Mnagerial vs.

Entrepreneurial
decision making
 Entrepreneurial process

• The Entrepreneurial Process involves continuous

finding, evaluating, and developing an opportunity
by overcoming the strong forces that resist the
creation of something new.
 The Entrepreneurial Process has 4 distinct phases

1. Identification and evaluation of the opportunity

2. Development of the business plan
3. Determination of the required resources
4. Management of the resulting enterprise
 Four ways to identify more
business opportunities.
• Listen to your potential clients and past leads. When
you're targeting potential customers listen to their needs,
wants, challenges and frustrations with your industry....
• Listen to your customers....
• Look at your competitors....
• Look at industry trends and insights.
 Developing a Business Plan
• Executive summary -- a snapshot of your business
• Company description -- describes what you do
• Market analysis - research on your industry, market and competitors
• Organization and management -- your business and management structure
• Service or product -- the products or services you’re offering
• Marketing and sales -- how you’ll market your business and your sales strategy
• Funding request -- how much money you’ll need for next 3 to 5 years
• Financial projections -- supply information like balance sheets
 Types of Resources

• At this stage each task on the task list is scrutinized and the resources
required to perform the task are identified. there are four major types of
resources:
• Labor
• Tools & equipment
• Material & supplies
• Fixed cost items like subcontractors, etc.
• Other resources; financial capital, intellectual capital, skills,
competencies.
 Managing the resulting
enterprise
• Initiate business operations
• Need to manage every thing in order to achieve
goals
• Need to develop hierarchy.
 HOW DO ENTREPRENEURS
THINK AND MAKE DECISIONS?

“If I may control the future, I do not

have to predict it”
 Saras Sarasvathy

• Associate Professor of Business Administration

• Top class world professor in entrepreneruship
• Author of effectuation theory
 Casual vs. Effectuation
• Casual process or Managerial thinking:
A process that starts with a desired outcomes and focus on
the means to generate that outcome.
• Effectuation process or Entrepreneurial thinking:
A process that starts with what one has ( who they are, what
they know, and whom they know) and select among possible
outcomes.
 Effectuation vs causation
• There are different approaches to take actions, solving problems and decision
making of entrepreneurs, especially in uncertain environment.

• Effectuation - the future is unpredictable yet controllable, entrepreneurs

create opportunities, effectual models begin with given means and seek to
create new ends, based on the premise „To the extent we can control the
future, we do not need to predict it”

• Causation – rooted in prediction, causal models begin with an effect to be

created, based on the premise „To the extent we can predict the future, we
can control it”
SEE WHAT YOU HAVE PREPARE THE MEAL

MOBILIZE YOUR
CLARIFY YOUR IDEA
RESOURCES
READ THE RECIPE GO TO SHOP TO BUY INGREDIENTS COOK

SET THE GOALS OBTAIN THE RESOURCES ACHIEVE THE

GOAL
Howard Stevenson dimensions of managerial and
entrepreneurial decision making
Conceptual dimensions Entrepreneurial Focus
Strategic orientation Driven by perception of
opportunity
Commitment to opportunity Revolutionary with short
duration
Commitment of resources Many stages with minimal
exposure
Control of resources Episodic use and rent of
required resources
Management structure Flat with multiple informal
networks
Reward philosophy Based on value creation
Growth orientation Rapid growth is top priority;
risk accepted to achieve goals
Entrepreneurial culture Promoting broad search for
opportunities
Administrative Focus
Driven by controlled
resources
Evolutionary with long
duration
A single step with complete
commitment out of decision
Ownership or employment
of required resources
Hierarchy
Based on responsibility and
seniority
Safe, slow and steady
Opportunity search
restricted by controlled
resources; failure punished.