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  1. 1. Chapter 5 Entrepreneurship© SB InstitutE
  2. 2. 5.1 Learning ObjectivesAfter reading this chapter, you should be able to: Explain what entrepreneurs do and describe how the environment supports their activities Describe the personal characteristics that contribute to an entrepreneur’s success Describe the planning requirements associated with becoming a successful entrepreneur Recognize intrapreneurs and the organizational characteristics that encourage intrapreneurship© SB InstitutE
  3. 3. 5.2 Advantages of Working in a Small Business Greater opportunity to increase personal wealth More likely to have “extremely satisfied” employees Variety of skills and responsibilities Personal performance affects company’s profitability© SB InstitutE
  4. 4. 5.3 Disadvantages of Working in a Small Business Lower guaranteed pay Fewer medical and other insurance benefits Expected to use many skills and wear different hats (could be viewed as advantage) Fluctuation in business size and condition is possible May be difficult to move to a big company© SB InstitutE
  5. 5. 5.4 Characteristics of Entrepreneurs Personal Attributes Technical Successful Proficiency Entrepreneur Managerial Competencies© SB InstitutE Adapted from Figure 5.2
  6. 6. 5.5 Questions Addressed in a Business Plan What are my motivations for owning a business? Should I start or buy a business? What and where is the market for my product or service? How much will it cost to own the business, and where will I get the money? Should my company be domestic or global? How will growth be managed?© SB InstitutE
  7. 7. 5.6 Questions to Consider When Deciding to Start a Business Is there a way to begin the enterprise in stages or with a limited investment? Can I run the company at first as a home-based business? Can I continue working for someone else and put in time after hours? To what extent can I draw on relatives to help me?© SB InstitutE
  8. 8. 5.7 Considerations For Going Global Are the best human resources dispersed among various countries? Would foreign financing be easier or more suitable? Do target customers require a venture to be international? Will worldwide communication lead to quick responses from competitors in other countries? Will worldwide sales be required to support the venture? Will domestic inertia be crippling if internationalization is postponed?© SB InstitutE
  9. 9. 5.8 Successful Family Businesses Clear job responsibilities Clear hiring criteria for interested family members Clear plan for management transitions Committed to resolving conflicts quickly Outside advisors are used to mediate conflicts© SB InstitutE Adapted from Figure 5.4
  10. 10. 5.9 Strategic Factors for Survival to the Next Generation Ensuring equitable estate treatment Preparing for ownership transfer Minimizing estate taxes Ensuring the financial security of the senior generation Selecting and developing a successor© SB InstitutE
  11. 11. 5.10 Characteristics of Intrapreneurial Firms Commitment from senior management Flexible organization design Autonomy of the venture team Competent and talented people who exhibit entrepreneurial behaviors and attitudes Incentives and rewards for risk taking An appropriately designed control system© SB InstitutE