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  • Chapter 1: Entrepreneurship 1Copyright 2002 Prentice Hall Publishing Company

    The Foundations of Entrepreneurship

    The Foundations of Entrepreneurship

  • Chapter 1: Entrepreneurship 2Copyright 2002 Prentice Hall Publishing Company

    The World of the EntrepreneurThe World of the Entrepreneur

    A new business is born every 11 seconds in A new business is born every 11 seconds in the United Statesthe United States

    Study of influential Americans Study of influential Americans the the defining issue of the 21defining issue of the 21stst Century: Century: Entrepreneurship!Entrepreneurship!

    One of 12 Americans is actively involved in One of 12 Americans is actively involved in trying to start a new business. trying to start a new business.

  • Entrepreneurial Activity Across the GlobeEntrepreneurial Activity Across the Globe

    1.4%

    1.6%

    1.8%

    2.0%

    2.2%

    3.3%

    3.4%

    5.4%

    6.8%

    8.5%

    0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

    Percent

    Finland

    J apan

    France

    Denmark

    Germany

    Great Britain

    Italy

    Israel

    Canada

    United States

    Cou

    ntry

    Percentage of Adult Population Working to Start a New Business

  • Chapter 1: Entrepreneurship 4Copyright 2002 Prentice Hall Publishing Company

    What is an Entrepreneur?What is an Entrepreneur?

    One who creates a new business in the face One who creates a new business in the face of risk and uncertainty for the purpose of of risk and uncertainty for the purpose of achieving profit and growth by achieving profit and growth by identifying opportunities and assembling identifying opportunities and assembling the necessary resources to capitalize on the necessary resources to capitalize on them. them.

  • Chapter 1: Entrepreneurship 5Copyright 2002 Prentice Hall Publishing Company

    Characteristics of EntrepreneursCharacteristics of Entrepreneurs Desire for responsibilityDesire for responsibility Preference for moderate riskPreference for moderate risk Confidence in their ability to succeedConfidence in their ability to succeed Desire for immediate feedbackDesire for immediate feedback High level of energyHigh level of energy Future orientationFuture orientation Skilled at organizingSkilled at organizing Value achievement over moneyValue achievement over money

  • Chapter 1: Entrepreneurship 6Copyright 2002 Prentice Hall Publishing Company

    The Type E PersonalityThe Type E Personality

    Common Traits of Entrepreneurs:Common Traits of Entrepreneurs:

    Aggressively pursues goals; pushes self and othersAggressively pursues goals; pushes self and others

    Seeks autonomy, independence and freedom from boundariesSeeks autonomy, independence and freedom from boundaries

    Sends consistent messages; very focusedSends consistent messages; very focused

    Acts quickly, often without deliberatingActs quickly, often without deliberating

    Keeps distance and maintains objectivityKeeps distance and maintains objectivity

    Pursues simple, practical solutionsPursues simple, practical solutions

    Willing to take risks; comfortable with uncertaintyWilling to take risks; comfortable with uncertainty

    Exhibits clear opinions and values; has high expectationsExhibits clear opinions and values; has high expectations

    Impatient; just do it mentalityImpatient; just do it mentality

    Positive, upbeat, optimistic; communicates confidencePositive, upbeat, optimistic; communicates confidence

  • Chapter 1: Entrepreneurship 7Copyright 2002 Prentice Hall Publishing Company

    Common Themes in Definitions Common Themes in Definitions of Entrepreneurshipof Entrepreneurship

    DefiningEntrepreneurship

    TheEntrepreneur

    Innovation

    Organization Creation

    CreatingValue

    Profit orNonprofit

    Growth

    Uniqueness

    Process

  • Chapter 1: Entrepreneurship 8Copyright 2002 Prentice Hall Publishing Company

    The Development of The Development of Entrepreneurship TheoryEntrepreneurship Theory

    18th Century

    Richard Cantillon: Coins term

    entrepreneur

    (go-between or between taker)

    Entrepreneur bears risks and plans,

    supervises, organizes, and owns factors of

    production

  • Chapter 1: Entrepreneurship 9Copyright 2002 Prentice Hall Publishing Company

    The Development of The Development of Entrepreneurship TheoryEntrepreneurship Theory

    19th Century

    Jean Baptiste Say:

    Proposed that profits from entrepreneurship

    were separate from profits of capital

    ownership

    Distinction made between those who supplied funds and earned interest and

    those who profited from managerial abilities

  • Chapter 1: Entrepreneurship 10Copyright 2002 Prentice Hall Publishing Company

    The Development of The Development of Entrepreneurship TheoryEntrepreneurship Theory

    20th Century

    Joseph Schumpeter:

    Described the entrepreneur as

    someone who is an innovator and someone

    who creatively destructs

    Peter Drucker:

    Described the entrepreneur as someone who

    maximizes opportunity

  • Chapter 1: Entrepreneurship 11Copyright 2002 Prentice Hall Publishing Company

    Myths About Myths About EntrepreneurshipEntrepreneurship

    1. Successful entrepreneurship takes only a great idea.1. Successful entrepreneurship takes only a great idea.

    2. Entrepreneurship is easy.2. Entrepreneurship is easy.

    3. Entrepreneurship is a risky gamble.3. Entrepreneurship is a risky gamble.

    4. Entrepreneurship is found only in small businesses.4. Entrepreneurship is found only in small businesses.

    5. 5. Entrepreneurial ventures and small businesses are identical.Entrepreneurial ventures and small businesses are identical.

  • Chapter 1: Entrepreneurship 12Copyright 2002 Prentice Hall Publishing Company

    The Entrepreneurial The Entrepreneurial ProcessProcess

    Exploring the Entrepreneurial

    Context

    IdentifyingOpportunities/PossibleCompetitive Advantage

    Starting the Venture:Starting the Venture:

    Researching FeasibilityResearching Feasibility

    Planning the VenturePlanning the Venture

    Organizing the VentureOrganizing the Venture

    Launching the VentureLaunching the Venture

    Managing the Venture:Managing the Venture:

    Managing ProcessesManaging Processes

    Managing PeopleManaging People

    Managing GrowthManaging Growth

    Special IssuesSpecial Issues

  • Chapter 1: Entrepreneurship 13Copyright 2002 Prentice Hall Publishing Company

    Rewards of Being an Rewards of Being an EntrepreneurEntrepreneur

    High degree of independence freedom from constraints

    Get to use a variety of skills and talents

    Freedom to make decisions

    Accountable to only yourself

    Opportunity to tackle challenges

    Feeling of achievement and pride

    Potential for greater financial rewards

  • Chapter 1: Entrepreneurship 14Copyright 2002 Prentice Hall Publishing Company

    Feeding the Feeding the Entrepreneurial FireEntrepreneurial Fire

    Entrepreneurs as heroesEntrepreneurs as heroes Entrepreneurial educationEntrepreneurial education Demographic and economic factorsDemographic and economic factors Shift to a service economyShift to a service economy Technological advancementsTechnological advancements Independent lifestylesIndependent lifestyles E-Commerce and the World Wide WebE-Commerce and the World Wide Web International opportunitiesInternational opportunities

  • Chapter 1: Entrepreneurship 15Copyright 2002 Prentice Hall Publishing Company

    Challenges of Challenges of Being an EntrepreneurBeing an Entrepreneur

    Must be comfortable with change and uncertainty

    Must make a bewildering number of decisions

    May face tough economic choices

    Must be comfortable with taking risks

    Need many different skills and talents

    Must be comfortable with the potential for failure

  • Chapter 1: Entrepreneurship 16Copyright 2002 Prentice Hall Publishing Company

    The Cultural Diversity of The Cultural Diversity of EntrepreneurshipEntrepreneurship

    Young entrepreneursYoung entrepreneurs WomenWomen Minority-owned enterprisesMinority-owned enterprises Immigrant entrepreneursImmigrant entrepreneurs Part-time entrepreneursPart-time entrepreneurs Home-based businessesHome-based businesses Family businessesFamily businesses CopreneursCopreneurs Corporate castoffsCorporate castoffs Corporate dropoutsCorporate dropouts

  • Chapter 1: Entrepreneurship 17Copyright 2002 Prentice Hall Publishing Company

    Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

    1.1. Management incompetenceManagement incompetence2.2. Lack of experienceLack of experience3.3. Poor financial controlPoor financial control4.4. Failure to develop a strategic planFailure to develop a strategic plan5.5. Uncontrolled growthUncontrolled growth

  • Chapter 1: Entrepreneurship 18Copyright 2002 Prentice Hall Publishing Company

    Nine Deadly Mistakes of Nine Deadly Mistakes of EntrepreneurshipEntrepreneurship

    (continued)(continued)

    6.6. Poor locationPoor location7.7. Improper inventory controlImproper inventory control8.8. Incorrect pricingIncorrect pricing9.9. Inability to make the entrepreneurial Inability to make the entrepreneurial

    transitiontransition

  • Chapter 1: Entrepreneurship 19Copyright 2002 Prentice Hall Publishing Company

    Differences Between Small Businesses Differences Between Small Businesses and Entrepreneurial Venturesand Entrepreneurial Ventures

    Independently owned,