Part I Entrepreneurship in the TwentyFirst Century Chapter

Part I – Entrepreneurship in the Twenty-First Century Chapter 1 - The Entrepreneurial Revolution Chapter 2 - Entrepreneurship: An Evolving Concept Chapter 3 - Intrapreneurship: Developing Corporate Entrepreneurship Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Chapter 1 – The Entrepreneurial Revolution

Entrepreneurs Challenging The Unknown

Entrepreneurship: A Perspective

Our Entrepreneurial Economy The Environment for Entrepreneurship

Predominance of New Ventures in the Economy • New business incorporations averaged 600, 000 per year • 807, 000 new small firms were established in 1995, an all-time record • Small business (< 500 employees) employ 53% of the private work force and account for 47% of sales and 51% of private sector gross domestic product (GDP)

Entrepreneurial Firms’ Impact • Entrepreneurial firms make two indispensable contributions to the U. S. economy: – First, they are an integral part of the renewal process that pervades and defines market economies. – Second, they are the essential mechanism by which millions enter the economic and social mainstream of American society.

Trends in Research and Education 1. The entrepreneurial and managerial domains are not mutually exclusive but overlap to a certain extent. 2. Venture financing, including both venture capital and angel capital financing as well as other innovative financing techniques, emerged in the 1990 s with unprecedented strength.

Trends in Research and Education 3. Intrapreneurship (that is, entrepreneurship within large organizations) and the need for entrepreneurial cultures have gained much attention during the past few years. 4. Entrepreneurial entry strategies have been identified that show some important common denominators, issues, and tradeoffs.

Trends in Research and Education 5. More research on the psychological aspects has emerged. 6. The risks and trade-offs of an entrepreneurial career have been subject of keen research interest. 7. Women and minority entrepreneurs have emerged in unprecedented numbers. 8. The entrepreneurial spirit is universal.

Trends in Research and Education 9. The economic and social contributions of entrepreneurs have been shown to make immensely disproportionate contributions. 10. Entrepreneurial education has become one of the hottest topics at U. S. business and engineering schools.

The Age of Gazelles • A “gazelle” is a business establishment with at least 20% sales growth every year (for five years), starting with a base of at least $100, 000.

Gazelles - Innovation • Gazelles are leaders in innovation. • Gazelles produce twice as many product innovations per employee as do larger firms.

Gazelles - Growth • By the year 2010, demographers estimate, 30 million firms will exist in the United States, up significantly from the 22. 5 million firms existing in 2000.

Gazelles - Survival • The common myth is that 85% of all firms fail in the first year. • The more accurate statement is that about half of all start-ups last between 5 and 7 years.

Emerging Trends: Internet and E-Commerce • U. S. businesses spent 85. 7 billion on building up their Internet capabilities in 1999. • Smaller ventures use the Internet for a variety of operations, including customer-based identification, advertising, consumer sales, business-to-business transactions, e-mail, and private internal networks for employees.

The E-Commerce Challenge • Electronic commerce (e-commerce)the marketing, promoting, buying, and selling of goods and services electronically, particularly via the Internet- is the new wave in transacting business.

Advantages and Challenges of ECommerce for Entrepreneurial Firms Advantages: • Ability of small firms to compete with other companies both locally and nationally. • Convenient and easy way of doing business transactions. Challenges: • Avoiding being a victim of fraudulent activities online. • Handling the costs required to maintain the site.

Developing a Web Site • Attractive and Useful • Marketing the Website • “Stickiness”

Use of Internet Sites • • • Company Information Corporate image building Product information Advertising Marketing Customer communications 93% 89% 80% 78% 77% 76%

Most Important Factors for Customers to do Business Online User-friendly and easy to navigate 54% Good previous experiences 36% Fast response time 36% Relevant and updated content 27% Bargain prices 15%

Emerging E-Commerce Strategies • 3 -P Growth Model 1. Presence 2. Penetration 3. Profitability

Emerging E-Commerce Strategies • Another Strategy – Reach – Richness – Affiliation

Entrepreneurial Opportunities

Self-Employment, 1966 -2006 Thousands 14, 000 11, 615 Agriculture 12, 000 10, 490 Non-agriculture 10, 000 8, 000 6, 000 4, 000 2, 000 7, 428 1, 646 8, 971 7, 881 5, 991 1, 518 1, 447 8, 127 2, 136 9, 327 1, 519 5, 783 10, 096