Академический Документы
Профессиональный Документы
Культура Документы
Entre pr eneur s
Recognize opportunities where others see chaos
or confusion
Are aggressive catalysts for change within the
marketplace
Challenge the unknown and continuously create
the future
2009 South -Western, a part of Cengage Learning. All rights reserved. 110
Table
1.2 Definitions And Criteria Of One Approach To The Micro View
Entrepreneurial
Model Definition Measures Questions
Great Person
Extraordinary Achievers Personal principles What principles do you have?
Personal histories What are your achievements?
Experiences
Psychological Founder Locus of control What are your values?
Characteristics Control over the means Tolerance of ambiguity
of production Need for achievement
Classical People who make innovations Decision making What are the opportunities?
bearing risk and uncertainty Ability to see opportunities What is your vision?
Creative destruction Creativity How do you respond?
Management Creating value through Expertise What are your plans?
the recognition of business Technical knowledge What are your capabilities?
opportunity, the management Technical plans What are your credentials?
of risk taking . . . through the
communicative and management
skills to mobilize . . .
Leadership Social architect Attitudes, styles How do you manage people?
Promotion and protection Management of people
of values
Intrapreneurship Those who pull together Decision making How do you change and adapt?
to promote innovation
2009 South -Western, a part of Cengage Learning. All rights reserved. 112
Ch a p t e r Ob j e c t ive s
2009 South -Western, a part of Cengage Learning. All rights reserved. 113
Ch a p t e r Ob j e c t ive s
2009 South -Western, a part of Cengage Learning. All rights reserved. 114
Ch a p t e r Ob j e c t ive s
2009 South -Western, a part of Cengage Learning. All rights reserved. 115
The Nature of Corporate Entrepreneurship
Defining The Conce pt
Corporate Entrepreneurship
Activities that receive organizational sanction and
resource commitments for the purpose of
innovative results.
- A process whereby an individual or a group of individuals,
in association with an existing organization, creates a
new organization or instigates renewal or innovation
within the organization.
- A process that can facilitate firmsefforts to innovate
constantly and cope effectively with the competitive
realities that companies encounter when competing in
international markets.
2009 South -Western, a part of Cengage Learning. All rights reserved. 316
Figure
3.1 Defining Corporate Entrepreneurship
Source: Michael H. Morris, Donald F. Kuratko, and Jeffrey G. Covin, Corporate Entrepreneurship & Innovation (Mason, OH, Thomson), 2008, p. 81.
2009 South -Western, a part of Cengage Learning. All rights reserved. 317
Sustaining Corporate Entrepreneurship
Sustaine d Corpo rat e Entre pr ene urship Mode l
Based on theoretical foundations from previous
strategy and entrepreneurship research.
Considers the comparisons made at the individual and
organizational level on organizational outcomes, both
perceived and real, that influence the continuation of
the entrepreneurial activity.
Transformational trigger
Something external or internal to the company that initiates
the need for strategic adaptation or change.
2009 South -Western, a part of Cengage Learning. All rights reserved. 318
Developing Innovative (I) Teams
Innovat ive (I) Team
A semi-autonomous self-directing, self-managing, high
-performing group of two or more people who formally
create and share the ownership of a new organization.
The leader is called a
product championor an
corporate entrepreneur.
Collect ive Entre p re ne urship
Individual skills are integrated into a group; this
collective capacity to innovate becomes something
greater than the sum of its parts.
2009 South -Western, a part of Cengage Learning. All rights reserved. 319
Figure
3.5 A Model of Sustained Corporate Entrepreneurship
2009 South -Western, a part of Cengage Learning. All rights reserved. 121
Ch a p t e r Ob j e c t ive s
2009 South -Western, a part of Cengage Learning. All rights reserved. 122
Et h ic a l Re sp on sib ilit y
Ethical consciousness:
Ethical Process and culture:
Institutionalization:
2009 South -Western, a part of Cengage Learning. All rights reserved. 123
Ch a p t e r Ob j e c t ive s
2009 South -Western, a part of Cengage Learning. All rights reserved. 124
Figure
3.5 A Model of Sustained Corporate Entrepreneurship
Pathways to New
Ventures
Obtaining a
Franchise
Approaches to
New-New New-Old
Approach Creating a New Approach
Venture
2009 South -Western, a part of Cengage Learning. All rights reserved. 630
Acquisition of a Business Venture
Personal
Preferences
Examination
of
Acquiring a Evaluation of
Opportunities Business Venture the Venture
Asking Key
Questions
2009 South -Western, a part of Cengage Learning. All rights reserved. 631
Advantages of Acquiring an Ongoing Venture
Buying an
Ongoing
Venture
2009 South -Western, a part of Cengage Learning. All rights reserved. 632
Evaluation of the Selected Venture
Factors
Affecting Sale of
the Venture
2009 South -Western, a part of Cengage Learning. All rights reserved. 633
Key Questions to Ask
Why is t his b usiness b eing sold?
What is t he p hysical condit ion of t he b usiness?
What is t he condit ion of t he inve nt o ry?
What is t he state of t he firm
s o t her asset s?
How many emp lo yees will remain?
What t ype of comp et it io n doe s t he business face?
What does t he fir m
s financial p icture loo k like?
2009 South -Western, a part of Cengage Learning. All rights reserved. 634
Negotiating the Deal
Information
Time
Factors Affecting Pressure
Negotiations
Alternatives
2009 South -Western, a part of Cengage Learning. All rights reserved. 635
Franchising: The Hybrid
Franchising
Any arrangement in which the owner of a trademark,
trade name, or copyright has licensed others to use it
in selling goods or services.
Franchise e
A purchaser of a franchise
Franchiso r
The seller of the franchise
2009 South -Western, a part of Cengage Learning. All rights reserved. 636
Franchising
Advant age s Disadvant age s
Training and guidance Franchise fees
Brand-name appeal Franchisor control
A proven track record Unfulfilled promises of
Financial assistance franchisor
2009 South -Western, a part of Cengage Learning. All rights reserved. 637
Evaluating the Franchise Opportunity
The Franchise
Opportunity Decision
2009 South -Western, a part of Cengage Learning. All rights reserved. 638
Identifying Legal Structures
A le gal st ruct ure that will be st suits t he de mands of t he
ve nt ure addr esse s:
Changing tax laws
Liability situations
The availability of capital
The complexity of business formation.
Thr ee primar y le gal forms of organizat io n
Sole proprietorship
Partnership
Corporation
2009 South -Western, a part of Cengage Learning. All rights reserved. 739
Sole Proprietorships
Sole Pr oprie to rship
A business that is owned and operated by one person.
The enterprise has no existence apart from its owner.
To establish a sole proprietorship, a person merely
needs to obtain whatever local and state licenses are
necessary to begin operations.
2009 South -Western, a part of Cengage Learning. All rights reserved. 740
Sole Proprietorships (cont
d)
Advant age s Disadvantage s
Ease of formation Unlimited liability
Sole ownership of Lack of continuity
profits Less available capital
Decision making and Relative difficulty
control vested in one obtaining long-term
owner financing
Flexibility Relatively limited
Relative freedom from viewpoint and
governmental control experience
Freedom from corporate
business taxes
2009 South -Western, a part of Cengage Learning. All rights reserved. 741
Partnerships
Part ne rship
An association of two or more persons acting as co-
owners of a business for profit.
The Revised Uniform Partnership Act (RUPA) acts the
guide for legal requirements in forming partnerships.
Art icle s of Part ne rship
Clearly outline the financial and managerial
contributions of the partners and carefully delineate
the roles in the partnership relationship.
2009 South -Western, a part of Cengage Learning. All rights reserved. 742
Articles of Partnership Items
Name, purp ose , domicile Sep arate deb ts
Durat ion of agre ement Author ity (individual p ar tner
s aut ho rity
Characte r o f p ar tner s ( gener al o r on busine ss conduct )
limit ed, act ive or sile nt ) Books, re cor ds, and met ho d o f
Co nt ributio ns by p ar tner s (at incep tion, acco unting
at later date ) Sale of p ar tner ship inter est
Division of pr ofit s and losses Ar bitration
Dr aws or salar ie s Set tle me nt of disp ut es
Right s of co nt inuing p artner (s) Additions, alt er at ions, or mo difications
De ath of a p ar tner (dissolution and of par tnership
windup ) Requir ed and p ro hibited acts
Release o f deb ts Ab sence and disability
Business expense s ( me thod of handling) Emp loye e management
2009 South -Western, a part of Cengage Learning. All rights reserved. 743
Partnerships (cont
d)
Advant age s Disadvant age s
Ease of formation Unlimited liability of at
Direct rewards least one partner
Growth and Lack of continuity
performance facilitated Relative difficulty
Flexibility obtaining large sums of
capital
Relative freedom from
governmental control Bound by the acts of
and regulation just one partner
Possible tax advantage Difficulty of disposing
of partnership interest
2009 South -Western, a part of Cengage Learning. All rights reserved. 744
Corporations
Corpo rat ion
An artificial being, invisible, intangible, and existing
only in contemplation of the law .
Supreme Court Justice John Marshall
As such, a corporation is a separate legal entity apart
from the individuals who own it.
Forming a Corpo rat ion
Subscriptions for capital stock must be taken and a
tentative organization created.
Approval (a charter) must be obtained from the
secretary of state in the state in which the corporation
is to be formed.
2009 South -Western, a part of Cengage Learning. All rights reserved. 745
Corporations (cont
d)
Advant age s Disadvant age s
Limited liability Activity restrictions
Transfer of ownership Lack of representation
Unlimited life Regulation
Relative ease of Organizing expenses
securing capital in Double taxation
large amounts
Increased ability and
expertise
2009 South -Western, a part of Cengage Learning. All rights reserved. 746
Table
7.3 General Characteristics of Forms of Business
Duration Terminates on Usually unaffected Unaffected by death Unaffected by death Unaffected by death Unaffected by death Unaffected by death Usually unaffected
death or by death or or withdrawal of or withdrawal of or withdrawal of or withdrawal of or withdrawal of by death or
withdrawal of withdrawal of partner partner, unless sole partner, unless sole shareholder shareholder withdrawal of
sole proprietor partner general partner general partner member
dissociates dissociates
Management By sole By partners By partners By general partners By general partners By board of By board of By managers or
proprietor directors directors members
Owner Liability Unlimited Unlimited Mostly limited to Unlimited for Limited to capital Limited to capital Limited to capital Limited to capital
capital contribution general partners; contribution contribution contribution contribution
limited to capital
contribution for
limited partners
Transferability of None None None None, unless agreed None, unless agreed Freely transferable, Freely transferable, None, unless agreed
OwnersInterest otherwise otherwise although although otherwise
shareholders may shareholders
agree otherwise usually agree
otherwise
Source: Jane P. Mallor, A. James Barnes, Thomas Bowers, and Arlen W. Langvardt, Business Law:
The Ethical, Global, and E-Commerce Environment, 13 ed., McGraw Hill Irwin, 2007, p. 897.
2009 South -Western, a part of Cengage Learning. All rights reserved. 747
Table
7.3 General Characteristics of Forms of Business
Source: Jane P. Mallor, A. James Barnes, Thomas Bowers, and Arlen W. Langvardt, Business Law:
The Ethical, Global, and E-Commerce Environment, 13 ed., McGraw Hill Irwin, 2007, p. 897.
2009 South -Western, a part of Cengage Learning. All rights reserved. 748
Specific Forms of Partnerships and
Corporations
Limit e d Part ne rships
Have two or more partners without responsibility for
management and without liability for losses beyond
their investment with the right to share in the profits.
Formed under The Uniform Limited Partnership Act (ULPA).
Limit e d Liability Par tne rship ( LLP)
Allows professionals the tax benefits of a partnership
while avoiding personal liability for the malpractice of
other partners.
2009 South -Western, a part of Cengage Learning. All rights reserved. 749
Figure
8.1 Who Is Funding Entrepreneurial Start-Up Companies?
2009 South -Western, a part of Cengage Learning. All rights reserved. 851
Debt Financing
Commer cial Banks
Make 1-5 year intermediate-term loans secured by
collateral (receivables, inventories, or other assets).
Questions in securing a loan:
What do you plan to do with the money?
How much do you need?
When do you need it?
How long will you need it?
How will you repay the loan?
2009 South -Western, a part of Cengage Learning. All rights reserved. 852
Debt Financing (cont
d)
Advant age s Disadvant age s
No relinquishment of Regular (monthly)
ownership is required. interest payments are
More borrowing allows required.
for potentially greater Continual cash-flow
return on equity. problems can be
During periods of low intensified because of
interest rates, the payback responsibility.
opportunity cost is Heavy use of debt can
justified since the cost inhibit growth and
of borrowing is low. development.
2009 South -Western, a part of Cengage Learning. All rights reserved. 853
Table
8.1 Common Debt Sources
2009 South -Western, a part of Cengage Learning. All rights reserved. 855
Other Debt Financing Sources (cont
d)
Equit y Instrume nt s
Give investors a share of the ownership.
L o an w i th w ar r an ts provide the investor with the right to buy
stock at a fixed price at some future date.
Co n v er ti b l e d eb en tu r es are unsecured loans that can be
converted into stock.
Pr ef er r ed sto c k is equity that gives investors a preferred
place among the creditors in the event the venture is
dissolved.
Co mm o n sto c k is the most basic form of ownership and is
often are sold through public or private offerings.
2009 South -Western, a part of Cengage Learning. All rights reserved. 856
Equity Financing
Equit y Financing
Money invested in the venture with no legal obligation
for entrepreneurs to repay the principal amount or pay
interest on it.
Funding sources: public offering and private
placement
Pub lic Offe ring
Going publicrefers to a corporation s raising capital
through the sale of securities on the stock markets.
Initial Public Offerings (IPOs): new issues of common stock
2009 South -Western, a part of Cengage Learning. All rights reserved. 857
Public Offerings
Advant age s
Size (selling securities fast way to large capital in
short time)
Liquidity (provided for owner then can sell the stock)
Value (market added put value to company s stock)
Image is stronger in supplier eyes
Disadvant age s
Costs (accounting fees , legal fees
Disclosure must be public
Requirements (regulation , performance information ,
time, energy and many)
Shareholder pressure for short term performance
2009 South -Western, a part of Cengage Learning. All rights reserved. 858
Private Placements
Re gulat ion D
Securities and Exchange Commission (SEC)
regulations for reports and statements required when
selling stock to private partiesfriends, employees,
customers, relatives, and professionals.
Defines four separate exemptions, which are based on
the amount of money being raised:
Rule 504a: placements of less than $500,000
Rule 504: placements up to $1,000,000
Rule 505: placements of up to $5 million
Rule 506: placements in excess of $5 million
2009 South -Western, a part of Cengage Learning. All rights reserved. 859
Private Placements (cont
d)
Accre dit e d Purchase r
Regulation D uses the term accredited purchaser.
Included in this category are the following:
Institutional investors such as banks, insurance companies,
venture capital firms.
Any person who buys at least $150,000 of the offered security
and whose net worth, including that of his or her spouse, is at
least 5 times the purchase price.
Any person who, together with his or her spouse, has a net
worth in excess of $1 million at the time of purchase.
2009 South -Western, a part of Cengage Learning. All rights reserved. 860
Elements of a Business Plan
Sect ion I: Exe cut ive Summar y
Sect ion II: Business De scrip tio n
A. General description of business
B. Industry background
C. Goals and potential of the business and milestones (if any)
D. Uniqueness of product or service
Sect ion III: Mar ket ing
E. Research and analysis
1. Target market (customers) identified
2. Market size and trends
3. Competition
4. Estimated market share
2009 South -Western, a part of Cengage Learning. All rights reserved. 1065