Notes

Notes
EDBS

Friday, April 6, 2012

EDBS Important Q&A

What are the four stages of decision making described by Simon?

Simon's four stages of decision making are:
· Intelligence: identification of problems, where and why. Information systems can deliver a wide variety of detailed information.
· Design: designing a set of multiple solutions for problems. Small DSS systems operate on simple models that can be developed quickly and operated with little data to support the designers.
· Choice: choosing among alternatives. Larger DSS can be used to develop more extensive data on a variety of alternatives and use complex analytic models to account for all of the consequences.

Implementation: monitoring the progress of a specific solution. Reporting systems can be used to obtain information on specific solutions


What are the four kinds of computer-based information systems that support decisions?

The four kinds of computer-based information systems that support decisions (from lowest to highest) are:
Transaction processing systems (TPS
Management information systems (MIS)
Decision support systems (DSS)
Executive support systems (ESS)

What is the CPM?

Critical Path Method (CPM), is a procedure forusing network analysis to identify those tasks whichare on the critical path: ie where any delay in thecompletion of these tasks will lengthen the projecttimescale, unless action is taken.For all tasks off the critical path, a degree oftolerance is possible (eg. late start, late completion,early start, etc.).Network charts and CPM analysis used to be carriedout by hand.Software is now available which requires the useronly to enter the tasks, duration of each task anddependencies upon other tasks; a network chart andCPM is then automatically created.

EDBS Notes

Strategic Alliance
A strategic alliance is a voluntary, formal arrangement between two or more parties to pool resources to achieve a common set of objectives that meet critical needs while remaining independent entities. Strategic alliances involve exchange, sharing, or co development of products, services, procedures, and processes. To these ends, strategic alliances can—in fact, frequently do— call on contributions of organization-specific resources and capabilities (that may involve trade-offs in capital, control, and time). The generic motive, to a greater extent than in the 1990s, is to sustain long-term competitive advantage in a fast-changing world, for example, by reducing costs through economies of scale or more knowledge, boosting research and development efforts, increasing access to new technology, entering new markets, breathing life into slowing or stagnant markets, reducing cycle times, improving quality, or inhibiting competitors.
Types of Alliances
Strategic alliances between organizations are now everywhere. Depending on the objectives or structure of the alliance, they take various configurations along a continuum of cooperative arrangements, e.g., cartels, cooperatives, joint ventures, equity investments, licensing, subcontracting (outsourcing), franchising, distribution relationships, research and development consortiums, industrial standards groups, action sets, innovation networks, clusters, letters of intent, memorandums of understanding, partnership frameworks, etc. Some are short-lived; others are the prelude to a merger. In the public sector, from the 1990s, the formation of partnerships began to sweep through policies, strategies, programs, and projects, including their design, implementation, results, and associated business processes.
Types of TakeoversTakeover
– The transfer of control from one ownership group to another.
Acquisition
– The purchase of one firm by another
Merger
– The combination of two firms into a new legal entity
– A new company is created
– Both sets of shareholders have to approve the transaction.
Amalgamation
– A genuine merger in which both sets of shareholders must approve the transaction
– Requires a fairness opinion by an independent expert on the true value of the firm’s shares when a public minority exists
Classifications Mergers and Acquisitions
Horizontal
• A merger in which two firms in the same industry combine.
• Often in an attempt to achieve economies of scale and/or scope.
Vertical
• A merger in which one firm acquires a supplier or another firm that is closer to its existing customers.
• Often in an attempt to control supply or distribution channels.
Conglomerate
• A merger in which two firms in unrelated businesses combine.
• Purpose is often to ‘diversify’ the company by combining uncorrelated assets and income streams
Cross-border (International) M&As
• A merger or acquisition involving a Canadian and a foreign firm a either the acquiring or target company.
Benefits of M&A
Increased firm size
– Managers are often more highly rewarded financially for building a bigger business (compensation tied to assets under administration for example)
– Many associate power and prestige with the size of the firm.
Reduced firm risk through diversification
– Managers have an undiversified stake in the business (unlike shareholders who hold a diversified portfolio of investments and don’t need the firm to be diversified) and so they tend to dislike risk (volatility of sales and profits)
– M&A can be used to diversify the company and reduce volatility (risk) that might concern managers.

STRATEGIC MANAGEMENT
What is strategic management? Strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines, etc. Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.
In 1988, Henry Mintzberg concludes that there are five types of strategies:
Strategy as plan – a direction, guide, course of action – intention rather than actual
Strategy as ploy – a maneuver intended to outwit a competitor
Strategy as pattern – a consistent pattern of past behaviour – realized rather than intended
Strategy as position – locating of brands, products, or companies within the conceptual framework of consumers or other stakeholders – strategy determined primarily by factors outside the firm
Strategy as perspective – strategy determined primarily by a master strategist
Strategy formation
The essential points of the Classical approach of Strategic Management are "where are we now?", "where do we want to be?" and "how do we get there?" It thus comprises an environmental analysis, a choice of available options, and determining a path for action and implementation.
The initial task in strategic management is typically the compilation and dissemination of a mission statement. Additionally, it specifies the scope of activities an organization wishes to undertake, coupled with the markets a firm wishes to serve.
Following the devising of a mission statement, a firm would then undertake an environmental scanning within the purview of the statement.
Strategic formation is a combination of three main processes which are as follows:
· Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.
· Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
What is strategic planning? Strategic planning is a management tool, period. As with any management tool, it is used for one purpose only: to help an organization do a better job - to focus its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment. In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future.
The process is strategic because it involves preparing the best way to respond to the circumstances of the organization's environment, whether or not its circumstances are known in advance; nonprofits often must respond to dynamic and even hostile environments. The process is about planning because it involves intentionally setting goals (i.e., choosing a desired future) and developing an approach to achieving those goals. The process is disciplined in that it calls for a certain order and pattern to keep it focused and productive. The process raises a sequence of questions that helps planners examine experience, test assumptions, gather and incorporate information about the present, and anticipate the environment in which the organization will be working in the future.
Finally, the process is about fundamental decisions and actions because choices must be made in order to answer the sequence of questions mentioned above. The plan is ultimately no more, and no less, than a set of decisions about what to do, why to do it, and how to do it. Because it is impossible to do everything that needs to be done in this world, strategic planning implies that some organizational decisions and actions are more important than others - and that much of the strategy lies in making the tough decisions about what is most important to achieving organizational success.
The strategic planning can be complex, challenging, and even messy, but it is always defined by the basic ideas outlined above - and you can always return to these basics for insight into your own strategic planning process.
What is the difference between strategic planning and long-range planning? Although many use these terms interchangeably, strategic planning and long-range planning differ in their emphasis on the "assumed" environment. Long-range planning is generally considered to mean the development of a plan for accomplishing a goal or set of goals over a period of several years, with the assumption that current knowledge about future conditions is sufficiently reliable to ensure the plan's reliability over the duration of its implementation.. Economy was relatively stable and somewhat predictable, and, therefore, long-range planning was both fashionable and useful. On the other hand, strategic planning assumes that an organization must be responsive to a dynamic, changing environment (not the more stable environment assumed for long-range planning).
Certainly a common assumption has emerged in the nonprofit sector that the environment is indeed changeable, often in unpredictable ways. Strategic planning, then, stresses the importance of making decisions that will ensure the organization's ability to successfully respond to changes in the environment.
What is strategic thinking and strategic management? Strategic planning is only useful if it supports strategic thinking and leads to strategic management - the basis for an effective organization. Strategic thinking means asking, "Are we doing the right thing?" Perhaps, more precisely, it means making that assessment using three key requirements about strategic thinking: a definite purpose is in mind; an understanding of the environment, particularly of the forces that affect or impede the fulfillment of that purpose; and creativity in developing effective responses to those forces. It follows, then, that strategic management is the application of strategic thinking to the job of leading an organization.
Strategy formulation of the organization's future mission in light of changing external factors such as regulation, competition, technology, and customers development of a competitive strategy to achieve the mission creation of an organizational structure which will deploy resources to successfully carry out its competitive strategy. Strategic management is adaptive and keeps an organization relevant.
What is a strategic plan? In strategic planning it is critical to formally consider how your organization will accomplish its goals. The answer to this question is a strategy. There are a variety of formal definitions for strategies, but everyone fundamentally agrees that a strategy is the answer to the question, "How?" "Strategies are simply a set of actions that enable an organization to achieve results." MAP for Nonprofits, St. Paul, MN. "Strategy is a way of comparing your organization's strengths with the changing environment in order to get an idea of how best to complete or serve client needs." Jim Fisk & Robert Barron, the Official MBA Handbook.
Essentially, there are three different categories of strategies: organizational, programmatic, and functional. The difference among the categories is the focus of the strategy: Organizational strategy outlines the planned avenue for organizational development (e.g., collaborations, earned income, selection of businesses, mergers, etc.). Programmatic strategy addresses how to develop, manage and deliver programs (e.g., market a prenatal care service to disadvantaged expectant mothers by providing information and intake services in welfare offices). Functional strategies articulate how to manage administration and support needs that impact the organization's efficiency and effectiveness (e.g., develop a financial system that provides accurate information using a cash accrual method).
When should a strategic plan be developed? Strategy development follows the creation and affirmation of the organization's purpose statement, environmental and program data collection and analysis, and identification of critical issues. It is critical that strategy development follow these steps because the information gathered and decisions made in these phases are the foundation for strategy creation and selection. Each of these steps provides the following: The purpose statement, the statement of the organization's ultimate goal, provides the direction to which the strategies should ultimately lead.
External market data and program evaluation results provide critical data to support strategy development. Without this information and insight, the organization's strategies will not be in alignment with or effective in the marketplace. The critical issues list serves as the specific focus and framework for the activities of the organization and the pattern of these activities (developing and selecting the strategies).
What is SWOT Analysis? SWOT analysis is a methodology of examining potential strategies derived from the synthesis of organizational strengths, weaknesses, opportunities and threats (SWOT). The partnering of the different elements and the extensive data collected as a result of the analysis can serve as a spark for roundtable discussions and refinement of current strategies or generation of new strategies.
Alignment with Mission Statement: Services or programs that are not in alignment with the organizational mission, unable to draw on existing organizational skills or knowledge, unable to share resources, and/or unable to coordinate activities across programs should be divested.
Competitive Position: Competitive position addresses the degree to which the organization has a stronger capability and potential to fund the program and serve the client base than the competitive agencies.
Program Attractiveness: Program attractiveness is the complexity associated with managing a program. Programs that have low client resistance, a growing client base, easy exit barriers, and stable financial resources are considered simple or "easy to administer." The level of program attractiveness also includes an economic perspective or a review of current and future resource investments.
Alternative Coverage: Alternative coverage is the number of other organizations attempting to deliver or succeeding in delivering a similar program in the same region to similar constituents.
What Is a Critical Success Factor?
· A key area where satisfactory performance is required for the organization to achieve its goals
· A means of identifying the tasks and requirements needed for success
· At the lowest level, CSFs become concrete requirements
· A means to prioritize requirements
The CSF Method
· Start with a vision: mission statement
· Develop 5-6 high level goals
· Develop hierarchy of goals and their success factors
· Leads to concrete requirements at the lowest level of decomposition (a single, implementable idea)
· Along the way, identify the problems being solved and the assumptions being made
· Cross-reference usage scenarios and problems with requirements
Results of the Analysis
· Mission statement
· Hierarchy of goals and CSFs
· Lists of requirements, problems, and assumptions
CSF analysis:
· Produces results that express the needs of the enterprise clearly and (hopefully) completely.
· Allows us to measure success and prioritize goals in a sensible way.
· When used together with traditional usage scenarios, ensures that the needs of both the user and the enterprise are being met.
INVENTORY CONTROL SYSTEM
Inventory Theory
Inventory theory covers several aspects of the inventory of goods and supplies; including the role that inventory plays in the operation of a service, the charac­teristics of various inventory systems, and the costs that are involved in main­taining inventories.
Role of Inventory in Services
Inventories serve a variety of functions in service organizations, such as decou­pling the stages in the distribution cycle, accommodating a heavy seasonal de­mand, and maintaining a supply of materials as a hedge against anticipated in­creases in their cost. We will look at these and other functions in more detail later; first, we will examine the inventory distribution system.
Decoupling inventories: Consider the system two types of flow exist within the system. One is the flow of information begin­ning with the customer and proceeding back to the original source(s) of the goods or service, and the other is the actual movement of goods-in this case, from the producer to the customer-by way of inventory reserves at each stage of the system.
Services that experience such cyclical high-demand times may accumulate large inventories in advance of the high-demand season to accommodate their customers.
Speculative inventories: A service that anticipates a significant increase in the cost of a good in which it deals may find it more economical to accumulate and maintain a large inventory at present prices rather than to replenish its supplies after the increase. The strategy of maintaining a speculative inven­tory is known as forward buying. The reverse of this strategy occurred in the spring of 1996, when U.S. oil companies anticipated the reentry of Iraq into the international petroleum market, which would decrease the market value of the resource. These companies did not want to have huge reserves of "pre-Iraq" expensive oil when the world price dropped; therefore, they al­lowed their reserves (i.e., their inventory) to decline drastically-forward hedging!
Cyclical inventories: The term cyclical inventory refers to normal variations in the level of inventories. In other words, the level of stock in inventory is at its highest just after an order is received, and it declines to its lowest point just before a new order is received.
In-transit inventories:The term in-transit inventories is used for stock that has been ordered but has not yet arrived.
Safety stocks:An effective service maintains an inventory of stock that will meet expected demand. Services operate in a dynamic environment, how­ ever, which means that uncertainties in replenishment lead time and demand always exist. To deal with such unexpected fluctuations, many services main­tain inventory in excess of the inventory that is kept to meet the expected demand. This excess inventory is referred to as safety stock.
Inventory management is concerned with three basic questions:
1. What should be the order quantity?
2. When should an order be placed (called a reorder point)?
3. How much safety stock should be maintained?
Later, we will see that determining the reorder point is related to determining the safety stock. Both are influenced by the service level, which is the probability that all demand during the replenishment lead time is met (e.g., if the probabil­ity of a stockout is 5 percent, then the service level is 95 percent).
Characteristics of Inventory Systems
To design, implement, and manage an inventory system, we must consider the characteristics of the stocks that are to be stored and understand the attributes of the various inventory systems that are available.
• Type of customer demand. When evaluating the type of demand, we first look for any trends, cycles, or seasonality. Has demand been increasing steadily during the observation period without significant drops, or do we see a monthly cycle in which demand begins high and then tapers off by the end of the month? As noted earlier, demand also may be seasonal.
Other attributes of demand also are important to consider. Demand may occur in discrete units, such as the number of scuba-diving masks sold per day. It also may be continuous, such as gallons of water consumed, or bulk, such as passengers on an airline flight. If final customer demand can be described as a probability distribution, it is referred to as independent demand, and we then can forecast future demand. In other cases, the demand for one type of inventory item may be related to the demand for another; for exam­ple, the demand for catsup at McDonald's restaurant is dependent on the number of hamburgers and french fries that are sold.

Inventory Model with Planned Shortages
When customers are willing to tolerate stockouts, an inventory system with planned shortages is possible. For example, a tire store may not stock all sizes of high-performance tires, knowing that a customer is willing to wait a day or two if the particular tire is out-of-stock. For this strategy to be acceptable to customers, however, the promised delivery date must be adhered to, and it must be within a reasonable length of time. Otherwise, customers would fault the retailer for being unreliable.
Using electronic data interchange (EDI) and predictable delivery from suppli­ers, a strategy of minimal inventory stocking can be implemented. The benefits of such a system are captured by the tradeoff between the cost of holding in­ventory and the cost that is associated with a stockout that can be backordered. An item is considered to be backordered when a customer is willing to wait for delivery; thus, the sale is not lost. Some subjective cost should be associated with customer inconvenience, however. Software manufacturers have taken this tol­erance of stockouts to the extreme by creating "vaporware," which is software that is planned but not yet available. Such a company would advertise this soft ware to gauge the level of demand; however, excessive use of this strategy risks the credibility of the firm in the mind of customers. For retailers, this strategy can attract customers when the inventory cost savings are passed along as every­day low prices.
INVENTORY CONTROL SYSTEMS
Many different inventory control systems are used in actual practice. They dif­fer in the methods for determining the order quantity and when a replenishment order should be made. We shall restrict our discussion here to two of the most common inventory control systems: the continuous review system and the periodic review system (i.e., order-up-to). In all inventory control systems, two questions must be answered: 1) when should an order be placed? And 2) what size is the order quantity? Because inventory control systems face uncertainty in demand, we will find that when one of these questions is answered using a fixed value, the answer to the other must accommodate the uncertainty in demand.
Backorder a demand that is not sat­isfied immediately because of a stockout but is satisfied later because the customer is willing to wait until the replenishment order arrives to take delivery.
Economic order quantity (EOQ) the reorder quantity that minimizes the total incremental cost of holding in­ventory and the cost of ordering re­plenishments.
Electronic data interchange (EDI) a computerized exchange of data be­tween organizations that eliminates paper-based documents. Inventory turns the number of times an inventory stock is sold per year, calculated by dividing annual de­mand by the average inventory held.
Point-of-sale (FOS) on-line linking of sales transactions, using comput­erized cash registers, bar-code scan­ners, or credit-card readers, to a cen­tral computer allowing immediate updating of sales, inventory, and pricing information.
Replenishment lead time the time, usually in days, from an order being placed with a vendor to the delivery being made.
Reorder point level of inventory both on hand and on order when a reorder of a fixed quantity is made.
Safety stock inventory held in excess of expected demand during lead time to satisfy a desired service level,
Service level the probability that de­mand will be satisfied during re­plenishment lead time.

Financial planning languages are particular kinds of decision support systems that are employed for mathematical, statistical and forecasting modeling. Both types of languages find applications in developing complicated business model hypothetical representations of management problems.


Enterprise
Enterprise (occasionally used with the archaic spelling Enterprise) may refer to:

Economics and business
• A business
• A company
• Entrepreneurship, the practice of starting new organizations, particularly new businesses
• Enterprise architecture

The words entrepreneur, intra-preneur and entrepreneurship have acquired special significance in the context of economic growth in a rapidly changing socioeconomic and socio-cultural climates, particularly in industry, both in developed and developing countries. Entrepreneurial development is a complex phenomenon.

Entrepreneurship in Global Perspective
Introduction
The word 'entrepreneur' is derived from the Old French word 'entreprendre' which was first used by the economic 'theorist' Richard Cantillon in 1755 in an essay where he used this term to describe a person who assumed the risk of buying goods in the belief that they could sell them at a higher price at a later time. So, the term in French was used to describe 'one who undertakes' this particular risk.
Who Is An Entrepreneur?
Entrepreneur Is A Person Who Brings In Change through Innovation For the Maximum Social Good.
An entrepreneur is a person with a dream, originality and daring, who acts as the boss, who decides as to how the commercial organization shall run, who coordinates all activities or other factors of production, who anticipates the future trend of demand and prices of products.
The entrepreneur displays courage to take risk of putting his money into an idea, courage to face the competition and courage to take a leap into unknown future and create new enterprises/ business. This creative process is the life blood of the strong enterprise that leads to the growth and contributes to the national development.

An entrepreneur is one of the important segments of economic growth. Basically he is a person responsible for setting up a business or an enterprise. In fact, he is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green-field projects that create wealth, open up many employment opportunities and leads to the growth of other sectors.

Definition of Entrepreneur

According to Oxford Dictionary:
“One who undertakes an enterprise, especially a contractor – acting as intermediary between capital and labor”.
1725: Richard Cantillon:
An entrepreneur is a person who pays a certain price for a product to resell it at an uncertain price, thereby making decisions about obtaining and using the resources while consequently admitting the risk of enterprise.
1934: Schumpeter:
According to him entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.
1961: David McClleland:
An entrepreneur is a person with a high need for achievement [N-Ach]. He is energetic and a moderate risk taker.
Peter .P. Drucker:
“Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for different business or a different service”
1964: Peter Drucker:
“An entrepreneur is one who always searches for change, responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship”.
Walker:
“An entrepreneur is one who is endowed with more than average capacities in the task of organizing and co-coordinating the various factors of production. He should be a pioneer, a captain of industry.

The process undertaken by an entrepreneur to augment his business interests gave birth to “ENTREPRENEURSHIP”.
To put it very simply an entrepreneur is someone who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it.

Examples:
Computers, mobile phones, washing machines, ATMs, Credit Cards, Courier Service, and Ready to eat Foods are all examples of entrepreneurial ideas that got converted into products or services.

Myths about Entrepreneurship
1. Successful entrepreneurship takes only a great idea.
2. Entrepreneurship is easy.
3. Entrepreneurship is a risky gamble.
4. Entrepreneurship is found only in small businesses.
5. Entrepreneurial ventures and small businesses are identical.
The Entrepreneurial Process

The entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities and creating organizations to pursue them.
A wide range of factors could influence someone to become an entrepreneur, including environmental, social, personal ones, or a combination of them.

After one decides to be an entrepreneur, there are four steps of the entrepreneurial process he/she has to follow:

Ø Spot and assess the opportunity.
Ø Draw up a business plan.
Ø Establish the resources needed and get them.
Ø Run the company created.


Spot and assess the opportunity:
To identify an opportunity and analyze its potential in terms of: market needs, competitors and market potential and product lifecycle. It is important the entrepreneur to test his/her business idea/concept with potential customers, asking if they would buy the product or service, doing some research to find the market size and whether if it is growing, stable or stagnating, finding out about his/her competitors strengths and weaknesses, threats and opportunities.

Draw up the business plan:
The business plan is an important part of the entrepreneurial process. A well planned business will have more chance to succeed all the other aspects of the company being equal. It is crucial for the entrepreneur to know how to plan his/her actions and lay out strategies for the business to be created or under expansion.

Establish the resources needed and provide them:
The entrepreneur should use his/her planning ability and bargaining skills to get to know the best alternatives on the financing market for their business, that is, which will offer the best cost benefit ratio.

Run the firm created:
Running the company can seem to be the easiest part of the entrepreneurial process, since the opportunity has been identified, the business plan developed and the source of funding provided. But running a company is not as straightforward as it seems. The entrepreneur must recognize his/her limitations, recruit a first rate team to help manage the company, implementing actions to minimize problems and maximize profits. That is, the firm has to produce more, with the fewest resources possible, combining efficiency and efficacy.

Entrepreneurship

· Process of creating something new and assuming the risks and rewards
· Innovating, Creating something new of Value
· Devoting time & effort
· Financial, Psychic, Social Risk
· Monetary Rewards, Personal Satisfaction & Independence

Entrepreneurial Decision

· Deciding to become an entrepreneur by leaving present activity
· Intra-preneurship
· Entrepreneurship within an organization

7 Key Qualities of a Successful Entrepreneur
· Inner Drive to Succeed
See bigger picture, Massive goals for themselves
· Strong belief in themselves
Strong & Assertive personality, Focused, Determined, Flamboyant
· Search for New Ideas & Innovation
Passionate Desire to do better, improve their products/services
· Openness to Change
If not working-Change, Up to Date with latest & ready to change
· Competitive by Nature
Thrive on Competition, compete with other successful Businesses
· Highly Motivated & Energetic
Always on the move, full of energy, highly motivated
· Accept Constructive Criticism
Readjust to constructive criticism, disregard pessimism

Differences between Managers Vs Entrepreneurs Vs Intrapreneurs
· Primary Motives
· Time Orientation
· Activity
· Risk
· Status
· Failure & Mistakes
· Decisions
· Who serves
· Family History
· Relationship with others

Benefits of Entrepreneurship
Opportunity to
· create your own destiny
· Make a difference
· Reach your full potential
· Reap impressive Profits
· Contribute to society & be recognized
· Do what You enjoy & have fun at it

Drawbacks of Entrepreneurship

Potential drawbacks
· Uncertainity of Income
· Risk of losing your entire investment
· Long hours & Hard work
· Lower quality of life until the Business is established
· High levels of stress
· Complete responsibility
· Discouragement
10 Mistakes of Entrepreneurs
· Management mistakes -Good judgment at top
· Lack of Experience – Technical, People skills, Visualize
· Poor Financial Control– Shoestring Budget, Cash flow, debt control
· Weak Marketing – Sustained, creative, economic marketing effort
· Failure to develop a Strategic Plan– Create competitive edge
· Uncontrolled Growth– Planned & Controlled Growth
· Poor Location– Sales not availability
· Inventory Control– Stock outs, Excess, Wrong invemtory
· Incorrect Pricing– Overpriced, underpriced, competitor’s price
· Entrepreneurial Transition– Different Management styles

How should Entrepreneurs avoid difficulty?
Know your Business in Depth-Knowledge Sponges
Develop Solid Business Plan– Answer crucial questions
Manage Financial Resources– Startup Capital, Cash, Profit, growth
Understanding Financial Statements– Mirror
Manage People effectively– Trained & Motivated, Attract, Retain
Keep in tune with Yourself– Time, Stress, Passion
Must Skills for Entrepreneur

· Technical Skills
· Writing, Oral, Computer, Interpersonal, Listening, Organizing, Networking, Coaching, Team Building
· Business Management Skills
· Planning & Goal Setting, Decision Making, Human Relations, Marketing, Finance, Accounting, Negotiating, Controlling, Managing Growth
· Personal Entrepreneurial Skills
· Personal Discipline, Risk Taking, Innovative, Change oriented, Persistent, Visionary

Ethics & Social Responsibility of Entrepreneurs

· Daily Stressful situations, Pressures from Society, Competitors, Community Norms
· Balance between Ethical – economic – social responsibility
· Morally correct Business Practices


Entrepreneurship Development Institute of India (EDI)

The Entrepreneurship Development Institute of India (EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely, the IDBI Bank Ltd, IFCI Ltd. ICICI Ltd and State Bank of India (SBI).

Tuesday, March 6, 2012

PROJECT FEASIBILITY STUDY

MARKET ANALYSIS
In order to identify the market for one’s product/service market analysis is a study of knowing who all comprise your customers, for this you require information on:
• Consumption trends.
• Past and present supply position
• Production possibilities and constraints
• Imports and Exports
• Competition
• Cost structure
• Elasticity of demand
• Consumer behavior, intentions, motivations, attitudes, preferences and requirements
• Distribution channels and marketing policies in use
• Administrative, technical and legal constraints impinging on the marketing of the product
FINANCIAL ANALYSIS
Financial analysis is to ascertain whether the proposed project will be financially viable .In a financial appraisal certain aspects has to be looked into:
• Investment outlay and cost of project
• Means of financing
• Projected profitability
• Break- even point
• Cash flows of the project
• Investment worthiness judged in terms of various criteria of merit
• Projected financial position
BUSINESS PLAN
• The business plan is a written document that serves as a road map in the entrepreneur’s journey from start-up to project implementation.
• It describes all the relevant elements involved in starting a new business enterprise.
• It is often an integration of functional plans such as marketing, finance, manufacturing and human resources.
• Potential investors and suppliers too are interested in a business plan, as it can prove helpful in taking decisions.
IMPORTANT OF BUSINESS PLAN
Business plan is important due to the following reasons:
• It helps the entrepreneur to decide where he wants to go.
• It helps him to determine the viability of the venture.
• It provides guidance to the entrepreneur in planning realistic goals and targets, in organizing and even in identifying possible roadblocks.
• It is a pre-requisite to obtain finance.
BUSINESS CONSTITUTION
Forms of Organization
• Sole Proprietor
• Partnership
• Company
• Co-operative
• Clearances and Approvals

BANK ASSITANCE
Small Industries Development Bank of India (SIDBI)


National Bank for Agriculture and Rural Development (NABARD)


All India Development Banks(IDBI,ICICI)


State-level Institutions(SFC)
REGISTRATION


Registration entitles you to avail of the privileges available for the small-scale industries and facilitates easy access to land, utilities and other facilities.


The registration of Small Scale units is done in two stages
(a) Provisional registration –This is made before the unit is set up.
(b) Permanent registration-This is given when the unit goes into production.

PROJECT PLANNING

WHO IS AN ENTREPRENEUR?
Evaluation of the character ,who is planning for an Enterprise ,like
· Frankness
· Reasonableness
· Patience
· Attitude towards Risk Taking
OTHER QUALITIES:
· INITIATIVE
· DYNAMISM
· LEADERSHIP
· RESOURCEFULLNESS
PROJECT
· SELECTION OF LINE OF ACTIVITY
· GETTING THOROUGH KNOWLEDGE ABOUT THE PROPOSED LINE OF ACTIVITY
· HOW TO MANUFACTURE AND MARKET THE PRODUCT?
· WHETHER THE PRODUCT PROPOSED TO BE MANUFACTURED IS A INNOVATIVE ONE (OR) IMPROVED VERSION OF THE ALREADY EXISTING PRODUCT?
· WHETHER YOU CAN FUNCTION AS AN ANCILLARY UNIT TO A MAJOR MANUFACTURER?
Lastly 5 M’s – MAN, MATERIAL, MARKET, MACHINE, MONEY
SELECTION PROCESS
LOCATION – Proximity to the point of sale (or) supply
PREMISES – Own (or) Leased.
MACHINERY – Manually operated (or) Computerized Numeric Control (CNC) machine.
MANPOWER – Unskilled, Semi-skilled, Skilled
MATERIAL – Type
MARGIN MONEY – Source – Self, Friends & Relatives
COST OF PROJECT
· Land Cost
· Building Cost
· Machinery Cost
· Working Capital Margin
All the above Costs have to be met out from Long Term Sources.
WORKING CAPITAL
For running a business (or) a factory Working Capital is very much required.
How to mobilize Working Capital?
Own investment
Borrowings
a) Friends & Relatives
b) Banks
BANK BORROWINGS
Expectation of the Bank Manager will be:
§ Will he repay the Loan? – Character, Competence and Capital.
§ Competence: can the loaner repay the Loan?
i. Managerial Competence
ii. Technical Competence
iii. Capital – Promoter’s Stake in the business.
A Project can be technically feasible but it may be financially not viable. Following things needs to be checked:
· Manufacturing Cost
· Administrative Cost
· Selling Expenses
· Net Profit
COLLATERAL SECURITY
From Immovable property
· Landed Property
· Building Property
· House
· Factory Building.
By means of Personal Guarantee of a worthy person
FINANCIAL ASSISTANCE
Term Loan like
· Short Term
· Long term
· Soft loan
Building, Technical Know-how fees, Machinery.
SHORT TERM LOAN
· Presale Credit Limits.
· Post -sale Credit Limits.
SCHEMES AND OPPOTUNITIES for SMALL AND MEDIUM ENTERPRISES
Investment in Plant and machinery does not exceed Rs. 1.00 crore – It is as SSI Limit.
In respect of certain specified items this investment limit has been enhanced to Rs. 5.00 Crores.
List of Service Sector activities covered under Medium Enterprises
· Call Centre
· BPOs
· Hotels and Restaurants
· Advertising Agencies
· Industrial Testing Labs
· Cold Storage Services / Milk Chilling / Milk Processing.
· Washing and Laundry Services / Dry Cleaning.
· Training Centre for Professionals.
· Resorts and Travel Agents.
FINANCIAL INSTITUTIONS OF INDIA
Specialized financial institutions may be divided into the following types:
(a) All India Development Banks
1. Industrial Development Bank of India (IDBI)
2. Small Industries Development Bank of India (SIDBI)
3. Industrial Finance Corporation of India (IFCI)
4. Industrial credit and Investment corporation of India (ICICI)
5. National Bank for Agriculture and Rural Development (NABARD)
6. Industrial Investment Bank of India Ltd. (previously, Industrial Reconstruction Bank of India)
(b) State-level Institutions
1. State Financial Corporations (SFCs)
2. State Industrial Development Corporations (SIDC)
3. State Industrial Investment Corporations (SIIC)
(c) Investment institutions
1. Unit Trust of India (UTI)
2. Life Insurance Corporation of India (LIC)
3. General Insurance Corporation (GIC)
IMPORTANCE OF FIS
The importance of FIs may be attributed to the following:
1. They constitute an important source of long-term finance to industry.
2. FIs have played an important role in the development of
(a) Small scale industry,
(b) Projects in backward areas.
3. They have helped new and small entrepreneurs in setting up industry.
4. These institutions have, aided in better use of the available resources for the economic development of the country.
6. FIs have been a source of technical and managerial advice to the industry.
7. They have also helped in identification, evaluation and execution of new investment projects.

Points to consider while preparing a project report seeking finance from bank
· WHAT IS PROJECT REPORT?
· HOW TO PREPARE A PROJECT REPORT?
· WHAT ARE ALL THE POINTS TO BE COVERED IN THE PROJECT REPORT?
· WHETHER ANY CONSULTANT (OR) AUDITOR HAS TO BE CONTRACTED TO PREPARE THE PROJECT REPORT?
· HOW TO EXPRESS TO THE BANK MANAGER ABOUT THE PROPOSED PROJECT FOR WHICH YOU REQUIRE FINANCIAL ASSISTANCE?

Wednesday, February 22, 2012

Strategic Management

What is strategic management?

Strategic Management can be defined as:

“The art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective”

How the strategic management work?
On-going process:

Strategic management is a on-going process which is in existence through out the life of organization.

Shaping broad plans:

An on-going process in which broad plans are firstly formulated then implemented and finally controlled.

Strategic goals:

Strategic goals are those which are set by top management. The broad plans are made in achieving the goals.

Internal and external environment:

Internal and external environment generally set the goals.

Stages of Strategic management:

The strategic management process consists of three stages:

· Strategy Formulation (strategy planning)

· Strategy Implementations

· Strategy Evaluation

Strategic Formulation:

Strategic formulation means a strategy formulate to execute the business activities. Strategy formulation includes developing:-

· Vision and Mission (The target of the business)

· Strength and weakness (Strong points of business and also weaknesses)

· Opportunities and threats (These are related with external environment for the business)

Key Terms in Strategic Management

· Strategists

· Mission statements

· Internal strengths and weaknesses

· External opportunities and threats

· Long-term objectives

· Annual objectives, and policies

Vision Statements

Many organizations today develop a "vision statement" which answers the question, what do we want to become?

Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement.

Mission Statements

Mission statements are enduring statements of purpose that distinguish one business from other similar firms.

A mission statement identifies the scope of a firm's operations in product and market terms.

A clear mission statement describes the values and priorities of an organization and also a path to achieve organizational objective.

SWOT Analysis

SWOT analysis is a technique for identifying your Strengths and Weaknesses

Study any Opportunities and Threats you face

It is also a powerful strategic planning tool used to evaluate a project or in a business venture or in any other situation of an organization or individual requiring a decision in pursuit of an objective.

It involves monitoring the marketing environment internal and external to the organization or individual.

SWOT Analysis – Internal and External Factors

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:

SWOT Analysis – Errors to Be Avoided

Conducting a SWOT analysis before defining and agreeing upon an objective (a desired end state) SWOTs should not exist in the abstract. They can exist only with reference to an objective.

Opportunities external to the company are often confused with strengths internal to the company. They should be kept separate.

SWOTs are sometimes confused with possible strategies. SWOTs are descriptions of conditions, while possible strategies define actions.

Diversification

A business strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to all move in the same direction.

Diversification is the process of spreading the total investment money available across different asset classes, countries, industries, and individual companies.

The goal of diversification is to reduce the risk in a business. Diversification can only reduce unsystematic risk.

Types of Takeovers

Takeover

The transfer of control from one ownership group to another

Acquisition

The purchase of one firm by another

Merger

· The combination of two firms into a new legal entity

· A new company is created

· Both sets of shareholders have to approve the transaction.

Amalgamation

A genuine merger in which both sets of shareholders must approve the transaction

Requires a fairness opinion by an independent expert on the true value of the firm’s shares when a public minority exists

Strategic alliances
Meaning cooperative agreements between two or more organizations

A means to enhance strategic resources:

Self-sufficiency is becoming increasingly difficult in a complex, uncertain, and discontinuous external environment.

Strategic alliances that bring organizations together promise unique opportunities for partners.

Turnaround strategy
There are three stages of a turnaround strategy:

I – Pre-turnaround

II – Period of Crisis

III – Period of Recovery

Steps in turnaround strategy

Changing the leadership

· Redefining strategic focus

· Selling or divesting unnecessary assets

· Improving Profitability

· Making careful acquisitions

Divest Strategy

· Plan whereby a product line (or a product division of a business) is liquidated or sold so as to limit either real or anticipated losses

· To redirect the resources behind that product line or division to other company products or divisions.

What Is a Critical Success Factor?

· A key area where satisfactory performance is required for the organization to achieve its goals

· A means of identifying the tasks and requirements needed for success

· At the lowest level, CSFs become concrete requirements

· A means to prioritize requirements

The CSF Method

· Start with a vision: mission statement

· Develop 5-6 high level goals

· Develop hierarchy of goals and their success factors

· Leads to concrete requirements at the lowest level (a single, implementable idea)

· Along the way, identify the problems being solved and the assumptions being made

· Cross-reference usage scenarios and problems with requirements