning about it.

Proposed Solution: Describe your idea for solving the problem. This need not yet be complete, but should include some specific ideas. Research Plan: Describe clearly exactly what you will do. Evaluation Plan: Describe how you will evaluate your work. This should include (possibly speculative) descriptions of specific sample programs you will use in your evaluation. Schedule and Division of Labor: Calendar showing specific milestones, when they

will be accomplished, and how the team will split up the work.

Project status reports

•

Project status reports are accomplished to serve the following purposes; To keep an updated flow of information in relation to the project’s progress

• To immediately address issues and concerns that may come up at any point of

the project’s implementation or duration • To document reasons for changes and adjustments made to the original plan for

the project • To monitor fund utilization and to ensure that the project expenses are still within

the budget • •

To serve as a basis for decision-making and addressing problems To keep track of the team’s performance and individual contributions

• To act as a uniform procedure for communicating project development to the stakeholders.

Multiple Choice Questions

Question No: 1 Which of the following shows the process of creating something new? a) Business model b) Modeling c) Creative flexibility d) Innovation

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Question No: 2 Which one of the following gives suggestions for new product and also help to market new products? a)Existing products and services b) Federal government c) Distribution Channels d) Consumers

Question No: 3 Which of the following is used by entrepreneurs to acquire experience in an international market before making a major commitment? a)Merger b) Minority Interest c) Joint venture d) Majority interest

Question No: 4 The entrepreneur was distinguished from capital provider in: a) Middle ages b) 17th century c) 18th century d) 19th and 20th century

Question No: 5 A person who managed large project was termed as the entrepreneur in the _________. a) Earliest period b) Middle ages c) 17th century d) 19th and 20th century

Question No: 6 What is the process by which individuals pursue opportunities without regard to resources they currently control?

a) Startup management b) Entrepreneurship c) Financial analysis d) Feasibility planning

Question No: 7 Having less than 50 percent of equity share in an international venture is called: a) Joint Venture b) Majority interest c) Minority interest d) Exporting

Question No: 8 Having more than 50% ownership position that provides the entrepreneur

with managerial control is called: a) Joint venture b) Majority interest c) Horizontal merger c) Diversified activity merger

Question No: 9 Which one of the following is the process of entrepreneurs developing new products that over time make current products obsolete? a) New business model b) Anatomization c) None of the given options d) Creative destruction

Question No: 10 Which of the following factors is the most important in forcing U.S companies to focus on new product development and increased productivity?

a) Entrepreneurship b) Hyper competition c) Governmental laws d) Organizational culture

Short /Long Answer Questions

Q1 Define Market Survey with its types

Q2 Give difference between supply and demand

Q3 Explain Preliminary Project Report

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3 Project Report Preparation

Project Presentation Guidelines

PROJECT PRESENTATION GUIDELINES

This handout is intended to let you know what we expect to see in your week 10 presentations.

Required elements

Your presentation should be 15 minutes long with time (5 minutes) for questions afterward.

Your presentation should be a polished, carefully planned performance.

Follow the outline included in this document.

Include a short performance of some kind: a skit, a reading, a demonstration of a program, a

PowerPoint presentation with screen shots or images, etc.

Each member of your group (if your project is a group project) must play a significant role in

the presentation.

If you are using the projection monitor (i.e., a computer to present), come to the room where

the presentation is to be held 15 minutes early to upload the presentation to the computer in

that room. You should verify ahead of time that your presentation will run on that

computer; for example, some animations developed on a Mac will not run on a PC and vice

versa. You can use a thumb drive and the program fileshare as a backup, for the file(s) you

will need. If you plan to have a live demo (and thus need software installed), you will need

to coordinate with your project faculty to make sure your own computer can be setup to

project properly.

Project Presentation Outline

Your presentation outline should address these topics, and proceed in this order:

Introduction – summarize your project’s purpose and platform

Goals (Objectives) & Constraints – related programs/ projects / apps that you knew of going

into the project or that you discovered while working on your project. What were the

limitations going in.

Ethics (If applicable) – Any ethical concerns?

Challenges – Both expected and encountered

Demo – Show us something of your project. It doesn’t have to be an application. It could be a

handout.

Accomplishments/What you learned – Which objectives did you meet? Which ones weren’t

you able to meet in the time provided? How is your project or what you learned important?

Future Work – Will you continue with your project in any form? If so, how?

Leave time for questions

Tips on Giving Good Presentations

Practice ahead of time. It’s surprising how quickly time can go by; going through your

presentation a few times beforehand will help you to be clear about how long each part will

take and, naturally, will help you to work out the kinks.

Start with an outline and end with a conclusion. At the beginning of your presentation, let

your audience know what to expect; at the end, concisely review what you’ve done.

Be confident; speak clearly.

Maintain eye contact with the audience. We don’t want to watch you read your notes to us

Use visual aids! Even simple visual aids will help keep your audience’s attention and will

help keep your talk moving along. At a minimum, it’s a good idea to have a separate visual

for each segment of your presentation. Whenever possible, show an example in addition to

(or instead of) telling it.

Consider using handouts. Handouts are a great way to show your audience detailed

information that doesn’t work well on the screen or blackboard

4 Introduction to Management

Management’s primary function is to get people to work together for the attainment of an

organization’s goals and objectives

Management: An Overview

Management is the act of getting people together to accomplish desired goals and objectives

using available resources efficiently and effectively. Since organizations can be viewed as

systems, management can also be defined as human action, including design, to facilitate the

production of useful outcomes from a system. This view opens the opportunity to manage

oneself, a pre-requisite to attempting to manage others.

Definition of Management: The Management Process

Management functions include: Planning, organizing, staffing, leading or directing, and

controlling an organization (a group of one or more people or entities) or effort for the purpose

of accomplishing a goal.

There are several different resource types within management. Resourcing encompasses the

deployment and manipulation of:

Human resources

Financial resources

Technological resources

Natural resources

Different type of Management Styles

There are different types of management styles, and the management process has changed over

recent years. The addition of work teams and servant leadership has changed what is expected

from managers, and what managers expect from their employees.

Traditional Management

There is a hierarchy of employees, low level management, mid-level management, and senior

management. In traditional management systems, the manager sets out expectations for the

employees who need to meet goals, but the manager receives the reward of meeting those goals.

Team Managment

In a team management arrangement the manager is a guiding hand to help the members of the

team work together to solve problems but doesn’t dictate policy and the entire team receives the

reward of meeting those goals.

Servant Management

With this approach, the manager helps supply resources the employees need to meet company

goals. In servant leadership, the organization recognizes employees as experts in their field and

work to help them work efficiently.

No matter which type of management style is used by an organization, the main objective of

managers is to help employees reach company goals and maintain company standards and

policies.

The Purpose of Management

The purpose of management is to serve customers. Yet, if one looks through most management

books for a definition of management, 99.9 percent of the time the word customer will not be

mentioned. This is astonishing because serving customers in order to obtain a profit is the crux of

every business organization. Equally remiss is the fact that most definitions of management

neatly filter out service in their descriptions of management.

Good managers constantly streamline their organizations toward making a sale. In other words,

good managers are needed to keep their organizations on track by ensuring that everything that’s

being done is ethically geared toward providing what customers want. In this regard, a good

manager is responsible for reducing waste and ambiguity, keeping costs down, and motivating

others to do the same. In the same vein, good managers regularly take educated risks and

exercise good judgement (the basis of entrepreneurship). These risks include:

The Need for Management

Management in all business and organizational activities is the act of getting people together to

accomplish desired goals and objectives using available resources efficiently and effectively.

Since organizations can be viewed as systems, management can also be defined as human action

(including design) to facilitate the production of useful outcomes from a system. Therefore,

management is needed in order to facilitate a coordinated effort toward the accomplishment of

the organization’s goals.

Since most managers are responsible for more work than one person can normally perform, a

good manager delegates and integrates his or her work (or the work of others). A manager does

this by acting as a clear channel of communication within the business that he or she serves.

Good management is needed to inject motivation, creativity, discipline, and enthusiasm into

areas in which they either don’t exist or they’re not necessarily wanted.

The various functions of management are classified as:

Planning

Organizing

Staffing

Leading/Directing

Controlling/Monitoring

Motivation

Management is also responsible for the formation and implementation of business policies and

strategies.

Line Organization

Line organization structure is the oldest and simplest form of organization. In these organizations, a

supervisor exercises direct supervision over a subordinate. Also, authority flows from the top-most

person in the organization to the person in the lowest rung. This type of an organization is also

called a military organization or a scalar-type organization.

Advantages of a Line Organization

Simple to work

Economical and effective. It also allows quick decisions and efficient coordination.

Conforms to the scalar principle of organization. Further, it promotes the unity of command.

In a line organization, the responsibility for the performance of tasks is fixed upon definite

individuals. Therefore, there is accountability of delegated tasks.

There is excellent discipline in a line organization due to unified control and undivided

loyalties.

The overall cost of running the organization is low due to the non-involvement of staff

personnel.

It is a stable form of organization.

Disadvantages of a Line Organization

A line organization can suffer from a lack of specialization. This is because each department

manager is concerned only with the activities of his own department. Therefore, employees

are skilled in tasks pertaining to their departments alone.

These organizations can overburden a keyman or a few key-men to the extent of their

breaking point. Also, in the absence of a staff aid, if a strong man seizes the organization, he

can run it arbitrarily. Such arbitrary power can lead to a considerable damage to the

organization.

Such organizations usually suffer from a lack of expert advice. If the line manager has

trouble making a decision, there is no expert staff that he can turn to.

A line organization is usually rigid and inflexible. In fact, such organizations maintain

discipline so rigorously that they can rarely change.

These organizations are based on the autocratic system of management.

The division of work is not based on any scientific plan but on the whims of the manager.

It might stop progress and prevent the unit to work effectively.

Such organizations might also encourage nepotism or favoritism based on relationship or

friendship.

Line Organization structure is useful in the following scenarios:

The scale of business is small and the number of subordinates and superiors are few.

In continuous process industries

Organizations where work is primarily routine in nature

Highly automated environments where the skills of the foreman are not important

Labor management problems are easy to solve

Q1. What is a line organization? In a line organization, a supervisor exercises direct control over a subordinate and the authority

flows from the top-most position to the lowest. It is also called a military or a scalar-type

organization.

Q2 What is Industrial Organization?

Industrial organization is a field of economics dealing with the strategic behavior of firms,

regulatory policy, antitrust policy and market competition. Industrial organization applies the

economic theory of price to industries. Economists and other academics who study industrial

organization seek to increase understanding of the methods by which industries operate, improve

industries' contributions to economic welfare, and improve government policy in relation to these

industries. The "industrial" in industrial organization refers to any large-scale business activity,

such as tourism or agriculture — not just manufacturing. Industrial organization is also

sometimes referred to as "industrial economy."

Industrial Organization Areas of Study

Below is a sample listing of topics that the study of industrial organization can focus on:

Market power

Product differentiation

Price discrimination

Durable goods and experience goods

Secondary markets and their relationship with primary markets

Collusion

Signaling

Mergers and acquisitions

Antitrust and competition

Industrial policy

5 Leadership and Motivation

Leadership at a Glance

A leader is crucial to the success of every team. Take an orchestra, for instance, one that consists

of all the best musicians in the world but lacks a conductor. Even though every member of the

orchestra can play perfectly by themselves, they will only produce an incompatible melody in the

absence of a conductor. The same concept applies to communities, companies, and countries.

Without a leader, nothing will ever run smoothly.

So, what makes leaders who they are? Why are some people elected as managers and presidents

while the rest remain followers? Leadership theories were developed to find answers to these

questions.

Key Leadership Theories

1. Great Man Theory

According to the Great Man Theory (which should perhaps be called the Great Person Theory),

leaders are born with just the right traits and abilities for leading – charisma, intellect,

confidence, communication skills, and social skills.

The theory suggests that the ability to lead is inherent – that the best leaders are born, not made.

It defines leaders as valiant, mythic, and ordained to rise to leadership when the situation arises.

The term ―Great Man‖ was adopted at the time because leadership was reserved for males,

particularly in military leadership.

2. Trait Theory The Trait Theory is very similar to the Great Man Theory. It is founded on the characteristics of

different leaders – both the successful and unsuccessful ones. The theory is used to predict

effective leadership. Usually, the identified characteristics are compared to those of potential

leaders to determine their likelihood of leading effectively.

Scholars researching the trait theory try to identify leadership characteristics from different

perspectives. They focus on the physiological attributes such as appearance, weight, and height;

demographics such as age, education, and familial background; and intelligence, which

encompasses decisiveness, judgment, and knowledge.

3. Contingency Theory

The Contingency Theory emphasizes different variables in a specific setting that determine the

style of leadership best suited for the said situation. It is founded on the principle that no one

leadership style is applicable to all situations.

Renowned leadership researchers Hodgson and White believe that the best form of leadership is

one that finds the perfect balance between behaviors, needs, and context. Good leaders not only

possess the right qualities but they’re also able to evaluate the needs of their followers and the

situation at hand. In summary, the contingency theory suggests that great leadership is a

combination of many key variables

4. Situational Theory

The Situational Theory is similar to the Contingency Theory as it also proposes that no one

leadership style supersedes others. As its name suggests, the theory implies that leadership

depends on the situation at hand. Put simply, leaders should always correspond their leadership

to the respective situation by assessing certain variables such as the type of task, nature of

followers, and more.

As proposed by US professor Paul Hersey and leadership guru Ken Blanchard, the situational

theory blends two key elements: the leadership style and the followers’ maturity levels. Hersey

and Blanchard classified maturity into four different degrees:

M1 – Team members do not possess the motivation or tactical skills to complete

necessary jobs.

M2 – Team members are willing and ambitious to achieve something, but they lack the

necessary ability.

M3 – Team members possess the skills and capacity to accomplish tasks, but they’re not

willing to take accountability.

M4 – Team members possess all the right talents and are motivated to complete projects.

According to situational theory, a leader exercises a particular form of leadership based on the

maturity level of his or her team. 5. Behavioral Theory

In Behavioral Theory, the focus is on the specific behaviors and actions of leaders rather than

their traits or characteristics. The theory suggests that effective leadership is the result of many

learned skills.

Individuals need three primary skills to lead their followers – technical, human, and conceptual

skills. Technical skills refer to a leader’s knowledge of the process or technique; human skills

means that one is able to interact with other individuals; while conceptual skills enable the leader

to come up with ideas for running the organization or society smoothly.

Motivation

Motivation is a powerful, yet tricky beast. Sometimes it is really easy to get motivated, and you

find yourself wrapped up in a whirlwind of excitement. Other times, it is nearly impossible to

figure out how to motivate yourself and you're trapped in a death spiral of procrastination. This

page contains the best ideas and most useful research on how to get and stay motivated.

1. Maslow’s Need Hierarchy Theory:

It is probably safe to say that the most well-known theory of motivation is Maslow’s need

hierarchy theory Maslow’s theory is based on the human needs. Drawing chiefly on his clinical

experience, he classified all human needs into a hierarchical manner from the lower to the higher

order.

In essence, he believed that once a given level of need is satisfied, it no longer serves to motivate

man. Then, the next higher level of need has to be activated in order to motivate the man.

Maslow identified five levels in his need hierarchy as shown in figure 17.2.

2. Herzberg’s Motivation Hygiene Theory:

The psychologist Frederick Herzberg extended the work of Maslow and propsed a new

motivation theory popularly known as Herzberg’s Motivation Hygiene (Two-Factor) Theory.

Herzberg conducted a widely reported motivational study on 200 accountants and engineers

employed by firms in and around Western Pennsylvania.

He asked these people to describe two important incidents at their jobs:

(1) When did you feel particularly good about your job, and

(2) When did you feel exceptionally bad about your job? He used the critical incident method of

obtaining data.

The responses when analysed were found quite interesting and fairly consistent. The replies

respondents gave when they felt good about their jobs were significantly different from the

replies given when they felt bad. Reported good feelings were generally associated with job

satisfaction, whereas bad feeling with job dissatisfaction. Herzberg labelled the job satisfiers

motivators, and he called job dissatisfies hygiene or maintenance factors. Taken together, the

motivators and hygiene factors have become known as Herzberg’s two-factor theory of

motivation

Herzberg’s motivational and hygiene factors have been shown in the Table 17.1

3 McGregor’s Participation Theory:

Douglas McGregor formulated two distinct views of human being based on participation of

workers. The first basically negative, labeled Theory X, and the other basically positive, labled

Theory Y.

Theory X is based on the following assumptions:

1. People are by nature indolent. That is, they like to work as little as possible.

2. People lack ambition, dislike responsibility, and prefer to be directed by others.

3. People are inherently self-centered and indifferent to organisational needs and goals.

4. People are generally gullible and not very sharp and bright.

On the contrary, Theory Y assumes that:

1. People are not by nature passive or resistant to organisational goals.

2. They want to assume responsibility.

3. They want their organisation to succeed.

4. People are capable of directing their own behaviour.

5. They have need for achievement.

What McGregor tried to dramatise through his theory X and Y is to outline the extremes to draw

the fencing within which the organisational man is usually seen to behave. The fact remains that

no organisational man would actually belong either to theory X or theory Y. In reality, he/she

shares the traits of both. What actually happens is that man swings from one set or properties to

the other with changes in his mood and motives in changing .environment.

6 Miscellaneous Topics

Customer Relationship Management, or CRM, is an essential part of modern business

management. This CRM article is provided by Ellen Gifford, who specializes in helping

organizations develop excellence in CRM, and this contribution is gratefully acknowledged.

What is Customer Relationship Management, or CRM? Customer Relationship Management

concerns the relationship between the organization and its customers. Customers are the

lifeblood of any organization be it a global corporation with thousands of employees and a multi-

billion turnover, or a sole trader with a handful of regular customers. Customer Relationship

Management is the same in principle for these two examples - it is the scope of CRM which can

vary drastically.

Successful organizations use three steps to build customer relationships:

determine mutually satisfying goals between organization and customers

establish and maintain customer rapport

produce positive feelings in the organization and the customers

Conditions

The organization and the customers both have sets of conditions to consider when building the

relationship, such as wants and needs of both parties;

organizations need to make a profit to survive and grow

customers want good service, a quality product and an acceptable price

Good CRM can influence both sets of conditions.

Types of CRM:

1. Operational CRM

Operational CRM streamlines the business process that includes Sales automation, Marketing

automation and Service automation. Main purpose of this type of CRM is to generate leads,

convert them into contacts, capture all required details and provide service throughout customer

lifecycle.

Sales Automation: Sales automation helps an organization to automate sales process. Main purpose of sales

automation is to set standard within organization to acquire new customers and deal with existing

customers. It organizes information in such a way that the business can meet customers’ needs

and increase sales more efficiently and effectively. It includes various CRM sales modules like

lead management, contact management, Quote-to-Order management, sales forecasting.

Marketing Automation: Main purpose of marketing automation is to find out the best way to offer products and approach

potential customers. Major module in marketing automation is campaign management. It enables

business to decide effective channel/s (like emails, phone calls, face to face meeting, ads on

social media) to reach up to potentials customers.

Service Automation: Service automation enables business to retain customers by providing best quality of service and

building strong relationship. It includes issue management to fix customers’ problems, customer

call management to handle incoming/outgoing calls, service label management to monitor

quality of service based on key performance indicators.

2. Analytical CRM

Analytical CRM helps top management, marketing, sales and support personnel to determine the

better way to serve customers. Data analysis is the main function of this type of CRM

application. It analyzes customer data, coming from various touch points, to get better insights

about current status of an organization. It helps top management to take better decision,

marketing executives to understand the campaign effectiveness, sales executives to increase sales

and support personnel to improve quality of support and build strong customer relationship.

3 Collaborative CRM

Collaborative CRM, sometimes called as Strategic CRM, enables an organization to share

customers’ information among various business units like sales team, marketing team, technical

and support team. For example, feedback from a support team could be useful for marketing

team to approach targeted customers with specific products or services. In real world, each

business unit works as an independent group and rarely shares customers’ data with other teams

that often causes business losses. Collaborative CRM helps to unite all groups to aim only one

goal – use all information to improve the quality of customer service to gain loyalty and acquire

new customers to increase sales.

Definition of TQM

Total Quality Management is defined as a customer-oriented process and aims for continuous

improvement of business operations. It ensures that all allied works (particularly work of

employees) are toward the common goals of improving product quality or service quality, as

well as enhancing the production process or process of rendering of services. However, the

emphasis is put on fact-based decision making, with the use of performance metrics to monitor

progress.

The key principles of Total Quality Management

Commitment from the management:

Plan (drive, direct)

Do (deploy, support, and participate)

Check (review)

Act (recognize, communicate, revise)

Employee Empowerment

Training

Excellence team

Measurement and recognition

Suggestion scheme

Continuous Improvement

Systematic measurement

Excellence teams

Cross-functional process management

Attain, maintain, improve standards

Customer Focus

Partnership with Suppliers

Service relationship with internal customers

Customer-driven standards

Never compromise quality

Benefits of Total Quality Management The benefits arising from the implementation of a Total Quality Management in an organization

are:

This will increase the awareness of quality culture within the organization.

A special emphasis on teamwork will be achieved.

TQM will lead to a commitment towards continuous improvement.

Essential requirements for successful implementation of TQM

Commitment: Quality improvement (in all aspect) must be everyone’s job in the

organization. An apparent commitment from the top management, breaking down the

barriers for continuous quality improvement and steps required to provide an

environment for changing attitudes must be provided. Training and support for this

should be extended.

Culture: There should be proper training to effect the changes in attitude and culture.

Continuous Improvement: Recognize improvement as a continuous process, and not

merely a one-off program.

Customer Focus: Perfection in service with zero defectives and full satisfaction to end-

user whether it’s internal or external.

Control: Ensure monitoring and control checks for any deviation from the intended

course of implementation.

1. Plan

2. Do

3. Check

4. Act

This also referred to as the PDCA cycle.

Planning Phase: This phase is the most crucial phase of total quality management. Under this

phase, employees have to come up with their respective queries and problems which need to be

addressed. The employees apprise the management of different challenges which they are facing

in their day to day operations and also analyze the root cause of the problem. They need to do the

required research and collect significant data which would help them find solutions to all the

problems.

Doing Phase: In this phase, a solution for the identified problems in the planning phase is

developed by the employees. Strategies are devised and implemented to crack down the

challenges faced by employees. The efficiency and effectiveness of solutions and strategies are

also evaluated in this stage.

Checking Phase: Under this phase, a comparison analysis of before and after is done in order to

assess the effectiveness of the processes and measure the results.

Acting Phase: This is the last phase of the cycle, in this phase employees document their results

and prepare themselves to address other problems.