MNE2601 EXAM PREPARATION.

MNE2601 EXAM PREPARATION. Introduction To Entrepreneurship And Small Business Management. The Economic Impetus of Entrepreneurship  The state of economy is determined by the type of business (small, micro etc).  GDP (Real gross domestic product) is the value of all production within a country’s geographical boundaries, it is used to measure the state of the economy (growing or declining) - GDP determines the economic growth rate.  Entrepreneurship has a higher stake in the employment industry than meets the eye. Best employment opportunity that exists in South Africa.  No growth in the economy equals less job opportunities. The Development of Entrepreneurship Theory The authors define the economic and behaviourist perspectives of entrepreneurship as follows: Economic perspective:  Detectors of opportunities  Venture creation  Risk taking  Profit  Innovation  Tolerance for ambiguity Behaviourist perspective:  Weber  McClelland This study source was downloaded by from CourseH on :44:41 GMT -05:00 This study resource was shared via CourseH Period Topics Authors and researchers 1.What entrepreneurs do 1700 – (1950) From an economic perspective Cantillon, Say, Schumpeter. 2.Who entrepreneurs are 1960 – (1980) From an behaviourist perspective Weber, McClelland, Rotter. De Vries. 3. What entrepreneurs do 1980- From a mgmt. science perspective Drucker, Mintzberg. 4. What support is needed by entrepreneurs 1985- From a social perspective, including economists Gartner, Welsh, Bygrave, Reynold. 5.What entrepreneurial activities are, and what competencies are requires to perform them 1990- From an entrepreneurship perspective Timmons, Vesper, Brockhaus. Defining the Concepts of Entrepreneurship, the Entrepreneur, Small Businesses and Entrepreneurial Ventures Entrepreneurship is the emergence and growth of new businesses. - Cause changes in the economic system through innovations of individuals who respond to opportunities in the market. - Create value for themselves and the society. - Rewarded with profit if it succeeds. Entrepreneur is an individual who establishes and manages a business for the main purpose of profit and growth. IS A PERSON WHO SEES AN OPPURTUNITY IN THE MARKER, GATHERS RESOURCES, AND CREATES AND GROWS A BUSINESS VENTURE TO MEET THESE NEEDS. HE OR SHE BEARS THE RISK OF VENTURE AND IS REWARDED WITH PROFIT IF IT SUCCEEDS. - Innovative behavior and employs strategic management practices in the business. - Characteristics: Innovation, opportunity recognition and growth in a business. Important aspects of entrepreneurship and the entrepreneur: Step 1: Identifying an opportunity. Step 2: Innovation and creativity. Step 3: Getting resources. Step 4: Creating and growing a venture. Step 5: Taking risk. Step 6: Being rewarded. Step 7: Managing the business. This study source was downloaded by from CourseH on :44:41 GMT -05:00 This study resource was shared via CourseH Small business is any business that is independently owned and operated, but is not dominant in its field and does not engage in any new marketing or innovative practices. A small business is defined in qualitative and quantitative terms. In terms of the qualitative criteria, which relate to the ownership structure of the business, it must:  be a separate and distinct business entity  not be part of a group of companies  include any subsidiaries and branches when measuring the size  be managed by its owners  Be a natural person, sole proprietorship, partnership or a legal person, such as a close corporation or company. The quantitative criteria classify businesses into micro, very small and medium, using the following guidelines in respect of different sectors of the economy:  Total full-time paid employees  Total annual turnover  Total gross asset values (excluding fixed property) Entrepreneurial Ventures are businesses in which the principal objectives are profitability and growth. Three characteristics distinguish the entrepreneurial venture from the small business: 1. Innovation. Entrepreneurial ventures thrive on innovation, be it technological innovation, a new product, or organizational structures. Small business is usually involved in delivering an established product or service. 2. Potential for Growth. Entrepreneurial venture is in a position to create its own market. The small business operates in an established industry , is unique only in terms of locality, and operates within a given market. 3. Strategic objectives Entrepreneurial ventures set objectives in relation to: -market targets -market development -market share -market position Small business objectives seldom go beyond survival, sales and profit.