Entrepreneurship Chap 1


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Entrepreneurship Chap 1

  1. 1. 1-2The Nature and Importanceof EntrepreneurshipMcGraw-Hill/IrwinEntrepreneurship, 7/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.Chapter 1
  2. 2. 1-3Development of Entrepreneurship (1 of 2) Earliest Period Entrepreneurs would sign contracts with a money person. Example: Marco Polo Middle Ages Entrepreneurs were actors and people who managed largeproduction projects. 17th Century Entrepreneurs entered into contractual arrangements with thegovernment. Example: Mississippi Company
  3. 3. 1-4Development of Entrepreneurship (2 of 2) 18th Century With global industrialization taking place, entrepreneurs weredistinguished from capital providers. Inventions developed during this time were reactions tothe changing world. Example: Edison & Whitney 19th and 20th Centuries Entrepreneurs were not distinguished from managers. They were viewed mostly from an economic perspective. Concept of innovation and newness was an integral part. Example: Andrew Carnegie
  4. 4. 1-5Definition of Entrepreneurs Today Entrepreneurship is the process of creating something newand assuming the risks and rewards. Four aspects of being an entrepreneur today: Involves creation process. Requires devotion of time and effort. Involves rewards of being an entrepreneur. Requires assumption of necessary risks.
  5. 5. 1-6Entrepreneurs Versus Inventors Inventor: Creates something for the first time; highlydriven and motivated by his or her own work andpersonal ideas. Differentiating characteristics of an inventor: Education. Level of experience. Problem-solving skills. Level of self-confidence. Willingness to take risks. Ability to tolerate ambiguity and uncertainty. View of monetary benefits in measuring success.
  6. 6. 1-7The Entrepreneurial Process Four distinct phases: Identify and evaluate the opportunity. Window of opportunity. Develop a business plan. Determine the resource requirement. Manage the resulting enterprise.
  7. 7. 1-8Aspects of the Entrepreneurial ProcessTable 1.1<<Insert Table 1.1>>
  8. 8. 1-9Types of Start-Ups Lifestyle firm Privately held; usually achieves only modest growth. Foundation company Created from research and development. Lays the foundation for a new business area. High-potential venture Receives the greatest investment interest and publicity. Starts out like a foundation company, but attains rapid growth. Also called gazelles, is integral to the economic developmentof an area.
  9. 9. 1-10Role of Entrepreneurship inEconomic Development Innovation is depicted as a key to economicdevelopment. Product-evolution process: Process through whichinnovation is developed and commercialized. Iterative synthesis: Critical point in the product-evolutionprocess. Three types of innovation: Ordinary Technological Breakthrough
  10. 10. 1-11Product EvolutionNeed RecognitionNeed RecognitionInitiate InnovationInitiate Innovation DevelopmentDevelopmentIndustrialIndustrialPress to InventPress to Invent
  11. 11. 1-12Government as an Innovator One channel for commercializing the results of thesynthesis of social need and technology. Frequently called technology transfer. Relatively few innovations reach commercial markets. Lacks business skills necessary for successfulcommercialization. Government bureaucracy and red tape act as inhibitors.
  12. 12. 1-13Corporate Entrepreneurship Strengths of an existing business: Financial resources. Business skills. Marketing and distribution systems. Factors that inhibit successful commercialization: Bureaucratic structure. Emphasis on short-term profits. A highly structured organization. In the current era of hypercompetition, strategicbusiness units (SBUs) are emerging.
  13. 13. 1-14Independent Entrepreneurship Factors that inhibit commercialization: Managerial skills. Marketing capabilities. Financial resources. Unrealistic inventions. Lack of awareness on interfacing with necessary entities(banks, suppliers, customers, venture capitalists,distributors, and advertising agencies).
  14. 14. 1-15Ethics and Social Responsibility Entrepreneurs usually develop an internal ethical code. Personal value systems tend to be influenced by: Peer pressure. General social norms in the community. Pressures from their competitors.
  15. 15. 1-16Future Entrepreneurship has gained mileage through a number ofways: Entrepreneurial education. Increase in academic research. Societal support (media coverage). Corporate entrepreneurship.
  16. 16. 1-17Entrepreneurial Universities Activities Seminars Consulting Research Case Development Technology Development &Transfer Joint Ventures & StrategicAlliances Structures Business Assistance Centers Incubators Innovation Centers Industrial Parks Enterprise DevelopmentCenters Venture Capital Exchanges Inputs Guest Lectures Board of Advisors/Trustees Internships Student Projects Source of Funds