Study Guide Exam 1 Test 1 50 multiple choice 10 15 which of the following are NOT Questions are more thought processed and ideas May be questions from textbook in class notes ONLY articles covered in class will be included 02 17 2014 Means in class notes the professor actually said The Highlighted lines are the titles of the Slides in the chapter notes At the end of all the chapters there are notes from the textbook chapters Chapter 1 What is entrepreneurship Opportunities Its about opportunity are o Perception that the market will support new product offerings o Discovered created or some combination Entrepreneurship is a mindset and set of behaviors that involves o Producing novelty o Accessing and using resources o Deciding what process to preform and execution of those processes o Influence behavior of people Innovation reconfigurations of what already exists Segway And or Using resources that are not being used currently Why is entrepreneurship important Creates new jobs Implications for the economy and society macro level o Improves peoples lives o Ex iPhone created a lot of opportunities for people like creating apps and making money off them o Reallocates resources creative destruction o Increase tax base this is why the government invests in entrepreneurship Entrepreneurship engine that drives the economy forward destroying the old creating the new Implications for the entrepreneur micro level o Given the amount of risk they take and hours they work entrepreneurs make less than a large company o Provides independence and autonomy o Generates wealth o Makes the entrepreneur a more valuable asset when getting a new job if venture fails you have more to offer economically o Enables the entrepreneur to go purse goals Venture Creation Process Failure o Many new ventures fail definitions of failure the negative return of capital not sale at the level envisioned cannot generate demand underfunded so never able to establish fully bankruptcy o Failure can be largely subjective you may consider yourself a success but compared to others their aspirations and success are higher o How is your business doing compared to how it could be doing This is another form of failure New creations o Involve uncertainty yet have important consequences o Many ventures end up not being what they were suppose initially o Are developed iteratively and nonlinearly often involving milestones achievement Ex 3M was founded as a mining company now creates hardware Ex Starbucks was founded as a coffee making equipment company Importance of Entrepreneur The entrepreneur decides to purse the opportunity and how to purse it the venture comes to look like the extension of the entrepreneurs personality Ex Wal Mart is frugal Sam Walton o Push o Pull factors relate to an entrepreneur s lack of alternative career prospects factor relates to the attractiveness of the opportunities work for themselves make for money Internal Environmental Factors Venture Strategy o Plans routines and commitments that direct resource acquisition and allocation o Both formulation and implementation are important Invention versus innovation versus imitation o Invention developing a new project offering often remember the innovator not the inventor Ex Henry Ford o Innovation commercializing a new products offering o Imitation replicating others product offering or processes Radical versus incremental innovation can t exactly define one innovation as either totally radical or Incremental Can be a total radical paradigm shift like the cell phone to the iPhone but then there s a incremental innovation like the 2012 toyota corolla and the 2013 o Radical large changes from the status quo potential generating new or reconfiguring existing information Founder of IMB stating the world only needed 5 computers o Incremental small changes over the status quo building upon not supplanting what exists Porter Article Class Discussion Don t offer everything in the field Zero in on a subset Jiffy Lube Oil change only o Ex Southwest they have created a trade off o Ex Ikea Book notes Stevenson quote on entrepreneurship The process by which individuals either on their own or inside organizations pursue opportunities without regard to the resources they currently control Passion in entrepreneur is intrinsic cant be practiced or learned 3 schools of thought help to understand the role of entrepreneurship in the economy 1 an integrated input output model proposed my Morris Lewis and Sexton 2 Ronstadt s career assessment approach make judgments based on where they are in their career 3 Gartner s conceptual framework for the new venture creation process 500 or less people working small firm 3 types of economies 1 Factor driven economies rely on unskilled labor and natural resources 2 Efficiency driven economies growing and in need of improving their production process and product 3 Innovation driven economies the most advanced Based on businesses who compete on innovation The mom and pop business compared to entrepreneurship because it is a lifestyle business in order to make living being the main focus not building an empire Big firms and companies also hire out management jobs compared to mom and pops who run it all themselves 1980 first time seeing the word entrepreneur Chapter 2 Preparing for the Entrepreneurial Journey Myths and Reality A business plan is required for success o Provides discipline and organization but they do not add value directly o Preparation is important Entrepreneurship is for the young and the reckless o Many ventures are founded by older individuals o Experience particularly within given industry is often important Entrepreneurship cannot be taught o Can apply learned skills o Personality and situation factors are difficult to change o Teaching about specific opportunities eliminates advantages of pursuing them o you need to be able to think differently in order to have a better venture than the person next to you older entrepreneurs have more capital to help a start up more experience knowledge younger people have advantages as well Paths to Entrepreneurship The home based entrepreneur o Most small businesses can right off on taxes for in home space used can only do this if you can handle the distractions o In the U S there is an infrastructure to support such businesses The serial entrepreneur o Founds and exits businesses repeatedly o Develops unique entrepreneurial skills through experience The portfolio entrepreneur o