1 Session 4: Understanding and Managing SocialEntrepreneurial ProcessICTM Module Delivery Team 1 ICON College of Technology and ManagementSocial Action Project Week 4 Activities PlannerWk4StepsDescriptionExample Activity TypesTool that will support this activity1Introduction(Informinglearners oftheobjective)DefinitionsObjectives: Students will be able to:Understand how entrepreneurial opportunities are differentUnderstand how entrepreneurial opportunitiesTo social venture effectivenessUnderstand the different sources of social entrepreneurshipStudents discuss … Continue reading “Managing Social Entrepreneurial Process | My Assignment Tutor”
1 Session 4: Understanding and Managing SocialEntrepreneurial ProcessICTM Module Delivery Team 1 ICON College of Technology and ManagementSocial Action Project Week 4 Activities PlannerWk4StepsDescriptionExample Activity TypesTool that will support this activity1Introduction(Informinglearners oftheobjective)DefinitionsObjectives: Students will be able to:Understand how entrepreneurial opportunities are differentUnderstand how entrepreneurial opportunitiesTo social venture effectivenessUnderstand the different sources of social entrepreneurshipStudents discuss a case studyon Social Entrepreneurship inthe ForumICON VLE: Instructions on the activity arewritten in the Forum2LecturesanddeliverymethodSession 2Discovering and Creating Social Entrepreneurial OpportunitiesFrom Opportunity to ActionFrom Action to ImpactFunding of social entrepreneurshipInstructor-led with Q&A for students engagementPresentation, video on “Howsocial entrepreneurship willchange the world”How social entrepreneurshipwill change the world | EricaWenger | TEDxUSCKaltura – My Media url to video.Lecture material on ICON VLE3ActivityIn Breakout Rooms: “Social economy and social entrepreneurship – themanifestation of social responsibility in the era of globalization”(Pongracz, 2020)1. Identify the differences between social economy and socialentrepreneurship2. List the determinants of social entrepreneurship development3. Discuss the barriers to entrepreneurial development in a developedcountryAfter: Group summaries are submitted onto the VLE Group reports;Concluding remarks by the lecturerGroup reports of the discussionof Social economy and socialentrepreneurshipBreakout Rooms in Kaltura4ReflectionandFeedbackGroups summarise the discussion of Social economy and socialentrepreneurshipFeedback; Students keep arecord of the discussion ofSocial economy and socialentrepreneurshipICON VLE and Kaltura5Consolidation andIntegrationStudents share their summaries of the discussion of Social economy andsocial entrepreneurship. These summaries are uploaded onto the ICONVLEStudents are divided intogroups in Breakout rooms todiscuss Social economy andsocial entrepreneurshipKaltura and ICON VLE ICTM Module Delivery Team21 223-3At the end of the session student will be able to: Understand the different types of social entrepreneurship Recognise the importance of social entrepreneurship Describe the growing importance of social entrepreneurshipICTM Module Delivery Team3-4The Entrepreneurship Process The entrepreneurship process is a course of action that involves allfunctions, activities and actions associated with identifying andevaluating perceived opportunities and the bringing together ofresources necessary for the successful formation of a new firm topursue and seize the said opportunities (Bygrave, 1997:2; Cornwall& Naughton, 2003:62).ICTM Module Delivery Team3 43ICTM Module Delivery Team 53-6Four stages of the entrepreneurship Process 1. Innovation, which includes generating the idea, innovation, identifying amarket opportunity, information search, conception, screening ideas forfeasibility, identifying where to extract value and the development of theproduct or service 2. Triggering event, which includes gestation, the motivation to start abusiness, the decision to proceed, the business planning, identifying thedifferent resources required, risk assessment, resource acquisition andassembling 3. Implementation, which includes infancy, incorporation, setting up andlaunching the new venture, business strategy, implementing the businessplan, running the business, deploying of resources, building success andmanaging the venture 4. Growth which includes adolescence, maximizing profits, harvesting therewards and continually growing the venture to include other opportunitiesICTM Module Delivery Team5 643-7Stage 1: InnovationOpportunity recognition – identification and refining of a viable economicopportunity that exists in the market Getting the idea – should be developed into a market opportunity,implementing it and building a successful business around it Opportunity identification – scanning the informational environment, beingable to capture, recognize and make effective use of abstract, implicit andchanging information from the changing external environments Opportunity development – timely adaptation of that opportunity to suitactual market need is key to new venture success, process of combiningresources to pursue a market opportunity identified, involves systematicresearch to refine the idea to the most promising high potential opportunitythat can be transformed into marketable items Opportunity evaluation- this should answer questions like : Product/service – Is the company able to produce product and supplyrequired aftercare support?ICTM Module Delivery Team3-8Stage 1: InnovationOpportunity evaluation- this should answer questions like : Product/service – Is the company able to produce product and supplyrequired aftercare support? Market opportunity – Where is the market demand? What is the targetmarket? Is it generic or a niche? Costing and pricing – How much will it cost to develop the product andcommercialize it? Profitability – Where is the money to be made in this activity? What are thegross margins? Capital requirements – How much capital (people, operating expense andassets) is required to start? Issues and risks – What risks (real and perceived) are inherent with theproduct/service?ICTM Module Delivery Team7 853-9Skills required in Stage 1: Innovation Technical skills – ability to identify opportunities based on existingcompetence Communication – ability to interact with individuals from many differentbackgrounds, plus interpersonal skills such as listening and persuasivecommunication as linked with success in the opportunity identification stage Problem solving – the capacity to solve everyday problems Motivation (need for achievement) – personal motivation as one of the keysuccess factors for systematically scanning and spotting the marketopportunity Adaptability to change – leads to a higher probability of identifyingopportunities Time management skills – crucial for identifying market opportunities Financial management – dependant on skills that enable the nascententrepreneur to accurately forecast financial estimatesICTM Module Delivery Team3-10Skills required in Stage 1: Innovation Human resources – ability to evaluate the opportunity and how it fits withthe skills of the team Marketing – abilities to identify niche markets, to identify the payingcustomers and to analyse competitors Networking – can facilitate successful opportunity identification as networksare pathways through which the firm can access opportunities Planning – skills that allow them to formulate strategic plans for setting upthe business Research and development – the firm’s intelligence-gathering efforts, whichinclude gathering, disseminating, sharing and acting on intelligence ICT skills – allow the entrepreneur to access critical knowledge aboutmarkets, opportunities and businesses Creativity – key for seeking business opportunities Innovation – key to the identification of opportunitiesICTM Module Delivery Team91063-11Skills required in Stage 1: Innovation Opportunity recognition – ability to detect, identify, select, evaluate anddevelop the right business opportunities is key for success in this first stage Ability to gather and control resources – needed to pursue the identifiedopportunity and to conceptualise how the entrepreneur will secure theseresources as important Calculated risk taking – influences the process of opportunity recognitionand development, identifying, quantifying plus analysing potentialuncertainties and envisioned risks linked with each opportunity identified isimportant for this stageICTM Module Delivery Team3-12Stage 2: Triggering event Motivation to become an entrepreneur – actual decision to become anentrepreneur is motivated by different factors that can be categorised intoeither the push (necessity) or pull (opportunity) factors Planning – a good business plan is essential to exploiting the definedopportunity and determining the resources required, obtaining thoseresources and successfully managing the resulting venture Gathering resources – acquiring of resources to be as important asopportunities discovered, because in the absence of the key resources theentrepreneurial process is likely to result in failure◦ Technical know-how, which assists in the production of a quality productor offering of a service◦ Finance including equity, cash and borrowing power◦ Physical assets including buildings, equipment, machinery and vehicles◦ Human resources including motivated employees with skills, training,experience, emotional and intellectual abilities◦ Intangible resources including information, networks, protected patents,unique technology and brand reputationICTM Module Delivery Team111273-13Skills required in Stage 2: Triggering event Technical skills – are a precondition for successfully starting a business Problem-solving – allow entrepreneurs to overcome challenges rife in thestart-up stage and therefore are key to successfully starting a smallbusiness Numeracy and literacy – low levels of literacy threaten economicperformance Communication skills – basic good communication skills to convincefunders and employees to be part of the venture Motivation (need for achievement) – a business will neither start up norsucceed without motivation Adaptability to change – willingness and ability to make appropriateadjustments to the business concept as the venture evolves from an initialbusiness idea, to the business plan and finally to an operational enterprise Learning abilities – is a function of the individual entrepreneur and his/herability to learn Decision-making skills – key to successfully starting a new venture lies inthe ability to make fast but accurate decisionsICTM Module Delivery Team3-14Skills required in Stage 2: Triggering event Negotiating skills – negotiation and persuasion skills are key skillsnecessary to start a business Financial management – should have adequate financial management skillsthat enable them to accurately estimate their resource needs, to understandthe financial terminology that investors and venture capitalist use and toindicate that the proposed venture can make on average 5% profit to beable to re-compensate their investors and cover the staff’s salary Human resources – ability to organise a team, to retain suitable staff, tomatch employee with operational needs and facilitate the adoption of anorganisational vision, strategy; lack of human resource management skillsis cited as a key factor constraining business start-up Legal – ability to seek advice from lawyers and normally form legal entities Marketing – poorly defined markets and insufficient market environmentanalysis can result in limited planning for start-up Networking – entrepreneurial networks are important for the mobilizationand acquisition of scarce resources that are crucial to starting anddeveloping a business; can provide human contact, preventing theloneliness that comes with working aloneICTM Module Delivery Team131483-15Skills required in Stage 2: Triggering event Planning – it describes the fits and gaps between resources, opportunityand the entrepreneur; it maps the way forward for the businessdevelopment and it is used to present a business case to financiers forapplication for finance Role model interpretation – exposure to relevant role models makes the actof initializing the entrepreneurship process seems much more doable Ability to gather and control resources – abilities to identify, seek, secure,capitalize on and control critical yet scarce resources as key to the successof the venture start-up phase; inability to secure resources has cited as oneof the main reasons leading to failure in entrepreneurial start-ups Calculated risk taking – ability to take calculated risks and to avoid thecognitive bias of underestimating the amount of risk involved in starting anew ventureICTM Module Delivery Team3-16Stage 3: ImplementationActivities undertaken in this stage include Creating the organisational capabilities Implementing a management style in order to grow managerialcompetencies Setting up production processes, structures and systems Quality control Waste elimination and cost effectiveness Dealing with distributors and suppliers Selling to customers Collecting the finance Resolving operational problems Fending off competitors Steering the organization towards its goals and determining the keyvariables for successICTM Module Delivery Team151693-17Skills required in Stage 3: ImplementationCan be catergorised into the four principles of management, namely planning,organizing, leading and control Technical skills – technical business knowledge is a key firm factor affectingsuccessful business performance, the entrepreneur must be able to createan excellent product Problem solving – ability and perseverance to solve numerous problems,obstacles, challenging circumstances and difficulties in everydaymanagement of the business Decision making skills – ability to swiftly make important decisions requiredto implement their dreams, to allow the firm to accomplish its goals, tomaintain the business as a going concern and to manage risk Motivation (need for achievement) – entrepreneurial success is a function ofachievement motivation and related self efficacy, positive attitudes andcommitment Time management – managing scarce time is crucial for businessperformance a scarce resource for the SME; the inability to adhere to timeconstraints has been cited as a factor contributing to failureICTM Module Delivery Team3-18Skills required in Stage 3: Implementation Negotiating skills – persuasion and negotiation skills were important forbusiness performance Communication skills – active listening, clear information andcomprehensible communication are very important for optimal businessperformance Adaptability to change – success is a function of the capacity to being quickand nimble; being fast and flexible; keeping an open mind plus respondingto and managing change Learning abilities – successful entrepreneurs are capable and efficientmanagers who take advice from experts and learn quickly from mistakesand from experiences Business systems management – Ability to have a clear understanding ofhow their own business works and to have the ability to rapidly assess anddefine the business processes of their partnering organizations andcompetitors General management – general management skills are one of the keyfactors in the entrepreneurial performance formulae; failure is often due to alack of general managerial experienceICTM Module Delivery Team1718103-19Skills required in Stage 3: ImplementationFinancial management – The following negatively influence success Inappropriate pricing strategy Inadequate bookkeeping knowledge and systems Lack of proper accounting Lack of adequate financial controls and monitoring Inadequate credit and debtors policies and controls Poor working capital management Poor Inventory control Cash flow problems Failure to reach income targets Large operation expenses Excessive fixed costs Insufficient profits Owner manager withdrawing too much cashICTM Module Delivery Team3-20Skills required in Stage 3: ImplementationHuman resources management skills – The following negatively influencesuccess Non-availability of suitably skilled personnel with specific management skills Failure to recruit relevant, trained or experienced workforce Inadequate labour capacity, as staff get by with general knowledge untilassigned new specific roles and functions Inability to motivate and retain a competent workforce Poor training of workers and lack of skills development plans to ensure thatthe team acquires entrepreneurial competencies Inadequate management structure, leading to the inability to make effectivedecisions, lead or delegate authority Inability to deal with conflict, worry and stress Inability to create attractive working conditions, leading to low staff moraleand reduced personal loyalty to the SME Inability to clarify job, roles, performance review and compensationprocessesICTM Module Delivery Team1920113-21Skills required in Stage 3: Implementation ICT skills – today’s information society requires that most SME have somelevel of ICT use integrated into their businesses, use of ICT can result inhigher profit ratios due to improved access to information, enhancednetworking, increased access to markets and crucial linkages with localbusinesses, as well as the reduction of client bad debts Marketing – Many entrepreneurs are “technically very proficient,” but lackthe sales and marketing know-how necessary to sell their product Networking – assists business venture performance through peer advice,access to complementary skills, information sharing and discussingsolutions to common problems encountered during the running of SMEs Operational – include mastering production skills, quality assurance,acceptable productivity and related performance monitoring, as well ascapacity management to enhance the use of existing capacity Planning – planning (goal setting, systematic planning, greater planningsophistication, focused strategies and action plans) has a strong positiveeffect on the financial performance and has been positively related tobusiness success. Lack of planning, poor planning, lack of written plans andprioritizing are often cited as factors leading to failure of SMEsICTM Module Delivery Team3-22Skills required in Stage 3: Implementation Value chain management – keeping good supplier and value chainrelationships; failure related to resource suppliers (inventory turnaroundtime, quality control and securing credit from suppliers) Creativity – very important for successful business performance in acompetitive and increasingly demanding world Innovation – ability to innovate in the light of the fast-changing environment;incorporate innovation for new ideas, opportunities, services, products andprocesses Opportunity recognition – economic success occurs when good managerialpractice is combined with enterprising qualities that optimize the identifiedopportunities and resources available Role model interpretation – access to role models who have experience inthe field is regarded as important for SME performance Ability to gather and control resources – ability to manage and controlscarce resources, to keep low overheads, increase productivity and nurturethe quality of resources Calculated risk taking – competence to gauge risk associated with variousstrategies and are capable to take calculated risks plus be able plan forcontingencies ICTM Module Delivery Team2122123-23Stage 4: Growth Facilitates the continued survival of the firm, which may lead to itsexpansion to some optimum size determined by the market demandIndicators of growth Financial growth – increases in turnover, costs and investmentneeded to achieve the turnover, profits, business assets and allrelated value added Strategic growth – mergers and acquisitions, exploiting of newmarkets, new products and new opportunities Structural growth – internal systems with regard to managerial roles,increasing employees and their responsibilities, reportingrelationships, communication links and increased use of internalsystems to control resources Organizational growth – processes used, the organization’s culture,management attitudes towards staff, as well as changes regardingthe entrepreneur’s role as the business moves from small to large Image growth – becoming more formal (e.g., having formal businesspremises), moving to newly built premises, redecorating thepremises and moving to a new environment.ICTM Module Delivery Team3-24Stage 4: GrowthActivities undertaken – linked to five strategic growth intentions, namely marketexpansion, technological change, garnering resources, operations, andorganisational development Market expansion – continually scanning the changing businessenvironment and preparing to exploit these opportunities ahead of, or notfar behind competitors Technological change – includes acquiring new equipment, computerizingcurrent operations, upgrading computer systems, replacing presentequipment. It also includes keeping up with the increases in technicalknowledge Garnering resources – evaluating whether the company has the resourcesto fund the growth strategy, taking action, taking new risks, setting linkageswith external factors, consolidating available cash on hand, seekingadditional financing, etc. Operations – being product/service-focused and growing the firm’s specificcompetences and skills to overcome constraints and complacence and todeploy resources optimally. Organisational development – the development of the organization towardsincreasing the firm’s competitive advantage.ICTM Module Delivery Team2324133-25Skills required in Stage 4: Growth Technical skills – technical skills and vocational abilities are paramount Problem solving – conflict resolution and overcoming stress as key abilitiesfor successfully growing SMEs Adaptability to change – ability to manage change, to anticipate, executeplus monitor the change towards SME growth Learning abilities – ability to learn, flexible to continually adapt the range ofpotential behaviours to changing opportunities Numeracy and literacy – inadequate literacy / numeracy skills impactnegatively on the growth of small business Motivation (need for achievement) – ability to motivate themselves and theteam to continuous commitment and initiative Time management – managing it productively, effectively and efficientlyduring the growth stage of a business Communication skills – ability to express their vision for growth clearly andefficiently Negotiating skills – ability to build long-term relationships with suppliers,bankers, directors, managers, shareholders, customers (negotiatingcontracts or tenders), distributors, unions and other stakeholdersICTM Module Delivery Team3-26Skills required in Stage 4: Growth Decision making skills – ability to make quick and correct decisions Business systems management – applications of business systems andprocesses enable the owner-manager to adopt a hands-off managementstyle more appropriate for growing businesses General management – planning, executing (organizing and leading) andmonitoring (or control) Financial management – Credit and cash flow management, bookkeeping,financial insight and basic financial management are additional areas thatneed the entrepreneur’s attention in the growing stage ICT skills – can assist in driving the SME from the spectre of failure pastmere survival into growth by enabling the SME to tap into global informationnetworks and markets Marketing – strategic intentions that emphasize market growth and theactual marketing expertise (and understanding of marketing) needed tobecome competitive Networking – Strong networks (social, public and professional) andpractices of networking foster venture growth Operational – great concern for reputation and high-quality work andtherefore most have high operational skillsICTM Module Delivery Team2526143-27Skills required in Stage 4: Growth Research and development – conduct research that helps them adaptproducts and technology to changing needs Creativity – creativity should continue if the competitive advantage is to besustained Innovation – dependant of the planning of innovation, the development ofnew innovative products and innovative techniques Opportunity recognition – ability identify opportunities to increase coremarket share; increase sales volume; develop new products; enter newmarkets; diversify; integrate; form strategic alliances; expand distributionchannels; advance technical Ability to gather and control resources – ability to secure adequatecapitalisation competitively; to manage these resources effectively Calculated risk taking – ability to take new risks in order to grow theircompaniesICTM Module Delivery Team3-28Entrepreneurial ProcessDeciding – Developing – Moving – Managing – RecognizingThe process of starting a new venture is embodied in the entrepreneurialprocess, which involves more than just problem solving in a typicalmanagement position. An entrepreneur must find, evaluate, and develop anopportunity by overcoming the forces that resist the creation of somethingnew. The entrepreneurial process involves all the functions, activities andactions linked with perceiving an opportunity and creating an organization topursue themThe process has four distinct phases Identification and evaluation of the opportunity Development of the business plan Determination of the required resources Management of the resulting enterpriseICTM Module Delivery Team2728153-29Entrepreneurial ProcessIdentify and Evaluate the opportunity Opportunity identification and evaluation is a very difficult task Most good business opportunities do not suddenly appear, butrather result from an entrepreneur’s alertness to possibilities, or insome case, the establishment of mechanisms that identify potentialopportunities Although most entrepreneurs do not have formal mechanisms oridentifying business opportunities, some sources are often fruitful:consumers and business associates, members of the distributionsystem, and technical people Often, consumers are the best source of ideas for a new ventureICTM Module Delivery Team3-30Entrepreneurial Process Whether the opportunity is identified by using input from consumers,business associates, channel members, or technical people, eachopportunity must be carefully screened and evaluated This evaluation of the opportunity is perhaps the most criticalelement of the entrepreneurial process, as it allows the entrepreneurto assess whether the specific product or service has the returnsneeded compared to the resources required This evaluation process involves looking at the length of theopportunity, its real and perceived value, its risks and returns, its fitwith the personal skills and goals of the entrepreneur, and itsuniqueness or differential advantage in its competitive environment The opportunity must fit the personal skills and goals of theentrepreneur The entrepreneur should put forth the necessary time and effortrequired to make the venture succeedICTM Module Delivery Team2930163-31Entrepreneurial ProcessDeveloping a Business Plan A good business plan must be developed in order to exploit the definedopportunity Time consuming phase Business plan also determines the resources required and how to obtainthose resourcesDetermine the Resources Required The resources needed for addressing the opportunity must also bedetermined This process starts with an appraisal of the entrepreneur’s presentresources Any resources that are critical need to be differentiated from those that arejust helpful Care must be taken not to underestimate the amount of variety of resourcesneededICTM Module Delivery Team3-32Entrepreneurial ProcessManage the Enterprise After resources are acquired, the entrepreneur must use them to implementthe business plan The operational problems of the growing enterprise must also be examined– this involves implementing a management style and structure, as well asdetermining the key variables for success A control system must be established, so that any problem areas can bequickly identified and resolved Some entrepreneurs have difficulty managing and growing the venture theycreated.ICTM Module Delivery Team3132173-33University of Pretoria (nd) Chapter 3: The entrepreneurship processMicrosoft Word – Chapter 3 Final yvonne.doc (up.ac.za)ICTM Module Delivery TeamICTM Module Delivery Team 343334
