Chapter 1

Introduction to Entrepreneurship
Bruce R. Barringer R. Duane Ireland

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Entrepreneurship
Successfully Launching New Ventures
Text Book Author: Bruce R Barringer R. Duane Ireland

Part I- Decision To become an Entrepreneur

Chapter 1: Introduction to Entrepreneurship

Introduction to an Entrepreneurship Entrepreneurship Importance The Entrepreneurial Process

Introduction to Entrepreneurship
There is tremendous interest in entrepreneurship around the world.

According to the GEM 2008 study, about 300 million people, or 12.5%, of the adults in the 40 countries surveyed, are involved in forming new businesses.

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What is Entrepreneurship?
(3 of 3)

eBay Case
All these qualities were exemplified by Pierre Omidyar, the founder of eBay. Omidayar saw an opportunity to create a marketplace where people could find each other online, he risked his career by quitting his job to work on eBay full time, and he worked hard to build a profitable company that delivers a creative and useful service to its customers.
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Pierre Omidyar Founder of eBay

Introduction to an Entrepreneurship

What is Entrepreneurship?
eBay the classic Entrepreneurial story Entrepreneurship definition
French word Entre Between, Prendre To take on The word usually descries people who take on the risk between Buyers & Sellers or who Undertake a task to such as starting a new Venture. Inventor & Entrepreneur differ as Creates new concept or Product Inventor Entrepreneur se assembles & then integrates m all the recourses needed (Money, People, Business Model, Strategy, Risk Modeling)bl transform Invention into a Viable Business. to

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Entrepreneurship definition

Entrepreneurship is the process by which individual pursue opportunities without regards to resources they currently controlled. IDENTIFYING OPPORTUNITIES & PUTTING USEFUL IDEAS INTO PRACTICES The Task called for this behavior can be accomplished by Individual or a Group and typically requires Creativity - Drive - Willingness to take risk Example of Omidyar simplified all these qualities while taking a risk on leaving his job to work on eBay in getting this opportunity for bringing buyer & seller together through online. Difference between Entrepreneurial Firm & Conservative Firm Entrepreneurial firm Proactive innovators & are not adverse to risk Conservative Firm (wait & see) Less Innovative & are risk adverse

Why Become an Entrepreneur?

The 3 primary reason to become an entrepreneur and start their own firm are
To be their own Boss Pursue their own idea Realize financial rewards Example of TJ Rogers, the founder &CEO of Cyprus Semiconductors an international Supplier of Computer Chips initially worked for AMD (Advance Micro Devices) People who have desire to be independent cannot grow their firms beyond their immediate control. Omidyar hired Meg Whitman, Professional manager to run the company. He knew that the potential of eBay would soon outpace his ability to lead it.

To be their own boss

Difficult to work with trouble accepting authority Long time ambition to have their own firm Or frustrated working in traditional jobs

Why Become an Entrepreneur?

Pursue their own idea

Reason to start ones firm is to pursue and implement their own idea. Some are quick to respond while recognizing the idea and then desire to realizing it.

It can happen in non corporate firms as well while recognizing the need of the product or services that is not available in the market.
Entrepreneur can only spend resources if he sees that the project has the worth and the business plan can have the viability

Corporate entrepreneurs who innovate within the context of existing firm normally get their ideas for both new products or services to be known.
While established firms resist innovation & are less risk takers that turn the employee to leave and become an entrepreneur.

Why Become an Entrepreneur?

Realize financial reward

People start their own firm to enjoy the financial reward for the work they have done. This motivation is secondary if the first two reasons are no longer be successful up to its hype. An entrepreneur cannot make more money if compared with a person having responsibility in a traditional job. Example In USA1997, only 13.1 % of the small business situated have earned more than ,US $ 50,000. Example

Michael Dell of Dell Computers, Jerry Yang of Yahoo & Scot McNealy of Sun Microsystems have earned Billion of dollars while having their own firm. But they insist that they were never having money as their primary objective.

Characteristics of Successful Entrepreneur

Four Primary Characteristics of Successful Entrepreneur

Passion for Business

Product/Customer Focus

Successful Entrepreneur

Tenacity despite failure

Execution intelligence

Characteristics of Successful Entrepreneur

Passion for their Business

Its typically derives from the entrepreneurs belief that the business will positively influence peoples life. Example of BenjaminTregoe a management Consulting firm Its tremendously important to feel that we are doing something which has a significance far beyond building a company. I am convinced that we are adding value to the whole world.

Computers and Larry Ellison of Oracle passionate to work hard even they are financially secure.

It explain why passion bring people to even throw their jobs an start their own firms and why even billionaire like Bill Gates of Microsoft, Michail Dell of Dell

Characteristics of Successful Entrepreneur

Product /Customer Focus

This quality is exemplified by Steven Jobs, the cofounder of Apple Computer, The computer is the most remarkable tool we have ever built, but the most important thing is to get them in the hands of as many people as possible No doubt Management, Marketing, Finance, are important as a function but it does not make impact if a firm do not have good product with the capacity to satisfy customer. Passionate entrepreneurs are always keen to make products

with customer focus. Example Dell company focuses on making technology that meets the requirement of the customer rather than introducing technology for its own sake.

Characteristics of Successful Entrepreneur

Tenacity Despite Failure

Because entrepreneur are typically trying something new the failure rate associated with their efforts is naturally high. Developing a new business is just like an experiment done by a scientist. Developing a business idea is just to experiment different ways to get required results with success. The test for an entrepreneur is to have the ability to preserve through setbacks and failures.

Characteristics of Successful Entrepreneur

Execution Intelligence
The ability to transform a solid business idea into a viable business Model is key characteristic of successful Entrepreneur. It is a factor which determines whether a startup is successful or a failure. An ancient Chinese saying warns To open a business is very easy, to keep it open is very difficult The ability to effectively execute a business idea means developing a business model , putting together a new venture team, raising money, establishing

partnerships, managing financing , leading and motivating employees and so on. It also demands the ability to translate thought, creativity, and imagination into action and measurable results.

Example of Starbucks a coffee shop purchased in 1987, realized that majority of the coffee lovers needs to have a quite and separate place to enjoy. Taking this idea and realizing the need of the hour offered the services and product according to dire need.

Common Myths about Entrepreneur

There are many misconception about who are the people called as Entrepreneur. Some time its a media covering which gives a typical example of the young college students who obtain venture capital and started their business on a small scale eventually made a billion dollar company. Such information spread through articles in the newspapers are just a marketing gems. The Actual realities are;
Myth 1: Entrepreneur are born not made: This myth is based on mistaken facts that some people are genetically conceived as entrepreneurs. In actual they are not born but having potential to become one. However there are certain personality traits or characteristics involved in developing certain personalities. Another part is that people who termed successful normally have their parents as their role models or either they are self made personalities. This instinct drives people to inspire and passionate to follow. Characteristics of Entrepreneur is Achievement motivated, Alert to opportunities, Creative, Decisive, Energetic, Moderate risk taker, Networker, persuasive, promoter, Resource assembler, self confident, self starter, have strong work Ethic, Tolerant of ambiguity, visionary

Common Myths about Entrepreneur

Myth 2: Entrepreneurs are Gamblers:

The second myth is that Entrepreneurs are gamblers and can take bigger risks. The truth is in actual they are moderate risk taker as a common person. This idea generates from 2 factors;
1) Entrepreneurs have jobs that are less structured and that is why they face more uncertain set of possibilities than managers working in rank system. Example of entrepreneur working on a e-business consulting service has less stable job than a person working in a phone company. 2) Many entrepreneur have a strong need to achieve and often set challenging goals, a behavior that is sometimes equated with the risk taking.

Common Myths about Entrepreneur

Myth 3: Entrepreneurs are motivated primarily by money

It is a wrong impression that Entrepreneur are motivated to earn money. In actual money is never been a primary reason for them to start their own business or firm. Its the passion behind their decision to go ahead in achieving their goals. It s about making their company credibility to be the highly professional corporate company.
Myth 4: Entrepreneurs should be young and energetic The average entrepreneur age is 35 to 45 rather than a college students. Its obvious a person who served initially in any good organization normally after gaining some experience would likely to shift for owing his own business. Investor normally would only consider those people who have a good experience to exercise., reputation, track record of successes, and passion about the business idea to be implemented. Normally people who retired earlier are the good starters of their own business model.

Common Myths about Entrepreneur

Myth 5: Entrepreneurs love the spotlights

The majority of Entrepreneur or Firm do not attract public attention. Majority of them are working on proprietary products and services avoid public notice.
Their real passion is to create or assemble, in order to transform idea into a viable business model.

Economic Impact of Entrepreneurial Firms

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Innovation
Is the process of creating something new, which is central to the entrepreneurial process. Small entrepreneurial firms are responsible for over twothirds of all innovations in the U.S.

Job Creation
In the past two decades, economic activity has moved in the direction of smaller entrepreneurial firms, which may be due to their unique ability to innovate and focus on specialized tasks.
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Economic Impact of Entrepreneurial Firms

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Globalization
Today, over 97% of all U.S. exporters are small businesses with fewer than 500 employees. Export markets are vital to the U.S. economy and provide outlets for the sale of U.S. produced products and services.

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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 in new ways.

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.
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Types of Start-up Firms

Salary Substitute Firms These are smaller firms that afford their owner or owners a level of income similar to what they would earn in conventional Jobs. Example of Salary substitute firms are, Dry Cleaners, Convenience Stores, Restaurants, accounting firms, Retail Stores and Hair Styling salons. The vast majority of small businesses fits into this category . These firms offer common products or services and are not particularly innovative. Lifestyle Firms These are firms that provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so.

Example of lifestyle firms include, ski instructors, golf pros, and tour guides. These firms are not innovative nor do they grow quickly. It normally promote particular sports, hobby, or pastime activity.

Types of Start-up Firms

Entrepreneurial Firms

These firms brings new products and services to market by creating and seizing opportunities.
Google, eBay, and star bucks are well known highly examples of entrepreneurial firms. Companies of this type create products and services that have worth, are important to their customer and that provides a measure of usefulness to their customers.

Case Study Assignment No. 1

Case 1.1
Launching the palm Pilot: A classic Tale of Tenacity Despite Failure (Pg 23) www.palmone.com

Case 1.2
Chem Connect: Creating anew kind of Marketplace through Digital Technologies (Pg 24) www.chemconnect.com