Comm 320 Entrepreneurship

1
Comm 320 Entrepreneurship

• The Entrepreneur and the
• New Economy

2
Lecture Objectives

• Define Entrepreneurship
• Understand its role in national economy
• Examine the critical success factors causes of
  small business failures

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Why study Entrepreneurship?

• Approximately 97 of all businesses are small
• 60 of the labour force is employed by small
  businesses
• More and more Business graduates are attracted to
  the demands of small business and the potential
  payoffs
• We have entered the Knowledge-Based Era

4
Defining Small Business General Characteristics

• Business is managed by the owner or owners of the
  firm
• Decision making lies mostly with one executive
• Annual sales are less than 2 million
• There is a close management-employee relationship
• Normally, the company stock is not listed with a
  stock exchange
• The firm is not dominant in the industry (size of
  business, market share)
• The business employs less than 200 people
• Criteria size, employees, sales volume,
  ownership

5
The Changing Environment

• The New Economy

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The Changing Environment

• Innovation comes from the ability to be flexible
  and adaptable to technological changes in the
  environment (Apple, Kodak)
• Economies of Scale can be obtained by smaller
  businesses flexible manufacturing, outsourcing,
  strategic alliances
• Small business can attract innovators

7
Economic Trends Small Business Enterprises

• A shift from manufacturing to Services
• Growth in home-based businesses
• advances in technology, low over-head, available
  financing
• Global Economy Virtual Business
• access to large markets
• Niche Marketing -- Big fish in a small pond
• Trends in large companies downsizing , layoffs
  outsourcing era of entrepreneurship
• New economy shows major trends emerging affecting
  small business sector

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The Successful Entrepreneur

• Two critical factors
• 1. Character traits (Entrepreneurial)
• Achievement Oriented Independent
• Pro-active and Committed
• Innovative
• Tolerant of ambiguity
• Conducive environment (culture family
  background)

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The Successful Entrepreneur

• 2. Management Skill
• Effective management of functional areas
• Strategic planning
• Cash-flow management
• Marketing
• Networking
• Delegation
• Many small firms bankrupt due to lack of
  management skills lack of adequate knowledge

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Components of a Successful Venture

• The entrepreneurs skills and competence
• Market acceptance of the product or service
• The attractiveness of the industry (structure
  competitive forces)
• The new ventures capabilities

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Conclusion

• The Entrepreneur is the cornerstone of the
  venture as he/she is the one who
• Develops the product/service
• Marshals resources develops capabilities to
  exploit opportunity
• Develops effective business strategy in light of
  industry structure, characteristics and
  competitive forces