Class Notes (838,990)
Canada (511,155)
MGTA01H3 (348)

Management Chapter 3 Notes

13 Pages
Unlock Document

Management (MGT)
Chris Bovaird

Chapter Three: Understanding Entrepreneurship, Small Business + New Venture Small Business - Defining a ‘small’ business can be tricky - Various measures might be used o Number of people the business employs o Company’s sales revenue o Size of investment o Type of ownership - Industry Canada main federal government agency responsible for small business - Government relies on two distinct sources of information: o Business Register – tracks businesses o Labour Force Survey – tracks individuals - To be included in register o Have at least one paid employee o Annual sales revenue of $30 000 or more o Or be incorporated - Considered small o For goods producing business – fewer than 100 employees o Service-producing business – fewer than 50 employees - Labour Force Survey uses information from individuals o Make estimates of employment and unemployment levels o Self-employed – working owners of a business, working for themselves - Majority of the businesses in Canada have no employees nor are they incorporated - Small business: an owner-managed business with less than 100 employees The New Venture/Firm - Three most common criteria to determine when a new form comes into existence: o When it was formed o Whether it was incorporated o If it sold goods or services - Business considered to be new – if has become operational within previous 12 months - New Venture(Firm): a recently formed commercial organization that provides goods or services Entrepreneurship - Entrepreneurship: the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it - Entrepreneurs: people who recognize and seize opportunities - Small businesses are usually independent owned and influenced by unpredictable market forces o They provide an environment where attributes like creativity can be used - Entrepreneurs can occur in different types of firms The Role of Small and New Businesses in the Canadian Economy Small Businesses - Close to 98% of all businesses in Canada are small - 58% of all businesses are located in Ontario and Quebec - Canadian allocation of small businesses are similar to US - Majority of the small businesses have fewer than five employees - Private Sector: the part of the economy that is made up of companies and organizations that are not owned or controlled by the government - According to Industry Canada small businesses account for over 2/3 of employ in four industries: o Non-institutional health care o Construction industry o Other services o Accommodation and food - Contribution of small businesses to economy in terms of GDP? o Annual contribution has been valued at 25% New Ventures - New firms are responsible for the vast majority of new products and services - Most of the growth in firms occurred in services produces sector - The number in high-knowledge industries doubled - Women are playing a far more prominent role than before o In terms of who has been responsible for the growth o more than 800,000 women entrepreneurs in Canada - government statistics exclude new ventures if they are without employees The Entrepreneurial Process - entrepreneur must first identity a business opportunity and access resources needed to capitalize on it - if elements are mismatched the journey may be abandoned The Entrepreneur - the entrepreneur is at the heart of the entrepreneurial process - personal characteristics include o behavioural high energy level o personality independence - people are not ‘born’ entrepreneurs - personal characteristics have less impact on a person’s actions than the situation - what is important is what the person DOES - two main things they need to do : o identify an opportunity o access resources Identifying Opportunities - involves generating ideas for new or improved products + screening those products - Involves developing the opportunity Idea Generation: - Generating involves abandoning traditional assumption about how things work - Most new ventures do not come from a deliberate search for business o Comes from events relating to work or everyday life - Sources for ideas: o Work experience is common source of ideas Entrepreneur is aware as an employee with the marketpace o Next most frequent sources is personal interest/hobby o Chance happening A situation were idea comes about unexpectedly Characteristics that an idea has that will make it a greater opportunity - The Idea Creates or Adds Value for the Customer o Product solves a significant problem or meets a significant need - The Idea provides a Competitive Advantage that Can Be Sustained o Competitive advantage exists when customers see the product as being better than competition o Involves maintaining it in the face of your competitions actions or changes o The longer the markets are in a state of flux – greater likelihood of being able to sustain a competitive advantage - Idea that is Marketable and Financially Viable o It is important to determine whether sales will lead to profits o You have to understand who the customers are, how the product will satisfy their needs o Requires a thorough understanding of key competitors o Entrepreneurs must prepare a Sales Forecast: An estimate of how much a product or service will be purchased by prospective customers over a specific period – typically one year Total sales venue is estimated by multiplying unit expected to sell by their price o Financial forecasts consist of start up costs, cash budget, income statement, balance sheet - The Idea has Low Exist Costs o Exit costs are low if a venture can be shut down without a significant loss of time, money or reputation Developing the Opportunity - Clear notion of business concept and entry strategy needs to be developed o During the process, business concepts often change - Important to be responsive to new information - Important to be on the lookout for opportunities that were not anticipated - Three Main Entry Strategies o They introduce a totally new product or service o They introduce a product that will compete directly with existing but add a new twist o They franchise - Franchise: an arrangement in which a buy (franchisee) purchases the right to sell the product or service of the seller (franchiser) - Business Plan: a document that describes the entrepreneur’s proposed business venture o Explains why it is an opportunity o Outlines its marketing plan, operational and financial details o Outlines manager’s skills and abilities - Planning does not have to be completed before action is taken Accessing Resources
More Less

Related notes for MGTA01H3

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.