topic 4 introduction to business

7/27/2019 Topic 4 Introduction to Business

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The University of Choice

Chapter 2: Introduction to

Business


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Business Defined

A business is an enterprise that provides

products or services desired by

customers.


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Business Management

Management is the act of getting people

together to accomplish desired goals and

objectives using available resources efficiently

and effectively.

Management comprises planning, organizing,

staffing, leading or directing, and controlling anorganization (a group of one or more people or

entities) or effort for the purpose of

accomplishing a goal.
http://en.wikipedia.org/wiki/Objective_(goal)http://en.wikipedia.org/wiki/Planninghttp://en.wikipedia.org/wiki/Organizinghttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Leadershiphttp://en.wikipedia.org/wiki/Control_(management)http://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Control_(management)http://en.wikipedia.org/wiki/Leadershiphttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Organizinghttp://en.wikipedia.org/wiki/Planninghttp://en.wikipedia.org/wiki/Objective_(goal)


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Resourcing encompasses the deployment and

manipulation of human resources, financial

resources, technological resources and natural

resources.Since organizations can be viewed as systems,

management can also be defined as human

action, including design, to facilitate the

production of useful outcomes from a system.

This view opens the opportunity to 'manage'

oneself, a pre-requisite to attempting to manage

others.
http://en.wikipedia.org/wiki/Resourcinghttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Financialhttp://en.wikipedia.org/wiki/Technologicalhttp://en.wikipedia.org/wiki/Natural_resourceshttp://en.wikipedia.org/wiki/Natural_resourceshttp://en.wikipedia.org/wiki/Systemshttp://en.wikipedia.org/wiki/Systemshttp://en.wikipedia.org/wiki/Natural_resourceshttp://en.wikipedia.org/wiki/Natural_resourceshttp://en.wikipedia.org/wiki/Technologicalhttp://en.wikipedia.org/wiki/Financialhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Resourcing


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Key Business Decisions

Product What type of product should be produced?

Preschool Programs, daycare service, tuitions

Production How should the product be produced? Teaching &learning.

Promotion How should the product be promoted? Flyers/brochures,

roadshow, community services

Financing How should the company obtain funds to finance the cost

of producing the product? NGO, Government Sponsored,

Company, joint-venture, Sole proprietorship,


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Business Decisions


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Key Stakeholders

Owners Entrepreneurs/Sole proprietors

Co-owners (joint-venture)

Stockholders (pt. Ltd/Sdn. Bhd.)

Employees

Admin, teachers, etc

Suppliers

Franchisor, product/servicesuppliers

Customers

Parents/children


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Planning Ahead Study Questions

What is entrepreneurship?

What is special about small businesses? How does one start a new venture?

What resources support entrepreneurship and

business development?


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Study Question 1: What is

entrepreneurship? Entrepreneurship

Strategic thinking and risk-taking behavior that resultsin the creation of new opportunities for individuals

and/or organizations.

Entrepreneurs Risk-taking individuals who take actions to pursue

opportunities and situations others may fail to

recognize or may view as problems or threats.


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Definition of EntrepreneurOur common understanding:

The boss

The business owner The risk taker

One who starts a small business

The resourceful person


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Entrepreneurs are Founders of businesses that become large-scale

enterprises.

People who: Buy a local franchise outlet

Open a small retail shop

Operate a self-employed service business

People who introduce a new product or operational

change in an existing organization.


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Typical characteristics of entrepreneurs: Internal locus of control

High energy level

High need for achievement Tolerance for ambiguity

Self-confidence

Passion and action-orientation

Self-reliance and desire for independence

Flexibility


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Personal traits and characteristics of entrepreneurs.


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Typical entrepreneurial backgrounds andexperiences: Parents were entrepreneurs or self-employed.

Families encouraged responsibility, initiative, andindependence.

Have tried more than one business venture.

Have relevant personal or career experience.

Become entrepreneurs between 22 and 45 years ofage.

Have strong interests in creative production andenterprise control.

Seek independence and sense of mastery.


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Common myths about entrepreneurs:

Entrepreneurs are born, not made.

Entrepreneurs are gamblers.

Money is the key to entrepreneurial success.

You have to be young to be an entrepreneur.

You must have a degree in business to be anentrepreneur.


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Why become an entrepreneur?

Being able to do own thing

Greater control over own workingenvironment

More opportunities for continuous

growth and mobility Flexibility in lives

Huge financial rewards


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Types of Entrepreneurs Owning own business may be a life time pursuit or just one

part of your career. Serial entrepreneurs start, grow, and

sell several business over the course of their career.

Approaches to the types of entrepreneurs vary across a

wide spectrum. Ray Smilor recognizes 3 kinds of

entrepreneurs:

1. Aspiring entrepreneurs

Dream of starting a business; hope to be their own bosses,

but not yet made the leap from their current employment

into a startup; 7 millions in US


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2. Lifestyle entrepreneurs

Have developed an enterprise that fits their

individual circumstances and style of life.

To earn income for themselves and families.

Referred as small business , develop ventures

that are essential to a communitys well being; >

13 millions in US; running business from home, e.gservice firms, consulting practices, sales, technical

and administrative support, repair service, and arts.


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3. Growth entrepreneurs Have both the desire and ability to grow as fast and

as large as possible.

Most dynamic job generators in the American

economy.

E.g. In US : 300,000 entrepreneurial companies

with 50 employees, 20 % increase per year,

employment grows at an estimated rate of 150,000jobs per year (David Birch at Cognetics, inc.,

Cambridge, Massachusetts)


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Disadvantages of lifestyle

entrepreneurs

limited fund, no possibilities of selling part of the

company for cash to pay for growth;

not provide a way for investors to get a return ontheir investment through the sale of their

ownership position in the company.

Being dishonest with yourself at an early stage

about the control and lifestyle issues will lead toserious and unpleasant conflicts with investors.


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Growth entrepreneurs, are much less driven by

control or lifestyle. They recognize that to grow

quickly they will have to sell part of theircompany to raise cash.

These investors will apply various level of

control. They want to build a valuable company

and then sell it either to an established companyor public. They are willing to trade control for

growth and wealth creation.


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Entrepreneurship Entrepreneurship is more than simply starting a

business.

It is the process of creating something new with value by

devoting the necessary time and effort, assuming the

accompanying financial, psychic (physical) and social risks,

and receiving the resulting financial rewards, personalsatisfaction and independence.

Entrepreneurial success is simply a function of the ability of

an entrepreneur to see these opportunities in the

marketplace, initiate change (or take advantage of change)

and create values through solutions.

Entrepreneurship can include small business, business

owned by women, high technology start ups, home based

business, family owned business.


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Forms of Entrepreneurship1. Social Entrepreneurship

2. Business Entrepreneurship

3. Techno Entrepreneurship


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Social Entrepreneurship

Any creative and innovative solution applied to

solve social problems (Mohammad Yunus,

2007) It involves social mission

Profit and/or entrepreneurial processes


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Business Entrepreneurship

Its about the study of systems, structure, and

staffing to make a large corporation stay

competitive, innovative, and profitable on asustainable basis.


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MotherTeresa did

what nootherperson hasdone

before totake care ofthe poor,destituteand sick


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Lance Armstrong

7 times Tour de

France champion His real victory is

with the LAF where

he helps hundreds

of cancer victims

T


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Sir Edmund Hillary was first to

conquer Mt. Everest

T U f C


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Sir Edmund Hillary came back to Nepal and

helped the Sherpas improve their livingconditions.

T U f C


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Banker to the poor

Th U f Ch


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Mohammad Yunus

Taught Developmental Economics at the

University of Chitagoong in Bangladesh.

Economics, right at the outskirt of theUniversity, poverty was everywhere.

He found out that all that was needed by the

poor was a loan of 27 chakas. Thats how the

Grameen Bank started.

Th U f Ch


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Why are they entrepreneurs?

They had little or no

resources at all but they

survived and achieved whatthey wanted in life.

Th U f Ch


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Entrepreneurship and the Internet The Internet offers numerous entrepreneurial

opportunities.

Online buying and selling Dot-com businesses

Businesses are limited only by personal creativity.

Business-to-Business (B2B) ventures are possible.

Th U f Ch


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International business entrepreneurship

Provides strategic opportunities for small businesses.

Creates exporting and importing opportunities.

Supported through appropriate governmental and

non-governmental organizations.

Th U f Ch


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Study Question 2: What is special about

small businesses?Small businesses

Ones with 100 or fewer employees.

Independently owned and operated. 50 percent of the private labour force works in

small businesses.

Are established by:

Starting a new business.

Buying an existing business.

Buying and running a franchise.

Th U i it f Ch i


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Family businesses

Owned and financially controlled by family members.

Largest percentage of businesses worldwide. Can provide an ideal business situation.

Problems unique to family businesses:

Family business feud

Succession problem

Th U i it f Ch i


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Reasons for small business failures: Lack of experience

Lack of expertise

Lack of strategy and strategic leadership

Poor financial control

Growing too fast

Insufficient commitment

Ethical failure

Th U i it f Ch i


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Eight reasons why many small

businesses fail.

Th U i it f Ch i


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Study Question 3: How does one start

a new venture? Important issues in new venture creation:

Does the entrepreneur have good ideas and the courage to give

them a chance?

Is the entrepreneur prepared to meet and master the test of

strategy and competitive advantage?

Can the entrepreneur identify a market niche that is being

missed by other established firms?

Can the entrepreneur identify a new market that has not yetbeen discovered by existing firms?

Can the entrepreneur generate first-mover advantage by

exploiting a niche or entering a market before competitors?

Th U i it f Ch i


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Questions that keep a new venture focused on its

customers

Who is your customer?

How will you reach key customer market segments?

What determines customer choices to buy or not buy your

product/service?

Why is your product/service a compelling choice for the

customer?

How will you price your product/service for the customer?

How much does it cost to make and deliver your

product/service?

How much does it cost to attract a customer?

How much does it cost to support and retain a customer?

Th U i it f Ch i


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Life cycle of entrepreneurial firms

Birth stage

Breakthrough stage Maturity stage

Each stage poses different managerial

challenges and requires different managerialcompetencies.

Th U i it f Ch i


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Stages in the life cycle of an

entrepreneurial firm.

Th U i sit f Ch i


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Basic items that should be included in a business plan: Executive summary

Industry analysis

Company description Product and services description

Market description

Marketing strategy

Operations description

Staffing description Financial projection

Capital needs

Milestones

Th U i sit of Choic


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Forms of legal ownership

Sole proprietorship

Partnership

General partnership

Limited partnership

Limited liability partnership

Corporation

Limited liability corporation (LLC)

The U iversity of Choice


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Financing the new venture

Sources of outside financing

Debt financing Equity financing

Equity financing alternatives

Venture capitalists

Initial public offerings Angel investors



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Promoting entrepreneurship in large enterprises

Intrapreneurship Skunk works

Business incubators

Small Business Development Centers



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Activity

What characteristics do you have to be a successful

entrepreneur?

Find a profile of a successful entrepreneur who

inspires you and

share it to the class. What are the characteristics that

you can learn from her or him to be a successfulentrepreneur?



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THANK YOU

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