© 2002 by Prentice Hall 1-1 Entrepreneurship The dynamic process of vision, change, and creation. It requires an application of energy and passion toward the creation and implementation of new ideas and creative solutions. Essential ingredients include the willingness to take calculated risks – in terms of time, equity, or career; the ability to formulate an effective venture team; the creative skill to marshal needed resources; the fundamental skill of building a solid business plan; and, finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.

© 2002 by Prentice Hall 1-2 Age of Gazelles  A business firm with at least 20 percent sales growth each year, starting with a base of at least $100,000.  High growth  Leaders in Innovation

© 2002 by Prentice Hall 1-3 Importance of Newtworking  Who? Friends Contacts Professional Associations or Groups Memberships  Why? Build Resource Base Future Reference Mentoring  How? Maintain Contact Resource File Join Organizations Attend Meetings, Forums, and other Events

© 2002 by Prentice Hall 1-4 CEO in Terms of Entrepreneurship  Create Endless Opportunities  Catch Every Obstacle

© 2002 by Prentice Hall 1-5 A New Generation of Entrepreneurs  They are comfortable with new technologies  They welcome change  They think differently  They are independent  More interested in business ownership than any previous generation  Many have entrepreneurial heroes

© 2002 by Prentice Hall 1-6 Basic Risks Entrepreneur’s Face  Financial  Career  Family and Social  Psychic

© 2002 by Prentice Hall 1-7 Characteristics of Entrepreneurship  Creation  Innovation  Resource leveraging  Organization building  The pursuit of gain  Risk & uncertainty

© 2002 by Prentice Hall 1-8 Creation  New products or services  New methods or technologies  New markets targeted and opened  New sources of supply and resources  New forms of industrial organization created

© 2002 by Prentice Hall 1-9 Characteristics of Entrepreneurs Then... Small business founder Boss Lone Ranger Secretive Self-reliant Seat-of-the-pants Snap decisions Male ownership Idea-driven Trade knowledge Automation and efficiency © 2002 by Prentice Hall 1-3

© 2002 by Prentice Hall 1-10 Characteristics of Entrepreneurs © 2002 by Prentice Hall and Now True entrepreneur Leader Networker Open Inquisitive Business plan Consensus builder Mixed & dispersed ownership Execution-driven Business knowledge Innovation

© 2002 by Prentice Hall 1-11 Sam Walton’s 10 Rules of Business 1. Commit to your business and believe in it. 2. Share profits with partners and employees. 3. Motivate partners - challenge them and keep score. 4. Communicate everything. 5. Appreciate associates with well-chosen words. 6. Celebrate successes. 7. Listen to everyone and get them talking. 8. Exceed customers’ expectations. 9. Control expenses. 10. Break all the rules (Rules 1- 9 are not for everyone).

© 2002 by Prentice Hall Dimensions of Quality  Transcendent Approach Question the nature of things  Product-based Approach Product attributes are key  User-based Approach Quality is in the eye of the beholder  Manufacturing-based Approach Conformance to standards is key  Value-based Approach Cost-value relationship is key

© 2002 by Prentice Hall 1-13 Dimensions of New Venture Creation Individual Characteristics Environmental Constraints Organization New Venture Creation Environment

© 2002 by Prentice Hall 1-14 Dimensions of New Venture Creation: Individual Characteristics Personal resource base:  Need for achievement  Locus of control  Propensity for taking risk  Knowledge  Experience  Reputation New Venture Creation

© 2002 by Prentice Hall 1-15 Dimensions of New Venture Creation: Individual Characteristics (cont’d) Sociological factors:  Perceptions of desirability  Perceptions of feasibility  Role models and mentors  Entrepreneurial parents  Networks and contacts New Venture Creation

© 2002 by Prentice Hall 1-16 Dimensions of New Venture Creation: Individual Characteristics (cont’d) Demographics:  Age  Gender  Education New Venture Creation

© 2002 by Prentice Hall 1-17 Dimensions of New Venture Creation: Organization Strategies:  Generic strategies Overall cost leadership Differentiation Focus  Functional level strategies Financial Marketing Organizational New Venture Creation

© 2002 by Prentice Hall 1-18 Dimensions of New Venture Creation: Organization (cont’d) Strategies:  Primary entry wedges New product or service Parallel competition Franchise entry  Minor entry wedges  Isolating mechanisms  Culture New Venture Creation

© 2002 by Prentice Hall 1-19 Dimensions of New Venture Creation: Environment Resources in the environment:  Venture capital availability  Availability of financial resources  Presence of experienced entrepreneurs  Technically skilled labor force  Larger urban areas  Large industrial base  Accessibility of suppliers  Accessibility of customers  High occupational and industrial differentiation  Proximity of universities  Availability of land or facilities  Accessibility of transportation  Attitude of the area population  Availability of supporting services New Venture Creation

© 2002 by Prentice Hall 1-20 Dimensions of New Venture Creation: Constraints in the Environment Barriers to entry:  Governmental influences  Rivalry among existing competitors  Pressure from substitute products  Bargaining power of buyers  Bargaining power of suppliers New Venture Creation