BUS W212 TEST 1

Innovation can be in any of the 5 areas

-Firm's strategy -Product offerings -Served markets -Internal organization (i.e., structure, processes, and capabilities) Business model

Sustainable Entrepreneurship

-Focus on the preservation of nature, life support, and community -Pursuing opportunities to bring into existence future products, processes, and services for gain, including economic and noneconomic gains to individuals, the economy, and society

Considerations When Buying a Business

-Request that the seller retain a minority interest in the business or establish the final purchase price dependent on the performance of the business over a three-to-five-year span. -Be wary of any promises made without written corroboration. -Spend time reconstructing financial statements to determine how much cash is actually available. -Interview the owner, vendors, competitors, customers, and employees.

Franchisee: 5 things

1. Makes a financial investment in the operation 2. Obtains and maintains a standardized inventory and/or equipment package usually purchased from the franchisor 3. Maintains a specified quality of performance 4. Pays a franchise fee as well as a percentage of the gross revenues 5. Engage in a continuing business relationship with the franchisor .

Important practices for establishing an innovation-driven organization:

1. Set explicit innovation goals 2. Create a system of feedback and positive reinforcement 3. Emphasize individual responsibility 4. Provide rewards for innovative ideas 5. Do not punish failures

Franchisor provides: 6 things

1. The company name that provides drawing power 2. Identifying symbols, logos, designs, and facilities. 3. Professional management training for each independent unit's staff. 4. Sale of merchandise necessary for the unit's operation, equipment to run the operation, and the food or materials needed for the final product 5. Financial assistance, if needed 6. Continuing aid and guidance to ensure that everything is done in accordance with the contract.

Boomerpreneurs

55 years or older and convinced their business has a positive social impact business

gazelle

A business establishment with at least 20 percent sales growth every year, starting with a base of at least $100,000

Social Entrepreneur

A person or small group who founds or leads an organization or initiative engaged in social entrepreneurship Sometimes also referred to as "public entrepreneurs," "civic entrepreneurs," or "social innovators"

external locus of control

A point of view in which external processes are sometimes beyond the control of the individual entrepreneur.

A "unicorn"

A pre-IPO (private) start-up company with a $1 billion market value • Examples: Oculus VR, Nest, Minecraft, Beats • In 2018, 80 start-ups were valued at $1 billion or more.

What is Corporate Entrepreneurship?

A process whereby an individual or a group, in association with an existing organization, creates a new organization or instigates renewal or innovation within the organization. corporate venturing: New venture creation within the organization OR strategic entrepreneurship: transformation of organizations through strategic renewal

Franchisee

A purchaser of a franchise

Corporate Entrepreneurship Strategy

A vision-directed, organization-wide reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.

Corporate Social Responsibility

Actions that appear to further some social good, beyond the interests of the firm and that which is required by law

Corporate Venturing:

Adding new businesses to the corporation

Direct Selling

Allows independent salespersons to earn profit on retail sale of products and the ability to earn commissions

Triple Bottom Line

An accounting framework that goes beyond the traditional measures of profit, return on investment, and shareholder value to include environmental and social dimensions

Corporate entrepreneurship strategy is manifested through the presence of three elements:

An entrepreneurial strategic vision o A pro-entrepreneurship organizational architecture o Entrepreneurial processes and behavior as exhibited across the organizational hierarchy

Franchising

Any arrangement in which the owner of a trademark, trade name, or copyright has licensed others to use it in selling goods or services.

Factors Affecting Sale of the Venture

Assets of the venture Profits, sales, and operating ratios the business environment

3,235 certified companies globally spanning 71 countries- NOT VERY POPULAR

B-corps

Growth Mindset

Believe abilities can be developed through hard work Brains and talent are only the beginning of success Lifelong learners View failure as an opportunity to improve

It requires congruence between the entrepreneurial vision of the organization's leaders and the entrepreneurial actions of those throughout the organization.

Corporate Entrepreneurship Strategy

Elements of a Corporate Entrepreneurship Strategy: Preparation for Failure

Create a "learning from failure" mentality o Provide social support mechanisms to help employees cope with failure

Entrepreneurial Mindset

Describes the most common characteristics associated with successful entrepreneurs as well as the elements associated with the "dark side" of entrepreneurship

most common characteristics of entrepreneurial mindset

Determination and Perseverance, drive to achieve, opportunity orientation, problem seeking, seeking feedback, internal locus of control, tolerance for ambiguity, calculated risk taking, high energy level, creativity and innovativeness, vision, passion, team building

3M's Innovation Rules

Don't kill a project-Tolerate failure Keep divisions small-Motivate the champions Stay close to the customer-Share the wealth

Forms of Sustainable Entrepreneurship

Ecopreneurship Social Entrepreneurship Corporate Social Responsibility

Middle-level managers

Endorse, refine, and guide entrepreneurial opportunities, and identify, acquire, and deploy resources needed to pursue opportunities

Buying an Existing Business

Entrepreneur purchases existing business Takes over operations Less risky than starting from scratch

Serial Entrepreneurs

Entrepreneur start several businesses simultaneously or in quick succession Always new ideas Seeks greater opportunities

Ecopreneurship

Environmental entrepreneurship with entrepreneurial actions contributing to preserving the natural environment, including the Earth, biodiversity, and ecosystems •

First-level managers

Experiment with change, promote adjustment to change, and foster conformity in the development of competencies needed to execute the strategy

Family Enterprising

Family members own and manage Each generation can make changes Sometimes difficult to work with family members (blurred lines) Resistant to changes

The Dark Side of Entrepreneurship

Financial risk versus profit (return) motive varies in entrepreneurs' desire for wealth. - Career risk—loss of employment security. - Family and social risk—competing commitments of work and family. - Psychic risk—psychological impact of failure on the well-being of entrepreneurs

Elements of a Corporate Entrepreneurship Strategy: Control vs. Autonomy

Find balance to curb rogue behavior o Create deliberate organization structure to be conducive to innovation while providing checks & oversight

social entrepreneurship

Form of entrepreneurship with the purpose of social problem solving

Traditional and Social Entrepreneur Similarities

Found new organization Find information and resources Form connections Create marketing initiatives Promote offerings

__________ are responsible for 55% of innovations in 362 different industries and 95% of radical innovations. • Produce twice as many product innovations per employee as do larger firms. • Obtain more patents per sales dollar than do larger firms.

Gazelles

Senior-level managers

Have ratifying, recognizing, and directing roles that in turn are associated with particular managerial actions

entrepreneurial discipline

In every case, there is a discipline and the techniques and principles of this emerging discipline will continue to drive the entrepreneurial economy in the twenty-first century.

Necessity-based Entrepreneurs

Individuals who are pushed into starting a business because of circumstance Layoffs, threat of job loss, inability to find a job

Micro view

Internal locus of control. entrepreneurial trait, venture opportunity and strategic formulation school

entrepreneurial leadership

It is leadership in discovering new possibilities, opening up new horizons, promulgating a new vision, combining resources in new ways, and inspiring others while implementing new venture concepts

Key internal climate factors in determining an organization's readiness for entrepreneurial activity:

Management support Autonomy/work discretion Rewards/reinforcement Time availability Organizational boundaries

Millennipreneurs—

Millennipreneurs—under age 35 and define success by the positive social or environmental impacts of their business

New -New Approach

New product/service in a new market

New -Old Approach

Old product/service in a new market

Direct Selling Company

Owns the company and makes product decisions

Direct Selling: A Hybrid Model Hybrid because...

Part creating a new venture and part acquiring an existing venture

Franchising: The Hybrid Model Hybrid because...

Part creating a new venture and part acquiring an existing venture

Triple Bottom Line: economic performance

Personal income • Cost of underemployment • Establishment sizes • Job growth • Employment distribution by sector • Percentage of firms in each sector • Revenue by sector contributing to gross state product.

Triple Bottom Line

Profits -Sales People -Put people first in everything Planet -Climate conscious

Advantages of Acquiring an Ongoing Venture

Purchasing at a good price Reduced time and effort less fear about future successful operation

Certified B Corporation ("B Corp")

Purpose: to create a material positive impact on society and the environment. Accountability: to have a fiduciary duty to consider the interests of workers, the community, and the environment. Transparency: to report annually to the public on overall social and environmental performance with a credible and transparent third-party standard.

Strategic Entrepreneurship:

Rejuvenating various aspects of an organization in search of competitive advantage

The Franchise Opportunity Decision

Seeking Professional Help Investigating the Franchisor Finding reliable information

-Private-sector focus on innovation, risktaking, and large-scale transformation used to pursue solutions to social problems -Sale of products or services to drive an explicit and central social mission

Social Entrepreneurship

Start-up Costs vs. Operating Costs

Start-Up Costs o Decorating & Remodeling o Installation of Fixtures & Equipment o Starting Inventory o Deposits w/Utilities o Legal & Other Professionals Fees o Licenses & Permits o Advertising & Promotion o Accounts Receivable (how much will be tied up for how long) Operating Costs o Wages o Rent o Advertising o Delivery Expense o Supplies o Telephone/Utilities o Insurance o Taxes/Social Security o Interest on Debt o Maintenance o Professional Services o Miscellaneous

A "decacorn"

Start-ups with a $10 billion or more market value • Examples: Facebook, Uber (taxis), and Airbnb (hotels)

Organizational Constraints on CE

Systems • Oppressive control systems • Inflexible budgeting systems Structures • Too many hierarchical levels • Top-down management • Lack of accountability for effective change Strategic Direction • Absence of innovation goals • No formal strategy for entrepreneurship Policies and Procedures • Extensive documentation requirements People • Fear of failure • "Turf" protection Culture • Values that conflict with entrepreneurial

Fixed Mindset

Talents and abilities are perceived as traits Brains+ talent= success View constructive criticism as a personal attack The success of others is luck Avoid challenges

Entrepreneurial Stress

The extent to which entrepreneurs' work demands and expectations exceed their abilities to perform as venture initiators, they are likely to experience stress.

Radical Innovation

The launching of inaugural breakthroughs o Creates new businesses, new categories, and redefines the competitive environment

The five most important skills to the practice of entrepreneurship

The skill of play The skill of experimentation The skill of empathy The skill of Creativity The skill of Reflection

Incremental Innovation

The systematic evolution of a product or service into newer or larger markets o Improvements to existing products, services, and processes

internal locus of control

The viewpoint in which the potential entrepreneur has the ability or control to direct or adjust the outcome of each major influence.

Developing a Startup

Thought of as the most common form of entrepreneurship Building a new business model around a new technology, product, or service

Example of Unintended Consequences of Social Entrepreneurship

Toms Shoes • "Buy One Give One"

Differences in Traditional and Social Entrepreneur

Traditional: Create ventures with a goal of making a profit., Measure performance by profits. Social: Create ventures to tackle social problems and bring about social change., Measure performance by advancing social and environmental goals, Both for-profit and nonprofit

Buying a Franchise

Turnkey operation Outsider gains access to the market

Triple Bottom Line: social performance

Unemployment rate • Median household income • Relative poverty • Percentage of population with a post-secondary degree or certificate • Average commute time • Violent crimes per capita • Health-adjusted life expectancy

Key Questions to Ask

Why is this business being sold? What is the current physical condition of the business? Need major repair or update? What is the condition of the inventory? What is the state of the other assets of the business? How many employees will remain with the business? What type of competition does the business face? What does financial picture of the business look like?

entrepreneurship

____________________ is a dynamic process of vision, change, and creation that requires an application of energy and passion toward the creation and implementation of new ideas and creative solutions help

What makes ________ so successful at corporate innovation

amazon

The Social Entrepreneurship Process:

desire for social change -> translation into business opportunity-> creative acquisition/utilization of resources--> achievement of social impact

___________________________-create over 400,000 new businesses each year

entrepreneurs

In what ways does Patagonia practice social entrepreneurship?

environmentally conscious: recycled materials

Macro view

external locus of control. Environmental, financial and displacement

Ultraprenueurs

focus on environmental and social concerns

Serialpreneurs

have four or more operating companies

Triple Bottom Line: environmental performance

hazardous chemical concentrations • Selected priority pollutants • Electricity consumption • Fossil fuel consumption • Solid waste management • Hazardous waste management • Change in land use/land cover

The Social Entrepreneurship Process:

it begins and ends with desire for social change

Independent Sales Consultant

owns their own business selling the products

Factors Affecting Negotiations

pressure, information, time, alternatives