Entrepreneurship:
Entrepreneurship involves more than just starting a new business. It entails identifying, evaluating, and exploiting opportunities. Entrepreneurial opportunities exist where persons are able to sell new products or services at a profit producing price.
This module covers the fundamentals of entrepreneurship.
Objectives:
After completing this module, you should be able to do the following:
• An understanding of the three stages of entrepreneurship.
• An overall appreciation for the opportunity concept and an understanding of the primary types of entrepreneurial opportunities.
• An ability to distinguish between opportunity identification, evaluation, and exploitation.
• Insights regarding the various types of financing available to entrepreneurs.
• An appreciation for how existing organizations use corporate entrepreneurship.
• An understanding of and appreciation for the role of social entrepreneurship in society.
Reading:
Certo, S.C., & Certo, S.T. (2009). Modern management (11th ed.). Upper Saddle River, NJ: Prentice Hall. Read Chapter 6.
Lecture Slides: Please refer to link in this module
Assignments:
- Participate in this module’s course discussion forum (100 points total)
Google Case Study:
Problem 1. Do you think Google will be able to maintain its entrepreneurial culture in spite of its recent growth and increased size? Why or why not?
Problem 2. In your opinion, what were the key factors in determining the success of Google’s entrepreneurial founders?
Problem 3. As you look into the future, what do you think represents a bigger threat to Google: established companies like Microsoft or smaller, entrepreneurial companies? Explain.
Module summary:
Entrepreneurship involves more than just starting a new business. It entails identifying, evaluating, and exploiting opportunities. Entrepreneurial opportunities exist where persons are able to sell new products or services at a profit producing price. To illustrate the importance of entrepreneurship, 460,000 people start new businesses in the U.S. each month, on average, yet research indicates that 34% of all new businesses fail within the first two years. Entrepreneurship truly plays a vital role in our society.
Entrepreneurs are individuals who are able to identify, evaluate and exploit these opportunities. There are five types of opportunities; creation of new products or services, discovery of new geographical markets, creation of new raw materials or alternative uses for existing ones, discovery of new methods of production, and the discovery of new methods of organizing. Entrepreneurs must be able to identify these opportunities. There are four factors which influence the ability of entrepreneurs to identify opportunities: entrepreneurial alertness, information asymmetry, social networks and the ability to establish means-ends relationships.
The three stages of the entrepreneurship process include: opportunity identification, opportunity evaluation, and opportunity exploitation of opportunities. (See Figure 6.1) When an entrepreneur analyzes whether an idea is viable, he or she engages in a feasibility analysis. One key issue to be examined in the evaluation stage is the entrepreneurial risk. It’s important when entrepreneurs are evaluating risk, that they don’t fall victim to the downside loss, law of small numbers or illusion of control.
It is common that when most entrepreneurs discover an opportunity they want to exploit, they lack the capital necessary. Some fund their operation with their own money or with credit cards, but most require at least some outside source of money. Three common sources of external capital for entrepreneurs include: angel investors, venture capitalists or bank financing.
Finally, there is both corporate or commercial entrepreneurship and social entrepreneurship. The two differ in three respects: mission, resources and performance measurements. Performance measures are based upon the networks of relationships, their capital bases, and the public’s acceptance of the new venture.