business organization - week 2 - entrepreneurship

entrepreneurship

process by which individuals pursure opportunities

entrepreneur searches for change + exploits it

finding solutions to problems

opportunity

favorable set of circumstances that creates a need for a new product/service/business

process

predictive output (no uncertainty)

a model

mindset of an entrepreneur (based on uncertainty)

causal logic (managerial thinking)

selecting between given means to achieve given goals

shane + venkat araman

entrepreneurial opportunities exist and some entrepreneurship successfully exploit them

sarasvathy

entrepreneurs create opportunities

effectuation cycle

how entrepreneurs use available resources to develop opportunities

effectuation of effectual thinking (entrepreneurial thinking)

imagining possible new ends using a given set of means (being open to anything)

five principles drivinf entrepreneurs action

means: who you are, what you know, who you know

affordable loss: invest what you can afford, no expected return (calculated risk)

co

creation partnership: build a network of selected stakeholders

leverage contingencies: embrace/leverage surprises, don't avoid

world view: future comes from what people do

not with inevitable trends (control vs. prediction)

three primary reasons to become an entrepreneur

1. desire to be your own boss

2. desire to pursue your own ideas

3. financial rewards

10 traits of an entrepreneur

1. bias to action

2. welcome and create change

3. optimistic

4. resourceful

5. manage risk

6. intensively curious

7. experiment

8. failure savvy

9. know their customer

10. ask for forgiveness + permission

characteristics of a small business

have a narrow focus

have to get by with limited resources

often have more freedom to innovate

find it easier to make decisions quickly + react to changes in the market

economic roles of small businesses

provide jobs, introduce new products, meet the needs of larger organizations, inject a considerable amount of money into the economy, take risks that larger companies sometimes avoid, provide specialized goods and services

types of substitute firms: salary substitute firms

firms that provide the same income that they would have in a conventional job

types of substitute firms: lifestyle firms

firms that provide their owners the opportunity to pursure a particular lifestyle

types of substitute firms: entrepreneurial firms

firms that bring new products/services to the market by creating/seizing opportunities

types of entrepreneurship: corporate entrepreneurship

creating new products/ventures/processes or renewing within large corporations

looking for innovations

types of entrepreneurship: entrepreneurial firms

proactive, innovative, risk taking

types of entrepreneurship: conservative firms

wait and see posture, less innovative, risk averse

difficulties start

ups face

financial outlay / borrowing capital / getting investors

owner's freedom and flexibility

business processes and systems

support networks

workforce

customer base, brand recognition, sales

why new businesses fail

leadership issues

marketing and sales issues

financial issues

systems and facilities issues

business incubators

help businesses develop

financial options: seed money

first infusion of capital to get business started

financial options: micro

lender

financial options: venture capitalists

investors who provide money in exchange for partial ownership

financial options: angel investors

private individuals who invest in startups (bigger amounts than banks but smaller than VC's

financial options: initial public offering

a company's first offering of shares to the public

financial options: crowd funding

soliciting project funds, business investments or business loans from the members of the public

franchise alternative: franchise

business arrangement in which one company obtains rights to sell the products and use various elements of a business system of another company

franchisee

business ownder who pays for the rights to sell the products and use the business system of a franchiser

franchiser

company that licenses elements of its business system to other companies (franchisee)