OBS114 Chapter 1-10 PDF

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Chapter 1:Entrepreneurship4 Key ideas when starting an entrepreneurial small businessA small business has around 1-50 people and its owner manages the business daily. Believe that you can do it. o Self-efficacy – a person’s belief in their belief to achieve a goal. Plan before implementing action. A...

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Chapter 1: Entrepreneurship 4 Key ideas when starting an entrepreneurial small business A small business has around 1-50 people and its owner manages the business daily. -

Believe that you can do it. o Self-efficacy – a person’s belief in their belief to achieve a goal. Plan before implementing action. Ask for help from other entrepreneurs. Do well & do good for others.

An entrepreneur is someone who notices opportunities and decides how to mobilize the resources necessary to produce new and improved goods and services.

Firms’ typical start-up processes: -

Feel – entrepreneur has a feeling about starting a business or creating a product. Check - check the likelihood for success in their idea through analysis. Plan – making a business plan or business modelling. Do – approach refinement until they have a successful firm.

Entry competencies 4 elements needed to start a business (brie model)

The Entrepreneurial process Opportunity -

Consider market readiness, consumer trends & behaviors that seek Page 1 of 41

Products or services

Resources -

Let opportunity guide you towards the level of resources needed (move away from bootstrapping). Minimize and control rather than maximize and experience cash flow problems.

Entrepreneur/ Team -

A good team can unlock higher potential with any opportunity and manage growth related pressures.

Creativity, communication & leadership -

Entrepreneur needs to be able to create balance by applying creativity, leadership and maintaining effective communications.

Business plan -

Where opportunity, resources and teamwork are integrated into a complete strategic plan for business.

Small businesses and the economy Provide new jobs -

Small businesses are more likely to offer jobs to people with atypical work histories or needs, new people to the workforce, people with uneven employment histories and people wanting part-time work. This makes them more attractive to local and state governments.

Innovative -

Small businesses offer a special environment in which the new can come into being.

New opportunities -

People who own their own business are presented with tremendous opportunities – to improve their life, wealth, help them move upward economy and society. Small businesses offer communities the opportunity to enjoy goods and services.

Two Aspects of Global Entrepreneurship -

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A factor driven economy is a nation where the major forces for revenue, jobs and taxes come from farming or extractive industries. o Pakistan, Jamaica & Venezuela. Efficiency driven economy is a nation where industrialization becomes the major force of providing jobs, revenue and taxes while minimizing cost and maximizing productivity. o Russia, Brazil & China. Innovation driven economy is a nation where the major forces for jobs, revenues and taxes come from high value-added production based on new ideas from professional services based on higher education. o Germany & US. Opportunity driven entrepreneurship is creating a firm to improve one’s income or a products or service. Page 2 of 41

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Necessity driven entrepreneurship is creating a firm as an alternative to unemployment.

CSI Entrepreneurship CSI – corporate, social and independent. -

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3 aspects differ on what they focus on. o Creating – looks at making new entities. o Customer-focus – being in tune with the market o Efficiency – doing the most work with the least resources. o Innovation – looks at a new thing or way of doing things. Independent entrepreneurship (form of entrepreneurship where a person or group owns a for profit business) focusses on all 4. Corporate entrepreneurship (takes place in existing businesses around new products, services or markets) focusses on customer-focus, efficiency and innovation. Social entrepreneurship is solving the creation of self-sustaining charitable and civic organisations. It focusses on creation, customer-focus and efficiency. Sustainable entrepreneurship is an approach or operating a firm that does things that minimizes the depletion of natural resources and maximizes use of recycled material to improve the environment.

5 Aspects the most successful entrepreneurs display -

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Passion – an intense positive feeling the entrepreneur has toward the business. Perseverance Promotion-Prevention Focus – balancing maximizing gains and minimizing losses. Planning style o Comprehensive planners – develop long term plans for all business aspects. o Critical-point planners plan around most important business aspect first they consider if more plans are needed. o Opportunistic planners – start with a goal & look for opportunities to complete it. o Reactive planners – passive, wait for cues to determine what action to take. o Habit-based planners – actions dictated by their routines. Professionalism – the extent which a firm meets or exceeds standard business practices. o Expert business personalization when all major functions of the firm are conducted according to the standard business practices. o Specialized business professionalization when owners are passionate about certain key business functions and pursues them in a professional manner. o Minimalized business professionalization when entrepreneur does everything the simplest way possible than professional.

Entrepreneurial Operational Competencies -

Competencies are forms of business-related expertise. o Industry specific knowledge – activities, knowledge and skills specific to businesses in an industry.

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Resource competencies – the ability to find expendable components necessary to the operation of the business. Determination competencies – skills identified with the energy and focus to start a business. Opportunity competencies – skills necessary to identify and exploit elements of the business environment that can lead to a profitable & sustainable business.

The entrepreneurial life cycles 1. 2.

3. 4. 5.

Business life cycle – the sequence of developmental stages businesses goes through during its life span. Emergence – entrepreneur moves from thinking about to starting the business. Existence – business in operation but not stable in terms of markets, operations and finances. a. Liability of newness – risks faces due to owner’s lack of knowledge about their businesses. Success – firm being established in its market, operation and finances. a. Slack resources are profits that can be used to satisfy how the owner runs the business. Resource maturity – stable or slowly rising profits over several years. Takeoff occurs after the success stage where rapid growths occur.

Ideas, opportunities and businesses -

Opportunity recognition is searching and capturing new ideas that lead to business opportunities. Entrepreneurial alertness is a set of observational and thinking skills that help entrepreneurs identify good opportunities. Causal mode of entrepreneurship is where you want to create a product or service that does not exist yet.

From ideas to opportunities using creativity -

Creativity – a decision makers ability to discover original and novel ideas that lead to feasible alternative courses of action. Substitute – think of what you need to substitute for something else for a new idea to form. Combine – think of possible combinations you can make that result in something entirely different. Adapt- think of what could be adapted from already existing products and services. Magnify/ modify – change an existing products appearance or add more features. Put to other uses - think of ways you can generate a high number of opportunities for your product or service to go beyond what it is traditionally used for. Eliminate - search for opportunities that arise when you get rid of something. Reverse/ rearrange

Graham Wallis’s process of organizing creative thinking: -

Preparation - exploring the opportunity from all directions Incubation – thinking about the problem in a non-conscious way Page 4 of 41

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Illumination - ideas begin to flow Verification – testing the idea and reducing it to its most exact form.

Screen ideas -

RBI screen is a fast technique for making initial assessments of prospective business ideas based on 5 ideas. o who are you? o what are you offering? o Whom are you offering it to? o Why do they care? o Do you have any key or core science/technology or feature?

Make sure an idea is feasible Feasibility is the extent to which you are aware of internal and external forces that could affect your business.

Business model canvas approach Business models are a way to identify and organize key information on a business and how it achieves its goals. -

Customer segments are groups of potential purchasers that can be approached in a coherent manner. Pain is any sort of problem, annoyance etc. customers or potential customers face. Gain is any sort of outcome customers or potential customers would like to encounter or depend on. Solution – how to plan to solve pains or create gains. Value proposition are small business owners unique selling points that customers can expect from your goods or services. Channels is how you will get your product to the customer. Directly can be more expensive or hard to get going. Customer relationships Revenues is how you will make money. Freemium is an approach to pricing that connects free and premium products are offered. Key resources are what your firm has that no one else does. Key activities are what will be the most important activities in making your firm successful. Key partners are individuals or organizations that help make your firm successful. Costs

A pilot test is a preliminary run of a business, program etc. that assesses how well the overall approach works and what problems it might have. Conversion rate is the measure of how many visitors to your website are willing to make a commitment to the promoted product or service.

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A/B testing is a way to check customer reaction to websites describing your products or services. 2 versions of the site are posted and served up randomly to prospective customers. The least attractive site is revised, and the sites are tested until one gets consistently superior customer reactions.

Leadership Leadership is the process by which an individual exerts influence over other people and inspires, motivates and directs their activities to help achieve group or organizational goals A leader is an individual who can exert influence over other people to help achieve group or organizational goals Managers are organizational member who establish and implement processes and procedures to ensure smooth functioning and are accountable for goal accomplishment. Servant leaders have a strong desire to serve and work for the benefit of others, they share power with their followers and work to ensure that their needs are met, that they’re able to develop as individuals and their wellbeing is enhanced and they focus on the least well off in society.

Leadership styles across cultures -

European managers tend to be more humanistic Japan places emphasis on group rather than individual US is more profit orientated Differences also occur in time horizons

Sources of managerial power -

Legitimate power is the authority a manager has by virtue of his or her position in an organisations hierarchy. Reward power is the ability to withhold tangible and intangible rewards. Coercive power is the ability of the manager to punish others. Expert power is based on a special knowledge, skills and expertise a leader possesses Referent power is power that comes from subordinates or coworkers respect, admiration and loyalty.

Empowerment Empowerment is the expansion of an employee’s knowledge, tasks and decision-making responsibilities. -

Increases managers abilities to get things down as there is now additional support. Increases worker’s involvement, motivation and commitment which ensures that they work towards organizational goals. Gives managers more time to focus on pressing concerns rather than day to day supervision.

The trait model of leadership -

Intelligence – helps managers understand complex issues and solve problems Page 6 of 41

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Knowledge and expertise – help increase efficiency and effectiveness Dominance – influence their subordinates to achieve organizational goals Self-confidence – contributes to managers effectively influencing subordinates to achieve organizational goals High energy – help deal with many demands they face Tolerance for stress – help deal with uncertainty and make difficult decisions Integrity and honesty – help managers work ethically and earn subordinates trust and confidence Maturity – helps managers avoid acting selfishly, controlling their feelings and admit when they’ve made a mistake

Behavior model -

Consideration – behavior indicating that manager trusts, respects and cares about subordinates. Initiating structure is behavior that managers engage in to ensure that work gets done, subordinates perform their jobs acceptably and the organisation is efficient and effective

Fielders contingency model Leader style -

Relationship orientated leaders primary concern is to develop good relationships with their subordinates and to be liked by them Task orientated leaders primary concern is to ensure that subordinates perform at a high level

Situational characteristics -

Leader member relations is the extent to which followers like, trust and are loyal to their leader, a determinant of how favorable a situation is for leading. Task structure is the extent to which the work to be performed is clear cut so that a leader’s subordinates know what needs to be done and how to go about doing it Positional power is the amount of legitimate, reward, and coercive power that a leader has by virtue of his or her position in an organisation

Path goal theory is a contingency model of leadership proposing that leaders can motivate subordinates by identifying their desired outcomes, rewarding them for high performance and the attainment of work goals with these desired outcomes and clarifying for them the paths leading to the attainment of work goals.

3 guidelines to being effective leaders: -

Find out what outcomes your subordinates are trying to obtain from their jobs and the organisation Reward subordinates for high performance and goal attainment with the outcomes they deserve Clarify the paths to goal attainment for subordinates, removes any obstacles to high performance and express confidence in subordinates’ capabilities

4 kinds of leadership behaviors that motivate subordinates -

Directive behaviors Supportive behaviors Page 7 of 41

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Participative behaviors Achievement orientated behaviors

Leadership substitute is a characteristic of a subordinate or of a situation, or context, that acts in place of influence of a leader and makes leadership unnecessary Transformational leadership is leadership that makes subordinates aware of the importance of their jobs and performance to the organisation and aware of their own needs for personal growth and that motivates subordinates to work for the good of the organisation

Charismatic leaders are an enthusiastic, self-confident leader who can clearly communicate his or her vision of how good things could be Intellectual stimulation is behavior a leader engages in to make followers aware of problems in new ways, consistent with the leader’s vision Developmental consideration is behavior a leader engages in to support and encourage followers and help them develop and grow on the job. Transactional leadership is leadership that motivates subordinates by rewarding them for high performance and reprimanding them for low performance Gender and leadership - female and male managers do not differ in their leadership behaviors they perform. Female managers are sometimes more participative than male managers. Research has shown and men and women make equally effective managers and leaders. Emotional intelligence and leadership – the moods and emotions leaders experience on the job, and their ability to effectively manage these feelings, can influence their effectiveness as leaders. It can encourage and support creativity among followers. Bootstrapping refers to using low-cost or free techniques to minimize cost of doing business.

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The manager as a person Personality traits Personality traits are enduring tendencies to feel, think and act in a certain way.

The big 5 personality traits -

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Extraversion is the tendency to experience positive emotions and moods and to feel good about oneself and the restvL of the world. Tend to be social, affectionate, outgoing and friendly. Introverts are less social and have a less positive outlook. Negative affectivity is the tendency to experience negative emotions and moods, feel distressed and be critical of oneself and others. It might help improve performance. Agreeableness is the tendency to get along well with others. Likeable, tend to be affectionate and care about other people. Low on agreeableness are somewhat distrustful, unsympathetic, uncooperative, and even antagonistic. Conscientiousness is the tendency to be careful, scrupulous and persevering. High conscientiousness – organized & self-disciplined. Openness to experience is the tendency to be original, have broad interests, be open to a wide range of stimuli, be daring and take risks. High openness – take risks and be innovative

Other personality traits that affect managerial behavior -

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Locus of control o Internal locus of control believes they themselves are responsible for their own fate, they see their actions and behaviors as being major decisive determinants of important outcomes. o External locus of control believe that outside forces are responsible for what happens to and around them; they don’t think their actions make much of a difference. Self-esteem is the degree to which individuals feel good about themselves and their capabilities. High self-esteem – competent, deserving and capable of handling most situations. Low selfesteem – unsure of their capabilities. Need for achievement, affiliation and power. The need for achievement is the extent to which an individual has a strong desire to perform challenging tasks well and to meet personal standards for excellence. Need for affiliation is the extent to which an individual is concerned about establishing and maintaining good interpersonal relations. Need for power is the extent to which an individual desire to control or influence others.

Values, attitudes, moods and emotions: Values -

Values describe what managers are trying to achieve through work and how they think they should behave.

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Terminal value is a personal conviction about lifelong goals or objects. Lead to formation of norms which are inwritten, informal codes of conduct that prescribe how people should act situations and that are considered importantly by most member of a group or organisation. Instrumental value is a person conviction about desired modes of conduct or ways of behaving.

Attitudes -

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An attitude is a collection of feelings or beliefs. o Job satisfaction is the collection of feelings and beliefs that managers have abou...