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
All firms fall along a conceptual continuum that ranges from highly conservative to highly
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
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
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
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
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
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
Myth 5: Entrepreneurs love the spotlight. the vast majority of them do not attract public
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
Lifestyle firms include ski instructors, golf and tennis pros, wine bars, and tour guides. These
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
Innovation is the process of creating something new, which is central to the entrepreneurial
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
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
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
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
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.
it’s important to distinguish between trends and fads.
even though we discuss each trend individually, they are interconnected and should be
simultaneously when brainstorming new business ideas.
- State of the economy
- Level of disposable income
- Consumer spending patterns
- Social and cultural trends
- Demographic changes
- What people think is ”in“
- 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