Entrepreneurship Lesson 1

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Questions and Answers

What is the primary distinction between creativity and innovation?

Creativity focuses on the act of creation while innovation is about generating ideas.

Creativity is the ability to generate new ideas and innovation is the application of those ideas. (correct)

Creativity can exist without innovation, but innovation cannot exist without creativity.

Creativity is restricted to artistic fields, whereas innovation applies to business domains.

Which stage is NOT typically included in the creative process?

Preparation

Completion (correct)

Idea germination

Incubation

What type of entrepreneurial opportunity involves inheriting a business?

Venture Capital Opportunity

Startup Opportunity

Family Business Opportunity (correct)

Franchising Opportunity

Which of the following best describes a Type A idea for a startup?

A new market offering products or services not currently available. Signup and view all the answers

What is indicated as essential for innovation according to the Philippine Trade Training Center?

Creativity Signup and view all the answers

What is one reason why entrepreneurs might choose to start a business from scratch?

To launch innovative products or services. Signup and view all the answers

What is one characteristic of an entrepreneur according to Scaborough & Zimmerer?

Desire for responsibility Signup and view all the answers

Which of the following is NOT a source of entrepreneurial opportunities as outlined by Longenecker?

Investment Opportunities Signup and view all the answers

How do entrepreneurs typically respond to future opportunities?

They adapt to changing demands Signup and view all the answers

According to Forsyth, what roles do entrepreneurs play in managing enterprises?

Take full control and assume risks Signup and view all the answers

What process involves refining product design and securing financing?

Innovation Signup and view all the answers

What does a high degree of commitment mean for entrepreneurs?

Dedicated to successfully launching their company Signup and view all the answers

Which of the following indicates an entrepreneur's preference for moderate risks?

Spotting market opportunities Signup and view all the answers

What is the primary motivating force for entrepreneurs?

Achievement of their goals Signup and view all the answers

Which competency is indicative of more successful entrepreneurs?

Systematic planning of tasks Signup and view all the answers

What does initiative mean in the context of entrepreneurship?

Taking action before being asked Signup and view all the answers

What does Type C Ideas primarily focus on?

Improvements on existing functions Signup and view all the answers

What is one reason for buying an existing business rather than starting a new one?

To reduce uncertainties associated with new ventures Signup and view all the answers

Which of the following is NOT a type of franchising system mentioned?

System D Signup and view all the answers

What is a common benefit of purchasing a franchise?

Proven marketing methods Signup and view all the answers

What limitation is associated with franchising?

High initial investment and ongoing costs Signup and view all the answers

Which option describes the role of a franchisor?

The provider of branding and operational guidelines Signup and view all the answers

Which step is NOT typically involved when purchasing an existing business?

Creating a marketing strategy Signup and view all the answers

What is a disadvantage of franchising that potential franchisees should consider?

Ongoing royalty payments and costs Signup and view all the answers

What is one major benefit of small business ownership?

Complete independence and control Signup and view all the answers

Which factor is a key challenge that can lead to the failure of small businesses?

Economic fluctuations Signup and view all the answers

What can result from the psychological impact of business failure?

Negative effects on the entrepreneur’s mental health Signup and view all the answers

How does inflation affect small businesses specifically?

They are vulnerable to sustained price changes Signup and view all the answers

What is one effect of rising interest rates on small businesses?

Reduction in net worth Signup and view all the answers

What responsibility do entrepreneurs have regarding business decisions?

They must make quick decisions impacting success Signup and view all the answers

What is a potential drawback of starting a small business?

Lower quality of life until the business is established Signup and view all the answers

Why do small businesses struggle to secure loans compared to larger companies?

Lack of resources and collateral Signup and view all the answers

What is one common reason for business failures?

Management incompetence Signup and view all the answers

Which strategy can help prevent business failures?

Acquiring in-depth knowledge of the business Signup and view all the answers

What type of entrepreneurial network relationship connects with financial and legal experts?

Professional Signup and view all the answers

Which of the following was a notable product introduced by Wrigley?

Juicy Fruit Signup and view all the answers

What is a key characteristic of the Lancaster Caramel Company established by Milton S. Hershey?

Used fresh milk for candy production Signup and view all the answers

Which of these is NOT a reason for business failures?

Having a strategic plan Signup and view all the answers

What was a significant challenge faced by Wrigley in 1899?

Competition from a gum trust Signup and view all the answers

What is a common component of networking for entrepreneurs?

Connections with suppliers and clients Signup and view all the answers

Study Notes

Entrepreneur Overview

Entrepreneurship defined by Schumpeter as revolutionizing production through new inventions and technologies.
Forsyth emphasizes the role of entrepreneurs in starting and managing enterprises with full control and risks.
Scaborough & Zimmerer highlight entrepreneurship as creating new businesses, confronting risks, and pursuing profit and growth.

Characteristics of Entrepreneurs

Desire for Responsibility: Entrepreneurs take personal responsibility for their ventures and control over resources.
Preference for Moderate Risks: Calculated risks are taken by identifying market opportunities.
Confidence in Success: They maintain optimism and confidence in their capabilities.
Desire for Immediate Feedback: Constantly seek performance feedback for improvement.
High Energy Levels: Essential for sustained effort in ventures.
Future Orientation: Entrepreneurs prioritize future achievements over past ones.
Skill at Organizing: They excel in assembling teams to accomplish tasks efficiently.
Commitment and Flexibility: Total commitment to navigating obstacles, with the ability to adapt to changing demands.

Competencies of Successful Entrepreneurs

Initiative and Assertiveness: Proactively confront problems and direct others as needed.
Achievement Orientation: Identify and act on unusual opportunities for business initiation.
Efficiency and Quality Focus: Strive for faster processes and high-quality outputs.
Systematic Planning: Break down tasks and anticipate obstacles.
Monitoring: Develop procedures to ensure quality and task completion.
Commitment to Others: Willingness to make personal sacrifices to fulfill work contracts.

Creativity and Innovation

Creativity is essential for innovation; it involves generating new ideas rather than the act of creation.
The creative process comprises five stages: idea germination, preparation, incubation, implementation, and verification.
Innovation translates ideas into practical applications, involving market development and financial securing.

Sources of Entrepreneurial Opportunities

Startup and Buyout Opportunities: Entrepreneurship can stem from founding new ventures or acquiring existing ones.
Franchising Opportunities: Involves operating a pre-established business model.
Family Business Opportunities: Inheritance or takeover of family enterprises is common.

Types of Startup Ideas

Type A: New markets for unavailable products/services.
Type B: Technological or process innovations.
Type C: Improvements on existing functions, prevalent in startup concepts.

Advantages and Disadvantages of Franchising

Advantages: Formalized training, financial assistance, proven marketing methods, quicker startup, and lower failure rates.
Disadvantages: High costs including royalty payments and various operational expenses.

Benefits and Drawbacks of Small Business Ownership

Benefits: Control over business decisions, personal growth opportunities, potential for unlimited profits, and contribution to community.
Drawbacks: Income uncertainty, risk of capital loss, psychological stress from potential failures, and long working hours.

Key Factors for Business Success or Failure

Success Influencers: Business cycles, inflation, interest rates, access to capital, and government regulations.
Specific Failure Reasons: Management incompetence, lack of planning, inadequate financial control, and poor customer credit policies.

Recommendations to Avoid Failures

Gain in-depth industry knowledge, engage in thorough planning, set clear goals, and seek professional support.

Entrepreneurial Network Relationships

Key Categories: Business (suppliers, clients), collegial (peers), professional (experts), organizational (former employers), social (community ties), and other familial connections.

Case Studies of Entrepreneurs

William Wrigley:
- Transitioned from soap salesman to chewing gum entrepreneur; introduced iconic products like Juicy Fruit and Spearmint.
- Pioneered advertising strategies and achieved international growth for his business.
Milton S. Hershey:
- Started as a printer, faced early failures, and founded Lancaster Caramel Company using fresh milk for production.

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Description

This quiz covers the fundamental concepts of entrepreneurship, including definitions and characteristics as outlined by various theorists. Explore the roles and risks taken by entrepreneurs in creating and managing new ventures, as well as their impact on production and innovation.