Textbook Notes (362,796)
Canada (158,054)
MGTA01H3 (583)
Chapter 3


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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

• 380 businesses are started in Canada everyday • 3 terms ◦ small business ◦ new venture ◦ entrepreneurship Small Business • hard to define: ◦ partly because of the way the government collects and reports info on small businesses • industry canada ◦ federal government agency responsible for small business • 2 sources of info (on small businesses that the gov't relies on): ◦ Business Register (tracks businesses) ◦ Labour Force Survey (tracks individuals) • Business Register qualifications: ◦ must have at least one paid employee ◦ annual sales revenues of $30k or more ◦ or be incorporated • Labour Force Survey-qualifications for status of self-employed ◦ working owners of a busness that is incorporated or unincorporated ◦ work for themselves (but do not have a business) ◦ work without pay in a family business • Considered small if: ◦ goods-producing business: fewer than 100 employees ◦ service-producing business: fewer than 50 employees • 2.2 million businesses, 2.5. million self-employed people • majority of businesses ◦ no employees (just the owner) ◦ are not incoporated • nascent entrepreneurs ◦ people who are trying to start a business • small business ◦ owner-managed business with less than 100 employees New Venture/Firm • 3 criteria to determine when a new firm comes into existence ◦ when it was formed ▪ if operational within the past 12 months ◦ whther it is incoporated or not ▪ adopts an organizational forms e.g. proprietorship, partnership, corporation or co-operative ◦ sells goods and/or services • new venture/firm ◦ recently formed commercial organization that provides goods and/or services for sale Entrepreneurship • entrepreneurship ◦ process of identifying an opportunity in the marketplace and accessing the resources need to capitalize on it • entrepreneurs ◦ people who recognize and seize opportunities • intrapreneurs ◦ people who exhibit entrepreneurial characteristics and create something new in an existing large firm or organization ◦ e.g. Procter & gamble (different divisions that focus on new products) ◦ key difference between entrepreneurs and intrapreneurs: ▪ intrapreneurs don't have to get the resources for the new product, that is taking care of by the employer Small Businesses in Canada • it's only after the 1980s that people started realizing that small businesses are important to the economy • 98% of all business in Canada are small (have less than 100 employees) • 58% of all business are located in ON and QC • 57% of small businesses have less than 5 employees • Private sector ◦ part of the economy that is made up of companies and organizations that are not owned or controlled by the government Employee breakdown: • 49% of employees work for a small business • 16% work for medium sized business • 35% work for a large business • **small businesses are important to the economy because the employe more people than large business do ◦ small businesses employ 2/3 of employees in 4 industries ◦ healthcare (non-insitutional) ◦ consturction ◦ other service ◦ accommodation and food GDP contribution • contribute to 25% of Canada's GDP New Ventures • most of the growth in firms occurs in service-producing industries ◦ high-knowledge industries are doubling in it (e.g. biotechnology) • exlcused businesses without employees (because unincoporated businesses with no employees would not be included in Stats Canada Business Register) ◦ however, once employees are hired, will be counted as a business ◦ this is why there may be comapnies that have been in existance for a long time but are still considered "new" because they acquired employees only recently Female Entrepreneurs • more than 800k women entrepreneurs in Canada ◦ increases by 3% each year • Female Entrepreneurs ◦ grown by 208%, while for men, growth is 38% • Self-employed females ◦ grew by 43% for women, 21% for men Entrepreneurial Process (3 Important Process elements) • Entrepreneur • Opportunity • Resources The Entrepreneur • Behavioural (e.g. high-energy level), personality (e.g. independence) & skills (e.g. problem solving) • people are not born entrepreneurs: ◦ personality alone is not a good indicator, since actions are what will shape results much more ◦ entrepreneurial characteristics are widely distributed in the population Identifying Opportunities • Idea Generation • Screening • Developing the Opportunity Idea Generation • need to abandon traditional assumptions of how things ought to be • Heirarchy of Idea generation: • work: ◦ majority of ideas originate from events relating to work (45-85%) ◦ reason: familiar with product, customer, needs • hobby/personal interest ◦ 16% • chance happening ◦ 11% Screening • weed out dead-end ideas through several steps: ◦ idea creates or adds value for the cx ◦ idea provides a competitive advantage that can be sustained ◦ idea is marketable and financially viable ◦ the idea has low exit costs • idea creates or adds value for the cx ◦ solves a significant problem or ◦ meets a need in a new way • idea provides a competitive advantage that can be sustained ◦ competitive advantage: ▪ exists when cx's see the prodct or service as better that the other competitors ◦ sustaining competitive advantage ▪ maintaining advantage in face of competitors ▪ *generally, the longer the markets are in flux, the greater the likelihood of being able to sustain advantage ◦ ***absence of these results in 2 fatal flaws of many new ventures • idea is marketable and finacially viable ◦ determine if the sales will actually lead to profits ◦ requires understanding of: ▪ who cx's are ▪ their needs ▪ how product is better than competitor's at satisfying need ▪ key competitors ◦ sales forecast ▪ estimate of how much of a product or service wil be purchased by the prospective cx's for
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