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GMS200-ChapterSix.docx

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Department
Global Management Studies
Course
GMS 200
Professor
Shavin Malhotra
Semester
Fall

Description
Chapter SIX: Entrepreneurship and Small Business ACE enables university students to reach their full potential by helping others reach theirs. Develop hands on leadership experience, gain business confidence, and network in a unique way and attend international competitions. THE NATURE OF ENTREPRENEURSHIP The dynamic environment demands that organizations and their managers frequently adapt and renew themselves continually to succeed over time. Success in competitive business environment depends on entrepreneurship- dynamic strategic thinking and risk taking, creative, and growth-oriented behaviour that results in the creation of new opportunities for organizations. •••Who are the Entrepreneurs? -An entrepreneur is a risk taking individual who takes actions to pursue opportunities in situations others fail to recognize, or even view as problems or threats. -starts new ventures that bring to life new products or service ideas Frank Stronach Magna International. Held vision = building a culture known as Fair Enterprise- ensures the rights of employees, management and investors to share in the profits they all help produce Richard Branson Started with student literary magazine and small mail-order business. Built “Virgin” company=mobile-airline Heather Reisman Co-founded Paradigm Consulting- worlds first strategic change consultancy. Became president of Cott Corporation. Launched Indigo Books. Frank Sobey Started from small family butcher shop. Second-Largest grocery chain in Canada – Sobeys. Teresa Casciolo Chair and CEO of Lakeport Brewing. Took over company that was in bankruptcy protection and made it profitable. Fastest growing companies. Tim Horton and Tim Horton, opened 1964 Hamilton. Joined with Roy Joyce. Joyce took over in 1965. Partnership with Wendys. Ron Joyce •••Characteristics of Entrepreneurs -founder of a new business enterprise that achieves large-scale success -Entrepreneurs also operate on a smaller and less public scale- local franchise, retail shop, or self-employed. -anyone who assumes responsibility for introducing a new product or change in operations within an organization is also demonstrating the qualities of entrepreneurship -entrepreneurs tend to share certain attitudes and personal characteristics -self-confidents, determined, resilient, adaptable and driven by excellence is the general profile The typical personality traits are the following: 1-Internal Locus of Control-they are in control of their destiny, self-directing and like autonomy 2-High energy level- they are persistent, hard-working and willing to exert extraordinary efforts to succeed 3-High need for achievement-motivated to accomplish challenging goals, thrive on performance feedback 4-Tolerance for ambiguity-risk takers, they tolerate situations with high degrees of uncertainty 5-Self Confidence-feel competent, believe in themselves and are willing to make decisions 6-Passion and action orientation- act ahead of problems, want to get things done, and not waste valuable time 7-Self-reliance and desire for independence-independence, self-reliant, want to be their own boss 8-Flexibility- willing to admit problems and errors, change a course of action when plans aren’t working. •••Diversity and Entrepreneurship -entrepreneurship is rich with diversity -women in Canada make up a larger share of the self employed population -women entrepreneurs are growing in number everywhere -more than 81,200 women entrepreneurs – increases at 8% growth rate -Entrepreneurship allows women opportunities of striking out on their own, pathway to opportunity that may be blocked otherwise -Women pursue entrepreneurship because either 1) they are not being taken seriously 2) glass ceiling & seeing others being promoted -Entrepreneurship is opening doors for the visible minorities _____________________________________________________________________________________________________________________________________ ENTREPRENEURSHIP AND SMALL BUSINESS Microenterprises= fewer than 10 employees Small= fewer than 100 employees Medium Sized= 100-500 employees -Small businesses offer major economic advantages -50% of Canada’s private labour force work in small businesses while 16% work in medium sized businesses -smaller businesses are common in service/retail sector -higher costs of entry make them less common in other industries (manufacturing or transportation) Motivations: 1.Waiting to be your own boss 2.Going to work for a family owned business 3. Seeking to fulfill a dream Common Ways to get a Franchise 1.start one 2. Buy an existing one 3.Buy and run a franchise* *where a business owner sells to another the right to operate the same business in another location. It runs under the original owner’s business name and guidance. In return, the franchise patent receives a share income or flat fee from franchise. •••Entrepreneurship and the Internet Internet has opened a whole new array of entrepreneurial possibilities. eBay. -dot com businesses -Majority of small firms are conduction business over the Internet. -Many of these firms are existing firms that modified traditional ways to pursue new Internet-driven opportunities -Internet entrepreneurship isn’t limited to trading through eBay: a growing area for Internet entrepreneurship is B2B business to business websites that link buyers and sellers. •••International Business Entrepreneurship -Small businesses find that international business brings opportunities for : expanded markets, additional financing, access to quality and possibly lower-cost resources, access to labour and technical expertise, and locations for outsourcing and manufacturing. -Internet makes selling abroad relatively easy with advanced distribution systems making product delivery quick and efficient -Smaller businesses can find alliance opportunities in strategic ventures with foreign partners -Economies of the world improve and so does consumer demand for goods and services grow -governments, federal and provincial, encourage small businesses to explore and expand export activities -Smaller businesses are seeking diversification opportunities abroad – but with that comes insurance against the risk of economic slowdown in one area -If domestic business declines – hope is that International business will take up the slack -Investment to any businesses internationally requires investment in travel, communication, expertise and such •••Family Businesses -Family business is ones owned and financially controlled by family members, represent the largest percentage of business operating worldwide -they must solve the same problems compared to small or large businesses -such as meeting the challenges of strategy , competitive advantage, and operational excellence - family firm is the ideal situation – everyone working together, sharing values and a common goal and knowing what they do benefits the family Conflicts -family business feud :members of the controlling family get into disagreements about work responsibilities, business strategy, operating approaches, finances or other matters -succession problem: transferring leadership from one generation to the other -A family that has been in operation for some time is a source of both business momentum and financial wealth -Recommended succession plan : formal statement that describes how the leadership transition and related financial matters will be handled when the time for changeover arrives. -it should include the procedures for choosing new leadership, legal aspects of ownership transfer and financial and estate plans relating to the transfer. -made well ahead the need of use for it and should be shared and understood •••Why Many Small Businesses Fail? -Small businesses have a high rate of failure -A high proportion of new businesses fail in their first five years of operation - (bias) counting issue: the government counts as a failure any business that closes, whether it is due to the death or retirement of an owner, sale to someone else, or the inability to earn profit -Most of them are due to bad judgments and management mistakes made by entrepreneurs and owners -The following errors are common causes: 1.Lack of Experience: not having sufficient know-how to run business in chosen market 2. Lack of Expertise: not having expertise in essentials of business operations (finance, purchasing, selling) 3. Lack of strategy and strategic leadership: not taking the time to craft a vision and mission or implement 4. Poor financial control: not keeping track of numbers and failure to co
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