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MNE3701 Unit 2 HOW CORPORATE ENTREPRENEURSHIP DIFFERS SUMMARY NOTES
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MNE3701 Unit 2 HOW CORPORATE ENTREPRENEURSHIP DIFFERS SUMMARY NOTES
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Unit 2HOW CORPORATE ENTREPRENEURSHIP DIFFERS
2.1 DISPELLING THE MYTHS AND SIDESTEPPING THE FOLKLORE
The following ten most notable myths are inaccurate:
1. Entrepreneurs are born not made:
- There is a long-prevailing notion that the characteristics of entrepreneurs cannot
be taught or learned, and that they are traits with which one must be born.
- This is not true
- Key traits associated with entrepreneurship include achievement motivation,
aggressiveness, initiative, drive, willingness to take risks, tolerance to ambiguity
an self-confidence
- Today, however it is recognised that such traits and characteristics are heavily
influenced by environmental conditions (family, work, peer-group, and social) and
that each of us has significant entrepreneurial potential.
2. Entrepreneurs must be inventors:
- The idea that entrepreneurs are inventors is a result of mis-understanding an
tunnel vision
- While many inventors are also entrepreneurs, there are numerous entrepreneurs
who pursue all sorts of innovative activity beyond formal inventions, and/or who
capitalise on the creative ideas of others.
3. There is a standard profile or prototype of the entrepreneur:
- Many books and articles have presented checklists of characteristics and skills of
the successful entrepreneur
- These lists were neither validated nor complete, they were based on case studies
an on research findings among achievement-orientated people
- Today, we realise that a standard entrepreneurial profile is hard to compile
- The environment, the venture itself and the entrepreneur have interactive effects,
which result in many different types of profiles.
4. All you need is luck to be an entrepreneur:
- Being at the right place at the right time is always an advantage but luck happens
when preparation meets opportunity
- Prepared entrepreneurs who seize the opportunity when it arises often appear to
be lucky
- They are in fact simply better prepared to deal with situations and turn them into
successes
- What appears to be lucky really is preparation, determination, desire, knowledge
and innovativeness
MNE3702 Page 1
,5. Entrepreneurs are extreme risk takers (Gamblers):
- The concept of risk is a major element in the entrepreneurship process
- However, the public’s perception of the risk assume by most entrepreneurs is
distorted
- While it may appear that an entrepreneur is “gambling” on a wild chance, the fact
is that an entrepreneur is usually working on a moderate or calculated risk
- Most successful entrepreneurs work hard through planning and preparation to
mitigate or minimize the risk involved
- Few like risk
- They seek to creatively manage risks in order to better control the destiny of their vision.
6. Entrepreneurial people are academic and social misfits:
- The belief that entrepreneurs are academically and socially ineffective is a result of some hard-headed
business owners having started successful enterprises after dropping out of school or quitting a job
- In many cases such an event has been blown out of proportion in an attempt to “profile” the typical
entrepreneur
- They abandoned him or her as a misfit in a world of corporate professionals
- Business education, for example, was aimed primarily at the study of corporate activity
- Today’s entrepreneur wears two hats, that of visionary change agent and effective manager
- He/she is typically adept socially, economically an academically
- No longer is a misfit, the entrepreneur now viewed as a professional.
7. All Entrepreneurs need is money:
- It is true that an innovative idea needs capital to survive; it is also true that a large number of business
failures occur because of a lack of adequate financing
- However, many other resources are vital for entrepreneurial success, such as a skilled and balanced
team, technical and selling capabilities, distribution channels, licences and more
- Money is not always a guarantee that the right resources are put together in the right way at the right
time
- Also, entrepreneurs do not own all the resources that they use – they are adept at borrowing, sharing,
leasing, renting and networking resources.
- Further, having money is not a bulwark against failure
- Failure due to a lack of proper financing often is an indicator of other problems: managerial
incompetence, lack of financial understanding, poor investments, poor planning…etc.
- To entrepreneurs, money is a resource but never an end in itself.
8. Ignorance is bliss for entrepreneurs:
- The myth that too much planning and evaluation lea to constant problems – that overanalyses leads
to paralysis – does not hold up in today’s competitive markets which demand detailed planning and
preparation
- Identifying the strengths and weaknesses of a concept or venture, setting up clear timetables with
contingencies for handling problems, and minimizing these problems through careful strategy
formulation are all key factors for successful entrepreneurship
- Therefore careful planning – not ignorance of it, is the mark of an accomplished entrepreneur.
MNE3702 Page 2
,9. Most entrepreneurial initiatives fail:
- It is true that many entrepreneurs suffer of failures before they are successful
- They follow the adage, if at first you do not succeed , try and try again
- In fact, failure can teach many lessons to those willing to learn and often leads to future successes
10. Entrepreneurship is unstructured and chaotic:
- There is a tendency to think of entrepreneurs as gunslingers – as people who shoot from the hip and
ask questions later
- They are assumed by some to be disorganised and unstructured, leaving it to others to keep things on
track
- The reality is that entrepreneurs are heavily involved in all facets of their ventures, and they usually
have a number of balls in the air at the same time
- As a result, they are typically well-organise individuals
- They tend to have a system – perhaps elaborate, perhaps not – personally designed to keep things
straight and maintain priorities
- In fact, their system may seem strange to the casual observer, but it works.
When doing something entrepreneurial, one is dealing with the unknown an there is a need to be
tolerant of ambiguity.
Unanticipated developments arise all the time.
Success is often a function of how prepared one is for the unknown, and whether one is in a position
to capitalize on the unanticipated.
Entrepreneurship is a planned activity that can be managed as a process, involves risk and requires
innovation, and can be applied in virtually any organisational context.
MNE3702 Page 3
, 2.2 ENTREPRENEURIAL REALITIES: UNDERSTANDING THE PROCESS
This process can occur in different settings. For example, it can occur in a new, start-up business or in a large
business.
Entrepreneurship is a process, which consists of six (6) stages, namely:
Stage 1: Identifying the opportunity
- Entrepreneurship does not start with the creative concept of a new product, service or process
- It begins with an opportunity, which can be defined as a favourable set of circumstances creating a
need or an opening for a new business concept or approach.
- The reality is that many new concepts failed because there was no opportunity. An example is the so-
called mousetrap that nobody wanted. Arguably the single largest category of new product failures,
these are often highly innovative, state-of-the-art advances – innovations that the casual observer
might find intriguing. And when the test of the marketplace is applied, not enough customers are
willing to buy, either because they are already satisfied, the concept is too complex or difficult to
understand, the perceived switching costs from current solutions are too high, or they do not have a
real need for the innovation.
- Just because something is better does not mean it is needed. The adage if you build it they will come
is foolish when discussing entrepreneurial initiatives. All too often new products, services and
concepts are developed in isolation, where the sole focus is on overcoming technical, financial and
human challenges.
- The underlying opportunity is simply assumed. Having a better product at a better price with better
product availability and customer service means nothing if the market does not exist, is too small, or is
unwilling to change: if competitors are completely entrenched; or if any other components of the
opportunity are inadequate.
- Timing is everything when it comes to new ideas, and the concept of a window means there is an
optimal time period during which a new concept can be implemented with a reasonable chance of
success.
- One can introduce something too early (before the market exists) or too late (once the market is
saturate or new technologies have begun to emerge).
Stage 2: Defining the business concept
- With an opportunity clearly in mind, the entrepreneur specifies a business concept.
- Opportunities represent potential – and with most opportunities, this potential can be capitalised in
multiple ways. Therefore a business concept is defines as an innovative approach for capitalizing on an
opportunity.
- A well-conceptualized concept has certain characteristics.
- It provides an overt benefit to a user
- It is unique and not easy to imitate
- It is comprehensive in the sense that it represents an entire value proposition
- It is feasible, and there is no reason to believe it can be implemented
- Its returns significantly exceed its costs.
MNE3702 Page 4
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