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MGTA02H3 (363)
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Management (MGT)

Chapter 3: Understanding Entrepreneurship, Small Business, and New Venture Creation THE LINKS AMONG SMALL BUSINESS, NEW VENTURE CREATION, AND ENTREPRENEURSHIP • Small Business o Owner managed business with less than 100 employees. • New Venture/Firm o Recently formed (within 12 months) commercial organization that provides G&S for sale. • Entrepreneurship o Process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it o Entrepreneurs – People who recognize and seize opportunities  Can be found in all times of firms (old, new, big, small, public, private) o Intrapreneurs – Within large firms; don’t need to provide resources THE ROLE OF SMALL AND NEW BUSINESSES IN THE CANADIAN ECONOMY • Small Businesses o Medium business (100-499) o Large (500+) o Private Sector – Part of economy made up of companies and organizations that are not owned or controlled by the gov o Small businesses make up large part of work force • New Ventures o Main source of job creation and responsible for new G&S o Growth in female entrepreneurship o Gov statistics on new ventures exclude businesses without employees. Hence businesses counted as ‘new’ could have been operating for years.  Unincorporated business operated by a self-employed person (no employees) is not included in stats Canada business registrar o One large business outperforms small businesses but SMEs (Small and Med Enterprises) outperform large businesses in terms of contribution to employment THE ENTREPRENURIAL PROCESS • The Entrepreneur o Must present specific behaviourial (ex: high energy level), personality traits (independence), and skills (problem solving) o Must identify opportunity and access resources • Identifying Opportunities o Idea Generation  Not about understanding how things work, or how they ought to be but about seeing what others do not  New prospective are what can produce profits  Most ideas don’t come from searching for them but from events that occur relating to work or everyday life  Work experience is most common source of ideas  Then personal interest/hobby  Lastly, chance happening (unexpectedly) o Screening  An idea should contain a majority of these characteristics: • Creates/Adds value for customer (solves significant problem or need in different way) • Idea provides competitive advg that can be sustained compared to competitors and the changes they make when you enter market • Idea is marketable and Financially Viable o Sales Forecast – Estimate of how much of a GorS will be purchased by prospective customers over a specific period • Ideas has low exit costs (considered low if can be shut down without significant lost of time, money or reputation) o Developing the Opportunity  Business concept often changes from what was originally envisioned to sit needs of marketplace and the economies of business (when their better understood from screening)  3 entry strategies: 1. Introduce new GorS 2. Introduce GorS with a twist 3. Franchise – An arrangement in which a buyer (franchisee) purchases the right to sell the GorS of the seller (franchiser) 4. Business plan – a document that describes the entrepreneur’s proposed business venture; explains why it is an opportunity; outlines its marketing plan, its operational and financial details, and its managers’ s
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