IB Business Management Unit 1/Section 1.1 Introduction to Business Management

Entrepreneurship /intrapreneurship 1.1

Providing NEW ideas-vital to business Intrapreneur An individual employed by a large organization who demonstrates entrepreneurial thinking in the development of new products and services. Entrepreneur An individual who demonstrates enterprise and initiative in order to make a profit. Usually self-employed.

Providing the impetus/motivation Entrepreneur: Owner or operator Visionary Substantial risk: Failure: Personal costs Reward: Profit Responsibility for workforce Intrapreneur: Employee Innovative Medium to high risk Failure: Absorbed by organization Reward: Pay and remuneration Accountability to owner/operator

WHAT DO ENTREPRENEURS/INTRAPRENEURS DO? PROVIDE INNOVATION Innovation: Market reading: observing customers and competitors and making small changes to existing products. Need Seeking: communicating with current/potential customers to determine their needs Technology Driving: Investing in research and development and following opportunities offered by technological capabilities. ( They have to balance the Risk of failure against the likelihood of success.

VIDEO - THE ART OF INNOVATION – GUY KAWASAKI

IN CLASS – CASE STUDY (10 marks) Case Studies of Intrapreneurship: Arthur Fry – Invented and commercialized Post it notes while working for 3M Paul Buchheit – Google – created gmail. Case Study of Entrepreneurship: Steve Jobs – Apple Mark Zuckerberg – Facebook Jeff Bezos – Amazon A. Describe what type of innovation did each of these intrapreneurs or entrepreneurs propose. AO1 -5 B. Explain if you consider there could be ethical dilemmas implied in any of the case studies. Justify your answer. AO2 - 2 C. Analyse which of these business ventures has produced more change? Which been more innovative? Justify your response. AO2 - 3

Starting a Business 1.1

Why would I start a business? Rewards: One may find more rewarding starting his own business, than being an employee earning a fixed salary. Independence: Being your own boss and not following someone else's rules. Necessity: Those who cannot find work and have the need of having an income. Challenge: To see if they can “make it” themselves. One person preforms all business functions. Interest: People with a passion for something, that just want to keep doing it. Finding a Gap: Businesses may see or find an untapped opportunity. Sharing an Idea: if you really believe in something you may want to sell the idea to others.

Reasons to start a business GET CASH Growth: Appreciation of the value of their assets. Earnings: Opportunity for higher earnings Transference and inheritance Challenge: Personal Satisfaction Autonomy: Freedom of choice and flexibility Security: Easier to accumulate personal wealth Hobbies: Turn their passion into a business

The process/steps of starting a business The Business Idea: The fundamental activity the business will do. Planning Organizing the basics Refining the business idea through market research Planning the business Establishing the legal requirements Raising the finance Testing the market

The process/steps of starting a business A. Organizing the basics: Where? Name? What will be its legal structure? Operational structure? B. Refining the business idea through market research: Determine how the business will distinguish itself, determine the market segment. How will you conduct market research? Who will be the target market? Can the new business test its concept? What will be its unique selling proposition? How will the business communicate with the market? C. Planning the business: Write the business plan with specific elements of how the business will operate. Includes goals and objective, an outline plan of how to accomplish them & how the business will operate (marketing, operations, and finance) D. Establishing the legal requirements: Obtain business registration and licenses laws that influence legal organization, labour practices, operational practices, tax obligations. E. Raising the finance: Obtain start up capital to get the business started and support the business until it can sustain operations from profits. F. Testing the market: To verify that the business idea will be well enough received by consumers to suggest the business has a reasonable chance of success. Advertising & Promotional Material, establishing an effective website.

The PROBLEMS THAT A NEW BUSINESS MAY FACE Organization : Inappropriate location Market research: The test was too optimistic Business plan: Did not convince Legal requirements: Registration was too difficult Finance: Raising start-up capital was too difficult The market: The launch failed

BUSINESS PLAN 1.1

The purpose of a business plan Business Plan: How the organization will meet its goals and objectives (it applies to a specific period and has short and long term objectives with an analysis of the resources needed to achieve those objectives). It should be reviewed and updated. Purpose: Support the launch of a new organization or a business idea. Attract new funds: from financial lenders and investors Support strategic planning Identify resource needs Provide a focus for development Work as a measure of business success

The elements of a business plan The Business idea, aims ( the what ) and objectives ( the how). Business organization: How the business will be organized (location, structure, type, legal) HR: How the business will be staffed. Owners & past business experience. Finance: How the business will be financed (Costs of premises & start up costs: budgets, income statements, cash-flow forecasts) Marketing: How to best market the product: market research, sales forecast, segment of the market, promotional mix. Operations: How will the product be made. How will production be organized, how many units will the business produce, how long will production take, is there likely to be lead time?

business plan ACTIVITY Choose one of the following businesses: a business needed in your city a business using your own personal skills and talents a business that involves exports to another country a home-based business a business that could be started with $1,000,000 pesos a business that would require $1,000,000 dollars to start a franchise that you develop and offer nationally a service business Work in groups of three to create a business plan for your new business. Each group will choose the company’s management positions as follows: CEO (Chief Executive Officer- Managing Director) COO (Chief Operating Officer) CMO (Chief Marketing Officer)

business plan activity Choose one of the following businesses: a business needed in your city a business using your own personal skills and talents a business that involves exports to another country a home-based business a business that could be started with $1,000,000 pesos a business that would require $1,000,000 dollars to start a franchise that you develop and offer nationally a service business Work in groups of three to create a business plan for your new business. Use the following questions to develop your plan: How can you describe the business...in only one paragraph please. What is your product or service? Who will buy it? Where should you locate the business? How can you attract customers? What is your competition? How much should you charge for the products or service? What advice do you need and who can provide it? How will you organize the managers and/or workers of the business? How will you split the profits? Who is responsible for the losses? business plan activity

business plan activity Choose one of the following businesses: a business needed in your city a business using your own personal skills and talents a business that involves exports to another country a home-based business a business that could be started with $1,000,000 pesos a business that would require $1,000,000 dollars to start a franchise that you develop and offer nationally a service business Work in groups of three to create a business plan for your new business. Use the following questions to develop your plan: What should you consider to be able to produce the product and get it to the customer? How much money is needed to get the business started? How many customers will you have per month and how much will they buy per month? How much does it cost to make the product or provide the service? What are your operating costs? (Include your own salary) How much money will your business earn each month by selling your product or service? How much investment will you need to keep the business going until you make a profit? What is your potential profit per year for Year I, Year II, and Year III? How much money do you need to borrow to start this business? How will you make the business grow in the future? business plan activity

business plan activity Work in groups of three to create a business plan for your new business. Choose one of the following businesses: Mm Each group will present its business plan in class divided by management positions, using the tools and techniques of their choice. Example: Powerpoints, Charts, Boards, Videos, Performance etc. At the end of all presentations, all students and teacher will anonymously vote for the best business plan. The best business plan will get an excellent note of 7.