Transcript CHAPTER 4 Forms of Business Ownership and Franchising

MAN 470 – Berk TUNCALI
Who among us is considering
to start up a business?
Who has already started a
business?
An entrepreneur
An entrepreneur is one who undertakes. is an owner or
manager of a business enterprise who makes money
through risk and initiative.
Origins: From the French “entre”and
“prendre”[“between”“Take”[undertake] meaning a
merchant who acts as a go between for parties in the
trading process. Richard Cantillion(1725) first used the
word to denote those who carry risk in the economy.
Since then there have been many
definitions
 “A person who organises and manages a business
undertaking, assuming the risk for the sake of profit”
 a person who is willing to help launch a new venture or
enterprise and accept full responsibility for the
outcome.
Traits of Entrepreneurship
 oppurtunisstic
 risk takers (risk managers) in ambiguity
 they can see risk before it comes (sense)
 they can take failure and continue
 action oriented
What do Entrepreneurs do?
 they keep the economy running!
 over 90% of businesses are small businesses
 limited skills and capabilities
 the centre of world economy
 they are the agents of change
 innovators
Name a few entrepreneurs that
changed our lives;
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Sergey Brin
Mark Zuckerberg
Steve Jobbs
Jack Dorsey
Pierre Omidyar
Chad Hurley
Who else???
Entrepreneurship may include;
 Starting a business
 Being creative and innovative in developing new
products or services
 Managing an existing venture in such a way that it
grows rapidly
 Accepting risk in the development of a venture
Key theories in Entrepreneurship
 The entrepreneur as innovator (Schumpeter)
 The alert entrepreneur ( Kirzner Kirzner)
 The entrepreneur as risk taker (Knight)
 The entrepreneur as superior manager (Marshall)
 The entrepreneur has no role (neo classical
economics)
The 3 Ms
To succeed in business you need the three Ms (Vesper
1990) “Ms”
 Margin to make a profit
 Margin to deal with the unexpected
 Margin to continue making profits when competitors
attack by reducing prices
Ingredients of an entrepreneurial
management style
 Sensitive to opportunities. – alertness/network building
 Sensitive to margins – evaluation skills needed
 Experimentation and piloting important
 Sensitive to risk but prepared to manage it rather than eliminate it.
 Ability to mobilise resources quickly to exploit opportunities
 Ability to manage failure of a venture without threatening overall
capital.
Entrepreneurial management. How
does it differ?
 Not formal and rigidly logical, more intuitive and “rules of
thumb thumb”.
 High margin opportunities cannot be logically predicted, They
arise through exploration, piloting, experimentation and luck
 Formal management necessary but can be
 Bought in when necessary.
 It is goals driven, not driven by the need to maximise profits.
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