midterm multiple choice
saud64
chp_10_-1.pptxPowerPoint Presentation by Charlie Cook The University of West Alabama
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© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–1
Management 11e Griffin
Discuss the nature of entrepreneurship.
Describe the role of entrepreneurship in society.
Understand the major issues involved in choosing strategies for small firms and the role of international management in entrepreneurship.
Discuss the structural challenges unique to entrepreneurial firms.
Understand the determinants of the performance of small firms.
10–2
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Learning Objectives
10–2
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Management 11e Griffin
The Nature of Entrepreneurship
Entrepreneurship
The process of planning, organizing, operating, and assuming the risk of a business.
Entrepreneur
Someone who engages in entrepreneurship.
Small Business
A business that is privately owned by one individual or a small group of individuals; it has sales and assets that are not large enough to influence its environment.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–3
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10–3
Management 11e Griffin
The Role of Entrepreneurship in Society
Research Findings:
Most new businesses fail, those that survive often do so because the entrepreneur works for little income.
More than 98% of U.S. businesses have fewer than 100 employees.
Most U.S. workers work for small businesses.
The majority of small businesses are owner operated.
Small business is a strong presence in both mature and emerging economies
Small businesses have a strong effect on job creation, innovation, and are important to big businesses.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–4
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–4
Management 11e Griffin
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–5
10.1 The Importance of Small Business in the United States
(a) Approximately 86 percent of all U.S. businesses employ fewer than 20 people; another 11.7 percent employ between 20 and 99 people. In contrast, only about 2.1 percent employ between 100 and 400 workers, and another .2 percent employ 500 or more. (b) 24.5 percent of all U.S. workers are employed by firms with fewer than 20 people; another 29.6 percent work in firms that employ between 20 and 99 people. 25.5 percent of U.S. workers are employed by firms with 100–499 employees, and another 20.3 percent work for businesses that employ 500 or more total employees
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10–5
Management 11e Griffin
Entrepreneurship’s Role in Society
Small Businesses’ Role in Job Creation
Create many of the new jobs in the U.S.
Dominate sectors that have added the most jobs.
Represent 92% of all U.S. exporters.
Innovation
Major innovations are as likely to come from small businesses as from large firms.
Much of what is created in the high-technology sectors comes from start-up companies.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–6
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10–6
Management 11e Griffin
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10–7
10.2 Representative Jobs Created and Lost between 2007–2008
Aetna
Wal-Mart
Home Depot
Verizon Communications
Sprint Nextel Corp.
Johnson & Johnson
IBM
Merck
Pfizer
Caterpillar
–1,240
–1,450
–7,000
–8,000
–8,000
–8,900
–10,000
–16,000
–19,500
–20,000
Whole Foods Market
Microsoft
T-Mobile
Nordstrom
Cisco Systems
Deloitte
Accenture
Edward Jones
+8,570
+7,130
+3,586
+3,550
+2,421
+2,412
+2,311
+2,176
+2,1290
JOB LOSSES
JOB GAINS
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10–7
Management 11e Griffin
Entrepreneurship’s Role in Society (cont’d)
Importance to Large Businesses
Most products made by large manufacturers are sold to customers by small businesses.
Small businesses as suppliers provide large firms with essential services, supplies, and raw materials.
Large businesses outsource many routine business operations such as packaging, delivery, and distribution to small businesses.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–8
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10–8
Management 11e Griffin
Strategy for Entrepreneurial Organizations
10–9
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Emphasizing distinctive competencies
Gaining first mover advantage
Choosing an industry in which to compete
Basic Strategic Challenges
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10–9
Management 11e Griffin
Services are the fastest growing segment of small-business enterprise.
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10–10
10.3 Small Businesses (Businesses With Fewer Than Twenty Employees) by Industry
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10–10
Management 11e Griffin
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10–11
10.4 Economies of Scale in Small-business Organizations
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10–11
Management 11e Griffin
Emphasizing Distinctive Competencies
Identifying Niches in Established Markets
Niches represent a market segment currently unexploited in a market where several large firms compete.
Niches offer a competitive advantage to small businesses.
Identifying New Markets
Using the transfer of an existing product/service to explore a new market.
Creating new industries/products/services.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–12
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10–12
Management 11e Griffin
First Mover Advantages
First-Mover Advantage
Exploiting an opportunity before any other firm does.
Why first-mover advantage is not taken by larger firms:
Decisions are slowed by organizational hierarchy.
Size of the assets at risk makes large firms overly cautious.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–13
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10–13
Management 11e Griffin
Management Challenge Question
What would you caution an entrepreneur about the dangers of taking first-mover advantage?
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10–14
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Management 11e Griffin
10–14
Writing a Business Plan
Business Plan
is a document that summarizes the business strategy and structure. It should include:
business goals and objectives.
strategies used to achieve these goals and objectives.
a plan of how the entrepreneur will implement these strategies.
Entrepreneurship and International Management
Expansion and growth potential in foreign markets.
Entering a foreign country’s market can be an important catalyst for success.
10–15
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10–15
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e Griffin
Structure of Entrepreneurial Organizations
Starting the New Business
Buying an Existing Business
Business has a proven ability to draw customers and make a profit (the business is a going concern).
Networks (e.g., customers and suppliers) are established.
Negative: New owners inherit any existing problems.
Starting from Scratch
Avoids problems associated with previous owners.
Freedom to choose suppliers, equipment, location, and workers.
Negative: More business risk and uncertainty.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–16
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10–16
Management 11e Griffin
Getting into the Game
Identifying a Genuine Business Opportunity
Who are my customers?
Where are they?
At what price will they buy my product?
In what quantities will they buy?
Who are my competitors?
How will my product differ from those of my competitors?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–17
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10–17
Management 11e Griffin
Financing the New Business
Venture Capital Companies
Small-Business Investment Companies
SBA Financial Programs
Sources of New Business Financing
Personal Resources
Strategic Alliances
Lenders
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–18
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10–18
Management 11e Griffin
Seeking New Business Advice
Advisory Boards
Management Consultants
Small Business Administration
Networking with Others
Sources of Management Advice
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–19
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–19
Management 11e Griffin
Franchising
The Franchising Agreement
Governs the operation of a franchise business by the entrepreneur (the franchisee) under a license by a parent company (the franchiser).
The entrepreneur pays the parent company for use of trademarks, products, formulas, and business plans.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–20
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10–20
Management 11e Griffin
Franchising (cont’d)
Disadvantages
Start-up fees to purchase franchise.
Limitations of franchise (market area, product, customers).
Loss of independence due to imposed operational controls of franchiser.
Advantages
Reduced financial risk of new business success through experience provided by franchiser.
Training, financial, and management support by franchiser.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–21
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10–21
Management 11e Griffin
Management Challenge Questions
What characteristics of a franchisee would an entrepreneur/franchisor likely find most attractive?
What aspects of this relationship could be detrimental to either party?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–22
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–22
Management 11e Griffin
10–23
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The Performance of Entrepreneurial Organizations
Crossovers to small business by former large-business employees
The emergence of E-commerce
Trends in New Business Start-Ups
Better survival rates for small businesses
Increased entrepreneurial opportunities for minorities and women
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–23
Management 11e Griffin
Success in Entrepreneurial Organizations
Reasons for Failure
Managerial incompetence/ inexperience of the entrepreneur.
Neglect in not devoting sufficient time and effort to the business.
Weak control systems that do not warn of impending problems.
Insufficient capital to sustain the business until it starts to turn a profit.
Reasons for Success
Hard work, drive, and dedication by the entrepreneur.
Careful analysis of market conditions provides insights about business conditions
Managerial competence through training and experience contributes to success.
Luck sometimes plays a role.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–24
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10–24
Management 11e Griffin
KEY TERMS
entrepreneurship
entrepreneur
small business
established market
niche
first-mover advantage
business plan
venture capital company
franchisee
franchisor
franchising agreement
10–25
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© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–25
Management 11e Griffin
