Chapter 07 – Entrepreneurship
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7
chapter
Entrepreneurship
Learning Objectives 2
Key Student Questions 3
Class Roadmap 4
Bottom Line 12
Social Enterprise 13
Lecturettes 14
CHAPTER CONTENTS
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1 Describe why people become entrepreneurs and what it takes,
personally.
2 Summarize how to assess opportunities to start new businesses.
LEARNING OBJECTIVES
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The revisions to Chapter 7 address some of the questions students have about entrepreneurship directly.
For example, the three questions most often asked by my students include:
1. “What does it take to be successful as an entrepreneur?”
2. “Where can I get ideas for an entrepreneurial venture?”
3. “Who can help me to write a business plan?”
Question 3 opens a whole series of nuts and bolts questions about starting a business, including things
like “Where do I go to get a business license?” “What are the advantages and disadvantages of having a
home-based business?” etc. While these kinds of details are beyond the scope of the class, it is useful to
have resources to give to students. Some of the ones that I have used in the past include:
KEY STUDENT QUESTIONS
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Management in Action
How Popchips Became Keith Belling’s Next Big Idea
Keith Belling already had two start-ups under his belt when he and a partner got the idea for
Introduction
A. Definitions
1. Entrepreneurship – The pursuit of lucrative opportunities by enterprising individuals.
2. Small Business – A business having fewer than 100 employees, independently owned
B. The Excitement of Entrepreneurship
C. Some myths about entrepreneurs (Exhibit 7.1)
LO 1: Describe why people become entrepreneurs, and what it takes, personally
1. Successful entrepreneurs (Exhibit 7.2)
A. Why Become an Entrepreneur?
1. Entrepreneurs start their own firms because of the challenge, the profit potential, and
I. ENTREPRENEURSHIP
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E.G.
Use Example 7.1 – Why become an entrepreneur?
B. What Does It Take to Succeed? (Exhibit 7.3)
1. Varies by creativity and innovation/general management skills
LO 2: Summarize how to assess opportunities to start new companies
C. What Business Should You Start?
1. The idea – a great product, viable market, and good timing are essential ingredients in
any recipe for success.
5. The Internet
a. Five successful business models:
i. Transaction fee model
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E.G.
Use Example 7.2 – Today’s entrepreneur here
D. What Does It Take, Personally?
1. Commitment and determination – successful entrepreneurs are decisive, tenacious,
disciplined, willing to sacrifice, and able to immerse themselves totally in their enter-
prises.
LO 3: Identify common causes of success and failure.
E. Success and Failure
1. Risk
a. Be realistic, and anticipate risks ahead
2. The role of the economic environment
a. Business incubators are protected environments for new, small businesses.
E.G.
Use Example 7.3 – Risk here
LO 4: Discuss common management challenges
F. Common Management Challenges
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1. You might not enjoy it
a. If you don’t want to sell, you don’t want to be an entrepreneur
2. Survival is difficult
5. Misuse of funds
a. Failure to use money that is available properly
6. Poor controls
E.G.
Use Example 7.4 – Lessons from failure here
Teaching Tip:
The student discussion question above can be enriched by asking students to compare two businesses – one which
folded, and one which was successful. In looking at the factors of success, be sure the students consider both envi-
ronmental and personal factors. For example, Southwest Airlines is a success, whereas People’s Express failed.
G. Going public
1. Initial stock offerings (IPOs) – sale to the public, for the first time, federally regis-
tered and underwritten shares of stock in the company.
2. Global start-ups
a. It is a new venture that is international from the very beginning.
b. Several questions must be answered to determine whether you should begin with
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Management in Action
– Progress Report
Popchips is still a small business in the snack food industry; its $93.7 million in sales represents just 0.1
percent of industry revenues. Before long, big rivals including Frito-Lay and Kellogg’s introduced their
own popped snack foods. Keith Belling, the former CEO, has hired a new CEO, Paul Davis, to help boost
sales and build brand awareness on a national level.
• What do you think are the most significant risks facing Popchips?
The most obvious risk is the strength of the company’s competitors, including industry giants such as
• Do you think Popchips would be a good candidate for an initial public offering (IPO)? Why or why not?
Answers will vary, but students should address the basic issues surrounding IPOs: An IPO can help Pop-
LO 5: Explain how to increase your chances of success, including good business planning.
H. Increasing Your Chances of Success
1. Planning
a. The first step is to do an opportunity analysis, which includes a description of
the product or service, an assessment of the opportunity, an assessment of the en-
2. Key planning elements
a. People should be energetic and have skills and expertise directly relevant to the
venture.
3. Selling the plan
a. The goal is to get investors to agree on and back up the written plan.
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4. Nonfinancial Resources
a. Legitimacy
E.G.
Use Example 7.5 – Business plans here
Multiple Generations at Work
Fast Growth Startup Realize that Three Generations Are Better Than One
Millennials have ambition when it comes to entrepreneurship, but lack many of the managerial
LO 6: Describe how managers of large companies can foster intrapreneurship and an entre-
preneurial orientation.
A. Building support for your idea – capitalize on a market opportunity.
1. The first step involves clearing the investment with your immediate boss or bosses.
You explain the idea and seek approval to look for wider support.
II. CORPORATE ENTREPRENEURSHIP
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B. Building intrapreneurship
E.G.
Use Example 7.6 – Intrapreneurship here
C. Management Challenges
1. The most dangerous risk is the risk of over-reliance on a single project.
D. Entrepreneurial orientation
1. Entrepreneurial orientation is the tendency of an organization to engage in activities
designed to identify and capitalize successfully on opportunities to launch new ven-
tures by entering new or established markets with new or existing goods or services.
2. Entrepreneurial orientation is determined by five tendencies:
a. allow independent action
Management Connection –
Onward
As an already-experienced entrepreneur, Keith Belling knew not to start Popchips alone. He partnered
with Pat Turpin, who contributed experience in investment banking and product management of consum-
er products. Belling’s business network also included Alex Panos, managing director at an investment
firm, and Rohan Oza, formerly chief marketing officer of Vitaminwater. But even with the ideas of all
these people together, Belling knows that running a successful business in a highly competitive market is
far from a sure thing.
• What actions described in this case increase Popchips’ chances of long-term success?
Several actions can help: finding a partner with important and complementary skills; building a network
• Why do you think the innovation of popped snacks came from an entrepreneur like Keith Belling instead
of from a big snack company?
• How could a large company increase the odds that it will be the source of the next great snack idea?
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p. 226: How is entrepreneurship different from inventing a new product?
The invention is just an idea or a prototype until someone—an entrepreneur—sets up a venture with the
p. 229: What are some environmentally friendly start-ups you’ve heard about? Do you think they have
great profit potential?
Students’ responses may vary widely here and may depend on their knowledge and awareness of corpo-
p. 241: What might be a sign that a small company is growing too fast?
The text provides an example in which the small company lacks the personnel to finish more work up to
standards and on time. Students may not have covered all the relevant topics to answer this question fully,
p. 242: An entrepreneur who loves selling delegates bookkeeping to an accountant. What is the danger to
the business?
The danger is that the entrepreneur will assume the accountant is keeping track of money coming in and
p. 249: What skills would you need in order to get people on board with a new idea?
In general, the innovator needs interpersonal and communication skills, discussed in Chapter 1. These
BOTTOM LINE
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Empowering Latina Entrepreneurs
1.What factors are motivating Galan to help Latinas become successful entrepreneurs?
Galan’s childhood idol has taught her that successful entrepreneurship by a woman is
2.Why do you think Coca-Cola, a consumer products company, is collaborating with Galan
to empower women entrepreneurs?
Coca-Cola’s sales are based off of consumer consumption of its products. When you
SOCIAL ENTERPRISE
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LECTURETTE 7.1: The Entrepreneur
ENTREPRENEURSHIP DEFINED
1. The concept of corporate entrepreneurship is one of the hottest topics in today’s management lit-
erature. Because the task of entrepreneurship is so complex, a simple definition of it is difficult to
articulate.
2. Originally, entrepreneurship was defined in such economic terms as the buying, selling, and
bringing together of the factors of production.
ENTREPRENEURSHIP AS AN ATTRIBUTE
1. Entrepreneurship can be viewed, as a trait or attribute possessed by the entrepreneur.
2. Some of the psychological properties that tend to be shared by entrepreneurs are as follows:
➢ Entrepreneurs have a future-oriented attitude, a way of examining events and cause-and-
effect relationships in the business environment in order to identify opportunities that can be
exploited.
➢ Entrepreneurs have an others-oriented focus on the needs of others in order to identify need-
3. Some of the surveyed characteristics of entrepreneurs are as follows:
LECTURETTE
Chapter 07 – Entrepreneurship
ENTREPRENEURSHIP AS A PROCESS
1. Entrepreneurship may be seen as a process of change in three basic stages.
➢ Recognition of some change in the marketplace. The change may be in buyer behavior, buyer
need, buyer ability to pay, a technological breakthrough, or some major event, such as war,
LECTURETTE 1.2: Intrapreneurship in Small Business
CONCEPT OF INTRAPRENEURSHIP
1. It is difficult to agree on a generally accepted definition of entrepreneurship.
2. New definitions of the concept have emerged, introducing new aspects such as risk taking and the
creation of independent units.
MOTIVATORS AND FACTORS GOVERNING EMERGENCE
1. Simplicity of organizational structures.
MOTIVATORS IDENTIFIED DIVIDED INTO FOUR MAJOR CATEGORIES
Chapter 07 – Entrepreneurship
1. Motivators related to the demands and constraints of the external environment (especially the
competition).
SIX POSTULATES SUPPORTING THE NEED TO RECONCILE THE CONCEPTS OF
INTRAPRENEURSHIP AND SMALL BUSINESS
1. Intrapreneurial characteristics are not the exclusive property of employees of large firms.
2. Intrapreneurs can be first-class allies for owner-managers of growing small businesses.
2 Carrier, Camille, “Entrepreneurship; Small Business, Entrepreneurship: Theory & Practice, Fall 1996, Vol. 21, Issue 1, p 5, 16