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New Business Ventures Session #2: Venture Creation – A Process Framework PowerPoint PPT Presentation


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New Business Ventures Session #2: Venture Creation – A Process Framework. PROFESSOR BALAGOPAL VISSA INSEAD 1, Ayer Rajah Avenue Singapore 138676 --- Office: (65) 67995382 Hand phone: (65) 94244573 Email: [email protected]

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New Business Ventures Session #2: Venture Creation – A Process Framework

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New business ventures session 2 venture creation a process framework

New Business Ventures

Session #2: Venture Creation – A Process Framework

PROFESSOR BALAGOPAL VISSA

INSEAD

1, Ayer Rajah Avenue

Singapore 138676

---

Office: (65) 67995382

Hand phone: (65) 94244573

Email: [email protected]

These notes are intended to support class discussions. They should not be considered a comprehensive set of issues to be dealt with.


A m acro p erspective o n new venture creation

(II)

Fledgling

new firm

(III)

Adult

population

Nascent

entrepreneur

(I)

Established

new firm

CONCEPTIONGESTATIONINFANCYADOLESCENCE

Crucial: How to get from idea to business?

A macro-perspectiveon new venture creation

Source: Based on Reynolds (1994)


Easy to enter tough to survive

Easy to enter, tough to survive

  • High levels of start-up activity in most industrial societies

  • Most founding attempts reproduce existing organizations

  • Low survival rates

    • Misguided idea / design

    • Failure to mobilize needed resources

    • Failure to control resources & organizational boundaries

    • Failure to execute properly (e.g., making sales, managing cash) etc…


Is venture creation an accidental process

Is venture creation an accidental process?

“Our venture idea came from an accidental process that just happened to uncover the concept”

Source: Hills and Shrader, “Successful Entrepreneurs’ lusights into Opportunity Recognition”, 1998


Process of business building concept development implementation

Process of business-building:Concept development/implementation

Supply & Demand Boundary

Organization

Creation

Business

Concept

Customer

Product

Development

Commitment to

Venture Creation

Stimulated

Opportunity

Recognition

Market

Operational

Feedback

Strategic

Feedback

Implementation stage

Concept stage

Source: Adapted from Bhave (1994), Journal of Business Venturing 9: 223-242


Most new ventures have little novelty

Most new ventures have little novelty

  • Business Concept:High Novelty (H) orLow Novelty (L)

  • Production Technology:High Novelty (H) orLow Novelty (L)

  • Production Technology Development:Yes (Y) or No (N)

  • Organization Creation: Resources Needed,High (H), Moderate (M) or Low (L)

  • Product Development:Yes (Y) or No (N)

  • Product:High Novelty (H) or Low Novelty (L)

Source: Bhave (1994)


What do entrepreneurs do

  • Writing a business plan

  • Designing the business model

  • Establishing a legal entity

Creating legitimacy

  • Initiating discussions with potential customers

  • Asking financial institutions/people for funds

Generating

social relationships

  • Purchasing raw-materials, inventories, supplies, components

  • Developing product

  • Conducting marketing and promotion

  • Buying/renting/leasing facilities, equipment, property

Transforming resources

What do entrepreneurs do?


Gaining legitimacy is crucial

Gaining legitimacy is crucial

Undertaking activities to generate legitimacy:

  • Enhances chances of survival in first 24 months of venture’s existence

  • Is generally a precursor to other organizing activities

  • Enhances chances of survival even more if undertaken before other organizing activities


Social ties support the entrepreneurial process

Social ties support the entrepreneurial process

  • Personal networks grant access to:

    • Social support

    • Emotional support

    • Material support

  • Important network dimensions

    • Diversity of social ties

    • Affective/emotional strength of social ties

      • Strong, weak, or indeterminate

  • Predictors of business creation

    • Number of people in network

    • Proportion of nascent entrepreneurs in network


Sources of entrepreneurial knowledge

Sources of entrepreneurial knowledge

How do founders know what resources to pursue and how to transform them?

  • Imitation & copying from existing organizations

    • Common practices (frequency imitation)

    • Practices of high-status organizations (trait imitation)

    • Successful practices (outcome imitation)

  • Advice from experts

  • Previous work experience


Types of experience relevant for entrepreneurs

Types of experience relevant for entrepreneurs

  • General management experience

    • Formal education

    • Supervisory experience (« has supervised others »)

    • Management experience (« has supervised managers »)

  • Experience specific to certain business context

    • Similar/same customers, suppliers, products in venture as in previous employment

  • Entrepreneurial experience

    • Managed own business before

      Source: Gimeno, Folta,

      Cooper and Woo (1997), ASQ.


Key takeaways

Key Takeaways …..

  • Creating a new venture from scratch is a process – what you do and how you do it are more crucial than your personality or cultural background

  • Opportunities are like diamonds in the rough – need to be polished thru hard work

  • Luck matters a great deal – but on the other hand, fortune favors the prepared!!


Course administration

Course administration


Course format

Course format

  • Project Teams

    • Teams of 2 to 4 members

    • Choose your team members wisely

      • Different skills, approaches to problem solving, etc.

      • Team grade will determine part of your final grade

  • Project

    • Irreversible choice

    • What if you find out it does not work?

    • External projects

  • Guest Speakers


Scheduling guests in p4

Scheduling: Guests in P4

  • Darran Nathan, VP Strategy - Project Proteus

    • Tuesday, 31st August 2004 (Session #3)

  • Jason Ma, CEO – Congruent Partners LLC

    • Tuesday, 21st September 2004 (Session #9)

  • Lim Teck Sin, CEO - KOOPrime Pte Ltd &

  • Madan Padaki, Director (Biz Dev) - Merittrac

    • Thursday, 30th September 2004 (Session #13)


Your job

Your job

  • Before class

    • Prepare the case & readings

    • Submit any assignments due

  • During class

    • Be prepared to lead case discussion and summarize readings

    • Be prepared to summarize lessons learnt in that class

  • Follow up

    • Do individual assignments (if any)


My job

My job

  • Before class:

    • Prepare the case and other readings

  • During class:

    • Facilitate discussion

    • Evaluate your contributions to the class discussion

    • Lecture on theoretical issues

  • Follow up

    • Upload slides / other notes on the course web page

    • Suggestions for further exploration on your own

    • Provide face to face time as desired


Course evaluation

Course evaluation

  • Class participation (Individual) (35%)

  • Individual assignment (20%)

  • Term project (Group grade) (45%)


Contact details

Contact details

  • Bala Vissa #315, x 5382

    • Mon, Wed and Fri pm is best.

  • Secretary, Tina Alias #335, x5391


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