entreprenuership chapter the nature & importance of entreprenurs chapter1
TRANSCRIPT
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Japanese proverb:IF ONE CAN DO IT,YOU TOO
CAN DO IT, IF NONE CANDO IT, YOU MUST DO IT.
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The Nature & Importance of
Entrepreneurs
Chapter One
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(American Entrepreneur)
(English entrepreneur)
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Do the profile of these people fit your
perception of the career of an entrepreneur?
What does it takes to start and operate a
successful business
To understand this better, learn about
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Historical Evolution Of Entrepreneurship Earliest Period
Middle Ages
17th Century
18th Century
19th & 20th Century
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Go-Between is Marco Polo Sign contract with a money person(Venture
capitalist) to sell his goods
Loan the Merchant Adventurer at a 22.5%rate
VC passive risk bearer
MA took active role in trading- active riskbearer (Physical, emotional)
MC completes trip successfully profits were
divided- VC taking 75% & MA 25%
Earliest Period
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Actor & person who managed largeproduction projects
Individual didnt take risks but only
managed the project using the resourcesprovided
Usually by the Govt of the Country
Middle Ages
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Re-emergent connection of risk withentrepreneurship developed
E person who entered into contractualagreement with the government to perform aservice or to supply products
17th Century
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Person with capital was differentiated from
the one who needed capital E was distinguished from the capital
provided(Venture capitalist)
One reason for differentiation was theindustrialization occurring throughout theworld
Invention developed during this time werereaction to the changing world
18th Century
VC- professional money manager who makes riskinvestments from a pool of equity to obtain high ROR on
the investments
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E were viewed from Economic Perspective
E organizes & operates an enterprise forpersonal gain
Pays prices for material consumed in the
business, for land, personal services heemploys, capital he requires
20th Century- Notion of an E as an innovator
was established
19th & 20th Century
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Process of creating something new withvalue by devoting the necessary time and
effort, assuming the accompanyingfinancial, psychological, and social risks; &receiving the resulting rewards of
monetary and personal satisfaction
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The process of initiating a newbusiness venture, organizing the
necessary resources and assuming
the associated risks and rewards
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New business idea/opportunityanalysis
Business plan
Manage the resources/Legal form
Manage the resulting enterprise
STARTING AN ENTREPRENEURIAL FIRM-
Entrepreneurial process
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All definitions of entrepreneurshipincludes
Newness, organizing, creating, wealth andrisk taking
Thus,Entrepreneurs are found in allprofessions
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Def stresses on Four basic aspects1. Creation process creating something new
value to entrepreneur & audience for which it is developed
2. Entrepreneurship requires the devotion ofthe necessary time and effort
time & effort to create something new & make itoperational
3. Risk take a variety of forms, depending onthe effort of the entrepreneur
4. rewards of being entrepreneurindependence- personal satisfaction- forprofit entrepreneurs, monetary reward alsocomes into play
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What then causes a person to make this
difficult decision ?
Poor sales
Lack ofcapital
Lack of managerialtalent
Intensecompetition
Financial
RiskEmotional
risk
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Individuals have difficulty bringing theirideas to the market & creating a newventure
Yet entrepreneurial decisions have resultedin several new businesses through out theworld
Despite recession- inflation- high interestsrate, lack of infrastructure-economicuncertainty & high probability of failure
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Deciding to become an entrepreneur byleaving present activity
Changing frompresent life style
Work Environment
Disruption
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Change Environment
Not easy to leavecareer
Two work environments
1. R&D : individuals
develop new productideas & leave to formtheir own companieswhen these ideas are not
accepted by theiremployers
2. Marketing : becomefamiliar with customers
unfilled needs & wants-start enterprise
Disruption
Negative force retired Who have been fired
12% new businesslistings in the yellow
pages increased duringlayoff period
Student who is notpromoted after receiving
an MBA or otherprofessional-frustrated &start new company
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WHEN INDIVIDUAL PERCEIVES THAT
FORMING A NEW ENTERPRISE IS BOTH
What causes this personal disruption toresult in a new company being formed ?
Desirable Possible
Aspects of a situation thatmake it desirable to start a
new company
Factors making It possible tocreate a new venture
f
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Possibility of New Venture Formation
Government
Background
Marketing
Finance
Role Models
Provides infrastructure to help/support a new ventureGive roads-communication systems-transportation system-utilities- & economic stability TAX RATE can suppresscompany formation-since Co wont have money to start & grow
E must have necessary background-Education, previousbusiness experience skills needed to form & manage anew enterpriseEntrepreneurs are not born: they develop
Presence of market of sufficient size- must also be a level of
marketing know-how to put together the best total package ofproduct, price, distribution & promotion needed for successfulproduct launchingA Co. is more easily formed when the driving force is more frommarket demand than a technology push
Financial resources must be readily available
Most start ups comes from personal savings-credit-friends-relatives, there is often a need for additional seed capital
see someone else succeed makes it easier to picture yourselfengaged in a similar activity
Frequent comment of E if that person could do it, so can I
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The future of Entrepreneurship
In spite of the difference conceptualperspectives, there are common aspects:risk taking, creativity, independence &
rewards and future is all about the above.
The future for E is bright we are livingin the age of entrepreneurship.
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Class Discussion
Thanks