Chapter 2 Flashcards
(31 cards)
How do entrepreneurs fulfill the economic principle
Entrepreneurs become aware of a need or want and then decide what, how, by whom and for whom products/services should be produced
Concepts and contributions of entrepreneurship
Job creation, economic development, generating income, innovation
Formal and informal sector
Small business owner vs entrepreneur
Buy a business/franchise/inherit a business - not an entrepreneur
Need to make a change (f.o.p), growth, risk taking, strategic link
Small business owners - satisfied with some autonomy/income but no intention of growing/developing business
Entrepreneur - creativity, self-efficacy, risk taking, resourcefulness, inner drive
Factors influencing entrepreneurship in South Africa
Levels fluctuate due to various factors:
* Bad economy + slow growth
* Lack of skilled labour
* Cash flow/capital lacking amongst entrepreneurs
* Society can’t supprt local businesses
* Infrastructural/logistical issues
* Lack of knowledge and social stigma
* Unstable political climate
* Crime
* Weather
Explain the trait of entrepreneurship:
Achievement motivation
- inner drive to accomplish something important goes hand-in-hand with a sense of satisfaction and self accomlishment
- need to be personally responsible for solving problems
- need to set own goals and reach them with their own efforts
- need to receive feedback on degree of success with which tasks are completed
- need to have personal achievements
- need to control one’s own time/money and use it creatively
Explain the trait of entrepreneurship:
Internal locus of control
- need to be in charge of their own destiny; believes outcomes are in their own control
- successful in persuading/motivating people
- seek relevant information; well informed about their careers
- perform well on skill related tasks
- process information efficiently
Explain the trait of entrepreneurship:
Innovation + creativity
- creativity - creation of something new
- innovation - existing businesses improve and add new products
Explain the trait of entrepreneurship:
Risk tolerance
- interpret the risk and take actions which minimise the risk
- calculated risks based on applicable research, analysis of information and investigation
Explain the trait of entrepreneurship:
Propensity to pay it forward
- re-investing in communities
Other traits of entrepreneurs
high energy, confidence, future orientation, optimism, desire for feedback, tolerance for ambiguity, flexibility, passion, commitment, determination, opportunity orientation, motivation to excel, work ethic
Necessity vs opportunity entrepreneurs
Necessity entrepreneurs have no better choice of work and are often less successful
Opportunity entrepreneurs are taking advantage of an opportunity and are often more successful
Steps of the entrepreneurial process
- Want to enter the business world
- Necessary entrepreneurial skills and abilities
- Required resources/access to the resources
- Above average chance that the idea will work
- Feasibility study show the opportunity is feasible
- Business plan convince investors the idea is successful
- Start the business
Explain the skill of entrepreneurship:
Strategy skills
- business as a whole and how it fits into the market place
- organise itself to deliver value more efficiently than competitors
Explain the skill of entrepreneurship:
Planning skills
- what future might offer
- impact on business and needed resources/actions
Explain the skill of entrepreneurship:
Communication skills
- send message, promote idea, manage a team, talk to stakeholders
- active listening for effective and clear messages
Explain the skill of entrepreneurship:
Marketing skills
- evaluate business offerings and how it satisfies needs and wants as an attractive solution
- pricing, promotion, distribution of products/services
Explain the skill of entrepreneurship:
Financial skills
- manage income and expenses
- assess potential/risk of investments
Explain the skill of entrepreneurship:
Project management skills
- organise projects, set objectives/schedules
- needed resources are in the right place at the right time in the right quantity and quality
Explain the skill of entrepreneurship:
Human relation skills
- ability to deal with people
- leadership skills, motivational skills, communication skills
Resources needed (access to and control of)
(Entrepreneurship)
- Financial resources: cash and basic resources easily converted into cash
- Human resources: people with knowledge and skill who contribute to the success of the business
- Operating resources: physical resources - assets used to run the business
- Educational resources: industry knowledge and about product/services
New venture ideas
Environmental changes and social trends create new ideas
See 2.7.3
New venture opportunities
(Criteria of a good opportunity)
Clealry defined market need for the product
Opportunity must be scalable
Must solve a problem
Must have potential for growth
Must be rewarding to entrepreneur
Window of opportunity must exist
See 2.7.3
Advantages
Buying an existing business
- groundwork in setting up is done
- easier to obtain financing
- customers familiar with location
- established customer base
- experienced employees
- planning based on historical data
- supplier relationships in place
- inventory and equipment in place
Disadvantages
Buying an existing business
- purchase price may be inflated to cover initial costs
- working capital may be underestimated and need more investment if business was neglected
- location may be undesirable
- image difficult to change
- employees are inherited not chosen
- difficulties in changing how it is run
- liabilities for past contracts
- inventory and equipment may be obsolete
