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Course Outline

What is the typical background of an entrepreneur?


Educational background
Family situations
Work profiles.
No such thing as a typical entrepreneur background

What are some of your habits or qualities that you possess that make you feel that you can
become an entrepreneur?
Will do something if they decide on it
Willingness to try new things despite fear
Satisfaction of doing a job well is satisfaction enough
Ask for what they want and don’t wait for someone to offer it to them
Urge to try something out even if others say it can’t be done.

Internal control to sustain drive needed to establish and run the enterprise
Other Feelings about Control
Need for independence – being one’s own boss
Need for achievement – a need to be recognized
Risk taking – whether financial, social or psychological
Improvement in lifestyle

Modern Definition of An Entrepreneur


Ability to spot an idea with right emotional and strategic fit and to identify the resources
necessary to take advantage of the opportunity.

Entrepreneur is someone who takes a risk and starts something new.

Creation – [Value for audience and entrepreneur] – Devotion of time & effort – Assuming
necessary risks - Rewards

Definition of Entrepreneurship
Process of creating something new with value by devoting the necessary time and effort,
assuming the accompanying financial, psychological and social risks and receiving the resulting
rewards of monetary and personal satisfaction and independence.

Capital provider (venture capitalist) vs capital user (entrepreneur)

Venture Capatalist is a professional money manager who makes risk investments from a apool of
equity to obtain a high rate of return on investments.

Innovation and newness – reform or revolutionize (not necessarily invent) methods and
inventions. Creating uniqueness. Can be related to production, organizational structure,
distribution. Can be difficult.

Like raising children. Emotional as well as financial risk.


Exciting field of study. Individuals who study entrepreneurship are more likely 3 to 4 times more
likely to start a business and earn 20 to 30 percent more than students in other fields.

Must understand the nature and development of entrepreneurship, the decision process involved
in becoming an entrepreneur and the role of entrepreneurship in the economic development of a
country.

Skills Required by Entrepreneurs

Technical Business Management Personal (diff bet manager


& Entrepreneur)
Oral & Written Planning and Goal Setting Inner control/discipline
Communication
Monitoring Environment Decision Making Risk Taker
Technical Business Human Relations Innovative
Management
Technology Marketing Change Oriented
Interpersonal Finance Persistent
Listening Accounting Visionary Leader
Ability to Organize Management Ability to Manage Change
Network Building Control
Management Style Negotiation
Coaching Venture Launch
Being a Team Player Managing Growth

Entrepreneurial Decision Process


Creative ideas do not always turn into successful ventures.

Movement from present lifestyle to a new enterprise.

Requires energy and courage to do something new and different.

Research and development of new idea in Technology or filling gaps in customer needs and
wants in Marketing. Can also be due to workplace disruption and completion of educational
degree.

Individual feels that forming the new company is desirable and possible.

Desirable comes from culture (country), subculture (sects, districts), family (a family’s
inclination), teachers and peers.

Possible comes from government (infrastructure, taxes, bureaucracy), background (business &
work experience), marketing (is there a sufficient market ,best combo of product, price,
distribution and promotion), role models (if someone else succeeded so can I), finances (funding,
personal and risk capital).
Types of Start-Ups
Lifestyle Firms – privately held, modest growth, 30-40 employees, to support owners, little
opportunity for expansion.
Foundation Companies – result of r&d, foundation for a new business area, over time up to 400
employees, private investors.
High Potential Ventures – rapid growth, 500+ employees, important for economic development
of an area, high investment interest and publicity.

Role of Entrepreneurship In Economic Development


Increasing per capita output and income
Initiating and constituting change in the structure of business and society.
Innovation helps create an interest in investment – helps supply and demand side.

Product evolution process – an innovation develops and commercializes through entrepreneurial


processes.

Intersection of knowledge and a recognized social need is key in product evolution. Also point
where idea fails to make it to market as a product and needs considerable attention. Matching
technology with appropriate market and making needed adjustments is tricky.

Ordinary innovation: Most common and has little technological change.


Technological innovation: Less common and are new products with significant technological
advancement.
Breakthrough innovations: Less common. New products with some technological change.

Innovation reaches commercialization through one of three mechanisms:


Government – transfer of technology. Few scientific tech inventions from government effort
reach market as they have little use. As they lack business skill, these products must be
significantly modified to make them suitable for the market [Internet]
Intrapreneurship: entrepreneurship within an organization – Organizations have financial
resources, business know how and marketing and distribution systems. However bureaucratic
structure, emphasis on short-term profits and rigid structures inhibit creativity. Strategic Business
Units (SBUs) have been developed in numerous companies to combat these problems.
Entrepreneurship: The most effective method for bridging the gap

ETHICS AND SOCIAL RESPONSIBILITY

The Entrepreneurial Process

Involves much more than a typical managerial position.

1. Identify and Evaluate Opportunity


 Difficult. Must be focused on the opportunity and be the basis for whether or not
to act on the opportunity. It is not a business plan focused on the entire venture.
 Identifying opportunity a result of inquiry and observation NOT suddenly like a
light bulb
 Fruitful sources of opportunities - consumers and business associates, members of
distribution system (close contact with end user), technical people (branch into
new applications e.g. resin in caskets).

o Opportunity Assessment - Each opportunity must be carefully screened and


evaluated. VIMP
o Creation and length of opportunity – window of opportunity.
o Real vs perceived value of opportunity
o Risk and returns. Risks focus on market, competition, technology amnd amount of
capital required. Financial and personal rewards.
o Compatibility with personal skills and goals
o Competitive environment

An assessment plan requires


Description of Product or service, assessment of the entrepreneur and team, specs of all activities
and resources needed to translate opportunity into viable business/venture, and source of
financing.

Assessment of opportunity - What need it fills and the demand, personal observations about need
or available market research data, patents, sizing up current and expected competition and its
behavior, the international market and competition, where is the money to be made in this
activity.

2. Develop Business Plan


 Time consuming.
 Important for identifying, obtaining and managing resources for a successful
venture.

o Format
o Contents, Summary, Appendixes nad exhibits.
o Major sections include:
i. Description of business and industry
ii. Technology plan
iii. Marketing plan
iv. Financial plan
v. Production plan
vi. Organizational plan
vii. Operational plan

3. Resources Required
 Appraisal of present resources.
 Sort by importance – critical vs helpful
 Sort by types
 Entrepreneur should maintain as much control as possible especially in start-up
stage. Ownership relinquished as more financing comes in.
 Alternative suppliers with their requirements to help secure lowest costs and least
loss of control.

o Determine Resources Needed


o Determine existing resources
o Identify resource gaps and available suppliers
o Develop access to needed resources.

4. Managing The Enterprise


 Use of acquired resources to implement business plan
 Operational problems during growth.
 Determining a management style and structure.
 Control systems to quickly identify and solve problems.

Managerial Versus Entrepreneurial Decision Making

Can be viewed from five key business dimensions. Managerial styles are known as the
administrative domain i.e. the way they make decisions.

1. Strategic Orientation
 Depends on entrepreneur’s perception of the opportunity.
 Use of planning systems and measuring performance to control resources the
administrative domain is operant like multinational organizations.

2. Commitment to Opportunity
 Entrepreneurial domain – pressured by need for action, short decision windows,
willingness to assume risk, few decision constituencies and short time span for
commitment.
 Administrative domain – Slow to act, commitment is often long lasting.

3. Commitment of Resources
 Resources are committed at periodic intervals based on tasks or objectives being
met.
 Resources difficult to obtain – usually from others and hence, often maximize
resource usage.
 Multistage commitments allowed interested investors to monitor track record at
each interval and minimize exposure.
 In administrative funding may be periodic but commitment to entire fund is made
initially.

4. Control of Resources
 Entrepreneur – faces pressure of limited resources, obsolesce, a need for
flexibility – strive to rent vs own, and use resources on an as-needed basis.
 Administrative – rewards based on accumulating resources

5. Management Structure
 Entrepreneurial - Flat organization with informal networks throughout.
 Administrative – formalized, hierarchical structure, clear lines of authority.

INTRAPRENEURSHIP
 Important to maintain and instill entrepreneurial spirit in a corporation to
encourage innovation and growth.
 Flexibility and creativity can be critical for a large organization to grow and adapt
new systems and techniques.

International Entrepreneurship
Nature – Exporting, licensing, opening a sales office in another country or something as simple
as advertising in a foreign newspaper.

Key difference between International and domestic entrepreneurship is the variation in the
relative importance of factors affecting sales, costs and profits.

Economics – currency valuations, government policies, banking, venture capital, marketing and
distribution systems.

Economic development – infrastructure i.e. roads, electricity, communication, banking facilities


and systems, educational systems, legal system, business ethics and norms.

Balance of payments – It is the difference in the value of country’s imports and exports over
time. It affects valuation of a currency.

Political-legal environment – restriction on imports, trade agreements and restrictions, taxes, oil
price fluctuations, types of ownership and organizational forms.

Cultural Environment – language barriers, morals and ethics

Technological Environment – variations and availability. Industry standards e.g permissible car
emissions in different countries.

Strategic Issues
 Who will take responsibility?
 Reporting, planning and control systems
 Organizational structure
 Standardization

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