Understanding Enterprise and Entrepreneurship Topic 1 -

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Entrepreneurship and Innovation

Topic 1: Understanding Enterprise

and Entrepreneurship

© NCC Education Limited

 Understanding Enterprise and Entrepreneurship Topic 1 -
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Scope and Coverage

This lecture will introduce the area of

entrepreneurship and what it means by focussing
upon:-
• definitions and terminology
• the characteristics of entrepreneurs
• how enterprises develop their models of
business.
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Learning Objectives
On completion of the topic, students will be able to evaluate: -
• The mindset of entrepreneurs
• Characteristics of an entrepreneur
• Motivations for starting an enterprise: -
o Trait theory, Push-pull motives
o Impact on local economies
o Models of Enterprises
o B2B, B2C, C2C Strategies
o Models of business (e.g. auction, freemium, bait and hook)
o Social Enterprises
• Discuss local and international examples
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Understanding the Terms

Start-up

Serial
Entrepreneur SME

Enterprise

Intrapreneurship Entrepreneurship

Owner-Manager
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Definition of Entrepreneurship

‘The capacity and willingness to develop, organize

and manage a business venture along with any
risks in order to make a profit’.
www.businessdictionary.com

Often it is associated with innovation and ground-

breaking products and processes.
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Key Factors of Production

These are the 4 key resources required to produce

goods and services in an economy.
These are:-
Land, Labour, Capital and Enterprise.

Enterprise is vital to a prosperous economy and is

encouraged and supported by government, both
regional and national.
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Enterprise Within the UK Economy

• In 2017 , there were 5.7 million businesses in

the UK
• Increase of 4% from 2016
• Increase of 64% from 2000
• 21% of SMEs are female-led
• 96% of businesses have <10 employees
• Since 2015 the business ‘birth-rate’ is higher
than the business ‘death rate’
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Benefits to the Economy

Corporation
Sales Tax Income Tax
Tax

National
Council Tax Employment
insurance

Increasing Export/Impor Community

Skills t duties Investment

Reduction in Aggregate
Supply chain
welfare state demand
development
reliance increase
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What Makes an Entrepreneur?

Characteristics - Bolton and Thompson (2004) and Chell, Hawarth and Brealey (1991)

Creative, innovative, resilient, networkers

Spot and exploit new opportunities

Motivations and leadership -

Push (necessity-based) / Pull (opportunity-based)
4-Types theory of leadership
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What Makes an Entrepreneur?

Trait theory – Born or Made?

Born -This argues that entrepreneurial skills are
instinctive and cannot be learned. It matches an
entrepreneurs need for success with esteem.
Made This argues that entrepreneurship is a skill
that can be learned and applied.
As they do not conform with typical employment
roles, entrepreneurs needs to form their own
niche.
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What Affects an Entrepreneur?

Market Conditions
Impacted by recession, interest rates, aggregate
demand, & legislation.

Their community – often leading to social

enterprises
Philanthropic – business started to support other
areas – such as Belu Water.
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Factors Affecting Entrepreneurship

Recession
•. creates
barriers

Recession
Regional
stimulates
taxation rates
innovation

Factors

Regional
Gender
catastrophes

Ethnicity
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Enterprises : Structure

Legal structure is usually established at the start

but may change as the business grows

Limited
Sole Trader Partnership
Partnership

Limited Public
Company Limited
(Ltd/LLC) Company
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Trading of Goods

This is how a business operates in order to make

money.

Barter The nature Trade

of trading has evolved.
Global trade

• Excess • Selling of • Alternative

goods goods trading strategies
exchanged produced needed

Entrepreneurs need new methods of selling in

highly competitive and changing markets
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Thinking About Failure

• At all stages an organisation must assess risks

• Review the ‘what if’ scenarios
• Look at examples of failures either from
personal experience or well-known business
cases to see the impact of-
• External issues
• Unreliable delivery methods
• Poor supply partners
• Poor market and customer focus
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Bluesmart Inc

• Connected (smart) luggage

• Crowdfunded – raising US$2.2m
• Failed following some airlines banning luggage
with non-removeable batteries
• Lesson for enterprises:-
• heavy reliance on one product or KSF can result
in failure when outside forces changed in the
marketplace
• Further discussed in Topic 12
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How Do We Sell?

• Many models of delivery

• Key to maximise sales by using appropriate
combinations of delivery
• Not just traditional models used.
• QVC sells diamond jewellery via TV campaigns
– an unexpected channel but, this is now a key
gem-selling method due to low price, quality
guarantees, and good reputation.
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Selling Strategies

• There are numerous methods.

Direct Home
Low Frills Downloads
Sales Shopping

Advertising
Add-on Affiliate Freemium
Model

Subscriptio Bait and

Auction Franchising
n Hook
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Selling Strategies (2)

Kindle E-
Market Stall QVC Ryanair
Reader

London
Car
Evening Amazon Candy Crush
accessories
Standard

Birch Box Nespresso

eBay Subway
Make-up Coffee Pods
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The Changing Customer

• The customer chain also affects the strategies
adopted by an enterprise.
• Business to business
B2B • Cheese producer to supermarket

• Business to consumer
B2C • Supermarket to shopper

• Customer to customer
C2C • eBay – seller to seller
• Customer to business
• Eg - Advertising space on blog, incentivised reviews on
C2B websites
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Selling Strategies to Customers

• These can be combined.

Hewlett
Packard
(HP)

• Direct online sales (B2B,

HP Make B2C)
and sell • Sales via retailer (B2B, B2C)
printers

Bait and • Direct online sales (B2B, B2C)

Hook HP • Sales via retailer (B2B, B2C)
sells ink • Subscription model via HP
cartridges Instantink
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Seminar and Self Study

• The seminar will cover more detail on the traits and

the characteristics of entrepreneurs

• Tutorials will look further into Social Enterprises

and Motivations theory

• Your private study will focus on academic research

and studying 2 entrepreneurs of your choice
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References

• Briefing Paper - Number 06152, 28 December 2017

www.parliament.uk/commons-library
• www.businessdictionary.com/definition/entrepreneurship.html
• www.gemconsortium.org
• www.instituteof customerservice.com/media-centre/customer-service-
news/article/8-customer-types-that-can-inform-service-strategies
• Ajzen, I. (1991). The theory of planned behaviour. Organizational Behaviour
and Human Decision Processes, 50(2), pp.179-211.
• Alexander Brem, Maximilian Maier, Christine Wimschneider, (2016)
"Competitive advantage through innovation: the case of Nespresso", European
Journal of Innovation Management, Vol. 19 Issue: 1, pp.133-
148, https://doi.org/10.1108/EJIM-05-2014-0055
Topic 1 – Understanding Enterprise and
Entrepreneurship

Any Questions?