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Entrepreneurship: Successfully Launching New Ventures, 2/e

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Entrepreneurship: Successfully Launching New Ventures, 2/e Bruce R. Barringer R. Duane Ireland Chapter Objectives (1 of 2) Explain entrepreneurship and discuss its ... – PowerPoint PPT presentation

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Title: Entrepreneurship: Successfully Launching New Ventures, 2/e


1
Entrepreneurship Successfully Launching New
Ventures, 2/e Bruce R. Barringer R. Duane Ireland
2
Entrepreneurship Successfully Launching New
Ventures, 2/e Bruce R. Barringer R. Duane Ireland
Chapter 1
3
Chapter Objectives (1 of 2)
  1. Explain entrepreneurship and discuss its
    importance.
  2. Describe corporate entrepreneurship and its use
    in established firms.
  3. Discuss the three main reasons that people decide
    to become entrepreneurs.
  4. Identify four main characteristics of successful
    entrepreneurs.
  5. Explain the five common myths regarding
    entrepreneurship.

4
Chapter Objectives(2 of 2)
  • 6. Explain how entrepreneurial firms differ
    from salary-substitute and lifestyle firms.
  • Discuss the changing demographics of
    entrepreneurs in the United States.
  • Identify ways in which large firms benefit from
    the presence of smaller entrepreneurial firms.
  • Explain the entrepreneurial process.

5
Introduction to Entrepreneurship
According to the GEM 2005 study, about
330 million people, or 14 of the adults in the
35 countries surveyed, are involved in
forming new businesses
There is tremendous interest in entrepreneurship
around the world
6
What is Entrepreneurship?(1 of 2)
  • Origin of the Word Entrepreneur
  • The word was originally used to describe people
    who take on the risk between buyers and sellers
    or undertake a task such as starting a new
    venture.
  • Difference Between an Inventor and an
    Entrepreneur
  • An inventor creates something new.
  • An entrepreneur puts together all the resources
    neededthe money, the people, the strategy, and
    the risk-bearing ability to transform the
    invention into a viable business.

7
Transforming Ideas into InnovationsSources
  • Inventors
  • One ten-year study found that inventors
    typically
  • Have mastered the basic tools and operations of
    the field in which they invent, but they will
    have not specialized solely on that field.
  • Are curious, and more interested in problems than
    solutions.
  • Question the assumptions made in previous work in
    the field.
  • Often have the sense that all knowledge is
    unified. They will seek global solutions rather
    than local solutions, and will be generalists by
    nature
  • Such individuals may develop many new devices or
    processes but commercialize few.

Why do you think this is so?
8
What is Entrepreneurship?(2 of 2)
  • Entrepreneurship Defined
  • Entrepreneurship is the process by which
    individuals pursue opportunities without regard
    to the resources they currently control.
  • The essence of entrepreneurial behavior is
    identifying opportunities and putting useful
    ideas into practice.
  • The set of tasks called for by this behavior can
    be accomplished by either an individual or a
    group and typically requires creativity, drive,
    and a willingness to take risks.

9
Corporate Entrepreneurship(1 of 2)
  • Corporate Entrepreneurship
  • Is the conceptualization of entrepreneurship at
    the firm level.
  • All firms fall along a conceptual continuum that
    ranges from highly conservative to highly
    entrepreneurial.
  • The position of a firm on this continuum is
    referred to as its entrepreneurial intensity.

10
Corporate Entrepreneurship(2 of 2)
Entrepreneurial Firms
Conservative Firms
  • Proactive
  • Innovative
  • Risk taking
  • Take a more wait and see
  • posture
  • Less innovative
  • Risk adverse

11
Corporate Entrepreneurship
  • Venture Team (skunk works)
  • A small team that operates as a semiautonomous
    unit to create and develop a new idea. May be
    from different organizations.

12
Why Become an Entrepreneur?
There are three primary reasons that people
become entrepreneurs and start their own firms
Desire to be their own boss
Desire to pursue their own ideas
Financial rewards
13
Characteristics of Successful Entrepreneurs(1 of
3)
Four Primary Characteristics of Successful
Entrepreneurs
14
Characteristics of Successful Entrepreneurs(2 of
3)
  • Passion for the Business
  • The number one characteristic shared by
    successful entrepreneurs is a passion for the
    business.
  • This passion typically stems from the
    entrepreneurs belief that the business will
    positively influence peoples lives.
  • Product/Customer Focus
  • A second defining characteristic of successful
    entrepreneurs is a product/customer focus.
  • An entrepreneurs keen focus on products and
    customers typically stems from the fact that most
    entrepreneurs are, at heart, craftspeople.

15
Characteristics of Successful Entrepreneurs(3 of
3)
  • Tenacity Despite Failure
  • Because entrepreneurs are typically trying
    something new, the failure rate is naturally
    high.
  • A defining characteristic for successful
    entrepreneurs is their ability to persevere
    through setbacks and failures.
  • Execution Intelligence
  • The ability to fashion a solid business idea into
    a viable business is a key characteristic of
    successful entrepreneurs.
  • The ability to translate thought, creativity, and
    imagination into action and measurable results is
    the essence of execution intelligence.

16
Characteristics of Successful Entrepreneurs(3 of
3)
  • Tenacity Despite Failure
  • Because entrepreneurs are typically trying
    something new, the failure rate is naturally
    high.
  • A defining characteristic for successful
    entrepreneurs is their ability to persevere
    through setbacks and failures.

17
Common Myths About Entrepreneurs(1 of 5)
  • Myth 1 Entrepreneurs Are Born Not Made
  • This myth is based on the mistaken belief that
    some people are genetically predisposed to be
    entrepreneurs.
  • The consensus of many studies is that no one is
    born to be an entrepreneur everyone has the
    potential to become one.
  • Whether someone does or doesnt become an
    entrepreneur is a function of the environment,
    life experiences, and personal choices.

18
Common Myths About Entrepreneurs(2 of 5)
Although no one is born to be an entrepreneur,
there are common personality traits and
characteristics of successful entrepreneurs
  • Achievement motivated
  • Alert to opportunities
  • Creative
  • Decisive
  • Energetic
  • Has a strong work ethic
  • Is a moderate risk taker
  • Lengthy attention span
  • Optimistic disposition
  • Persuasive
  • Promoter
  • Resource assembler
  • Self-confident
  • Tenacious
  • Tolerant of ambiguity
  • Visionary

19
Common Myths About Entrepreneurs(3 of 5)
  • Myth 2 Entrepreneurs Are Gamblers
  • A second myth about entrepreneurs is that they
    are gamblers and take big risks. The truth is,
    most entrepreneurs are moderate risk takers.
  • The idea that entrepreneurs are gamblers
    originates from two sources
  • Entrepreneurs typically have jobs that are less
    structured, and so they face a more uncertain set
    of possibilities than people in traditional jobs.
  • Many entrepreneurs have a strong need to achieve
    and set challenging goals, a behavior that is
    often equated with risk taking.

20
Common Myths About Entrepreneurs(4 of 5)
  • Myth 3 Entrepreneurs Are Motivated Primarily by
    Money
  • While it is naïve to think that entrepreneurs
    dont seek financial rewards, money is rarely the
    reason entrepreneurs start new firms.
  • In fact, some entrepreneurs warn that the pursuit
    of money can be distracting.
  • It can be very distracting - Intelledex

21
Common Myths About Entrepreneurs(5 of 5)
  • Myth 4 Entrepreneurs Should Be Young And
    Energetic
  • The most vibrant age range for early stage
    entrepreneurial activity is 25 to 34 years old.
  • While it is important to be energetic, investors
    often cite the strength of the entrepreneur as
    their most important criteria in making
    investment decisions.
  • What makes an entrepreneur strong in the eyes
    of an investor is experience, maturity, a solid
    reputation, and a track record of success.
  • These criteria often favor older rather than
    younger entrepreneurs.

The 1 criteria for VC is often the management
team.
22
Types of Start-Up Firms
Types of Start-up Firms
23
Changing Demographics of Entrepreneurial Firms(1
of 3)
  • Women Entrepreneurs
  • There were 6.5 million women-owned businesses in
    2002, the most recent year the U.S. Census Bureau
    collected business ownership data. That number
    is up 20 from 1997.
  • Minority Entrepreneurs
  • The number of minority-owned businesses has also
    risen sharply.
  • There were 1.2 million African-American owned
    businesses in 2002, up 45 from 1997.
  • There were 1.1 million Asian-owned businesses in
    2002, up 24 from 1997.
  • There were 206,125 Native American-owned
    businesses in 2002, up 24 from 1997.

24
Changing Demographics of Entrepreneurial Firms(2
of 3)
  • Senior Entrepreneurs
  • Although the Census Bureau does not collect data
    on senior entrepreneurs (people 55 years old and
    older), there is strong evidence to suggest that
    the number of older people starting their own
    businesses is rapidly growing.
  • The dramatic increase in the number of senior
    entrepreneurs is attributed to a number of
    factors, including
  • Corporate downsizing.
  • An increasing desire among older workers for more
    personal fulfillment in their lives.
  • Growing worries among seniors that they need to
    earn additional income to pay for future health
    care services and other expenses.

25
Changing Demographics of Entrepreneurial Firms(3
of 3)
  • Young Entrepreneurs
  • Interest in entrepreneurship among young people
    is also growing.
  • At the high school level, a Gallup study revealed
    that 7 out of 10 high school students want to
    start their own companies.
  • Interest in entrepreneurship on college campuses
    is growing. According to a recent study, 1,992
    two- and four-years colleges and universities now
    offer at least one course in entrepreneurship, up
    from 300 in the 1984-1985 school year.
  • Although the bulk of entrepreneurship education
    takes place within business schools, many other
    colleges and departments are offering
    entrepreneurship courses as well, including
    engineering, agriculture, theater, dance,
    education, law, and nursing.

26
Economic Impact of Entrepreneurial Firms(1 of 2)
  • Innovation
  • Is the process of creating something new, which
    is central to the entrepreneurial process.
  • Small entrepreneurial firms are responsible for
    55 of all innovations in the U.S.
  • Job Creation
  • In the past two decades, economic activity has
    moved in the direction of smaller entrepreneurial
    firms, which may be due to their unique ability
    to innovate and focus on specialized tasks.

27
Some Definitions
  • Idea - Something imagined or pictured in the
    mind.
  • Innovation - The practical implementation of an
    idea
  • Creativity The process of generating and
    converting an idea into an innovation.
  • For the purpose of this course we will consider
    innovation to be a noun defined by Merriam
    Webster as a new method or device.

28
Economic Impact of Entrepreneurial Firms(2 of 2)
  • Globalization
  • Today, over 97 of all U.S. exporters are small
    businesses with fewer than 500 employees.
  • Export markets are vital to the U.S. economy and
    provide outlets for the sale of U.S. produced
    products and services.

29
Entrepreneurial Firms Impact on Society and
Larger Firms
  • Impact on Society
  • The innovations of entrepreneurial firms have a
    dramatic impact on society.
  • Think of all the new products and services that
    make our lives easier, enhance our productivity
    at work, improve our health, and entertain us in
    new ways.
  • Impact on Larger Firms
  • Many entrepreneurial firms have built their
    entire business models around producing products
    and services that help larger firms become more
    efficient and effective.

30
The Entrepreneurial Process
The Entrepreneurial Process Consists of Four
Steps Step 1 Decision to become an
entrepreneur Step 2 Developing successful
business ideas Step 3 Moving from an idea to
an entrepreneurial firm Step 4 Managing and
growing an entrepreneurial firm
We will cover the first 3 steps.
31
Steps in the Entrepreneurial Process(1 of 2)
Step 1
Step 2
Developing Successful Business Ideas
32
Steps in the Entrepreneurial Process (2 of 2)
Step 3
Step 4
33
Business Mentor Project
  • Start thinking of idea for a business.

34
Entrepreneurship Successfully Launching New
Ventures, 2/e Bruce R. Barringer R. Duane Ireland
End Chapter 1
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