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What is entrepreneurship?
Origin lies in 17th century France : Entrepreneur was an individual commissioned to undertake a particular commercial project by someone with money to invest. Concepts derived:
Entrepreneurial Is an adjective describing how the entrepreneur undertakes what they do particular style to what entrepreneurs do.
Entrepreneurial process In which the entrepreneur engages is the means through which new value is created as a result of the project entrepreneurial
does
venture
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What is entrepreneurship?
Entrepreneurs: Has economic & social dimension Wealth creation is a general managerial activity Characterized by a particular approach to wealth creation
psychology,
&
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Owning organizations founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
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Owning organizations founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Ownership lies with those who invest in the business & own its shares the principals whereas the actual running is delegated to professional managers or agents. Entrepreneur owns & manage their own business dual roles. BUT!!! many people are also recognized as entrepreneur even if they do not own the venture they are managing.
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
General perception entrepreneur as someone who has established a new business organization. Entrepreneur is recognized as the person who undertakes the task of bringing together the different elements of the organization (people, property, productive resources, etc.) & giving them a separate legal identity.
BUT!!! They are also entrepreneurs who buy into organizations, develop them, or absorb them into existing organizations.
major
changes
in
their
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Innovation is a crucial part of the entrepreneurial process. Innovation as fundamental to the entrepreneurial process of wealth creation. Innovations encompasses any new way of doing something so that value is created. It can mean a new product or service, and can also include new way of delivering an existing product or service, new methods of informing the customer about a product & promoting it to them, new ways of organizing the company, or even new approaches to managing relationship with other organizations.
Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
An opportunity is a gap in a market where the potential exists to do something better & thereby to create value.
Having identified them, the entrepreneur must pursue them with a suitable innovation.
The real value is created when that opportunity is exploited by something new which fills the market gap.
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
Entrepreneur are characterized by the way they bring some sort of expertise to their jobs.
They have a special ability in deciding how to allocate scarce resources in situation where information is limited.
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
One special skill that entrepreneurs would seem to contribute to their ventures is leadership. In order to drive their innovation to market, they have to lead other people, both from within their organization & from people outside such as investors, customers & suppliers.. Leadership is an important factor in entrepreneurial success & it is often a skill that is exhibited well by the entrepreneur.
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Owning organizations Founding new organizations bringing innovations to market identification of market opportunity application of expertise provision of leadership the entrepreneur as manager week 01
It would seem that entrepreneurs take on no task that is fundamentally different from the tasks performed by ordinary managers at some time or other.
Entrepreneur is a manager!
To distinct entrepreneur from an ordinary manager, it must be in terms of what the entrepreneur manages, how they manage, their effectiveness and the effect they have as a manager.
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capital.
Value is created by combining these 3 things in a way which satisfies human needs.
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
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risk.
Entrepreneur accept risk on behalf of other people. They provide a service by taking this risk off peoples hands. week 01
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
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Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
Entrepreneurs keep an eye out for information that is not being exploited.
By taking advantage of this information, they make markets more efficient & are rewarded out of the revenues generated. week 01
Combination of economic factors providing market efficiency accepting risk maximizing investors returns processing of market information
opportunities.
Entrepreneurs are information processors is which in turn pursue opportunities & provide competitive efficiency..
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Entrepreneurs can certainly be inspiring, & may provide motivating role models.
Someone is an entrepreneur for an essentially negative reason; they are unable to fit into existing social situations. As a result the entrepreneur is driven to create his or her own situation. It is this that provides the motivation to innovate & build new organizations. Many entrepreneurs achieved success after comparatively unhappy & lackluster careers working as professional managers.
week 01
Often they relate their inability to fit into the established firm as a factor in driving them to start their own venture.
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Entrepreneurs are often characterized by privation & hardship which left the person with a lack of self-esteem, a feeling of insecurity & a repressed desire for control.
This leads to rebellious & deviant behavior which limits the persons ability to fit into established organizations.
Entrepreneurial activity is a way of coming to terms with this. It provides not only a means of economic survival but also an activity which enables a reaction against anxiety left by psychological scars. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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There is a common impression that entrepreneurs tend to be flamboyant extroverts who are spontaneous in their approach & rely on instinct rather than calculation.
Detailed studies, however, have shown that all types of personality perform equally well as entrepreneurs.
Personality type, as measured by personality test does not correlate strongly with entrepreneurial performance & success. E.g., introverts are just as likely to be entrepreneurs as are extroverts. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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David McClelland identified a need for achievement as the fundamental driving trait in the personality of successful entrepreneurs.
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Entrepreneurs are not born, they are made. A number of factors are seen as significant to the social development of entrepreneurs. In general, they fall into one of the three broad categories:
innate factors such as intelligence, creativity, personality, motivation, personal ambition, etc. acquired learning, training, experience in incubator organizations, mentoring, existence of motivating role models, etc. social - birth order, experiences in family life, socioeconomic group & parental occupation, society & culture, economic conditions, etc. week 01
APT 3083 STRATEGIC ENTREPREURSHIP
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Cognitive science is the branch of psychology that attempts to develop an understanding of how we as humans obtain & process information & use it to make sense of the world.
Organization-wide management The entrepreneurs manages with an eye to the entire organization.
They bring people. Money, ideas & resources together to build new organizations & to change existing ones.
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Self motivation why am I doing this? Learning from mistakes Enjoying the rewards
Motivation of others understanding personal
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Types of Entrepreneur
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Nascent entrepreneurs
Those planning to start up an initial venture Those running a single business At an early stage of venture development when they are still actively learning are referred to as novice entrepreneurs. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Singular entrepreneurs
Opportunist entrepreneurs
Who were interested in maximizing their returns from short-term deals
Craftsmen
Who attempted to make a living by privately selling their trade or products.
Were not so much interested in profits as in being able to earn a stable living from their specialist skills.
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Nascent entrepreneurs
Opportunist entrepreneurs
Growth-orientated
Who pursued opportunities to maximize the potential of their venture.
Independenceorientated
Whose main ambition was to work for themselves. Preferred stability to growth; willing to limit the scope of their ventures
Expansionorientated
Who take the risk of expanding their business & face the challenge of changing their role from being craft operators to being managers of craft operators
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week 01
Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Brings people, money & materials together to create an entirely new organizations; The classic type of entrepreneur, who identifies an unexploited opportunity & then innovates in order to pursue it
Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Goes beyond merely creating a new firm Their innovation is of such importance that a whole industry is created on the back of it They develop not only new products, but also a whole technology to produce them
Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
A manager who operates within an established firm but does so in an entrepreneurial fashion Usually occupying the chief executive or a senior managerial role, they are called upon to be innovative & to provide dynamism & leadership to the organization, particularly when it is facing a period of change Administrative entrepreneurs are often referred to as intrapreneurs. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Cantillon
entrepreneur
Industry-maker
Administrative
entrepreneur
Small owner
business
Is an entrepreneur who takes responsibility for owning & running their own venture The business may be small because it is in an early stage of growth, or the owner may actually wish to limit the size of their business because they are satisfied that it gives them a reasonably secure income & control over their life
High
Risk bearing
Gambler
Entrepreneur
Low
Consolidator
Dreamer
Low
High
Innovativeness
High
Risk bearing
Gambler
Entrepreneur
Gambler is the entrepreneur characterized by a low degree of innovation & a high level of risk. The gamble, of course, arises from the fact that without a significant innovation, the entrepreneur is taking a big chance in being better able to deliver value than existing players in the market.
Low
Consolidator
Dreamer
Low
High
Innovativeness
High
Risk bearing
Gambler
Entrepreneur
Consolidator is the entrepreneur who develops a venture based on low levels of both innovation & risk. This consolidates in that it is really, at best, a marginal improvement on what existing players are doing. Although risk are low, so too must be expected returns.
Low
Consolidator
Dreamer
Low
High
Innovativeness
High
Risk bearing
Gambler
Entrepreneur
Dreamer is the entrepreneur who attempts to combine a high level of innovativeness with low risk. All entrepreneurs would love to operate here. However, the dream cannot be realized as all innovation, by its nature, introduces risk. The more significant & hence potentially valuable, the innovation, the greater the risk of the unknown.
Low
Consolidator
Dreamer
Low
High
Innovativeness
High
Risk bearing
Gambler
Entrepreneur
Entrepreneur combines a high level of innovativeness with high risk. This is where true entrepreneurs operate. They must accept risk, but by understanding their innovation & why it appeals to the market, they minimize & manage the risks.
Low
Consolidator
Dreamer
Low
High
Innovativeness
Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research technical entrepreneur Producer technical entrepreneur User technical entrepreneur Opportunist technical entrepreneur
week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Research-producer entrepreneur
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Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research-producer entrepreneur
Who while working in an academic or industrial research environment have had exposure to commercial decision making
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Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research-producer entrepreneur
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Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research technical entrepreneur Producer technical entrepreneur User technical entrepreneur Opportunist technical entrepreneur
week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Research-producer entrepreneur An individual whose main experience has been commercially based but has involved contact with, & the development of knowledge about, a technical development. This may be because they have been employed in its marketing or sales, or perhaps in procuring that technology for a business.
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Technology-based entrepreneurs
- Are specially important in modern business as it is they who are taking advantage of new scientific developments, especially in the areas of IT, biotechnology & engineering science, & offering their benefits to the wider world. Landaus (1982) classification of entrepreneurial types Investors are attracted by the high growth potential of their ventures. Jones-Evan (1995) fourfold categorizations:
Research technical entrepreneur Producer technical entrepreneur User technical entrepreneur Opportunist technical entrepreneur
week 01 APT 3083 STRATEGIC ENTREPREURSHIP
Research-producer entrepreneur
Technology-based entrepreneurs
The approach to classifying technical entrepreneurs is useful for two key reasons: Landaus (1982) classification of entrepreneurial types
Reason 1
While in command of the technical aspects of what they are doing, may need support with the commercial management of their ventures. May call upon dedicated technical experts to underpin their commercial moves.
It enables investors to judge the managerial balance of the ventures to which they are called upon to commit themselves. An investor seeks not only a good idea, but also one that has a clear market potential & is backed by a managerial team that can not only invent but also deliver that invention to the customer profitably. week 01 APT 3083 STRATEGIC ENTREPREURSHIP
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Assessment based on: -Employment - managerial - financial - technical; and - strategic criteria
Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are also retired nut show more ambition for their ventures than do senior citizens
They often possess administrative experience & their business are bigger, drawing on a wider range of technical skills Strategic goals may be explicit & employees may be invited to make a personal investment in the future of the venture
Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Are younger entrepreneurs who aim to make a living from making deals
They may have only limited industrial & technical experience & rely on networks of personal contact Their ventures may be moderately large, but they tend not to have long-term strategic goals. The main aim is to maximize short-term profits. Fund is provided through retained earnings, family contributions & personal loans
Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
Senior citizen
Workaholics
Swingers
Idealists
High-flyers
Portfolio entrepreneurs
Who start new businesses in sequence, only running one at any time.
Sequential entrepreneurs
Those who run simultaneously. several businesses
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End of lesson 01