Chapter 6
Entrepreneurship process
- An entrepreneur is someone who conceives of new or improved goods and
services and exhibits the initiative to develop that idea by making plans and
mobilizing the necessary resources to convert that idea into reality
The importance of Entrepreneurship
Entrepreneurship and small businesses
- Some entrepreneurs manage large businesses and not all small business
managers are entrepreneurs.
- Entrepreneurial orgs are distinguished by doing something new, where are
small-medium enterprises (SEMs) are defined by their size, not on the basis
of whether they have done something new.
- Criteria for measuring company sizes are many however the most commonly
used is number of employees. Small orgs have fewer than 100 employees and
medium have 100-150.
- Difference that distinguish small from large Orgs
1. Fixed cost – SEMs have smaller budgets so any fixed cost of operation
will be relatively large and thus a greater burden.
2. Resources – SEMs have fewer resources
3. Economies of scale - SEMs are not large enough to benefit from
economies of scale.
Entrepreneurship and Family businesses
- Slide (10)
- Agency cost – the expense that owner pay to ensure that managers act in the
interest of the firm, rather than in their own self-interest
The 4-Step Entrepreneurial Process
Entrepreneurship process
- An entrepreneur is someone who conceives of new or improved goods and
services and exhibits the initiative to develop that idea by making plans and
mobilizing the necessary resources to convert that idea into reality
The importance of Entrepreneurship
Entrepreneurship and small businesses
- Some entrepreneurs manage large businesses and not all small business
managers are entrepreneurs.
- Entrepreneurial orgs are distinguished by doing something new, where are
small-medium enterprises (SEMs) are defined by their size, not on the basis
of whether they have done something new.
- Criteria for measuring company sizes are many however the most commonly
used is number of employees. Small orgs have fewer than 100 employees and
medium have 100-150.
- Difference that distinguish small from large Orgs
1. Fixed cost – SEMs have smaller budgets so any fixed cost of operation
will be relatively large and thus a greater burden.
2. Resources – SEMs have fewer resources
3. Economies of scale - SEMs are not large enough to benefit from
economies of scale.
Entrepreneurship and Family businesses
- Slide (10)
- Agency cost – the expense that owner pay to ensure that managers act in the
interest of the firm, rather than in their own self-interest
The 4-Step Entrepreneurial Process
