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Chapter 7

Entrepreneurship Chapter 7.docx

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Department
Commerce
Course Code
COMM 320
Professor
All

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Entrepreneurship Chapter 7Intellectual PropertyIntellectual property The core ideas about the entrepreneurs new product or serviceImportant for entrepreneurs to protect this because most of the time the only advantage they have over large existing firms lies in their product developmentProduct development The process by which the entrepreneur creates the product or service that will be sold to customersDifficult for many reasonsoEven if the need is recognized they need to find a solution for it and create it in a way that can be marketed and sold to consumers for less than they are willing to payoIt brings about a lot of uncertaintyA way to counteract this is to quickly screen many opportunities and select the one that has the best chance of succeedingIt is important to also limit preliminary investments into a productoLuck is an important part of product developmentAdvantages of new firms in product developmentEstablished firms have much better manufacturing processes than do new firms as they have learned from a long manufacturing history and have managed to establish economies of scaleEstablished firms are also better at marketing as they have a sales force already in place they have an established reputation and they have better knowledge of consumer needs and wantsNew firms are better at product development because they can develop products much easier and cheaper as they do not have the bureaucratic rules and procedures to followThey are also better because they can provide better incentives to employees such as equity to encourage them to develop new productsThey are also more flexible and this allows them to respond to changing consumer demands much faster than larger organizationsThere are some instances when large firms are better at product developmentoIn industries where production is concentrated in the hands of a few small firmsoIn industries that are very capital and advertising intensiveoIn industries that are very research and development intensive
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