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ADMS 3920 (34)
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3920_Lecture 1.docx

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Department
Administrative Studies
Course
ADMS 3920
Professor
Cameron Johnston
Semester
Fall

Description
ADMS 3920 Lecture 1_Chapter 1 & 3 Entrepreneurial opportunities: economically attractive and timely opportunity that creates value for interested buyers or end users, distinguishes between opportunities and ideas. True opportunity exists only for entrepreneur who has: interest, resources and capabilities required to succeed. Nature of entrepreneurship Differences between entrepreneurship and small business Entrepreneurs Small Business  Founding owner-managers  Employees who receive specified compensation  Second-generation owner-operators of family-  Employees who do not assume ownership risks owned firms  Franchisees  Owner-managers who have bought out the founders of existing firms Criteria for Small business  Financing supplied by one person or small group  Localized business operations (except marketing/sales)  Business’ size small relative to larger competitors  Fewer than 100 employees Importance of small business: small businesses dominate the economy of Canada Motivators of Entrepreneurship  Profit: freedom from the limits of standardized pay for standardized work. ( expected a return that will not only compensate them for the time and money they invest but also reward them well for the risk and initiative they take in operating their own businesses)  Independence: freedom from supervision and rules of bureaucratic organizations. (operate independently, financial freedom, entrepreneurs use their independence to achieve flexibility in their personal lives and work habits)  Satisfying way of life: freedom from routine, boring, and unchallenging jobs. Drawbacks of Entrepreneurship  Finding new customers/markets Causes of business failure  Dealing with finances  Government regulations and paperwork  Inadequate research and development  Keeping up with competition  Lacked competitive advantage  Dealing with employment issues  Uncontrolled costs  Keeping ahead of tax obligations  Poorly developed marketing strategies  Developing the firm’s products & services  Poor market timing  Dealing with technology  Competitor activities  Other Various types of entrepreneurs  Founder: an entrepreneur who brings a new firm into existence. (inventors who initiate businesses on the basis of new or improved products or services)  Business Owner-Operator: directs the continuing operations of an established firm  Franchisee: an entrepreneur whose power is limited by a contractual relationship with a franchising organization.  Intrapreneur: employee who launches new venture within established company ADMS 3920 Various types of entrepreneurial ventures Factors related to readiness for entrepreneurship Characteristic of successful entrepreneurs  Individuals are typically confident of their ability to meet the challenges confronting them.  ‘Yes’ > Internal locus of control - Entrepreneurs tend to hold themselves accountable for their own successes or failures - (people who believe they can and will manufacture their they can and will manufacture their own ‘good luck’)  ‘No’>External locus of control - non-entrepreneurs tend to believe that external circumstances, luck or fate drive what impacts their world  Entrepreneurial characteristics - Commitment and determination - Leadership - Opportunity obsession - Tolerance of risk, ambiguity and uncertainty - Creativity, self-reliance and adaptability - Motivation to excel Characteristics of Artisan Entrepreneurs Technical skills and little business knowledge Broad business skills and technical knowledge - Paternalistic approach - Scientific approach to problems - Reluctance to delegate - Willing to delegate - Narrow view of strategy - Broad view of strategy - Personal sales effort focus - Diversified marketing approach - Short planning horizon - Longer planning horizon - Simple record keeping - Sophisticated accounting and financial control ADMS 3920 Four routes to entrepreneurship 1. Starting a new business 2. Entering a family business 3. Opening a franchised business 4. Buying an existing business Age, Gender, and entrepreneurial opportunity Early Career Concerns Late Career Concerns 1. Getting an education 1. Fulfilling family responsibilities 2. Gaining work experience 2. Attaining seniority in 3. Acquiring financial resources employment 3. Earning investment in a retirement program Refugee: a person who becomes an entrepreneur to escape an undesirable situation.  Foreign refugee: a person leaves his or her native country and becomes an entrepreneur in the new country.  Corporate refugee: a person who leaves big business for him or herself  Many of these refugees are motivated more by entrepreneurial rewards than by an escapist mind-set. It is often a mixture of positive and negative considerations that provides the motivation. Reasons for individuals often become entrepreneurs  Job termination  Job dissatisfaction  Unexpected opportunity ADMS 3920 Chapter 3_Family Enterprise Family and Business Overlap Family concerns Business Concerns  Care and nurturing of family members  Production and distribution of goods or services  Employment and advancement in the firm  Need for professional management  Loyalty to the family  Effective and efficient operation of the firm Advantages of Family advantages  Strong motivation of family members to see business succeed  Developing firm-specific knowledge among family members  Focus on the long run  Reduced cost of control  Ability to use family theme in promotions  Shared social networks among family members  Preservation of the firm’s reputation based on maintenance of high standards Disadvantages of Family Business  Families tend to be stable, while businesses, especially those competing in the global economy, often face instability  Family seeks to perpetuate traditions, while the business must innovate to prosper  A business must deal with differences in competence and merit  A family is characterized by unity and cooperation, but a business grows through diversity and competition.  For families, loyalty usually trumps opportunity. But businesses are regularly challenged by opportunities that arise for bot
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