Entrepreneurship: Successfully Launching New Ventures PDF

Entrepreneurship: Successfully Launching New Ventures Sixth Edition, Global Edition Chapter 1 Introduction to Entrepreneurship Copyright © 2019 Pearso...

Entrepreneurship: Successfully Launching New Ventures Sixth Edition, Global Edition Chapter 1 Introduction to Entrepreneurship Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Learning Objectives 1.1 Describe entrepreneurship, corporate entrepreneurship, and the characteristics of entrepreneurial firms. 1.2 Discuss three main reasons people decide to become entrepreneurs. 1.3 Identify four main characteristics of successful entrepreneurs. 1.4 Explain five common myths regarding entrepreneurship. 1.5 Describe three types of start-up firms. 1.6 Discuss the positive effects of entrepreneurship and entrepreneurial firms on economies and societies. 1.7 Explain the entrepreneurial mindset. 1.8 Explain Briefly the entrepreneurial process. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Introduction to Entrepreneurship There is tremendous interest in entrepreneurship around the world. According to the 2019/2020 GEM study: One in two adults in Angola, and around one in three adults in Togo, Panama and Colombia, are starting or running a new business in 2020. At the lower level of the scale, one adult among 20 or less is starting or running a business in Italy, Poland and Germany. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Introduction to Entrepreneurship Saudia Arabia: Population (2020): 34.8 million (UN) Activity % Adults % Female % Male Total early-stage Entrepreneurial 19.6 19.0 20.1 Activity Established Business Ownership rate 5.3 3.7 6.6 Entrepreneurial Employee Activity 0.3 0.2 0.4 Source: GEM report study 2021-2022 Copyright © 2019 Pearson Education, Ltd. All Rights Reserved.  Introduction to Entrepreneurship Key Finings of GEM Saudi Arabia 2019-2020 Report: Knowing “There are “In my country, someone who has good it is easy to start started a business opportunities a business” in the past two to start a years business in the area where I live” % of Saudi adults aged 18–64 58.0 95.4 93.5 somewhat or strongly agree Source: GEM report study 2021-2022 Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Introduction to Entrepreneurship The research in the filed of entrepreneurship in Saudi Arabian context by Dr. Dalal Alrubaishi (2019) highlights the following: Entrepreneurship is the backbone of economies around the world. In Saudi Arabia, there is an increase attention to enhance the role of entrepreneurship in the economy. This is reflected in Vision 2030, an economic reform strategy which articulates an action plan to diversify the economy, with an emphasis on the development of the private sector and support for entrepreneurship. Saudi Arabia ranked 14th out of 54 economies on the overall National Entrepreneurial Context Index, and 3rd in the support and relevance of government policies (GEM 2019-2020). Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. What Is Entrepreneurship? Academic Definition (Stevenson and Jarillo) – Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control. Alternative View – Entrepreneurship is the art of turning an idea into a business. Explanation of What Entrepreneurs Do – Entrepreneurs assemble and then integrate all the resources needed – the money, the people, the business model, the strategy – to transform an invention or an idea into a viable business. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Corporate Entrepreneurship (1 of 2) Corporate Entrepreneurship ‒ Is the conceptualization of entrepreneurship at the firm level. ‒ All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. ‒ The position of a firm on this continuum is referred to as its entrepreneurial intensity. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved.  Corporate Entrepreneurship (2 of 2) Entrepreneurial Firms Conservative Firms Proactive Take a more “wait and see” posture Innovative Less innovative Risk taking Risk averse Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Social entrepreneurship Social entrepreneurship refers to the practice of applying entrepreneurial principles and strategies to address social, environmental, or community challenges. Social entrepreneurs are individuals or organizations that leverage business methods and innovation to create positive and sustainable social impact. While traditional entrepreneurs typically focus on profit maximization, social entrepreneurs prioritize social and environmental objectives alongside financial goals. Examples of social entrepreneurship initiatives include microfinance organizations providing financial services to the underserved, enterprises creating sustainable and eco-friendly products, and initiatives focused on improving education, healthcare, or access to clean energy. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Why Become an Entrepreneur? The three primary reasons that people become entrepreneurs and start their own firms. – Desire to be their own boss – Desire to pursue their own ideas – Financial rewards Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Characteristics of Successful Entrepreneurs (1 of 3) Figure 1.1 Four Primary Characteristics of Successful Entrepreneurs Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Characteristics of Successful Entrepreneurs (2 of 3) Passion for the Business – The number one characteristic shared by successful entrepreneurs is a passion for the business. – This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. Product/Customer Focus – A second defining characteristic of successful entrepreneurs is a product/customer focus. – This quality is exemplified by Steven Jobs, who wrote, “The computer is the most remarkable tool we’ve ever built... but the most important thing is to get them in the hands of as many people as possible.” – While it’s important to think about management, marketing, finance, and the like, none of those functions makes any difference if a firm does not have good products with the capability to satisfy customers. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Characteristics of Successful Entrepreneurs (3 of 3) Tenacity Despite Failure – Because entrepreneurs are typically trying something new, the failure rate is naturally high. – A defining characteristic for successful entrepreneurs is their ability to persevere through setbacks and failures. Execution Intelligence – The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs. – An ancient Chinese saying warns, “To open a business is very easy; to keep it open is very difficult.” Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common traits and characteristics of successful entrepreneurs A moderate risk taker Optimistic disposition Persuasive A networker Promoter Achievement motivated Resource assembler/leverager Alert to opportunities Creative Self-confident Self-starter Decisive Tenacious Energetic Tolerant of ambiguity A strong work ethic Visionary Lengthy attention span Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common Myths About Entrepreneurs Myth 1: Entrepreneurs Are Born, Not Made – This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs. – The consensus of many studies is that no one is “born” to be an entrepreneur; everyone has the potential to become one. – Whether someone does or doesn’t become an entrepreneur is a function of their environment, life experiences, and personal choices. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common Myths About Entrepreneurs Myth 2: Entrepreneurs Are Gamblers – Most entrepreneurs are moderate risk takers. – The idea that entrepreneurs are gamblers originates from two sources: ▪ Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs. ▪ Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common Myths About Entrepreneurs Myth 3: Entrepreneurs Are Motivated Primarily by Money – While it is naïve to think that entrepreneurs don’t seek financial rewards, money is rarely the reason entrepreneurs start new firms. – In fact, some entrepreneurs warn that the pursuit of money can be distracting. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common Myths About Entrepreneurs Myth 4: Entrepreneurs Should Be Young and Energetic – Entrepreneurial activity is fairly evenly spread out over age ranges. – While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important criterion in making investment decisions. ▪ What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success. ▪ These criteria favor older rather than younger entrepreneurs. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Common Myths About Entrepreneurs Myth 5: Entrepreneurs Love the Spotlight – While some entrepreneurs are flamboyant, the vast majority of them do not attract public attention. – As evidence of this, consider the following question: “How many entrepreneurs could you name?” ▪ Most of us could come up with Jeff Bezos of Amazon.com, Mark Zuckerberg of Facebook, Larry Page and Sergey Brin of Google or maybe Elon Musk of Tesla and SpaceX. ▪ But few could name the founders of Netflix, YouTube, or DIRECTV, even though we frequently use those firms’ services. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Figure 1.2 Types of Start-Up Firms Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Economic Impact of Entrepreneurial Firms Innovation – Is the process of creating something new, which is central to the entrepreneurial process. – Small innovative firms are 16 times more productive than larger innovative firms in terms of patents per employee. Job Creation – Small businesses create a substantial number of net new jobs in the United States. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. Entrepreneurial Firms’ Impact on Society and Larger Firms Impact on Society – The innovations of entrepreneurial firms have a dramatic impact on society. – Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us. Impact on Larger Firms – Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved. The Entrepreneurial Process The Entrepreneurial Process Consists of Four Steps Step 1: Deciding to become an entrepreneur. Step 2: Developing successful business ideas. Step 3: Moving from an idea to an entrepreneurial firm. Step 4: Managing and growing the entrepreneurial firm. Copyright © 2019 Pearson Education, Ltd. All Rights Reserved.