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Chapter

The Nature and Importance of Entrepreneurs

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Development of Entrepreneurship
Earliest Period- Marco Polo Middle Ages- Theater, Architectural Works 17th Century- Mississippi Company 18th Century- Edison & Whitney 19th & 20th Centuries
Organize/Operate Innovation
1-3 McGraw-Hill 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Environmental Factors Affecting Organizations

Hypercompetition Changing Technology Short Product Life Cycles New Markets Changing Employee Drives/Motives Focus on Sales/Profits Available Capital
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Economies
Market-Oriented
UNITED STATES

Controlled
CUBA

Market Conditions

Innovation Orientation

Investment Community

Entrepreneurship Culture

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Market Conditions
Large Market Easy To Form Company Positive Tax Structure Positive Media Coverage Code of Business/Contract Law Strong Govt Agencies- No Corruption Standard-Setting Associations Individual Investment Mentality
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Principles for Successful New Venture

1) 2) 3) 4) 5) 6) 7) Define Market Durable Products18 Month Customer Payback Market Growth = 30-50% in 5 Years Patent Protection No Product Substitutions Available Products Variants No Strong Competition Present 8) Quick Market Dominance 9) Gross Margin 3050% 10)Staged Financing 11)ROI = 10X in 5 Years (25-30%/Year) 12)Positive Cash Flow in 18 Months 13)Strong Management in Industry
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Infrastructure Needed for Innovation

Long-Term Thinking

Investment Community
Banks

Venture Capitalists
Informal/Informed Private Investors (Angels)
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Entrepreneurship Culture
More New Ventures Than Anywhere In The World Concentrated Areas
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Successful Entrepreneur
Initiates Creation Process Devotes Time/Effort Assumes Risk Receives Rewards
Independence Satisfaction Money
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Entrepreneurial Decision
Present Lifestyle Catalyst New Enterprise
Desirable Possible
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Drivers of New Venture Formation

Desirability Influences
Culture/Subculture Family/Peers Teachers

Possibility Factors
Government Background Marketing Role Models Finances
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Types of Startups
Lifestyle

Foundation High Potential

Gazelles
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Entrepreneur & Economic Development

Product-Evolution Process Iterative Synthesis

Innovation
Technological Breakthrough Government

Technology Transfer

Intrapreneurship vs. Entrepreneurship

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Product Evolution
Need Recognition
Industrial

Initiate Innovation

Development

Press To Invent
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Careers/Education
Life Space
Work/Occupation Individual/Personal Nonwork/family

Skills Required
Technical Business Management Personal
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Skills Required of Entrepreneur

Technical
Writing
Oral Communication Monitoring The Environment

Business Management
Planning
Decision Making Human Relations Marketing (Selling)

Personal
Inner Control
Risk Taking Innovative

Use Technology

ChangeOriented Visionary
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Ethics & Social Responsibility

Ethics- Behavior/Morals in Business Value System
Peer Pressure Social Norms Competitors Individual vs. Community
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Future
Entrepreneurial Education

Government- Promotion
Societys Support Corporate Intrapreneurship
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Entrepreneurial Universities
Activities
Seminars Consulting Research Case Development Technology Development

Structures
Business Assistance Centers Incubators Innovation Centers Industrial Parks Enterprise Development Centers Venture Capital Exchanges

Inputs
Guest Lectures Board of Advisors/Trustees Internships Student Projects Source of Funds
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& Transfer
Joint Ventures & Strategic Alliances