Management & Organization Behavior class Three different Discussions
Entrepreneurship
Chapter Seven
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Learning Objectives
LO1 Describe why people become entrepreneurs and what it takes, personally.
LO2 Summarize how to assess opportunities to start a new company.
LO3 Identify common causes of success and failure.
LO4 Discuss common management challenges.
LO5 Explain how to increase your chances of success, including good business planning.
LO6 Describe how managers of large companies can foster entrepreneurship.
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Entrepreneurship
Entrepreneurship
The pursuit of lucrative opportunities by enterprising individuals.
Discovering, evaluating, and capitalizing on opportunities to create new and future goods and services.
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Entrepreneurship
Small business
A business having fewer than 100 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices.
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Entrepreneurship
Entrepreneurial venture
A new business having growth and high profitability as primary objectives.
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Some Myths About Entrepreneurship
Entrepreneurs are born, not made.
Anyone can start a business
Entrepreneurs are gamblers
Entrepreneurs want the whole show to themselves
Entrepreneurs are their own bosses and completely independent.
Entrepreneurs work longer and harder than managers in big companies.
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Some Myths About Entrepreneurship
Entrepreneurs experience a great deal of stress and pay a high price.
Start a business and fail and you’ll never raise money again.
Money is the most important start-up ingredient.
Entrepreneurs should be young and energetic.
Entrepreneurs are motivated solely by the quest for the almighty dollar.
Entrepreneurs seek power and control over others.
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Entrepreneurship
Entrepreneur
Individuals who establish a new organization without the benefit of corporate sponsorship.
Intrapreneurs
New-venture creators working inside big companies.
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Mega-Entrepreneurs Who Started in Their 20s
Table 7.2
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Who is The Entrepreneur?
Figure 7.1
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The Idea
A great product, a viable market, and good timing are essential ingredients in any recipe for success.
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What Business Should You Start?
An entrepreneur should consider opportunities in:
Technological discoveries
Demographic changes
Lifestyle and taste changes
Economic dislocations
Calamities
Government initiatives and rule changes.
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What Business Should You Start?
Franchising
An entrepreneurial alliance between a franchisor (an innovator who has created at least one successful store and wants to grow) and a franchisee (a partner who manages a new store of the same type in a new location).
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Question
Which Internet model charges fees to advertise on a site?
Transaction fee model
Subscription model
Advertising support model
Affiliate model
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The correct answer is c – advertising support model. See next slide
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The Internet
Transaction fee model
Charging fees for goods and services.
Subscription model
Charging fees for site visits.
Advertising support model
Charging fees to advertise on a site.
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The Internet
Intermediary model
Charging fees to bring buyers and sellers together.
Affiliate model
Charging fees to direct site visitors to other companies’ sites.
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Social Entrepreneurship
Social entrepreneurship
Leveraging resources to address social problems
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Examples of Social Entrepreneurship Companies
Table 7.3
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What Does it Take, Personally?
Commitment and determination
Leadership
Opportunity obsession
Tolerance of risk, ambiguity, and uncertainty
Creativity, self-reliance, and ability to adapt
Motivation to excel
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Entrepreneurial Strategy Matrix
Figure 7.2
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Success and Failure
Anticipate risk
Consider the role of the economic environment
Utilize business incubators
Realize there are common management challenges
Going public with an initial public offering (IPO)
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Biggest Start-Up Mistake
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Question
A _____________ is a protected environment for small businesses.
Business incubator
Small business office
SBA
Service incubator
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The correct answer is a – business incubator. See next slide.
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Success and Failure
Business incubators
Protected environments for new, small businesses
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Common Management Challenges
You might not enjoy it
Survival is difficult
Growth creates new challenges
It’s hard to delegate
Misuse of funds
Poor controls
Mortality and succession
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Going Public
Initial public offering (IPO)
Sale to the public, for the first time, of federally registered and underwritten shares of stock in the company
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Increasing Your Chances of Success
Opportunity analysis
A description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities and resources needed to translate your idea into a viable business, and your source(s) of capital.
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Opportunity Analysis
Table 7.4
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Planning
Business plan
A formal planning step that focuses on the entire venture and describes all the elements involved in starting it.
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Outline of a Business Plan
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Outline of a Business Plan
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Five Key Factors
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The people
The opportunity
The competition
The context
Risk and reward
Nonfinancial Resources
Legitimacy
People’s judgment of a company’s acceptance, appropriateness, and desirability, generally stemming from company goals and methods that are consistent with societal values.
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Nonfinancial Resources
Social capital
A competitive advantage in the form of relationships with other people and the image other people have of you.
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Building Support for your Idea
Clear the investment with your immediate boss
Make cheerleaders who will support your idea
Horse trading for support, time, money, and other resources
Get the blessing of relevant higher-level officials
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Building Intrapreneurship
Skunkworks
A project team designated to produce a new, innovative product.
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Building Intrapreneurship
Bootlegging
Informal work on projects, other than those officially assigned, of employees’ own choosing and initiative.
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Entrepreneurial Orientation
Entrepreneurial orientation
The tendency of an organization to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services
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Characteristics of Entrepreneurial Orientation
Allow independent action
Innovativeness
Risk taking
Proactiveness
Competitive aggressiveness
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Video: Pillow Pets
What was the impetus for Jennifer Telfer to start Pillow Pets?
How did she expand the business?
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