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Summary OBS 114
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Summary of chapters 1,2,5,6
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OBS114Part A: Origin of the Enterprise
Chapter 1: Entrepreneurship
Nature of entrepreneurship
- Important role in creation & growth of business in growth & prosperity of regions &
nations
- Opportunity – new goods & services, materials, organizing methods can be
introduced & sold at greater than their cost of production.
- Offered to market through new/exciting organization
- Risk of failure vs possibility of reward
New business - 1-50 people and owner manages business on day to day basis
Self-efficacy – believe in ability to achieve a goal
4 Key ideas when starting entrepreneurial business
Believe that you can do this: self-efficacy, more likely to succeed
Planning & Action = Success: right plan to get you to the right action
Help others: learn from others
Do well, do good: do good for others & do well in business
Entrepreneur – notices opportunities & decides to mobilise necessary resources to
produce new/improved goods & services
5 Steps to be successful:
1. Feel: feeling of starting business / creating something new
: starts founding process
2. Check: check likelihood for success through feasibility analyses or customer
development process
3. Plan: idea to business, done by part-time start-ups, lean business practices
approaches etc.
4. Do: find that you need to refine approach until you have a successful firm
4 Elements that need to come together to start your business (BRIE):
, 1. Boundary: creating place for business in people’s mind & in location
2. Resources: money, product, knowledge etc. that makes business
3. Intention: desire to start business
4. Exchange: moving resources / products / services in exchange for money
Boundary actions: creating business websites / cards
: registering business name
Resource actions: obtaining copyright, patents, trademark
: purchasing raw material, inventory
Intention actions: thinking about business
: developing product & services
Exchange actions: generating sales revenue
: establishing credit with supplier
How small business contribute to economy
New Jobs: creates 63% of new jobs
: more willing to offer jobs to inexperienced workers
Innovations: creative destruction – newly created goods & services / firms can hurt
existing goods & services / firms
: freedom small business gives owners to pursue & perfect their dream
creates innovations which we all benefit from
New Opportunities: offer communities another type of opportunity = to enjoy goods &
services. Example, grocery, pharmacy, gas station.
Aspects of Global Entrepreneurship:
Factor-driven economy: nation where major forces for jobs, revenues & taxes come
from farming or industries like forestry, mining.
Efficiency-driven economy: nation where industrialization is becoming major force
providing jobs, revenues & taxes & where minimizing costs while max productivity is
a goal.
Innovation-driven economy: nation where forces for jobs, revenues & taxes come
from high-value-added production based on new ideas & techniques.
Opportunity-driven economy: creating firm to improve one’s income / product /
service.
Necessity-driven economy: creating firm as an alternative to unemployment.
,Beyond Small businesses: CSI Entrepreneurship:
- Social ventures = social entrepreneurs
- Entrepreneurs employed by existing firm = corporate entrepreneur
- Plan to start business on their own = independent entrepreneur
- CSI Entrepreneurship – corporate, social, independent
- Creation – focus that looks at making new entities
- Customer-focus – focus that refers to being in tune with one’s market
- Efficiency – focus refers to doing most work with fewest resources
- Innovation – looks at new thing / new way of doing things
- Independent Entrepreneurship – for-profit business
- Corporate Entrepreneurship – new products & services / markets
- Social Entrepreneurship – charitable / civic organizations – or for-profit firm that
invests in charitable activities
- Sustainable Entrepreneurship – identifies, creates, exploits opportunities to make
profit & min depletion of natural resources, max use of recycled material
- Green Entrepreneurship – same as sustainable
- Mindshare – degree of attention your target market pays to your idea /
organizations
Focus of Entrepreneurship
Creation Customer Efficiency Innovation
Corporate x x x
Social x x x
Independent x x x x
Entrepreneurial process: Timmons Model
1. opportunity
4. creativity 4. communication
Business plan
3. entrepreneur
2. resouces
/ team
6. risk vs capital market contest 4. leadership
1 = idea vs opportunity & is at heart of process
= consider market readiness, trends & behaviour
2 = max & own rather than min & control (cash flow)
= build good resource base to facilitate start-up process
, 3 = nature of opportunities determines size & shape of team
4 = balance by applying creativity, leadership & maintaining effective communications
5 = strategic plan, not financing process communicate quality of 1+2+3
6 = balancing, managing risks & capturing market share
5 P’s of Entrepreneurial Behaviour:
Passion
- Positive feeling towards business & idea of business
- Increase commitment towards business
- Inspire stakeholders = potential investors
Perseverance
- Ability to stick with activities even when it takes long time & outcome is not
immediately known
Promotion – Prevention Focus
- Promotion = max gains &pursuing opportunities likely to lead to gains
- Prevention = at min losses with bias toward inaction or protective action to
prevent loss
Planning Style
- Comprehensive planners = develop long-range plans for all aspects of business
- Critical-point planners = focus on most important aspects first, not long term
- Opportunistic planners = start with goal instead of plan & look for opportunities to
achieve goal, short term in orientation
- Reactive planners = passive approach, wait for cues to determine actions to take,
short term
- Habit-based planners = don’t plan, actions dictated by routines
Professionalism
- Extend firm meets / exceeds standard business practices for its industry
- Standard business practices = action that has been widely adopted within industry
/ occupation
- Expert business professionalism = situation that occurs when all major functions
of firm are conducted according to standard business practices of it industry
- Specialized business professionalism = business have owners who are passionate
about key functions = sales, accounting, and pursue functions in professional
manner
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