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
Our Entrepreneurial EconomyThe 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 • The entrepreneurial and managerial domains are not mutually exclusive but overlap to a certain extent. • Venture financing, including both venture capital and angel capital financing as well as other innovative financing techniques, emerged in the 1990s with unprecedented strength.
Trends in Research and Education • Intrapreneurship (that is, entrepreneurship within large organizations) and the need for entrepreneurial cultures have gained much attention during the past few years. • Entrepreneurial entry strategies have been identified that show some important common denominators, issues, and trade-offs.
Trends in Research and Education • More research on the psychological aspects has emerged. • The risks and trade-offs of an entrepreneurial career have been subject of keen research interest. • Women and minority entrepreneurs have emerged in unprecedented numbers. • The entrepreneurial spirit is universal.
Trends in Research and Education • The economic and social contributions of entrepreneurs have been shown to make immensely disproportionate contributions. • 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 E-Commerce 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 93% 89% 80% 78% 77% 76% • Company Information • Corporate image building • Product information • Advertising • Marketing • Customer communications
User-friendly and easy to navigate Good previous experiences Fast response time Relevant and updated content Bargain prices Most Important Factors for Customers to do Business Online 54% 36% 36% 27% 15%
Emerging E-Commerce Strategies • 3-P Growth Model • Presence • Penetration • Profitability
Emerging E-Commerce Strategies • Another Strategy • Reach • Richness • Affiliation
Self-Employment, 1966-2006 Thousands 14,000 11,615 Agriculture 12,000 10,490 1,519 Non-agriculture 9,327 1,518 10,000 1,447 8,127 8,000 7,428 2,136 10,096 1,646 6,000 8,971 7,881 4,000 5,991 5,783 2,000