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3 - Entrepreneurship - Lecture notes.docx

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Wilfrid Laurier University
Sofy Carayannopoulos

Understanding Entrepreneurship Sept 23/13 Questions to think about Entrepreneurship  What is the difference between a new venture, small business and entrepreneurship? Are they mutually exclusive?  What role does the “P” of PEST play in entrepreneurship and why does it choose to do so?* (what role does the government play?)  What is the entrepreneurial process and what influences it and why (the environment, if there are no opportunities then it is hard to being the process)? How are its elements and principles similar to the Diamond-E (strategy has to be in alignment and consistency with the process)?  Where does the process begin (Entrepreneurship), why does it begin there (they have to identify the opportunity and access the resources) and what determines if the process will be successful (that everything is in alignment)?  What are the components of opportunity recognition (coming up with an idea and making sure it is a good idea)? Why is screening important (shows if you have a good idea)?  How do you know if you have a good idea? (3 points)  Apply the screening process to a product or service  What choices does a firm have for accessing resources? What are the characteristics of each option?  In What ways are traditional and social entrepreneurship similar?  What is the different between a charity and social business  Who are the stakeholders in a social business  Identify a social business and describe how the key facets are illustrated in it Definitions  New venture – recently formed commercial organization that sells goods/services o Less than 5 years, product or service  Entrepreneurship – identifying an opportunity and accessing resources to capitalize on it o Large corporations do it to to remain in alignment with the environment  Small business – owner managed, no dominant in market, less than 100 employees o Contribute more than 26% annually to GDP** o Provide more jobs than large businesses o New ventures lead in new products and services o 97.8% of all businesses in Canada are small Entrepreneurial Process Identify Opportunity Entrepreneur  Influenced by PEST Access resources o From the external environment that opportunities come, and that you are going to chase o PEST exists in the environment  Successful only when the entrepreneur, opportunity and resources match o Alignment and consistency o What is on the inside has to match on the outside (environment) o Entrepreneur:  Determines where resources (money and human resources) will come from and what strategies to use  Also fits with organization because they provide leadership and sets the culture o All three have to be in alignment o Identify opportunity that makes sense for him/her  To execute that opportunity you have to have the resources to implement it  Then the resources circle back to entrepreneur, resources influence what the entrepreneur sees as an opportunity o Failure is not a loss, you learn lessons and what went wrong  Begins with entrepreneur identify an opportunity then accessing resources Opportunity Recognition 2 parts:  Idea generation: o Often paradigm shifts  Challenging social norms  Storing car with the engine at the front o Originate in events relating to work or daily life, hobbies, chance happening  Screening o Weeding out bad ideas  Not a good idea unless it makes money o Saves time and money o Ensures you have a viable idea with a competitive advantage  How is your product different in a valuable way? (People are willing to pay money for it) Three Step Screening Process  Screening for viability and competitive advantage. You know you have a good idea when: 1. Idea creates or adds value for the customer o Solves a problem, meets a need o Customer is willing to pay for it 2. Idea provides a competitive advantage that can be sustained o Product is unique in a valuable way/better than pother’s  How is it different and better from existing products and substitutes?  Are differences valuable to customers?  Is it something that existing firms can easily do or may want to imitate?  Can the idea be protected legally? 3. The idea is marketable and financially viable o Are there enough customers who will buy it? What is the market demand? o Who are the competitors and what are the forces that affect profitability? o Is the market growing (more customers), shrinking (less customers), concentrated (few companies, hard to break into), fragmented (where there are a lot of smaller business who all have a little market share)? o NVP - **HOW ARE YOU GOING TO GROW?**  Safety point – does this idea have low exit costs? o Longer time to profitability or greater up front investment needed = riskier venture How to Screen for NV Project  Use PEST analysis to assess environment – is it supportive of your idea? o SO WHAT?  Use Five Forces to determine ease of entry and profitability of industry  Use Five Forces, P
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