5allen-01.ppt

Chapter 1Understanding Entrepreneurship Learning Objectives • • • Define entrepreneurship Explain the role of entrepreneurship in economic growth Distinguish entrepreneurial ventures from small businesses in terms of their purpose and goals. Describe the evolution of entrepreneurship as a field of study since the 1960s Identify today’s broad trends in the field of entrepreneurship. • • Copyright © Houghton Mifflin Company. All rights reserved. 1 |2 1 |3 .Definition of Entrepreneurship • Entrepreneurship is a mindset that is: – opportunity-focused – innovative – growth-oriented Copyright © Houghton Mifflin Company. All rights reserved. The Promise of Entrepreneurship • • • An integrated input/output model The career assessment approach The new venture creation process Copyright © Houghton Mifflin Company. 1 |4 . All rights reserved. Figure 1. 1 |5 .1: The Entrepreneurship Process Copyright © Houghton Mifflin Company. All rights reserved. 1 |6 . All rights reserved.2: Entrepreneurship and Technological Change Copyright © Houghton Mifflin Company.Figure 1. Outcomes of Entrepreneurship • • • Economic growth New industry formation Job creation Copyright © Houghton Mifflin Company. All rights reserved. 1 |7 . stabilization. The pattern of growth. Disruptive or metamorphic technologies that destroy previous technologies and create new industries display a different pattern of behavior. 1 |8 • . All rights reserved. and decline of industry can be interrupted at any time by the entry of another disruptive technology.New Industry Formation • • New industries are born when technological change produces a new opportunity that an enterprising entrepreneur seizes. shakeout. Copyright © Houghton Mifflin Company. “Growing by Leaps and Inches: Creative Destruction. Zucker. Darby and L. G. pp. R. January 2003.” Economic Inquiry. and Inching Up. Real Cost Reduction. Copyright © Houghton Mifflin Company. 1-19 (January 2003).Figure 1.3: Industry Life Cycles Source: Adapted from M. 1 |9 . All rights reserved. Job Creation • The most recent data from 2003 indicate that small businesses created 1. Courts. Bureau of the Census. 1 | 10 .667 for large firms. All rights reserved.* *U. Administrative Office of the U.S.326 net new jobs as compared to 994. Copyright © Houghton Mifflin Company.S.990. Endogenous Growth and Entrepreneurial Activities. All rights reserved.The Nature of Entrepreneurial Start-ups • An entrepreneurial venture brings something new to the marketplace. • Three primary characteristics: 1. Innovative 2. Value-creating 3. 1 | 11 . Growth-oriented Copyright © Houghton Mifflin Company. All rights reserved. 1 | 12 .New Business Formation • Entrepreneurs use identifiable milestones to measure their progress: – Deciding to start a business – Researching the concept – Preparing for launch – Securing the first customer – Obtaining the business license – Other activities which signal the business is in operation Copyright © Houghton Mifflin Company. Figure 1. Vol. All rights reserved.4: Social. 153-227. Political. and Economic Context of the Entrepreneurial Process Source: Paul D. Reynolds.S. Copyright © Houghton Mifflin Company. pp. Databases for the Study of Entrepreneurship. 4. Amsterdam: JAI/Elsevier Inc. (2000) National Panel of U. Business Start-ups: Background and Methodology. 1 | 13 . New Business Failure • Not all entrepreneurs succeed in growing their start-up into an established business. Survival has been attributed to sufficient capital. 1 | 14 . • Copyright © Houghton Mifflin Company. and the entrepreneur’s intention in starting the business. having employees. All rights reserved. All rights reserved. Courts.S. and U. 1 | 15 . Department of Labor.S.1: Starts and Closures of Employer Firms. Bureau of the Census. Employment and Training Administration. Copyright © Houghton Mifflin Company. 2001-2005 Sources: U.S.Table 1. Administrative Office of the U. Socially Responsible Entrepreneurship • Today more than 85 percent of the company’s employees are involved in philanthropy. and promote compassionate capitalism.com’s people. All rights reserved.” • Copyright © Houghton Mifflin Company. 1 | 16 . technology and relationships to improve our communities. support the world during times of extreme need. inspire youth to be more successful. One company uses the following mission: The mission is to “use Salesforce. All rights reserved.The Entrepreneurial Revolution • Free enterprise as foundation of entrepreneurial motivation – Marc Andressen. Starbucks Copyright © Houghton Mifflin Company. 1 | 17 . Netscape Communications – Howard Schultz. 5: The Entrepreneurial Evolution Copyright © Houghton Mifflin Company. All rights reserved. 1 | 18 .Figure 1. Entrepreneurial Trends • • • • Women and minority-owned businesses Social responsibility The Internet Globalization Copyright © Houghton Mifflin Company. All rights reserved. 1 | 19 . Looking Ahead • Part One: The Opportunity – Chapter 1: Introduction to Entrepreneurship – Chapter 2: The Entrepreneur’s Perspective – Chapter 3: Opportunity Recognition – Chapter 4: The Business Concept and Model • Part Two: Feasibility Analysis (Ch 5-8) • Part Three: The Business Plan (Ch 9-16) • Part Four: Growth and Change (Ch 17-19) Copyright © Houghton Mifflin Company. All rights reserved. 1 | 20 .