Entrepreneurship, New venture creation - ______ _____ _____ ____.ppt

1、,Entrepreneurship,New venture creation,Prentice Hall of india,David H. Holt james Madison university,1,Part oneEntrepreneurship and free Enterprise,Part one provide an overview of entrepreneurship and the concept of starting new venture. Chapter one is a foundation chapter that defines entrepreneurs

2、hip and describes entrepreneurial characteristic. The chapter also addresses small business and corporate entrepreneurship, focusing on contemporary issues of new venture development.,2,Part oneEntrepreneurship and free Enterprise,Chapter 2 introduces the concepts of creativity and innovation, descr

3、ibing how entrepreneurs recognize opportunities and translate ideas into commercial venture. It also identifies common myths ascribed to entrepreneurs and provide real- world examples of successful entrepreneurs.,3,Part oneEntrepreneurship and free Enterprise,Chapter 3 addresses small business and c

4、orporate entrepreneurship , differentiating between them and the world of high- growth new ventures. The chapter also explores particle consideration for family- owned and personal service business and explain how corporate entrepreneurs reconcile their careers with their entrepreneurial aspirates.

5、Chapter 4 introduces a model for planning a new venture. This model became the foundation for the remainder of the text.,4,Objectives 1- describe how entrepreneurship evolved from economic theory. 2- explain entrepreneurship and characteristics of entrepreneurs. 3- discuss small business as a dimens

6、ion of entrepreneurship. 4- describe the concept of corporate entrepreneurship. 5- explain how entrepreneurship has influenced economic development and productivity recent years.,5,chapter 1,Entrepreneurship and New venture Opportunities,The concept of entrepreneurship has been around for a very lon

7、g time, but its resurgent popularity implies a sudden discovery. As if we had stumbled onto a new direction for American enterprise. America was discovered by entrepreneurs and nourished by entrepreneurs, and the united state became a world economic power through entrepreneurial activity. They are i

8、nspired people, often adventures, who can at once disrupt a society and instigate progress. They are risk takers who seize opportunities to harness and use resources in unusual ways, and entrepreneurs will thrust us into the twenty-first century with a thunderous roar.,6,Entrepreneurship and New ven

9、ture Opportunities,Entrepreneurship is one of the four mainstream economic factors: land, labor, capital, and entrepreneurship. early references to the entrepreneur in the 14th century spoke about tax contractors- individuals who paid a fixed sum of money to a government for the license to collect t

10、axes in the region. Tax entrepreneurs bore the risk of collecting individual taxes. Entrepreneurship was a common topic in economic essays for much of the 18th and 19th centuries. Notable early French, British, and Austrian economists wrote enthusiastically about entrepreneurs as the change agent of

11、 progressive economics.,7,AN entrepreneurial perspective,8,part one Entrepreneurship and free Enterprise,Entrepreneur buys farm produce at creation prices,Entrepreneur repacks and transport farm produce to market.,Entrepreneur sells food produce in city at uncertain prices.,investment,transformation

12、,Profit or loss,cantillons early view of entrepreneurial behavior,manager model of value-added transformation of resouces,Grain in field has very low value,Bulk grain from farmer has low value,Milled flour for baker has high value,Bread at bakery for sale has high value,Delivered baked bread is high

13、est value use,Priority 8,Priority 7,priority3,Priority 2,Priority 1,9,Starting a decade after most automobile manufactures had been established in the united state, Henry ford created the manufacturing miracle that launched a modern era in industry. His genius was in engineering an assembly line pro

14、cess, and his process was an historic innovation. Ford reversed the fundamental way things were manufactured. during his lifetime, ford instituted more than a thousand innovations, and at one time he had more ford automobiles on the road than the rest of the worlds manufactures combined.,Profile Hen

15、ry Ford,10,With a definition in mind, we still have trouble identifying entrepreneurs, finding them , or determining what they do. Is the local gas station owner an entrepreneur? Are there entrepreneurs in corporations? In schools? In government? There are no short answer to these question, and ther

16、e are no formal guidelines for classifying entrepreneurs. There is no entrepreneurial licensing procedure and no evidence of professional status. In an effort to understand better. Researchers have sought to define traits common to a majority of individual who start and ventures. john Hornaday of Ba

17、bson college was among the first to use surveys and intense interview to develop a composite list of entrepreneurial traits. these are summarized in exhibit 1-1.,Who is an entrepreneur?,11,Self- confident and optimistic Energetic and diligent Able to take calculated risk Creative, need to achieve Re

18、spond positively to challenges Dynamic leader Flexible and able to adapt Responsive to suggestion Knowledgeable of markets Take initiative Able to get along well with others Resourceful an persevering Independent minded perceptive with foresight Versatile knowledge Responsive to criticism,Exhibit 1-

19、1 characteristic of successful entrepreneurs,12,THE TERM ENTREPRENEUR MAY BE PROPERLY APPLIED TO THOSE WHO INCOBATE NEW IDEAS, START ENTERPRISES BASED ON THOSE IDEAS, AND PROVIDE ADDED VALUE TO SOCIETY BASED ON THEIR INDEPENDENT INITIATIVE. HOEVER, INDIVIDUALS who simply substitute income by leaving

20、 jobs to operate local stores or independent service business are described as SMSLL businessperson. The person who establishes a fast- food franchise chain is called an entrepreneur, but the local restaurant owner is called a small business person. The small business person may exhibit these charac

21、teristic, but only coincidentally, Corporate entrepreneurship, sometimes referred to as entrepreneurship, is concerned with innovation that leads to new corporate divisions or subsidiary ventures in established, larger firms. The concept of entrepreneurship does not exclude managers in large organiz

22、ation from being entrepreneurs if they combine resources in unusual ways to create innovative new products or services.,Entrepreneurship, Small business, and Corporate VENTURES,13,During the small 1970s small business created more than 6 million new jobs for Americans. At the same time, fortune 500

23、firms cut employment by nearly 10 percent, for a net loss of more than a million jobs. During the first half of the 1980s, new jobs form small business enterprises eclipsed the gain of the 1970s, and today, more than 16 million small business account for approximately 97 percent of all non farm busi

24、ness . Between 1980 and 1987, 66 percent of all new jobs in the united states were in firm with fewer 1000 employees generating less than $10 million in annual sales. Figure 1-3 illustrates these relative changes.,Perspective On Small Business,14,New jobs in the united state(*1000),Annual employment

25、 in new nonfarm business formation of fewer than 1000 employees. Annual employment loss of established companies in the fortune 500.,1970-1974,1975-1979,1980- 1984,1985-1989,year,-200,0,200,400,600,800,15,According to the small business administration, a small business is one that does not dominate

26、its industry. SBA uses these benchmarks for evaluating loans and providing business assistance. Fast food franchises, such as McDonalds, generate million in sales with only a few employees. On the other hand, firms with several thousand workers may have low sales volume. In general, small business s

27、eldom dominate their industries and rely on filling a “niche” in local or regional markets.,Defining Small Business,16,Family enterprises are locally owned and operated, often by one person called a sole proprietor. Proprietors may have started their business in an effort to supplement or replace fa

28、mily income. Many are services based firms that rely on an owners skills. types of businesses that are family owned vary widely and can include retail stores. in the absence of a successor, the life of a venture is limited to the working life of its founder. succession is a serious problem, and succ

29、essful business owners often must resign themselves to dissolving their firms.,Defining Small Business,17,Personal service firms rely crucially on unique skills of their founders or key employees. in most instances, the business is the person, and succession is unlikely unless a son or daughter deve

30、lops comparable skills. many of enterprise become quite large and are distinguished from smaller personal service firm by their growth characteristic.,Defining Small Business,18,Types of small business: Advantages and Disadvantages,Century 21 Based in Irvine, California, century 21 is the worlds lar

31、gest real state organization. with more than 6,700 franchised office in the united state, Canada, Japan, and great Britain, the company generates $50 billion annually in world revenue. Century 21 plans to open an additional 500 units in England, Scotland , Wales, and northern Ireland, and 800 units

32、in France, Belgium, Luxemburg, Switzerland, and the Netherlands during the early 1990s. By awarding sub franchises territories or major regions to one substantial franchisee, century 21 has created a global network of expanding enterprise, each capable of opening new location and managing growth.,Pr

33、ofile,Discuss why many new ventures start small and remain small. Define personal service firm, and describe three that you frequent. Distinguish between a franchisor and a franchisee.,Checkpoint,Document preparation productivity changes with new technology,50,100,500,1000,Pen and pencil,Mechanical

34、typewriter,Electric typewriter,Electronic memory system,Word processing system,Entrepreneurship And Innovation,chapter 2,Entrepreneurship And Innovation,Idea germination : The seeding stage of a New idea recognition,The creative process,Preparation: Conscious Search for knowledge rationalization,Inc

35、ubation: Subconscious Assimilation Of information fantasizing,Illumination: recognition of idea as being Feasible realization,Verification Application for Test to prove Idea has value validation,Entrepreneurship And Innovation,invention,The creation of Something new,innovation,The transformation Of

36、an idea or Resources into Useful applications,Results in new knowledge,Results in new Products, services Or processes,Invention versus innovation,Entrepreneurship And Innovation,Analytical planning,Organizing resources,implementation,Commercial application,Translation of creative idea into a useful

37、application,To identify: Product design Market strategy Financial need,To obtain: Materials Technology Human resources capital,To accomplish: Organization Product design Manufacturing services,To provide: Value to customers Reward for employees Revenues for investors Satisfaction for founders,Entrep

38、reneurship And Innovation,Creative source,champion,sponsor,Inventor or originator Who creates something New through personal Vision and effort.,Entrepreneur or manager Age who pursues the Idea, providing leader Ship for application,PERSON OR ORGANIZATION THAT BACKS innovation with Finance advice and

39、 Contacts.,Key people in technological innovation,Entrepreneurship And Free Enterprise,Electricity (1880s),Electric Adding Machines (1920s),Technologic in: Electronic vacuumed Tubes switching devices Electromechanical Rays and control,Vacuum tube Electronic Computer (1959s),Knowledge in: Artificial

40、language,Punch card Input/output System (1940s),Binary System (1890s),Hollerith Code (1890s),Transistor semiconductor languages process system Digital system data storage memory system technology,High-speed microcomputers, minicomputers Mainframe system, and supercomputer,Mechanical Adding Machine (

41、mid- 1880s),Evolution of the electronic computer,Entrepreneurship And Free Enterprise,New venture Start-up,failed,sold,partnership,proprietorship,corporation,Family succession,Business purpose changes,Owner retires Or quit,Goes bankrupt Or terminates,Business acquired,New corporate formation,Busines

42、s merged,incorporates,Partners retire Or quit,sells,Possible changes in new venture status,Small Business And corporate Entrepreneyrship: contrastig Enterprise,Chapter 3,Small business and corporate entrepreneurship: contrasting enterprise,owner,Investment finance,Inventory control,Cash control,Mark

43、eting And sales,bookkeeping,purchasing,leadership,Business planning,Customer relations,Personal and Human resources,Entrepreneurship And Free Enterprise,INVESTORY OVERHEAD,MATERIAL PURCHASES (34%),MANUFACTURING LABOR AND PERSONAL COSTS (35%),ADMINISTRATION, SALES, AND INDIRECT COSTS(20%),COAST SAVIN

44、G=11%,INVESTORY OVERHEAD(7%),MATERIAL PURCHASES(31%),MANUFACTURING LABOR AND PERSONAL COSTS (33%),ADMINISTRATION, SALES, AND INDIRECET COSTS(33%),COMPANY BULLDS TO INVESTORY,COMPANY BULLDS TO MARKET,Relationship of inventory costs to total costs.,small business and corporate entrepreneurship: contra

45、sting niche,Computer retailer,Creates distinct competency in selected niche,Hardware software for small Office system,stand-alone retail system for home or office,Office network systems for multiuse environments,Educational services in primary and secondary systems,Accounting and management software

46、,hardware reseller for discount import systems,Professional services system and support,Niche markets for computer related retailers,Stage1: Solo phase,Stage2: Network phase,Stage3: Bootleg phase,Stage4: Formal team phase,Individual nurtures idea To establish feasible Innovation to develop,Innovator

47、 seeks advice And support form Colleagues to Develop the idea,Working informally Team proposes idea To organization For formal Development And support,Corporate support Provides budget And mandate for team To pursue formal Development Of innovation,stage1: initiation,Idea generation by innovator,Ad

48、hoc team develops Preliminary model,Initial proposal written,Corporate review by Committee on product innovation,Project approve For stage2 With team assigned And budget,Project denied,Stage2: Feasibility development,Development team initiates Stage2 with budget And company support,Feasibility Plan

49、developed,Corporate review by Committee on Product innovation,Approved for stage3 implement,Project denied,small business and corporate entrepreneurship,Stage3: Technology transfer,Project introduced to Corporate R innovation Team members Return to posts,mercks technology transfer process,Chapter 4,

50、A model for new ventures: feasibility planning,pre-start-up stage,Start-up stage,Early growth stage,Later growth stage,The period during Which entrepreneurs Plan the venture and Do the preliminary Work of obtaining Resources and Getting Organized prior to Start-up,The initial period of Business when

51、 the Entrepreneurs must Position the venture In a market and make Necessary Adjustment to Assure survival,A period of often rapid Development and growth when the Venture may undergo major changes In markets; finance, and Resource utilization,The evolution of a Venture into a large Company with activ

52、e Composition in an Established industry,The four-stage growth model,Business concept defined,Product-market study,Financial planning,Pre-start-up implementation,What is the purpose of the venture? What does the entrepreneur want to Accomplish with business?,Product research: is the product or servi

53、ce feasible? Market research: who will buy? where are they? What competitors exist?,Financial projections: what cash is Needed? How will income be generated? What expenses are expected? What is invested? Borrowed? What is needed to meet operating requirements?,Getting ready to start: the entrepreneu

54、r Must find resources; purchase beginning inventory Hire throes needed at start-up and obtain necessary licenses,Pre-start-up activities,Sales : to attain monthly sales volume as projected at prices projected in feasibility plan. To achieve projected sales mix of projected and services as summarized

55、 In feasibility plan. Revenue: to achieve cash flow with in budget based on sale volume and price projection. To meet targets above variable costs with appropriate operating margins. Growth: to realize incremental growth within seasonal pattern of forecast. To maintain balance of growth with ability

56、 to underwrite inventory. Position: to solidify a long-term in a appropriate markets as a result of adaptation during start-up,Exhibit4-1 start-up operating objectives,Sales increase slowly Because of the Nature of the Product or the limited market,Incremental growth is Within a comfort zone of The

57、ventures resources and Owners profit objectives.,Sales increase rapidly as New products gain Wide acceptance in new markets,Very slow,Perceived comfort zone,Very rapid,figure4-3 continuum early growth,Describe the four stage in the growth model and how they differ. Explain five set of activities ess

58、ential during the start-up-stage. Define growth continuum and contrast new venture activities at the polar extremes. What is the comfort zone in the continuum?,Checkpoint,Venture defined,Product or service,Market characteristic,Entrepreneurial team,Financial summary,Describe the propose and nature o

59、f The business,Describe the product of or service to Be sold,Describe market size and location and customers,Describe the founders key people And their roles.,Describe estimates of revenue and expenses Founders, debt , and capital needed.,sis key in the executive summary,Product or service,Pricing system,Promot