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Chapter 1

The Nature & Importance of

Entrepreneurship



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Brainstorming

Who is an Entrepreneur?

What is entrepreneurship?



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Introduction

Origin of the Word Entrepreneur

The word Entrepreneur originates from

the French word entreprende which

means to undertake.



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Who is an Entrepreneur?

One who organizes, manages, andassumes the risks of a business or enterprise.

Individual who takes risk and startssomething new.

One who creates a new business in theface of risk and uncertainty for the

purpose of achieving profit and growth byidentifying significant opportunities andassembling the necessary resources tocapitalize on them.



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What is Entrepreneurship?

The process of creating something

new with value by devoting the

necessary time and effort, assumingthe accompanying financial,

psychic, and social risks, and

receiving the resulting rewards of monetary and personal satisfaction

and independence.



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Characteristics of Successful

Entrepreneurs

The essence of entrepreneurial

behavior is identifying opportunities

and putting useful ideas into practice.

This requires creativity, drive, and a

willingness to take risks.

Example:

Pierre Omidyar – the founder of eBay

These qualities were demonstrated by

Pierre Omidyar, the founder of eBay.



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Characteristics of Successful

Entrepreneurs

Omidayar saw an opportunity to create

a marketplace where people could find

each other online.

He risked his career by quitting his job

to work on eBay full time.

He worked hard to build a profitable

company that delivers a creative and

useful service to its customers.



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Article Discussion

Successful Entrepreneurs

by J udith L. Glick-Smith



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Advantages of Entrepreneurship

Every successful entrepreneur bringsabout benefits not only for himself/ herself

but for the country as a whole.

The benefits that can be derived from

entrepreneurial activities are as follows:

Enormous personal financial gain. Freedom from the dependency on the

jobs offered by others.



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The ability to have great accomplishments.

Employment for others.

Development of more industries.

Income generation and increased economic

growth.

Healthy competition encourages higher qualityproducts.

More goods and services available.




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Development of new markets.

Promotion of the use of modern technology to

enhance higher productivity. Encouragement of more researches and

development of modern machines and

equipment.

Emigration of talent may be stopped by a better

domestic entrepreneurship climate.




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The Entrepreneurial Decision Process

For the person who actually starts his or her ownbusiness, the experience is filled with enthusiasm,frustration, anxiety, and hard work.

There is a high failure rate due to poor sales, intense

competition, lack of capital, or lack of managerialability. The financial and emotional risk can also bevery high.

What, then, causes a person to make this difficultdecision?

The question can be best explored by looking at thedecision process involved in becoming anentrepreneur.



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Entrepreneurial Decision Process

Deciding to become an entrepreneur byleaving present activity.

Change from Present Lifestyle

Work Environment

Disruption

Form New Enterprise

Desirable

Cultural

Subcultural

Family

Teachers

Peers

Possible

Government

Background

Marketing

Financing

Role Models



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Change from Present Lifestyle It takes a great deal of energy and courage to

change and to do something new and different.

Work Environment

While working in research and developmentindividuals develop new product ideas and often

leave to form their own companies when these new

ideas are not accepted by their present employers.

Individuals in marketing become familiar with themarket and customers’ unfulfilled wants and needs

and often leave to start new companies to fill these

needs.



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Disruption

A significant number of companies are

formed by:

People who have retired.

People who have been fired.

People who have not been promotedafter completion of an educational

degree.



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Desirability of New Venture Formation Aspects of a situation that make it desirable to start a

new company.

Culture/Subculture

A culture/subculture that values an individual who

successfully creates a new business leads to more

venture formations.

Example: The American culture places high value on

being one’s own boss, having individual opportunities,being a success, and making money – all aspects of

entrepreneurship. Therefore there is a high rate of

company formation in the United States.



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Family

Research studies indicate that many entrepreneurshad parents and other family members who valued

independence. Teachers

Teachers can significantly influence individuals toregard entrepreneurship as a desirable and viablecareer path.

Peers A meeting place where entrepreneurs and potential

entrepreneurs can discuss ideas, problems andsolutions leads to the formation of new companies.

Desirability of New Venture Formation



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Possibility of New Venture formation Factors making it possible to create a new

venture.

Government

The government contributes by providing theinfrastructure to support a new venture.

Background

Since the social, psychological, and financial

risks are present, the entrepreneur shouldhave the necessary background. Formaleducation and previous business experienceare needed to form and manage a newenterprise.



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Possibility of New Venture formation Marketing

In addition to the presence of a market of sufficientsize, there must be a level of marketing know-how toput together the best total package of product, price,distribution, and promotion needed for successfulproduct launching.

Role Models

A frequent comment of entrepreneurs when inquired

about their motivations for starting their newventures is,” if that person could do it, so can I!”

Financing

Financial resources must be readily available.

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