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Entrepreneurship and Innovation and.pptx
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- 2. Learning Objectives After readingthis chapter, you should be able to: • Explain the economic importance of entrepreneurship. • Identify the key characteristics and skills of entrepreneurs. • Recognize the basic ingredients needed to effectively start and manage an entrepreneurial venture. • Differentiate among the legal forms of organizing an entrepreneurial venture. • Identify alternative forms of entrepreneurship. • Describe innovation and demonstrate why it is important for business success. • Apply the “Five C” management tactics to maximize innovation.
- 3. Creativity is thinkingnew things, and innovation is doing new things Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities. Innovation is the ability to apply creative solutions to those problems and opportunities in order to enhance people’s lives or to enrich society Entrepreneurs: Researchers believe that entrepreneurs succeed by thinking and doing new things or old things in new ways . Entrepreneurship = creativity + innovation Creativity, innovation and entrepreneurs
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- 5. Entrepreneurship isthe result of a disciplined, systematic process of applying creativity and innovation to needs and opportunities in the marketplace. Entrepreneurs are those who do their creative ideas with the purposeful action and structure of a business. Creativity, innovation and entrepreneurs
- 6. What is Entrepreneurship? •The process of creating a business enterprise capable of entering new or established markets. • It involves deploying resources and people in a unique way to develop a new organization. • An entrepreneur is an individual who creates an enterprise that becomes a new entry to a market.
- 7. What is innovation? •Innovation is the process and outcome of creating something new, which is also of value. • Innovation involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales, while entrepreneurship only needs to involve commercialization.
- 8. Innovation and theEntrepreneur • Innovation: – Is the process by which entrepreneurs convert opportunities into marketable ideas. – Is a combination of the vision to create a good idea and the perseverance and dedication to remain with the concept through implementation. – Is a key function in the entrepreneurial process. – Is the specific function of entrepreneurship.
- 9. The Innovation Process •Types of Innovation – Invention – Extension – Duplication – Synthesis
- 10. There are fourdistinct types of innovation, these are as follows: Invention - described as the creation of a new product, service or process Extension - the expansion of a product, service or process Duplication - defined as replication of an already existing product, service or process Synthesis - the combination of existing concepts and factors into a new formulation Innovation
- 11. Table 5.6 Innovation inAction Type Description Examples Invention Totally new product, service, or process Wright brothers—airplane Thomas Edison—light bulb Alexander Graham Bell—telephone Extension New use or different application of an already existing product, service, or process Ray Kroc—McDonald’s Mark Zuckerberg—Facebook Barry Sternlicht—Starwood Hotels & Resorts Duplicatio n Creative replication of an existing concept Wal-Mart—department stores Gateway—personal computers Pizza Hut—pizza parlor Synthesis Combination of existing concepts and factors into a new formulation or use Fred Smith—Fed Ex Howard Schultz—Starbucks
- 12. Innovtion comes throughthese • Innovation comes about through new combinations made by an entrepreneur, resulting in – a new product, – A new service – a new process, – opening of new market, – new way of organizing the business – new sources of supply
- 13. Principles of Innovation Be action oriented. Make the product, process, or service simple and understandable. Make the product, process, or service customer-based. Start small. Aim high. Try/test/revise. Learn from failures Follow a milestone schedule. Reward heroic activity. Work, work, work.
- 14. Entrepreneurship Entrepreneurs make thingshappen. • They are individuals who take a concept and convert it into a reality. A product, policy or institution. • They become the champions of a new process, and they are engines of change. • Entrepreneurship occurs in all areas of life. In business, academy, government, Health and Ngos. • Entrepreneurship can be used for good and evil.
- 15. Entrepreneurs Can BeEncouraged and Discouraged • Openness to new ideas, freedom from investigation of operation, promotion and pay based on merit encourage entrepreneurship. • Excessive regulation, rigid hierarchy, lack of freedom, and excess control discourage entrepreneurship.
- 16. The Innovation Process •An innovation starts as a concept that is refined and developed before application. • Innovations may be inspired by reality. The innovation process, which leads to useful technology, requires: – Research – Development – Production – Marketing – Use
- 17. Innovation • Exploring anddeveloping new technologies and new ways of doing things • Vital for the future viability of an organization • Innovation is a key to long- term success
- 18. Innovation Requires Business Results NewIdea INNOVATION
- 19. Innovation: Five C’s •Capability •Culture •Cashand Recognition •Customer Orientation •Cut Losses
- 20. Types of Innovation •Product innovation – Efforts to create product designs – Applications of technology to develop new products for end users – More radical and common during early stages of an industry’s life cycle – Associated with differentiation strategies
- 21. Types of Innovation •Process innovations – Improving efficiency of an organizational process – Manufacturing systems and operations – More likely to occur in later stages of an industry’s life cycle – Associated with cost leader strategies
- 22. Types of Innovation •Incremental innovation – Enhance existing practices – Small improvements in products and processes – Evolutionary applications within existing examples
- 23. Challenges of Innovation •Seeds versus Weeds • Experience versus Initiative • Internal versus External staffing • Building capabilities versus Collaborating
- 24. Seeds versus Weeds •Deciding the merits of innovative ideas – Seeds – likely to create new – Weeds – cast away an existing one • Dilemma – Some innovation projects require considerable level of investment before merit can be determined
- 25. Experience versus Initiative •Deciding who will lead an innovation project – Senior managers have experience and credibility and tend to be more risk averse – Midlevel employees may be the innovators themselves and have more enthusiasm
- 26. Internal versus ExternalStaffing • People drawn from inside the firm – May have greater social capital – Know the organization’s culture and routines – May not be able to think outside the box • People drawn from outside the firm – Are costly to recruit, hire, train – May have difficulty building relationships
- 27. Building Capabilities versusCollaborating • Firms can seek help – Other departments – Partner with other companies that bring resources and experience • Partnerships – Create dependencies and inhibit internal skills development – Sharing benefits of innovation may create conflict
- 28. Entrepreneurial Venture vs. SmallBusiness Management Small Business • Independently owned and operated • Small in size • Does not dominate its markets • Has less than 100 employees Entrepreneurship • Growth is one of the most important goals • The goal is to become a medium-sized firm of 100-499 employees; or • A large firm with 500 or more employees
- 29. The Importance of Entrepreneurship •Job Creation Entrepreneurship accounts for most new jobs in the U.S. economy. • Innovation Entrepreneurships are responsible for introducing a major proportion of new and innovative products and services into market. • Opportunities for Diverse People People of diverse background can improve their economic status by becoming entrepreneurs.
- 30. Entrepreneurial Skills • Negotiationskills Ability to obtain resources that are controlled by other individuals. • Networking skills Gather information and build alliances Personal network Business network • Leadership skills Provide a shared vision
- 31. Why Entrepreneurships Fail •Lack of capital • Poor knowledge of the market • Faulty product design • Human resource problems • Poor understanding of the competition
- 32. Business Plan • Oncean entrepreneur conceives a good idea for a new venture, next critical step is to prepare a business plan. • It maps out the business strategy for entering markets. • It explains the business to potential investors. • It develops strategies and tactics to minimize risk of failure.
- 33. Key Components ofthe Business Plan • Description of the product or service • Analysis of market trends and potential competitors • Estimate for pricing the product or service • Estimate for the time it will take to generate profits • Plan for manufacturing the product • Plan for growth and expansion of the business • Sources of funding • Plan for obtaining financing • Organizational and management plan
- 34. Legal Forms of Entrepreneurship •Proprietorship – business owned by an individual • Partnership – association of two or more persons acting as co-owners of a business • Corporation – legal entity separate from the individuals who own it
- 35. Proprietorship Advantages • Easy tocreate • Owner keeps all profits • Owner makes all decisions Disadvantages • Unlimited liability • Harder to obtain credit and capital
- 36. Partnership Advantages • Ease offormation • Direct share of profits • Division of labor and management responsibility • More capital available than in a sole proprietorship • Less governmental control and regulation Disadvantages • Unlimited liability for firm’s debt • Limited continuity of life of enterprise • Difficulty in obtaining capital • Partners share responsibility for other partners’
- 37. Corporation Advantages • Owners’ liabilityfor the firm’s debt limited to their investment • Ease of raising large amounts of capital • Ease of transfer of ownership through sale of stock • Life of enterprise distinct from owners Disadvantages • Extensive government regulation of activities • High corporation fees • Corporate capital, profits, dividends, and salaries double-taxed • Activities limited to those stated in charter.
- 38. The End. Thank Youfor Attending. Bye: Mustafe Ibrahim Abdi