MIDTERMS 1: ENTREPRENEURSHIP

SMALL BUSINESS DEFINED

"Small business is a business, which employs less than 100 employees, owned by one or few individuals, with the exception of the marketing function has geographically localized operations, and does not dominate the industry."

Driving factors for innovation

1. Emerging technologies 2. Competitor Actions 3. New Ideas 4. External Environment

Examples of Incremental Innovation

1. Gilette 2. Coca-Cola 3. Cadbury

Advantages of Incremental Innovation

1. Helps companies remain competitive. 2. Ideas are easy to sell. 3. Affordability.

Stages of innovation

1. Idea Generation, Successful Generation 2. Advocacy and Screening 3. Experimentation 4. Commercialization 5. Diffusion and Implementation

In order ro succeed

1. Innovation is work 2. Innovations must build on their own strengths 3. Innovation is an effect or change must be close to the market

Form of the sense, the use or application of the innovation are considered: ?

1. Product 2. Process 3. Service Innovations

(Categories of Innovation) Three applications are considered:

1. Product Innovations 2. Process Innovations 3. Service Innovations

Innovation requires three basic components : the ________; the ________; and the ____________________ capacity needed to make the first two work.

1. The Infrastructure 2. The Capital 3. The entrepreneurial capacity......

Medium Enterprises

101 - 500 workers

Small Enterprises

20 - 100 workers

Classical Entrepreneur

A classical entrepreneur is one who is concerned with the customers and marketing needs through the development of a self-supporting venture. He is a stereo type entrepreneur whose aim is to maximize his economic returns at level consistent 'with the survival of the 'firm with or without an element of growth.

Kirzner-1973

A decision maker whose entire role arises out of his alertness to hitherto unnoticed opportunities.

First-Generation Entrepreneur

A first-generation entrepreneur is one who starts an industrial unit by innovative skill. He is essentially an innovator, combining different technologies to produce a marketable product or service.

Modern Entrepreneur

A modern entrepreneur is one who undertakes those ventures, which go well along with the changing demand in the market. They undertake those ventures, which suit the current marketing needs.

Synthesis

the combination of existing concepts and factors into a new formulation.

Extension

the expansion of a product, service or process.

SMALL BUSINESS FACTOR FAILURES

• External Factors of Failure • Personal Factors of Failure

Introduction

•The process of production • Innovation in production •New usage of materials •Creator of market

Corporate Entrepreneur

Corporate entrepreneur is a person who demonstrates his innovative skill in organizing and managing corporate undertaking.

One example of an innovation process is ________________________________.

Design Thinking.

The "theory of the __________________________________" can help us understand what we must do in terms of implementing steps and processes for innovations to be diffused into the areas of practice where they are needed

Diffusion of Innovation / Theory of the Diffusion of Innovation

________________________________ are different than incremental, evolutionary, and revolutionary innovation degrees.

Disruptive Innovation / Disruptive Innovations

Distribution Channels

Distribution channels can be observed to find a new ways to serve customer. Distribution channel understanding may be the good source of innovating new business idea.

___________________ innovations are different than incremental, evolutionary, and revolutionary innovation degrees.

Distruptive

COMMUNITY INVOLVEMENT

Donations of cash, products, services, or employee time Sponsorship of public health projects Support of education and the arts Support of community recreation programs Cooperation in community projects (recycling centers, disaster assistance, and urban renewal)

PRE-START UP STAGE

During this preliminary phase, ideas evolve from a creative process to the point of being consciously perceived as commercial endeavors. Entrepreneurs have already begun to believe that their ideas are feasible and they become fascinated by visions of their enterprise.

(Categories of Innovation) The first category is different "_______________________________". Form in the sense, the use or application of the innovation. Three application are considered: product, process, and service innovations.

Forms of Innovation

Entrepreneurship and Philosophy

Fundamentally, Entrepreneurship is a human creative act, involved in building a team of people with complementary skills and talents.

Entrepreneurial Skills

GENERAL MANAGEMENT SKILLS PEOPLE MANAGEMENT SKILLS

Growth Entrepreneur

Growth entrepreneurs are those who necessarily take up a high growth industry which has substantial growth prospects.

Mismanagement

Humble entrepreneurs steeped in inexperience can still go under simply mismanagement of resources; they simply make bad decisions in critical situations. Over investment in fixed assets Poor inventory control Poor financial control Poor business philosophy Lack of planning

The start-up stage can be further divided into four stages:

Identifying opportunities evaluating opportunities feasibility study developing business plan

LATER GROWTH STAGE

If the enterprise proves successful in the early growth stage and has momentum, it can find itself in competition with larger companies.

Adoptive or Imitative Entrepreneurs

Imitative entrepreneurship is characterized by readiness to adopt successful innovations by entrepreneurs. They imitate techniques and technology innovated by others.

Fabian Entrepreneurs

In this classification entrepreneurs are very cautious and skeptical in experimenting with any change in the in enterprise. They neither have a will to introduce new changes nor the desire to adopt new methods innovated by the most enterprising entrepreneurs.

(Forms of innovation) _____________________________: products must be incrementally improved or adjusted as problems are indentified in product, service or new requirements demand emerges.

Incremental Improvements

This innovation is to create a new business models without cannibalizing current ones, to grow sales and profits for existing products and services. And to protect current business models.

Incremental Innovation

Induced Entrepreneur

Induced entrepreneur is one who is induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture.

Industrial Entrepreneur

Industrial entrepreneur is essentially a manufacturer, who identifies the potential needs of customers and modifies a product or service to meet the marketing needs

Entrepreneur Behavior:

Initiative taking, organizing, reorganizing of social/economic resources and acceptance of risk or failure.

Innovating Entrepreneurs

Innovating entrepreneurs are characterized by aggressive assemblage in information and analysis of results, deriving from a novel combination of factors.

The first element of the theory is the ________________ itself, whether that be an idea, a product, a process, or something else that is new to potential adopters.

Innovation

The term "________________________" is a broad concept that holds all the activities that contributes to the efficient introduction and exploitation of new processes and products which are critical competitive performance and longterm growth of any industrial economy.

Innovation

___________________________ is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.

Innovation

Matthews and Bruggemann argue that a design should be judged based on its desirability, feasibility, and viability.

Innovation Criteria

Lundblad (2003) defined "diffusion of innovation" as "the adoption and implementation of new ideas, processes, products, or services" as she studied the diffusion of innovation "within and across organization".

Innovation Diffusion

___________________________________ refers to the speed with which an organization delivers innovation, and how that impacts its ability to compete.

Innovation Pacing

Another element of innovation is the set of planned innovation processes that are required to make innovation happen.

Innovation Processes

"Value without innovation is an improvement that may not be sufficient for organic growth. Innovation without value does not provide the utility that customers would be willing to purchase."

Innovation Value

__________________________________ is the simultaneous pursuit of differentiation and low cost, creating a leap value for both buyers and the company.

Innovation Value

Innovation and Entrepreneurship

Innovation is the powerful instrument of entrepreneurs through which they convert an opportunity into a business or a different service. A combination of entrepreneurship and innovation is a crucial factor to the long-term sustainability of a business.

ILO

International Labour Organization

_____________________: is the act of creating something new and unique

Invention

Advantage of Radical Innovation

It gives the chance to get huge win, as long as the innovator will be the pioneer in the field, with no competitors.

START UP STAGE

It is the initial period of business. For companies with products or services to sell, it is the first stage into revenue-generating activity.

(Typology of innovation) In ___________________________ the architecture and configuration associated with the existing system of an established product are used and it employs new components with different design concepts.

Modular Innovation

Hobbies

Most often people consider what they like doing frequently and enjoy, and change such vocations into business opportunities

Mass Medias

Observing mass media also maybe source of business idea as it keeps on informing about the challenges and development related to social, economic, financial, business and society issues.

EARLY GROWTH STAGE

Once the venture is positioned, successful businesses will experience a stage of early growth.

Employment generation

One of the driving forces for a country's economic progress is the creation of ample job opportunities for the people of the country.

WHAT IS SOCIAL ENTERPRISE?

Organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach.

Customers

Paying attention to the requirements of the needs and wants of the customers by giving customers the opportunity to express their opinion.

ENVIRONMENT

Pollution control Restoration or protection of environment Conservation of natural resources Recycling efforts

(Forms of innovation) _____________________________: Is the introduction of a new product of a new improved method for the production that adds value to the organization.

Process Innovations

(Forms of innovation) _____________________________: Product innovation is about making valuable changes to physical products.

Product innovation

Professional Entrepreneur

Professional entrepreneur is a person who is interested in establishing a business, but does not have interest in managing or operating it once it is established.

HUMAN RESOURCES

Promotion of employee health and safety Employee training and development Remedial education programs for disadvantaged employees Alcohol and drug counseling programs Career counseling Child day-care facilities for working parents Employee physical fitness and stress management programs

(Typology of innovation) A ____________________________ involves in totally developing a new design by using new components configured and incorporated into design in a new way. ________ are comparatively rare.

Radical Innovation

This innovation is focused on developing revolutionary new technologies, markets, and business models that change the world.

Radical Innovation

____________________ ocean strategies focus on competing with other players for market share within industries that currently exist.

Red Ocean / Red

R&D

Research and Development

Work experience

Research suggests that entry into business after certain level of work experience is a plus to success in business.

PROBLEMS FACED BY SMALL BUSINESS FINANCIAL ISSUES

START UP CASH FLOW FINANCIAL MANAGEMENT ACCESS TO CAPITAL

New or significantly improved service concepts and offerings.

Service Innovation

(Forms of innovation) _____________________________: typically take the form of a new method of providing a service. Sometimes even take the form of an entirely new service.

Service Innovations

Economic advancement

Setting the wheels in motion for economic development, entrepreneurial ventures make a significant contribution to national income.

Deliberate Search

Sizeable numbers of people who go into business after an extensive market need assessment to identifying demand and supply gaps and future prospects.

WHAT IS A SOCIAL ENTREPRENEUR?

Social entrepreneurs work to solve critical social problems and address basic unmet needs through innovation. Their entrepreneurial endeavors create system change, improving the lives of underserved or marginalized groups.

The final element of the theory is __________________________________, which might be somewhat limited, like the members of am organization, or widespread, like all of the consumers in a country.

Social system

'PULL' Influence

Someindividualsareattractedtowardsbusinessownershipbypositivemotives. Independence Market Opportunity Financial Incentives Community Service

Stages of innovation

Stage 1: Idea generation, successful idea generation, should be focused both by the pressure to compete and by the providing freedom to explore new idea.

Stages of innovation

Stage 2: Advocacy and screening, in this stage, Advocacy and screening have to take place at the same time to weed out ideas that lack potential without allowing stakeholders to reject ideas impulsively solely on the basis of their novelty.

Stages of innovation

Stage 3: Experimentation, The experimentation stage tests the sustainability at a particular time and in a particular environment.

Stages of innovation

Stage 4: Commercialization, "An invention is considered an innovation only once it has been commercialized".

Stages of innovation

Stage 5: Diffusion and Implementation, the diffusion is the process of gaining final recognition of an innovation and implementation is the process of setting up the structures, maintenance and resources needed to produce it.

Innovation process

Steps: 1: Innovation starts with a problem 2: Transform the problem into a challenge 3: Challenge others to give suggestive solutions 4: Collaborate idea generation 5: Combine and Evaluate ideas 6: Develop the new ideas 7: Implementing the idea

Super-Growth Entrepreneur

Super-growth entrepreneurs' are those who have show nenormous growth of performance in their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.

Promotes social change

The introduction of new products and services decreases the dependency of the country's population on obsolete organisations or technologies, giving way to better quality of living.

Trade Fair and Exhibitions

Visiting to national and international trade fairs provides a great opportunity to generate business ideas.

Duplication

defined as replication of an already existing product, service or process.

Invention

described as the creation of a new product, service or process.

Creativity

is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. Developing creativity is a process of changing the way you look at things.

Donate Back

organizations that contribute a portion of their profits to nonprofits that address basic unmet needs.

Transformative Products or Services

organizations that create social or environmental impact through innovative products and services.

Opportunity Employment

organizations that employ people who have significant barriers to mainstream employment.

Entrepreneurial Process (four stages)

pre-startup stage; startup stage; early growth stage and latter growth stages

Trading Entrepreneur

Trading entrepreneur is one who undertakes trading activities and is not concerned with the manufacturing work.

(Typology of Innovation) According to _______________ and _______________ (2004), architectural innovations are the changes in the subsystems and linking mechanisms that are necessary to obtain the best benefit from minor technological changes.

Tushman and Anderson

A radical innovation involves in totally developing a new design by using new components configured and incorporated into the design in a new way.

Typology of Innovation

Incremental Innovation refines and improves an existing design, through improvements in the components.

Typology of Innovation

Incremental innovation refines and improves an existing design, through improvements in the components.

Typology of innovation

Micro or very Small Enterprises

Up to 19 workers

Robert Hisrich (1985)

A process of creating something different with value by devoting the necessary time, and effort assuming the accompanying financial, psychological, and social risks, and receiving the resulting rewards of monetary and personal satisfaction

Pure Entrepreneur

A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.

Technical Entrepreneur

A technical entrepreneur is essentially compared to a 'craftsman.' He develops improved quality of goods because of his craftsmanship. He concentrates more on production than marketing.

The entrepreneur "__________________" - they have the willingness to develop and take risks

Adventurer

Agricultural Entrepreneur

Agricultural entrepreneurs are those entrepreneurs who undertake agricultural activities such as raising and marketing of crops, fertilizers and other inputs of agriculture.

___________________________ defined innovation as "the process whereby new and improved products, processes, materials, and services are developed and transferred to a plant and/or market where they are appropriate".

Albert Rubenstein

Peter F. Drucker

An entrepreneur as one who always searches for change, responds to it and exploits it as an opportunity. Innovation is the basic tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service.

Richard Cantillon

An entrepreneur is a person who buys factor services at certain prices with a view to selling its product at uncertain prices.

E.E. Hagen

An entrepreneur is an economic man who tries to maximize his profits by innovation, involve problem solving and gets satisfaction from using his capabilities on attacking problems.

______________________ ocean strategies are not about competing with others.

Blue ocean / Blue

Business Entrepreneur

Business entrepreneurs are individuals who conceive an idea for a new product or service and then creates a business to materialize their idea into reality.

ENTREPRENEURSHIP =

CREATIVITY + INNOVATION

The second element of the theory is __________________, specifically the processes used by people to share the information needed to develop a common understanding.

Communication

ENERGY

Conservation of energy in production and marketing operations Efforts to increase the energy efficiency of products Other energy-saving programs (for example, company-sponsored car pools)

FAIR BUSINESS PRACTICES

Employment and advancement of women and minorities Employment and advancement of disadvantaged individuals (disabled, Vietnam veterans, ex-offenders, former drug addicts, mentally retarded, and hardcore unemployed)Support for minority-owned businesses

PRODUCTS

Enhancement of product safety Sponsorship of product safety education programs Reduction of polluting potential of products Improvement in nutritional value of products Improvement in packaging and labeling

F.A. Walker

Entrepreneur is one who is endowed with more than average capacities in the task of organizing and coordinating the factors of production, i.e. land, labour capital and enterprises.

Popularity of innovative ideas

Entrepreneurial endeavours are witnessing a growth in popularity, thanks to the innovative ideas that start-up owners have brought to the fore.

McClelland

Entrepreneurship involves doing things in a new and better way. Entrepreneurial role calls for decision making under uncertainty.

Definition of Entrepreneurship

Entrepreneurship is the process of creating incremental wealth. The wealth is created by those individuals who assume the major risk in terms of equity and time or providing value for others.

'PUSH' Influence

Many people are pushed into founding a new enterprise by variety of factors including: Unemployment Disagreement with previous employer Challenge

Arrogance

Many small business persons particularly inventors and innovativeentrepreneurswithnewproductsbecomeegocentricallyengrossed in their ventures

Motivated Entrepreneur

New entrepreneurs are motivated by the desire for self fulfillment. They come into being because of the possibility of making and marketing some new product for the use of consumers.

(Forms of innovation) _____________________________: one of the main activities of the product design team is to work and produce next generation products or new models of products.

Next-Generation Products

Non-technical Entrepreneur

Non-technical entrepreneurs' are those who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business.

Observing the market

Observation of customer complaints, understandings of what the people like doing most often, and a closer examination of the socio-cultural conditions etc.

Who innovates?

The Entrepreneur "Adventurer" - they have the willingness to develop and take risks.

Historical Perspectives

The term entrepreneur comes from the French word and translated means 'to undertake' or 'go-between.' Meaning those, who undertook the risk of new enterprise.

Spontaneous Entrepreneur

These are persons with initiative, boldness and confidence in their ability, which activate, them, under age entrepreneurial activity. Such entrepreneurs have a strong conviction and confidence in their inborn ability.

Drone Entrepreneur

These entrepreneurs are characterized by a refusal to adopt opportunities to make changes in production formulas even at the cost of severely reduced returns.

Successful entrepreneurs

They are creative decisionmakers.

The third element of the theory is _________.

Time

Inexperience

Too often, entrepreneurs launch their enterprises without having sufficient experiences to succeed. In experience can be translated to mean a lack of technical or management insight.

Promotes research and development

While it is important to produce new business ideas, it is also essential to cultivate the ideas for the development of a successful business structure.

Schumpteter-1934

Who uses available resources in novel ways.