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

Introductionto an Entrepreneurship
Entrepreneurship Importance
The Entrepreneurial Process
Introduction to Entrepreneurship

There is tremendous
interest in According to the GEM
entrepreneurship around 2008 study, about 300
the world. million people, or 12.5%,
of the adults in the 40
countries surveyed, are
involved in forming
new businesses.

1-3
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
Pierre Omidyar creative and useful service to its
Founder of eBay
customers.

1-4
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

 Inventor asCreates new concept or Product
 Entrepreneur se assembles & then integrates
 all the recoursesmneeded (Money, People, Business Model, Strategy, Risk
bl
Modeling) to transform Invention into a Viable Business.
es
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
 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
◦ 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.
Why Become an Entrepreneur?

 Pursue their own idea

◦ Reason to start one’s firm is to
pursue and implement their own ◦ It can happen in non corporate
idea. firms as well while recognizing the
◦ Some are quick to respond while need of the product or services that
recognizing the idea and then is not available in the market.
desire to realizing it. ◦ Entrepreneur can only spend
◦ Corporate entrepreneurs who resources if he sees that the project
innovate within the context of has the worth and the business plan
existing firm normally get their can have the viability
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/Cust
omer Focus

Successful
Entrepreneur

intelligence
Execution
despite failure
Tenacity
Characteristics of Successful Entrepreneur

 Passion for their Business ◦ It explain why passion bring people

to even throw their jobs an start
◦ Its typically derives from the their own firms and why even
entrepreneurs belief that the billionaire like Bill Gates of
business will positively influence Microsoft, Michail Dell of Dell
people’s life. Computers and Larry Ellison of
◦ Example of BenjaminTregoe a Oracle passionate to work hard
management Consulting firm “Its even they are financially secure.
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”.
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 it’s 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.
It’s 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
(1 of 2)

Innovation
◦ Is the process of creating something new, which is central to
the entrepreneurial process.
◦ Small entrepreneurial firms are responsible for over two-
thirds 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.

1-
19
Economic Impact of Entrepreneurial Firms
(2 of 2)

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.

1-
20
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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21
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