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MGTA01H3 (583)
Chapter 3

MGTA03 Chapter 3 Notes.docx

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
MGTA03 Introduction to Management Chapter 3—Understanding Entrepreneurship, Small Business, and New Venture Creation The Link Among Small Business, New Venture, and Entrepreneurship Small Business  a good-producing business in the register (Canadian register that tracks businesses) is considered small if it has fewer than 100 employees, while a service-producing business is considered small if it has less than 50 employees—to be included a business must have at least one paid employee, annual sales revenue of at least $30 000 and/or be incorporated  individuals are considered self-employed if they are working owners of a business that is incorporated or unincorporated, if they work for themselves but do not have a business or if they work without pay in the family business  small business: an owner-managed business with less than 100 employees The New Venture/Firm  a business is considered to be new if it has become operational within the previous 12 months, if it adopts any of the main organizational forms and if it sells goods and services  new venture/firm: a recently formed commercial organization that provides goods and/or services for sale Entrepreneurship  entrepreneurship is the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on that opportunity; entrepreneurs are the people who recognize and seize opportunities  entrepreneurship occurs in a wide range of contexts: not just in small or new firms, but in old firms, in large firms, in firms that grow slowly or rapidly, in non-profit organizations, etc.  intrapreneurs are people who exhibit entrepreneurial characteristics and create something new within an existing large firm or organization  intrapreneurs don’t need to concern themselves with getting the resources needed to bring the new product to market since their employer provides the resources The Role of Small and New Businesses in the Canadian Economy Small Businesses  close to 98% of all businesses in Canada are small (of 2.2 million business establishments) and the majority are located in Ontario and Quebec; contribute to about 25% of the GDP  private sector refers to the part of the economy that is made up of companies and organizations that are not owned to controlled by the government New Ventures  new firms are not only the main source of job creation, but are responsible for the vast majority of products and services especially the growth in high-knowledge industries The Entrepreneurial Process The Entrepreneur  while there are numerous characteristics that define an entrepreneur, behavioural characteristics, personality traits and skills, what is most important is not who the person is but rather what the person does Identifying Opportunities  identifying opportunities involves generating ideas for new or improved products, processes or services, screening those ideas so that the one that presents the best opportunity can be developed, and then developing the opportunity  most venture ideas come from events relating to work or everyday life but some come from personal interests and hobbies and some are chance happenings  ideas for greater opportunities generally involve  creating value or adding value for the customer—solves significant problem or meets a significant need in a different way  provides a competitive advantage that can be sustained—when the product/service is seen as better than that of competitors  the idea is marketable and financially viable—prepare a sales forecast upon learning about competition and customers that estimates how much of a product or service will be purchased by prospective customers over a specific period  the idea has low exit costs—if a venture can shut down without a significant loss of time, money or reputation Developing the Opportunity  new ventures either introduce a totally new product or service, they introduce a product or service that will compete directly with existing competitive offerings but add a new thist, or they franchise  a franchise is an arrangement in which the buyer (fran
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