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Chapter 1-10

COMM 320 Chapter 1-10: 294162874-Untitled

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COMM 320
Robert Nason

Chapter 1 Explain entrepreneurship and discuss its importance. Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control. The art of turning an idea into a business. Describe corporate entrepreneurship and its use in established firms. Established firms with an orientation to acting entrepreneurially practice corporate entrepreneurship. 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. Discuss three main reasons people decide to become entrepreneurs. Be Their Own Boss many entrepreneurs want to be their own boss because either they have had a longtime ambition to own their own firm or because they have become frustrated working in traditional jobs. Sometimes the desire to be their own boss results from a realization that the only way they’ll achieve an important personal or professional goal is to start their own business. Pursue Their Own Ideas Some people are naturally alert, and when they recognize ideas for new products or services, they have a desire to see those ideas realized. Established firms, however, often resist innovation. employees are left with good ideas that go unfulfilled. Pursue Financial Rewards This motivation, however, is typically secondary to the first two and often fails to live up to its hype. Identify four main characteristics of successful entrepreneurs. Passion for the Business This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. FIVE PRIMARY REASONS PASSION IS IMPORTANT FOR THE LAUNCH OF A SUCCESSFUL ENTREPRENEURIAL ORGANIZATION 1. The ability to learn and iterate 2 willingness to work hard for an extended period of time 3 Ability to overcome setbacks and “no’s” 4 The ability to listen to feedback on the limitations of your organization and yourself 5 Perseverance and persistence when the going gets tough While entrepreneurs should have passion, they should not wear rose-colored glasses. Product/Customer Focus the two most important elements in any business—products and customers. A product/customer focus also involves the diligence to spot product opportunities and to see them through to completion. Tenacity Despite Failure Because entrepreneurs are typically trying something new, the failure rate associated with their efforts is naturally high. developing a new business idea may require a certain degree of experimentation before a success is attained. Execution Intelligence The ability to fashion a solid idea into a viable business is a key characteristic of successful entrepreneurs. The ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money, establishing partnerships, managing finances, leading and motivating employees, and so on. Explain the five common myths regarding entrepreneurship. Myth 1: Entrepreneurs are born, not made. The consensus of many hundreds of studies on the psychological and sociological makeup of entrepreneurs is that entrepreneurs are not genetically different from other people. people with parents who were self-employed are more likely to become entrepreneurs. Myth 2: Entrepreneurs are gamblers. The truth is, entrepreneurs are usually moderate risk takers, as are most people. entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than managers or rank-and-file employees. Many entrepreneurs have a strong need to achieve and often set challenging goals, a behavior that is sometimes equated with risk taking. Myth 3: Entrepreneurs are motivated primarily by money. money is rarely the primary reason entrepreneurs start new firms and persevere. Myth 4: Entrepreneurs should be young and energetic. Although it is important to be energetic, investors often cite the strength of the entrepreneur (or team of entrepreneurs) as their most important criterion in the decision to fund new ventures. What makes an entrepreneur “strong” in the eyes of an investor is experience in the area of the proposed business, skills and abilities that will help the business, a solid reputation, a track record of success, and passion about the business idea. Myth 5: Entrepreneurs love the spotlight. the vast majority of them do not attract public attention. Types of Start-Up Firms Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms. Salary-substitute firms Dry cleaners, convenience stores, restaurants, accounting firms, retail stores, and hairstyling salons are examples of salary-substitute firms. Salary-substitute firms offer common, easily available products or services to customers that are not particularly innovative. Lifestyle firms include ski instructors, golf and tennis pros, wine bars, and tour guides. These firms are not innovative, nor do they grow quickly. Entrepreneurial firms bring new products and services to market. the essence of entrepreneurship is creating value and then disseminating that value to customers. Discuss the changing demographics of entrepreneurs in the United States. Women Entrepreneurs the number of women-owned businesses is increasing. Minority Entrepreneurs There has been a substantial increase in minority entrepreneurs in the United States from 1996 to 2010. Senior Entrepreneurs This increase is attributed to a number of factors, including corporate downsizing, an increasing desire among older workers for more personal fulfillment in their lives, and growing worries among seniors that they need to earn additional income to pay for future health care services and other expenses. Young Entrepreneurs Interestingly, a drop in new entrepreneurial activity for people in the 20 to 34 age range occurred between 1996 and 2010. nonetheless, the number of young people interested in entrepreneurship remains strong. Discuss the impact of entrepreneurial firms on economics and societies. Economic Impact of Entrepreneurial Firms creative destruction entrepreneurs develop new products and technologies that over time make current products and technologies obsolete. creative destruction stimulates economic activity. Innovation is the process of creating something new, which is central to the entrepreneurial process. Job Creation Small businesses are the creators of most new jobs in the United States, and employ more than half of all private sector employees. Entrepreneurial Firms’ Impact on Society The innovations of entrepreneurial firms have a dramatic impact on a 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. However, innovations do create moral and ethical issues with which societies are forced to grapple. Identify ways in which large firms benefit from the presence of smaller entrepreneurial firms. entrepreneurial firms also have a positive impact on the effectiveness of larger firms. many entrepreneurial firms have built their entire business models around producing products and services that help larger firms be more efficient or effective. entrepreneurial firms partner with larger companies to reach mutually beneficial goals. Participation in business partnerships accelerates a firm’s growth by giving it access to some of its partner’s resources, managerial talent, and intellectual capacities. Explain the entrepreneurial process Step 1 Deciding to become an entrepreneur: Usually, a triggering event prompts an individual to become an entrepreneur. Step 2 Developing successful business ideas: Developing a successful business idea includes opportunity recognition, feasibility analysis, writing a business plan, industry analysis, and the development of an effective business model. Abusiness plan is a written document that describes all the aspects of a business venture in a concise manner. A firm’s business model is its plan for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it generates. Step 3 Moving from an idea to an entrepreneurial firm: to prepare a proper ethical and legal foundation for a firm, including selecting an appropriate form of business ownership. assessing a new venture’s financial strength and viability building a new-venture team getting financing or funding and identifies the options that a firm has for raising money Step 4 Managing and growing the entrepreneurial firm: marketing issues facing entrepreneurial firms, including selecting an appropriate target market, building a brand, and the four Ps— product, price, promotion, and place (or distribution)—for new firms. intellectual property in the growth of entrepreneurial firms. Preparing for and evaluating the challenges of growth strategies for growth, ranging from new product development to mergers and acquisitions. Chapter 2 Explain why it’s important to start a new firm when its “window of opportunity” is open. entrepreneurs recognize an opportunity and turn it into a successful business. An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. Some ventures are externally stimulated an entrepreneur decides to launch a firm, searches for and recognizes an opportunity, and then starts a business an entrepreneur decides to launch a firm, searches for and recognizes an opportunity, and then starts a business. Other firms are internally stimulated An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it. an opportunity has four essential qualities: It is.- (1) attractive, (2) durable, (3) timely, and (4) anchored in a product, service, or business that creates or adds value for its buyer or end user The term window of opportunity is a metaphor describing the time period in which a firm can realistically enter a new market. Once the market for a new product is established, its window of opportunity opens. As the market grows, firms enter and try to establish a profitable position. At some point, the market matures, and the window of opportunity closes. Explain the difference between an opportunity and an idea An idea is a thought, an impression, or a notion. An idea may or may not meet the criteria of an opportunity. An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. Most entrepreneurial ventures are started in one of two ways. Describe the three general approaches entrepreneurs use to identify opportunities. Observing Trends it’s important to distinguish between trends and fads. even though we discuss each trend individually, they are interconnected and should be considered simultaneously when brainstorming new business ideas. Economic Forces - State of the economy - Level of disposable income - Consumer spending patterns Social Forces - Social and cultural trends - Demographic changes - What people think is ”in“ Technological Advances - New technologies - Emerging technologies - New uses of old technologies Political Action and Regulatory Changes: Political and regulatory changes also provide the basis for opportunities - New changes in political arena - New laws and regulations Solving a Problem The second approach to identifying opportunities is to recognize problems and find ways to solve them. m
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