Module 1 - General Education Elective • Recognition of entrepreneurs dates back

to eighteenth-century France.
1.1 Evolution of Entrepreneurship • Until 1950, the majority of definitions
and references came from economists.
The field of entrepreneurship was • Over the decade, writers have continued
considered little more than an applied trade to modify the definition.
as opposed to an academic area of study, it • Robert C. Ronstadt said,
was thought that those who could not “Entrepreneurship is the dynamic
attend College would simply 'practice' the process of creating incremental wealth.”
concept of new business start-up. Yet most • In the twentieth century, the word
of the country's economy was actually based entrepreneur became closely linked with
upon entrepreneurship, and history has free enterprise and capitalism.
proven that with each downturn in the • Entrepreneurs serve as agents for
economy it is the entrepreneurial drive and change, provide creative, innovative
persistence that bring the economy back. ideas for business enterprises and help
Entrepreneurship is from the French businesses grow and become profitable.
“entreprendre,” meaning “to undertake.” • In the twenty-first century,
entrepreneurs are considered heroes of
free enterprise.
• Many people now regard
Characteristics of Entrepreneurs:
entrepreneurship as “pioneers” on the
Goal-oriented frontier of business.
Personal initiative • An integrated definition of
behavior
entrepreneurship recognizes
The ability to
entrepreneurship as a dynamic process
consolidate Confidence
of vision, change, and creation.
resources
Opportunistic 1.2 Approaches to Entrepreneurship
Management skills
Behavior
A desire for Approaches to Entrepreneurship
Intuitiveness
autonomy
THE MACRO VIEW
Risk-taking Reality-based action
Presents a broad array of factors that relate
The ability to learn
Aggressiveness to success or failure in contemporary
from mistakes
entrepreneurial ventures. Exhibits a strong
The ability to employ external locus of control point of view.
Competitiveness
human relations skills
The Macro View Entrepreneurial Schools of
thought:
Historical developments in entrepreneurship:
1. The Environmental
School of Thought
• No single definition of entrepreneur
2. The Financial/Capital
exists.
School of Thought
 3. The Displacement School
of Thought
Major types of displacement include:
▪ Political displacement:
Deals with government’s
policies and regulations
▪ Cultural displacement:
Deals with social groups
precluded from
professional fields
▪ Economic displacement:
Deals with economic
variations of recession
and depression
THE MICRO VIEW
Exhibits an internal locus of control point of
view.
Micro View Entrepreneurial schools of
thought
1. The Entrepreneurial Trait
School of Thought
2. The Venture Opportunity
School of Thought
3. The Strategic
Formulation School of
Thought
1.3 Entrepreneurial Revolution
Entrepreneurship is the symbol of business
tenacity and achievements. Entrepreneurs
were the pioneer of today's business
successes. Their sense of opportunity, their
drive to innovate, and their capacity for
accomplishment have become the standard
by which free enterprise is now
measured. This standard has taken hold
throughout the globe.
Global Entrepreneurship Monitor (GEM) has
shown that millions of people were involved
in the early stage of entrepreneurial activity
and the latest analyses show that growth
expectations and aspirations of early-stage
entrepreneurs represent a key dimension of
potential entrepreneurial impact which is
directly linked to many first-priority policy
objectives around the globe, which is to
create a job. The contribution of
entrepreneurship and entrepreneurial
mindset is the growth of jobs across the
globe.
GEM groups the participating economies
into three levels;
1. factor-driven phase - dominated by
subsistence agriculture and extraction
businesses, with a heavy reliance on labor
and natural resources
2. efficiency-driven phase - further
development is accompanied by
industrialization and an
increased reliance on economies of scale,
with capital intensive large organizations
more dominant
3. innovation-driven phase - development
advances, businesses are more knowledge-
intensive and the service sector expands.
1.4 Entrepreneurial Concept
Who Are Entrepreneurs?
Starting a new business requires more than
just an idea; it requires a special person, an
entrepreneur, who combines sound
judgment and planning with risk-taking to
ensure the success of his or her own
business.
Entrepreneur
- is an innovator or developer who
recognizes and seizes opportunities;
converts those opportunities into
workable/marketable ideas; adds value
through time, effort, money, or skills; and
assumes the risks of the competitive
marketplace to implement these
ideas. The entrepreneur is a catalyst for
economic change who uses
purposeful searching, careful planning, and
sound judgment when carrying out the
entrepreneurial process. The entrepreneur
is uniquely optimistic and committed works
creatively to establish new resources or
endow old ones with a new capacity, all for
the purpose of creating wealth.
Entrepreneurship
A dynamic process of vision,
change, and creation.
• Requires an application of energy and
passion towards the creation and
implementation of new ideas and
creative solutions.
Essential ingredients include:
• The willingness to take calculated risks—
in terms of time, equity, or career.
• The ability to formulate an effective
venture team; the creative skill to
marshal needed resources.
• The fundamental skills of building a solid
business plan.
• The vision is to recognize opportunity
where others see chaos, contradiction,
and confusion.
Module 1 Summary
Introduction to Entrepreneurship
Entrepreneurship: Theory, Process,
Practice concentrates on entrepreneurs and
entrepreneurial ventures where the
entrepreneur’s principal objectives are
innovation, profitability, and growth, not on
small businesses, which, although they are
independently owned and operated, are not
dominant in their fields and usually do not
engage in any new or innovative practices.
An entrepreneur is derived from the
French entreprendre, meaning “to
undertake.” The entrepreneur is one who
undertakes to organize, manage, and
assume the risks of a business. Although no
single definition of entrepreneur exists and
no one profile can represent today’s
entrepreneurs. Entrepreneurs recognize
opportunities where others see chaos,
contradiction, or confusion, are aggressive
catalysts for change within the marketplace,
and challenge the unknown, and
continuously create breakthroughs for the
future. Entrepreneurs were the pioneers of
today’s business successes, for economic
change who uses purposeful searching,
careful planning, and sound judgment when
carrying out the entrepreneurial process.
Entrepreneurship is the symbol of business
tenacity and achievement. it is a dynamic
process of vision, change, and creation. It
requires an application of energy and
passion toward the creation and
implementation of new ideas and creative
solutions. Entrepreneurship is a process of
innovation and new-venture creation
through four major dimensions—individual,
organizational, environmental, and
process—that is aided by collaborative
networks in government, education, and
institutions.
There are two Entrepreneurial Schools-of-
Thought Approach; Macro View: External
Locus of Control which covers, The
Environmental School of Thought (Considers
the external factors that affect a potential
entrepreneur’s lifestyle); The
Financial/Capital School of Thought (Based
on the capital-seeking process—the search
for seed and growth capital) and The
Displacement School of Thought (Alienation
drives entrepreneurial pursuits, Political,
Cultural and Economic displacement)
The Global Entrepreneurship Monitor (GEM)
provides an annual assessment of the
entrepreneurial environment of over 100
countries. Entrepreneurs lead to growth by
entering and expanding existing
markets, creating entirely new markets by
offering innovative products. increasing
diversity and fostering minority participation
in the economy.
To be a successful entrepreneur, an
individual must be an independent thinker
who is willing to take risks and to dare to be
different. Personal initiative, ability to
consolidate resources, management skills
and risk-taking are just a few of the
important qualities needed to be a
successful entrepreneur.
Module 2 – General Elective
2.1 The Dark Side of Entrepreneurship
Certain NEGATIVE factors may envelop
entrepreneurs and dominate their behavior.
Although each of these negative factors has
a positive aspect, it is important for
entrepreneurs to understand their potential
destructive side as well.
The Entrepreneur’s Confrontation with Risk
Starting or buying a new business involves
risk. A typology of entrepreneurial styles
helps describe the risk-taking activity of
entrepreneurs. In this model, financial risk is
measured against the level of desire to gain
profit from the venture.
Risk-Taking Activity of Entrepreneurs:
▪ Financial Risk
▪ Career risk
▪ Family and social risk
▪ Psychic risk
Dealing with Failures
How Entrepreneurs Deals with Failures
▪ Entrepreneurs use failure as a
learning experience. They have a
tolerance for failure.
▪ The most effective
entrepreneurs are realistic
enough to expect difficulties and
failures.
▪ If entrepreneurs deal effectively
with grief that emanates from
failure then they will not become
disappointed, discouraged, or
depressed. In adverse and
difficult times, they will continue
to look for opportunities.
The Grief Recovery Process
- is a negative emotional response from the
loss of something important that triggers
behavioral, psychological, and physiological
symptoms.
- The emotions generated by failure (i.e.,
grief) can interfere with the learning
process.
- A “loss orientation” towards grief recovery,
which focuses on failure, can sometimes
exacerbate negative emotional reactions to
failure.
- A “restoration orientation,” alternatively,
enables entrepreneurs to distract
themselves from thinking about the failure.
However, avoiding negative emotions is
unlikely to be successful in the long-run
- Research indicates that entrepreneurs may
recover more quickly from a failure if they
oscillate between a loss and a restoration
orientation.
Stress and the Entrepreneur
To achieve their goals, entrepreneurs are
willing to tolerate the effects of stress: back
problems, indigestion, insomnia, or
headaches. In general, stress can be viewed
as a function of discrepancies between a
person’s expectations and ability to meet
demands.
Lacking the depth of resources,
entrepreneurs must bear the cost of their
mistakes while playing a multitude of roles,
such as salesperson, recruiter,
spokesperson, and negotiator. Simultaneous
demands can lead to role overload.
Entrepreneurs often work alone or with a
small number of employees and therefore
lack the support from colleagues.
A basic personality structure, common to
entrepreneurs and referred to as type A
personality structure, describes people who
are impatient, demanding, and overstrung.
SOURCES OF STRESS
Four causes of entrepreneurial stress (Boyd
and Gumpert)
▪ Loneliness
▪ Immersion in Business
▪ People Problems
▪ Need to Achieve
DEALING WITH STRESS
If stress can be kept within constructive
bounds, it can increase a person’s efficiency
and improve performance.
Entrepreneurs Stress Vents:
1. Networking—One way to relieve
the loneliness of running a
business is to share experiences
by networking with other
business owners.
2. Getting Away from It All—The
best antidote could be a well-
planned vacation.
3. Communicating with
Employees—Entrepreneurs are
in close contact with employees
and can readily assess the
concerns of their staff.
4. Finding Satisfaction Outside the
Company—Entrepreneurs need
to get away from the business
occasionally and become more
passionate about life itself; they
need to gain some new
perspectives.
5. Delegating—Entrepreneurs find
delegation difficult because they
think they have to be at the
business all the time and be
involved in all aspects of the
operation.
6. Exercising Rigorously—Research
demonstrates the value of
exercise regimens on relieving
 the stress associated with
entrepreneurs.
2.2 Entrepreneurial Ethics
Entrepreneurial Ethics
Today’s entrepreneurs are faced with many
ethical decisions. As there is no simple
universal formula for solving ethical
problems, entrepreneurs have to choose
their own codes of conduct; the outcome of
their choices makes them who they are.
Ethics provides the basic rules or parameters
for conducting any activity in an
“acceptable” manner.
Ethics represents a set of principles
prescribing a behavioral code that explains
what is good and right or bad and wrong.
Sources of Ethical Dilemmas
▪ Pressure from inside and outside
interests
▪ Changes in societal values,
mores, and norms
Ethical Rationalizations
Decision-makers use one of four
rationalizations to justify questionable
conduct:
▪ That the activity is not
“really” illegal or
immoral
▪ That it is in the
individual’s or the
corporation’s best
interest
▪ That it will never be
found out
▪ That, because it helps
the company, the
company will condone it.
Reasons for Unethical Behaviors Occur
▪ Greed
▪ Distinctions between activities at
work and activities at home
▪ A reliance on other social
institutions to convey and
reinforce ethics
▪ Survival (bottom-line thinking)
▪ Lack of a foundation in ethics
Online Ethical Dilemmas in E-Commerce
▪ The slow demise of face-to-face
interactions causes
entrepreneurs to find ways to
build trust.
▪ Entrepreneurs recognize that
online consumer reviews are
used to inform purchasing
decisions and are posted to
reputation management systems
(Amazon and Yelp).
▪ Entrepreneurs find it far greater
to exhibit strong ethical
responsibility in their actions.
2.3 Corporate Entrepreneurship and
Innovation
Corporate Entrepreneurship and Innovation
The major thrust of corporate innovation is
to develop the entrepreneurial spirit within
the boundaries of the organization, thus
allowing an atmosphere of innovation to
prosper.
Definitions of corporate entrepreneurship:
 ▪ Corporate entrepreneurship as
centering on re-energizing and
enhancing the firm’s ability to
acquire innovative skills and
capabilities.
▪ Corporate entrepreneurship as
formal or informal activities that
create new businesses in
established companies through
product and process innovations
and market developments.
▪ Corporate entrepreneurship as
corporate venturing—adding
new business to the corporation
▪ Internal Corporate Venturing
▪ Cooperative Corporate
Venturing
▪ External Corporate
Venturing
▪ Corporate entrepreneurship as
strategic entrepreneurship—
transformation of organizations
via large-scale or otherwise
highly consequential innovations
adopted in the firm’s pursuit of
competitive advantage
▪ Strategic Renewal
▪ Sustained Regeneration
▪ Domain Redefinition
▪ Organizational Rejuvenation
▪ Business Model
Reconstruction
The Need for Corporate Entrepreneurship
and Innovation
A company must always be ready and willing
to accept innovations or it will quickly
become obsolete. The modern corporation
must develop in-house entrepreneurship or
face stagnation, loss of personnel, and
decline.
This need for corporate entrepreneurship
has arisen in response to a number of
pressing problems:
▪ Rapid growth in the number of
new and sophisticated
competitors
▪ A sense of distrust in the
traditional methods of corporate
management
▪ An exodus of some of the best
and brightest people from
corporations to become small-
business entrepreneurs (being
an entrepreneur is becoming
more of a status symbol; many
companies are losing their best
people, who are going out on
their own; venture capital is
becoming more widely available
for those who wish to go out on
their own, thus making
entrepreneurship more
attractive)
▪ International competition
▪ Downsizing of major
corporations
▪ An overall desire to improve
efficiency and productivity.
Obstacles to Corporate Entrepreneurship and
Innovation
The obstacles to corporate
entrepreneurship are usually due to
ineffective traditional management
techniques.
The adverse effects of traditional
management principles applied to new
venture development must be considered
and corrected.
The following factors exist in large
corporations that have exhibited successful
innovations:
▪ Atmosphere and vision
▪ Orientation to the market
▪ Small, flat organizations
▪ Multiple approaches
▪ Interactive learning
▪ Skunk Works
2.4 Corporate Entrepreneurship and Strategy
A Corporate Entrepreneurship (CE) strategy is
manifested through the presence of an
entrepreneurial strategic vision, a pro-
entrepreneurship organizational
architecture, and entrepreneurial processes
and behavior exhibited across the
organizational hierarchy.
CE strategy is about creating self-renewing
organizations through the unleashing and
focusing of entrepreneurial potential that
exists throughout those organizations.
Critical steps of a corporate
entrepreneurship strategy are:
1. Developing the vision
2. Encouraging innovation
3. Structuring for an
entrepreneurial climate
4. Preparing individual managers
for corporate innovation
1. Developing the Vision
The first step in planning a strategy of
corporate entrepreneurship is sharing the
vision of innovation that corporate leaders
wish to achieve.
The vision must be clearly articulated by the
organization’s leaders; however, specific
objectives are developed by managers and
employees.
2. Encouraging Innovation
Two distinct types of innovation exist:
▪ Radical innovation—his
type of innovation takes
experimentation and
determined vision, which
are not necessarily
managed.
▪ Incremental innovation—
▪ This type of innovation
refers to the systematic
evolution of a product or
service into newer
markets.
Both types of innovation require vision and
support. There needs to be a champion who
has the ability to develop and share a vision
as well as top management support of the
innovative activities.
3M follows a set of innovation rules that
encourages employees to foster ideas,
which are as follows:
▪ Don’t kill a project.
▪ Tolerate failure.
▪ Keep divisions small.
▪ Motivate the champions.
▪ Stay close to the
customer.
▪ Share the wealth.
3. Structuring the Work Environment
Employee perception of an innovative
environment is critical for stressing
management’s commitment to innovative
projects. Melding individual attitudes,
values, and behavioral orientations with the
organizational factors of structure and
reward is important.
Five factors critical to the internal
environment of an organization seeking to
have its managers pursue innovative
activity:
1. MANAGEMENT
SUPPORT—the extent to
which the management
structure itself
encourages employees
to believe that
innovation is, in fact, part
of the role set for all
organization members
2. AUTONOMY/WORK
DISCRETION—the extent
to which workers are
able to make decisions
about performing their
own work in the way
they believe is most
effective
3. REWARDS/REINFORCEME
NT—the extent to which
rewards are contingent
on performance,
providing challenges,
increasing
responsibilities, and
making the ideas of
innovative people known
to others in the
organizational hierarchy
4. TIME AVAILABILITY—the
extent to which
individuals have time to
incubate ideas
5. ORGANIZATIONAL
BOUNDARIES—the
extent to which people
are encouraged to look
at the organization from
a broad perspective
Control versus Autonomy
The encouragement of corporate
entrepreneurship can and often does result
in counterproductive, rogue behavior.
Deliberate design and development of
organizational systems reflecting the
organizational dimensions for an
environment conducive to corporate
innovation is critical.
Preparation for Failure
“Learning from failure” is an axiom in the
corporate entrepreneurial community.
Failure in a project may cause grief; the
organization should have social support
mechanisms in place to help with coping
with failure.
Better coping skills build self-efficacy in
corporate entrepreneurs and promote
continued corporate entrepreneurial
behavior in the future
4. Preparing Management
Key decision makers must find ways to
explain the purpose of using a corporate
innovation process to those from whom
entrepreneurial behaviors are expected.
CE training programs can induce the
changes needed in the work atmosphere to
develop more entrepreneurial activity.
The Corporate Entrepreneurship Assessment
Instrument (CEAI) provides an instrument for
measuring five key elements of an
organization’s entrepreneurial climate:
Module 2 Summary
The entrepreneurial perspective in
individuals. deals with topics that can be
useful in becoming an entrepreneur. Most
of the topics have to do with personal and
psychological traits that are hard to measure
but are identifiable. It describes the most
common characteristics associated with
successful entrepreneurs, the elements
associated with the “dark side” of
entrepreneurship, as well as the ethical
challenges that entrepreneurs confront.
In attempting to explain the entrepreneurial
mindset within individuals, this module
presents the concepts of entrepreneurial
cognition and metacognition in examining
the ways in which entrepreneurs view
opportunities and make decisions. Concepts
from cognitive psychology are increasingly
being found to be useful tools to help probe
entrepreneurial-related phenomena, and,
increasingly, the applicability of the
cognitive sciences to the entrepreneurial
experience is cited in the research literature.
The entrepreneurial cognitions view offers
an understanding as to how entrepreneurs
think and “why” they do some of the things
they do. For example, Cognitive adaptability,
which can be defined as the ability to be
dynamic, flexible, and self-regulating in
one’s cognitions given dynamic and
uncertain task environments, is important in
achieving desirable outcomes from
entrepreneurial actions.
Characteristics of successful entrepreneurs.
This list is long and ever-expanding and the
characteristics are not exclusively the ones
necessary to become a successful
entrepreneur. Some characteristics are
commitment, determination, and
perseverance, which are all goal-
oriented. Other traits are correcting
problems and seeking associates with
feedback. These are only a few of the many
that are there. Some of the traits involved in
the risk area indicate that the entrepreneur
must be a calculated risk-taker instead of a
high-risk taker. Also, the entrepreneur
must have a tolerance for failure; otherwise,
there would be no risk. There are other
traits that are personal, such as vision, self-
confidence, and optimism. These traits can
help with self-motivation and attitudes.
An examination of failure and the grief
recovery process is introduced because
failure is so often a learning experience for
entrepreneurs.
The dark side of entrepreneurship, which
encompasses the risks confronted by
entrepreneurs, including financial, career,
psychic, family, and social risk. These risks
can lead to many types of stress caused by
loneliness, immersion in business, people
problems, and the need to achieve. Possible
solutions to ease stress are networking,
getting away from it all, communicating with
subordinates, finding satisfaction outside
the company, and delegating. These, of
course, are not sure bets for curing stress
but they can help.
The ethical side of entrepreneurship. Ethics
is a set of principles prescribing a behavioral
code that explains right and wrong; it also
may outline moral duty and obligations.
Because it is so difficult to define the term, it
is helpful to look at ethics more as a process
than as a static code. Entrepreneurs face
many ethical decisions, especially during the
early stages of their new ventures.
Decisions may be legal without being ethical,
and vice versa. When making decisions that
border on the unethical, entrepreneurs
commonly rationalize their choices. These
rationalizations may be based on morally
questionable acts committed “against the
firm” or “on behalf of the firm” by the
managers involved. Within this framework
are four distinct types of managerial roles:
non-role, role failure, role distortion, and
role assertion.
It is also important for entrepreneurs to
realize that many decisions are complex and
that it can be difficult to deal with all of a
decision’s ethical considerations. Some of
them may be overlooked, and some may be
sidestepped because the economic cost is
too high. In the final analysis, ethics is
sometimes a judgment call, and what is
unethical to one entrepreneur is viewed as
ethical to another. Despite the ever-present
lack of clarity and direction in ethics,
however, ethics will continue to be a major
issue for entrepreneurs during the new
century.
To establish ethical strategies, some
corporations create codes of conduct. A
code of conduct is a statement of ethical
practices or guidelines to which an
enterprise adheres. Codes are becoming
more prevalent in organizations today, and
they are proving to be more meaningful in
their implementation.
Module 3 – General Education Elective
3.1 Social Entrepreneurship
Defining the Social Entrepreneur
Social entrepreneurs are sometimes referred to as:
▪ Public Entrepreneurs
▪ Civic entrepreneurs
▪ Social innovators
Social entrepreneurs are change agents:
▪ They create large-scale change
using pattern-breaking ideas
▪ They address the root causes of
social problems
▪ They possess the ambition to
create systemic change by
introducing a new idea and
persuading others to adopt.
These types of transformative changes can be
national or global. They also can be highly localized—
but no less powerful—in their impact.
Defining the Social Enterprise
There are challenges to the boundaries of what is and
what isn’t a social enterprise.
It is generally agreed that social entrepreneurs and
their ventures are driven by social goals; that is, the
desire to benefit society in some way.
But because the social mission of social
entrepreneurs is the most important criterion, not
wealth creation, arguments are made any social
enterprise should be in the world of not-for-profit
organizations.
3.2 Social Enterprise and Sustainability
Social Enterprise and Sustainability
The basic challenge of social enterprise—addressing
the obligations of a business to society—is the same
for all types of businesses—but questions concerning
the extent to which corporations should be involved
in social obligations to society is open to debate.
Sustainable Entrepreneurship
Sustainable entrepreneurship includes:
▪ Ecopreneurship, which refers to
environmental entrepreneurship with
entrepreneurial actions contributing to
preserving the natural environment
including the Earth, biodiversity, and
ecosystem.
▪ Social entrepreneurship, which
encompasses the activities and
processes undertaken to discover,
define, and exploit opportunities in
order to enhance social wealth.
▪ Corporate social responsibility, which
refers to actions that appear to further
some social good, beyond the interests
of the firm.
Ecopreneurship
The environment stands out as one of the major
challenges of social enterprise.
Entrepreneurs have an enormous challenge to build
socially responsible organizations for the future.
Ecovision—attention to employees, the organization,
and the environment—is a possible leadership style
for accomplishing this.
A plan to create a sustainable future through a
practical, clearly stated strategy, as defined by
Hawken and McDonough:
1. Eliminate the concept of waste.
2. Restore accountability.
3. Make prices reflect costs.
4. Promote diversity.
5. Make conservation profitable.
6. Insist on accountability of nations.
Shared Value and the Triple Bottom Line
The Triple Bottom Line (TBL) is an accounting
framework that goes beyond the traditional
measures of profit, return on investment,
and shareholder value to include environmental and
social dimensions.
"Shared value” is an approach to creating economic
value that also creates value for society by addressing
its needs and challenges.
Bottom-Line Measures of Economic Performance
▪ Personal income
 ▪ Cost of underemployment
▪ Establishment sizes
▪ Job growth
▪ Employment distribution by sector
▪ Percentage of firms in each sector
▪ Revenue by sector contributing to
gross state product
Bottom-Line Measures of Environmental Performance
Methods of Going International
Methods of going international are importing,
exporting, international alliances and joint ventures,
direct foreign investment, and licensing
IMPORTING
Importing is buying and shipping foreign-produced
goods for domestic consumption.

▪ Hazardous chemical EXPORTING

concentrations Exporting is the shipping of a domestically produced
▪ Selected priority pollutants good to a foreign destination for consumption.
▪ Electricity consumption
▪ Fossil fuel consumption
▪ Solid waste management
▪ Hazardous waste management INTERNATIONAL ALLIANCES AND JOINT VENTURES
▪ Change in land use/land cover
Three main types of international alliances: informal
international cooperative alliances; formal
Bottom-Line Measures of Social Performance
international cooperative alliances (ICAs); and
international joint ventures.
▪ Unemployment rate
▪ Median household income
▪ Informal alliances
▪ Relative poverty
are not legally
▪ Percentage of population with a
binding and are
post-secondary degree or
limited in scope and
certificate
time.
▪ Average commute time
▪ Formal alliances
▪ Violent crimes per capita
usually require a
▪ Health-adjusted life expectancy
formal contract with
specifics about what
3.3 Global Environment for Entrepreneurship each company
contributes and
Global Marketplace
involve a greater
Global Entrepreneurs commitment by
each company and a
Global entrepreneurs rely on global networks for transfer of
resources, design, and distribution. proprietary
information.
They rise above nationalistic differences to see the ▪ Joint ventures occur
big picture of global competition without abdicating when firms analyze
their own nationalities. the benefits of
creating a
They confront the learning difficulties of language
relationship, pool
barriers head-on, recognizing the barriers such
their resources, and
ignorance can generate.
create a new
venture. Joint
ventures imply the
sharing of assets,
profits, risks, and
venture ownership.
Advantages of Joint Ventures ▪ Government
regulations
▪ Combine the ▪ Political climate
strengths of the ▪ Infrastructure
partners involved ▪ Distribution
and thereby increase channels
competitive position. ▪ Competition
▪ Market size
▪ Intimate knowledge ▪ Local customs
of the local and culture
conditions and
government where INTERNATIONAL THREATS AND RISKS
the facility is located.
Dangers of foreign markets include political,
▪ Use the resources of
economic, and financial risks, including:
the other firms
involved in the
venture. ▪ Ignorance
▪ Strategic fit. ▪ Uncertainty
▪ Lack of
information
Disadvantages of Joint Ventures
▪ Restrictions
imposed by the
▪ Fragmented control.
host country
▪ Unstable
DIRECT FOREIGN INVESTMENT governments
▪ Changes in tax
A direct foreign investment is a domestically
laws
controlled foreign production facility. Does not imply
▪ Rapid rises in
that the firm owns a majority of the operation; can
costs and raw
be achieved by acquiring an interest in an ongoing
materials
foreign operation, by obtaining a majority interest in
▪ Fluctuating
a foreign company, by purchasing part of the assets
exchange rates
of a foreign firm, or by building a facility in a foreign
▪ Repatriation of
country.
profits and
LICENSING capital

Licensing is a business arrangement in which the
manufacturer of a product (or a firm with proprietary
rights over a certain trademark or technology) grants
permission to some other group or individual to
manufacture that product in return for specified
royalties or other payments.
Three basic types of licensing arrangements revolve
around patents, trademarks, and technical know-
how.
Researching Foreign Markets
Important parameters to identify and research
include:
3.4 Opportunity Identification: The Search for New
Ideas
Opportunity identification is the central domain of
entrepreneurship. The first step for any entrepreneur
is the identification of a “good idea.”
Sources of Innovative Ideas
Entrepreneurs, ever alert to opportunities that
inhabit the external and internal environments
around them, often spot potential opportunities in all
the following areas:
TRENDS

Trends signal shifts in the current paradigms (or

thinking) of the major population. Potential
entrepreneurial ideas: social trends, technology
trends, economic trends, government trends
UNEXPECTED OCCURRENCES
Unexpected occurrences are the unexpected
successes or failures that prove to be a major
surprise.
INCONGRUITIES
Incongruities exist when there is a gap or difference
between expectations and reality.
PROCESS NEEDS
Process needs exist whenever there is demand for
the entrepreneur to innovate and answer a particular
need.
INDUSTRY AND MARKET CHANGES
There are continual shifts in the marketplace caused
by advances in technology, industry growth, etc. The
entrepreneur needs to be able to take advantage of
any resulting opportunity.
DEMOGRAPHIC CHANGES
Demographic changes arise from changes in
population, age, education, occupation, geographic
locations, etc.
PERCEPTUAL CHANGES
Perceptual changes occur in people’s interpretation
of facts and concepts.
KNOWLEDGE-BASED CONCEPTS
Knowledge-based concepts lead to the creation or
development of something new.
The Knowledge and Learning Process
Entrepreneurs must be able to learn from their
experiences, acquiring and transforming information,
knowledge, and experience into recognizable
opportunities through the exercise of their cognitive
abilities.
3.5 Entrepreneurial Imagination and Creativity
The key to innovation is blending imaginative and
creative thinking with a systematic, logical process
ability.
The Role of Creative Thinking
Creativity is the generation of ideas that results in the
improved efficiency or effectiveness of system.
Two approaches to creative problem
solving: adapting or innovating.
The Nature of the Creative Process
Creativity is a process that can be developed and
improved.
It is a distinct way of looking at the world that is often
illogical, involving seeing relationships among things
that others have not seen.
The creative process has four commonly agreed-on
phases or steps, as itemized below.
PHASE 1: BACKGROUND OR KNOWLEDGE
ACCUMULATION
Background or knowledge accumulation provides the
individual with a variety of perspectives on the
situation. This helps the entrepreneur develop a basic
understanding of the product or venture to be
undertaken.
PHASE 2: THE INCUBATION PROCESS
The incubation process allows the individual to
subconsciously mull over the information gathered
during the preparation stage. The individual “sleeps
on it.”
PHASE 3: THE IDEA EXPERIENCE
The idea experience is the time when the idea or
solution the individual is seeking is discovered.
PHASE 4: EVALUATION AND IMPLEMENTATION
Successful entrepreneurs must be able to identify
workable ideas, which they have the skills to
implement.
Developing Your Creativity
To improve one’s creative talents, be aware of some
of the habits and mental blocks that stifle creativity
and practice exercises designed to increase creative
abilities.
3.6 Innovation and the Entrepreneur
Innovation is a key function of the entrepreneurship
process. It is the process by which entrepreneurs
convert opportunities into marketable ideas.
The Innovation Process
The innovation process is more than just a good idea.
Innovation combines the vision to create a good idea
with the perseverance to implement the concept.
Types of Innovation
o Invention: Creation of new product service,
or process.
o Extension: Expansion of a product, service,
or process.
o Duplication: Replication of an already
existing product, service, or process adding
own creative touch.
o Synthesis: The combination of existing
concepts and factors into new formulation
Principles of Innovation
o Be action-oriented; search for new ideas.
o Make the product, process, or service
simple and understandable.
o Make the product, process, or service
customer-based.
o Start small; begin small, plan for proper
expansion.
o Aim high; seek a niche in the marketplace.
o Try-test-revise; help work out flaws.
o Learn from failures.
o Follow a milestone schedule; have schedule
in order to plan and evaluate the project.
o Reward heroic activity and give it respect.
o Work, work, work!
Module 3 Summary
This module covers the challenge of social enterprise
that has emerged in this century as a major issue for
entrepreneurs. The social enterprise consists of
obligations that a business has to society. The boom
in social entrepreneurship and its promise of ending
daunting social problems across the globe are of
particular importance. Studies reveal that
entrepreneurs recognize social enterprise as part of
their role and that the structure of smaller firms
allows entrepreneurs to influence their organizations
more personally. Social entrepreneurs are change
agents: they create large-scale change with pattern-
breaking ideas, they address the root causes of social
problems, and they possess the ambition to create
systemic change.
With the huge growth and interest in social
entrepreneurship that we mention in the module
comes the challenges to the boundaries of what is
and what isn’t a social enterprise. Because social
causes can be so different and, at times, so oddly
personal, enterprises that embrace them can be very
tough to decipher. It seems that the best way to end
the confusion is to accept social entrepreneurship
activity as a continuum, with one extreme being
social entrepreneurs driven exclusively by producing
social benefits, and at the other extreme, social
entrepreneurs motivated primarily by profitability
with social benefits being the means.
Sustainable development is perhaps the most
prominent topic of our time. Scholars suggest that
entrepreneurial action can preserve ecosystems,
counteract climate change, reduce environmental
degradation and deforestation, improve agricultural
practices and fresh water supply, and maintain
biodiversity. Sustainable entrepreneurship includes
ecopreneurship (i.e., environmental
entrepreneurship), with entrepreneurial actions
contributing to preserving the natural environment.
Topic #1, includes coverage of a concept referred to
as “shared value.” It is an approach to creating
economic value that also creates value for society by
addressing its needs and challenges. It connects
company success with social progress. This concept
coupled with “triple bottom line” thinking (profits,
people, and the planet) will shape the transformation
of organizations in the twenty-first century.
Doing business globally is rapidly becoming a
profitable and popular strategy for many
entrepreneurial ventures. The North American Free
Trade Agreement, the EU (European Union), and the
World Trade Organization (WTO) are examples of the
powerful economic forces creating opportunities for
global entrepreneurs.
Topic #2, examined the importance of creative
thinking and innovation to the entrepreneur.
Opportunity identification was discussed in relation
to the knowledge and learning needed to recognize
good ideas. The sources of innovative ideas were
outlined and examined. The creativity process was
then described, and ways of developing creativity
were presented. Exercises and suggestions were
included to help the reader increase the
development of his or her creativity. The nature of
the creative climate also was presented.

The four basic types of innovation—invention,

extension, duplication, and synthesis—were
explained. The last part of the module reviewed the
misconceptions commonly associated with
innovation and presented the major innovation
principles.

This module also covers the importance of creative

thinking and innovation to the entrepreneur.
Opportunity identification was discussed in relation
to the knowledge and learning needed to recognize
good ideas. The sources of innovative ideas were
outlined and examined. The creativity process was
then described, and ways of developing creativity
were presented. Exercises and suggestions were
included to help the reader increase the
development of his or her creativity. The nature of
the creative climate also was presented.

The four basic types of innovation—invention,

extension, duplication, and synthesis—were
explained. The last part of the chapter reviewed the
misconceptions commonly associated with
innovation and presented the major innovation
principles.
Module 4 – General Education Elective
4.1 The Challenges and Pitfalls in New Ventures
The reasons that entrepreneurs start new ventures
are similar to the characteristics (as discussed in
previews modules) on the entrepreneurial mind-set:
(1) The need for approval
(2) The need for independence
(3) The need for personal development
(4) Welfare (philanthropic) considerations
(5) Perception of wealth
(6) Tax reduction and indirect benefits
(7) Following role models
Pitfalls in Selecting New Ventures
Six of the most important pitfalls commonly
encountered in the process of selecting a new
venture are listed below.
1. Lack of Objective Evaluation
▪ Many entrepreneurs lack objectivity.
▪ All ideas should be subject to rigorous
study and investigation.
2. No Real Insight into the Market
▪ Entrepreneurs must project the life
cycle of the new product.
▪ Timing of product is critical.
3. Inadequate Understanding of Technical
Requirements
▪ Entrepreneurs need to be thorough in
studying a new product.
▪ Unexpected technical difficulties
frequently pose time-consuming and
costly problems.
4. Poor Financial Understanding
▪ Entrepreneurs are sometimes ignorant
of costs.
▪ Entrepreneurs are sometimes victims
of inadequate research and planning.
▪ Entrepreneurs quite often
underestimate development costs by
wide margins.
5. Lack of Venture Uniqueness
▪ A new venture should be unique.
▪ Product differentiation is needed to
separate product from those of
competitors.
6. Ignorance of Legal Issues
Business is subject to many legal requirements:
▪ A safe workplace
▪ Reliable and safe products and
services
▪ Necessity for trademarks, patents,
and copyrights
4. 2 Critical Factors for New Venture Development
Five factors are critical during the prestart-up and
start-up phases of a new venture:
(1) the relative uniqueness of the venture,
(2) the relative investment size at start-up,
(3) the expected growth of sales and/or profits as the
venture moves through its start-up phase,
(4) the availability of products during the prestart-up
and start-up phases, and
(5) the availability of customers during the prestart-
up and start-up phases.
Uniqueness
Range of uniqueness in a new venture can be
considerable.
Uniqueness is further characterized by the length of
time a non-routine venture will remain non-routine.
Investment
Required capital investment can vary considerably.
Extent and timing of funds needed is critical.
Key questions to ask to determine the amount of
funding needed during the start-up phase:
▪ Will industry growth be sufficient to
maintain break-even sales to cover a
high fixed cost structure during the
start-up period?
 ▪ Do the principal entrepreneurs have ▪ May be possible to attract funds raised
access to substantial financial reserves through public or private placements.
to protect a large initial investment?
▪ Do the entrepreneurs have the Product Availability
appropriate contacts to take advantage
of various environmental o Goods or services must be available.
opportunities? o Lack of product availability can affect the
▪ Do the entrepreneurs have both company’s image and its bottom line.
industry and entrepreneurial track
records which justify the financial risk
Customer availability
of a large-scale start-up?
o Risk continuum (two extremes):
Growth of Sales
o Customers willing to pay cash before
Key questions to ask about growth of sales during delivery.
the start-up phase: o Venture begun not knowing exactly who will
buy the product.
o Two critical considerations:
▪ What is the growth pattern anticipated
o How long will it take to determine who the
for new-venture sales and profits?
customers are?
▪ Are sales and profits expected to grow
o What are the customers’ buying habits?
slowly or level off shortly after start-
up?
▪ Are large profits expected at some 4.3 Why New Ventures Fail
point with only small or moderate sales
Most studies have found that the factors underlying
growth?
the failure of new ventures are within the control of
▪ Are both high sales growth and high
the entrepreneur.
profit growth likely?
▪ Will there be limited initial profits with Three major categories of causes for failure:
eventual high-profit growth over a
multiyear period?
• product/market problems

In answering these questions, it is important to

poor timing, product design problems,
remember that most ventures fit into one of the
inappropriate distribution strategy, unclear business
three following venture classifications:
definition, over-reliance on one customer

▪ Lifestyle ventures
• financial difficulties
▪ Independence, autonomy, and control
are the primary driving forces.
▪ Sales and profits are deemed to initial undercapitalization, assuming debt too
provide a sufficient and comfortable early, venture capital relationship problems
living for the entrepreneur.
▪ Small profitable ventures • managerial problems
▪ Financial considerations play a major
role. concept of a team approach, human resource
▪ Autonomy and ownership control are problems
important factors.
▪ High-growth ventures
▪ Significant sales and profit growth are
expected.
▪ May be possible to attract venture 4.4 Creating New Ventures
capital money.
Creating New Ventures
Every prospective entrepreneur wants to know the
best method for getting a new business started.
New-New Approach to Creating New Ventures
The most effective way to start a new business is via
the introduction of new products or services into a
market. Most business ideas for new ventures come
from one’s experience, such as prior jobs, hobbies or
interests, and personally identified problems.
New-Old Approach to Creating New Ventures
Most small ventures do not start with a totally unique
idea. Instead, they often “piggyback” on someone
else’s idea by either improving a product or offering a
service in an area where it is not currently available.
Examining the Financial Picture When Creating New
Ventures
The worst thing an entrepreneur can do is adopt an
“all or nothing” strategy to creating a new venture.
The entrepreneur must consider the enterprise’s
financial picture. Consideration of start-up and
monthly expenses is a must. The entrepreneur must
be concerned with upside gain and downside loss
(the profits the business can make and the losses it
can suffer). The entrepreneur must gain an adequate
return on the amount of money risked.
4.5 Acquiring an Established Entrepreneurial Venture
Acquiring an Established Entrepreneurial Venture
Prospective entrepreneurs may elect to purchase an
existing business rather than start one, but
purchasing a business venture is a complex process.
Personal Preferences - Entrepreneurs need to limit
their choices of ventures to buy by recognizing
certain personal factors: background, skills, interests,
and experience all factors that should be weighed in
selecting the type of business to buy.
Examination of Opportunities - Business brokers,
newspaper ads, trade sources, and professional
sources can all be sources of information for possible
businesses to buy.
Advantages of Acquiring an Ongoing Venture
Three of the most important advantages of acquiring
an ongoing venture are discussed below.
LESS FEAR ABOUT SUCCESSFUL FUTURE OPERATION
- A successful business has already proved that it has
the ability to attract customers and control costs.
REDUCED TIME AND EFFORT - An ongoing enterprise
has already assembled the inventory, equipment,
personnel and facilities to run it. An ongoing
enterprise has already established relationships with
suppliers, bankers, and other business people.
A GOOD PRICE - It may be possible to purchase on
ongoing venture at a very good price.
Evaluation of the Selected Venture
Specific factors can be useful in evaluating the
venture being offered, such as the local environment
of the business, its location, profit potential, and
tangible and intangible business assets.
Key Questions to Ask
Asking the right questions is critical.
Why is the business being sold?
What is the current physical condition of the business?
What is the condition of the inventory?
What is the state of the company’s other assets?
How many of the employees will remain?
What type of competition does the business face?
What does the firm’s financial picture look like?
Negotiating the Deal, the potential buyer must
negotiate the final deal. Information, time, pressure,
and alternatives are all factors that should be
considered in the negotiations. Without reliable
information, the buyer is at a disadvantage; having
more time to make the deal is an advantage to that
party; pressure from other owners can influence the
deal; and a lack of alternatives in whether to make
the deal can conclude negotiations quickly.
4.6 Franchising
Franchising: The Hybrid
A franchise is an arrangement in which the owner of
a trademark, trade name, or copyright has licensed
others to use it in selling goods or services. A
franchisee is the purchaser of a franchise, and a
franchisor is the seller of the franchise.
How Franchising Works
 The franchisee usually contracts for the
following business package:
▪ Make a financial investment
in the operation
▪ Obtain and maintain a
standardized inventory and/or
equipment package
▪ Maintain a specified quality of
performance
▪ A franchise fee
▪ Engage in a continuing
business relationship
The franchisor usually provides:
▪ The company name
▪ Symbols, logos, designs, and
facilities
▪ Professional management
training
▪ Sale of specific merchandise
necessary for the unit’s
operations at wholesale prices
▪ Financial assistance
▪ Continuing aid and guidance
Advantages of Franchising
TRAINING AND GUIDANCE - Franchisor usually
provide both training and guidance to the Franchisee
BRAND-NAME APPEAL - Buying a well-known
franchise, a big name one has, a good chance to
succeed
A PROVEN TRACK RECORD - The number of years (5
to 10) in operation, and the number of units shows
how successful the operations have been
FINANCIAL ASSISTANCE - Some franchisors do
provide help to franchisees get started by lending
money and not requiring any repayment until the
operation is running smoothly.
Disadvantages of Franchising
FRANCHISE FEES—It is not uncommon to be faced
with fees as a franchisee
FRANCHISOR CONTROL—The franchisor generally
exercises a fair amount of control over the operation
in order to maintain a degree of uniformity.
UNFULFILLED PROMISES—In some cases, especially
among less-known franchisors, the franchisees have
not received all they were promised.
Evaluating Franchising Opportunities
- activities that potential franchisees perform:
Learning of Franchising opportunities
Investigating the franchisor
Seeking professional help
Making The decision: It’s up to the entrepreneur
Module 4 Summary
The complexity of factors involved in new-venture
start-up makes it difficult to clearly assess and
evaluate each one. In addition, the difficulty of
obtaining reliable data on failed firms adds to this
dilemma. Improvements are being made, however,
and new-venture assessment is becoming a stronger
process.
A number of pitfalls may occur in the selection of a
new venture: lack of an objective evaluation of the
venture, lack of insight into the market, inadequate
understanding of technical requirements, poor
financial understanding, lack of venture uniqueness,
and failure to be aware of legal issues.
When assessing a new venture, an entrepreneur
needs to consider several critical factors: the
uniqueness of the good or service, the amount of
capital investment required to start the venture, the
growth of sales, and the availability of the product.
Some major reasons new ventures fail are
inadequate knowledge of the market, faulty product
performance, ineffective marketing and sales effort,
inadequate awareness of competitive pressures,
rapid product obsolescence, poor timing, and
undercapitalization. In drawing together these and
other reasons, recent research reveals three major
categories of causes for failure: product/market
problems, financial difficulties, and managerial
problems. In addition, entrepreneurs face internal
and external problems.
The feasibility of the entrepreneur’s product or
service can be assessed by asking the right questions,
by making a profile analysis of the venture, and by
carrying out a comprehensive feasibility study.
The easiest and best way to approach a new business
venture is to design a unique product or service.
Sometimes this involves what is called a new-new
approach. In most instances, however, the
prospective owner-manager must be content to use a
new-old approach by “piggybacking” on someone
else’s ideas. This involves either expanding on what
the competition is doing or offering a product or
service in an area where it is not presently available.

On the financial side, the prospective owner-manager

needs to examine the enterprise’s financial
picture and to determine the costs of setting up the
operation and the amount of revenue that will be
generated during the initial period. Finally, the
prospective owner-manager must review a series of
other operational considerations ranging from the
building, merchandise, and equipment needed for
operations to record keeping, insurance, legal,
marketing, and personal matters.

Another opportunity is the purchase of an existing

successful firm. It has a number of advantages. Three
of the most important are that its successful future
operation is likely, the time and effort associated with
starting a new enterprise are eliminated, and a
bargain price may be possible.

Before deciding whether to buy, however, the

prospective owner needs to ask and answer a series
of “right questions,” Some of these follow: Why is the
business being sold? What is the physical condition of
the business? What is the condition of the inventory?
What is the state of the company’s other assets?
How many of the employees will remain? What
competition does the business face? What is the
firm’s financial picture?

After all, questions have been answered satisfactorily,

the prospective buyer must negotiate for the
business. In the final analysis, however, the
prospective owner should be concerned with buying
the company’s assets at market value and then
paying something for goodwill if it is deemed an
asset.
Module 5 – General Education Elective
5.1 Business Model Canvas vs. Lean Canvas
As an adaptation of the original Business Model
Canvas, Lean Canvas is designed to be a fast, easy
method for start-up entrepreneurs to plan and
execute business models. This lesson defines Lean
Canvas and identifies its primary principles.
Lean Canvas Business Modeling
What is a canvas? In a painting, the canvas holds the
entire image; if any part of the image isn't on the
canvas, then it isn't seen by the viewer. If you're a
gamer, you might automatically associate the word
canvas with 'canvasing an area'. This instruction
means that an entire area should be searched.
In both of these cases, the word canvas represents
the entirety of a thing.
Now consider the word lean. Lean meats are those
without excess fats. The word lean invokes images of
simplicity, a lack of excess.
These images explain the basic concept behind Ash
Maurya's Lean Canvas. It's a simple, one-page
business model designed to allow its user to visualize
an entire business plan at a glance. Maurya adapted
his model from Alexander Osterwalder's original
Business Model Canvas, to focus on the specific
environment of start-up businesses.
5.2 Lean Canvas
The key principles of the Lean Canvas and details how
it differs from Osterwalder's Business Model Canvas.
Key Principles
Lean Canvas focuses on start-up businesses. Start-up
businesses are high risk and high action. The
traditional business model canvas can take large
amounts of time to complete, and therefore isn't
updated very often in a timely manner as the
business environment changes.
Maurya's Lean Canvas creates a quick method for a
start-up entrepreneur to blue-print his or her
business in about 20 minutes. This encourages
ongoing updates due to the ease of completing the
canvas. The design prioritizes actionable items, those
items that lead directly to actions to be taken, and
high risk (meaning areas of extreme uncertainty)
factors of start-up endeavors. So, the key principles
of the Lean Canvas are ease/speed in completion,
focus on high risk aspects of start-ups, and prioritize
actionable items related to building a business.
There are nine blocks included in Lean Canvas. Let's
look at them now.
Problem
Starting with a clear and concise problem is the only
way to build a successful start-up business. The
problem is the reason for the business, the motivator
for the product; striving for its solution is the reason
the start-up exists. The problem section also includes
a mention of the existing alternatives, or solutions
already in existence for the same problem. To keep
the lean canvas lean means that a user should only
list up to three problems in this box.
Solution
The solution is the heart of the product to be offered
by the start-up. Each problem listed in the previous
box should have a possible solution listed in this
section.
Key Metrics
Key metrics are the life line of the business. They
keep track of any numbers deemed necessary to
quickly get a feel for the strength and well-being of
the business. Monitoring the correct key metrics of a
start-up can determine success or failure.
Unique Value Proposition
The unique value proposition is a statement that
clearly shows how the business is different and offers
value over all other existing alternatives. It answers
the questions 'How' and 'Why' customers should pay
attention to the business. The answers to these
questions would be listed in the incorporated section that you have a solid idea, but getting your thoughts
of high-level concept. written down and worked out can be a lot more
complicated.
Unfair Advantage

Maurya describes unfair advantage as something

that's developed over time and can't be easily gained. From ideas for new businesses to concepts for
He acknowledges that a start-up's first few Lean new products and services, creating a coherent plan
Canvas plans will likely not have anything to add to can take weeks or months. Lean Canvas is a planning
this box, but over time the company's unfair method that helps to get to the heart of the idea. It
advantage will become clear. puts everyone on one page, helping to set out the
key information that is needed, without any of the
Channels
unnecessary details.
Channels are simply identified means to connect with
customers.
Lean Canvas is a one-page business plan
Customer Segments
method created by Ash Maurya, which is adapted
Customer segments is a box that lists target from the Business Model Canvas by Alexander
customers and/or users Understanding the Osterwalder. The plan features a number of blocks to
characteristics of an ideal user is included in this box help you map out some key points that will help you
under the subheading early adopters. turn a business idea into something more concrete.
The Lean Canvas is created especially for
Cost Structure entrepreneurs to make it easier for them to get a
clear and simple idea of what they’re doing.
The cost structure box is a large box dominating the
bottom third of the left side of the canvas. In this box,
the entrepreneur should list all costs associated with
the business, including fixed and variable costs. The lean design and the limited boxes of the
Lean Canvas are easy to understand, and they
Revenue Streams encourage entrepreneurs to think carefully. There is
only so much space to use, which means it is
Dominating the bottom right third of the canvas is
essential to boil down key points into the most
the box revenue streams allowing the user to list and
important information. It recognizes that the
monitor all avenues of revenue for the start-up.
business plan is for the entrepreneur and is rarely
The Difference shown to other people. It does not need to be
extremely detailed when the point is to get to the key
As mentioned previously, the Lean Canvas was things that matter when creating a business plan.
developed from Alexander Osterwalder's original
Business Model Canvas. Boxes on the canvas that
were changed were done so in order to focus on the
volatile needs of a start-up entrepreneur. Only four
boxes were altered from the original for reasons of
focusing on high-risk and actionable items. Please
watch this video to help you better understand our
lesson,

Module 5 Summary

One of the biggest challenges for entrepreneurs

can be turning your ideas into plans. You might think
Module 6- Gen Elective Education
6.1 Sources of Capital for Entrepreneurs: Debt versus
Equity Financing
The Search for Capital
Every entrepreneur faces the challenge of finding
start-up capital. There are numerous possibilities and
combinations of financial packages that may be
appropriate for a business.
This module will examine the various forms of capital
formation for entrepreneurs. Initial consideration will
be given to debt and equity financing in the form of
commercial banks, trade credit, accounts receivable
financing, factoring and finance companies, and
various forms of equity instruments.
Debt versus Equity Financing
The use of debt to finance a new venture requires a
payback of funds plus a fee, whereas equity financing
involves the sale of some of the ownership in the
venture.
Debt Financing - a popular for short term borrowing
(one year or less) for working capital and for long
term borrowing (one to five years or more) for the
purchase of property or equipment.
COMMERCIAL BANKS
Advantages of Debt Financing
▪ No relinquishment of ownership.
▪ More borrowing allows for potentially
greater return on investment.
▪ During periods of low interest rates
opportunity cost is justified.
Disadvantages of Debt Financing
▪ Regular (monthly) interest payments
are required.
▪ Cash-flow problems can intensify
because of payback responsibilities.
▪ Heavy use of debt can inhibit growth
and development.
PEER-TO-PEER LENDING (P2P) - is the practice of
lending money to unrelated individuals, or “peers,”
without going through a bank or other traditional
financial institution. Social lenders, often Internet-
based sites, pool money from investors willing to lend
capital at agreed-upon rates. Once thought of as an
alternative funding option only for entrepreneurs
unable to qualify for commercial loans, P2P lending is
beginning to attract borrowers among established
entrepreneurs seeking quick capital without the
administrative overhead of traditional lenders.
OTHER DEBT-FINANCING SOURCES
Trade credit—Given by suppliers who sell goods on
account; must be paid in 30 to 90 days.
Accounts receivable financing—Short-term financing;
requires collateral.
Factoring—Sale of accounts receivable.
Finance companies—Asset-based lenders that lend
money against assets such as inventories, accounts
receivable, and equipment
Equity Financing
Requires sharing ownership and profit with the
funding source.
PUBLIC OFFERINGS
Advantages of public offerings:
▪ Size of capital amount
▪ Liquidity
▪ Value
▪ Image
Disadvantages of public offerings
▪ Costs
▪ Disclosure
▪ Requirements
▪ Shareholder pressure
6.2 The New Marketing Concept for Entrepreneurs
The new marketing logic requires a fundamental
rethinking of the old rules that applied in a world of
stability and control.
To illustrate this major rethinking in marketing, we
must shift from the 4Ps to the 4Cs:
• From Product to Cocreated
• From Promotion to Communities
• From Price to Customizable
• From Place to Choice
6.3 Marketing Research
Marketing research involves the gathering of
information about a particular market followed by
analysis of that information.
Defining the Research Purpose and Objectives
1. Identify where potential customers go to
purchase the good or service in question.
2. Identify why they choose to go there.
3. Identify the size of the market and how much of
it can the business capture.
4. Identify how the business compares with
competitors.
5. Identify the impact the business’s promotion has
on customers.
6. Identify the types of products or services desired
by potential customers.
Gathering Secondary Data
1. Secondary data consist of information that has
already been compiled.
2. Less expensive to gather than primary data.
3. Secondary data may be internal or external.
o Internal secondary data consist of
information that exists within the venture
such as business records.
o External secondary data are available in
periodicals, trade association literature, and
government publications.
4. Several problems occur due to the use of
secondary data.
o Data may be dated and less useful.
o Units of measure in secondary data may not
fit current problems.
Gathering Primary Data
Primary data consist of new information accumulated
through observational methods and questioning
methods. Observational methods avoid contact with
respondents and can be used economically.
Questioning methods involve contact with the
respondents. Surveys include contact by mail,
telephone, and personal interviews. Mail surveys are
often used when respondents are widely dispersed
and have low response rates. Telephone and
personal interviews involve verbal communication
with respondents and provide higher response rates.
Personal interviews are the most expensive and
people are reluctant to grant them. Experimentation
is a form of research that concentrates on
investigating cause-and-effect relationships.
DEVELOPING AN INFORMATION-GATHERING
INSTRUMENT
The questionnaire is the basic instrument for a
survey. Several considerations for designing a
questionnaire:
o Make each question pertain to a specific
objective.
o Place simple questions first.
o Avoid leading and biased questions.
o Ask “How could this question be
misinterpreted?”
o Give concise but complete directions.
o Use scaled questions rather than simple
yes/no questions.
Quantitative versus Qualitative Marketing Research
o Quantitative research involves empirical
assessments from numerical
measurements. Uses larger samples and
statistical analyses to generate results. Is
“objective.”
o Qualitative research involves in-depth
informational assessment. Uses smaller
samples and generates “subjective” results.
6.4 Social Media Marketing
Social media marketing describes the use of social
networks, online communities, blogs, wikis, and other
online collaborative media for marketing purposes.
Three important aspects to social media marketing:
• Create something of value (an event, a video, a
tweet, or a blog entry, etc.) that attracts
attention and becomes viral in nature.
• Enable customers to promote a message
themselves with multiple online social media
venues.
• Encourage user participation and dialogue.
Key Distinctions of Social Media Marketing
Useful distinctions between traditional marketing
(4Ps) and social media marketing (4Cs) based on the
customer focused concept:
• Control versus contributions
• Trust building
• Two-way communication
Developing a Social Media Marketing Plan
Social media marketing plan details an organization’s
social media goals and the actions necessary to
achieve them.
Critical steps for the entrepreneur to keep in mind:
• Listen
• Identify
• Categorize
• Appraise
• Implement
• Collaborate
• Contribute
• Convert
• Monitor
Mobile Marketing
Mobile marketing applications allow the creation and
exchange of user-generated content and a plethora
of marketing opportunities, such as text messaging,
mobile applications, and mobile advertising via
Common mobile computing devices include cell
phones, PDAs, smartphones, tablet PCs, and
netbooks.
Mobile marketing and the use of social media are
potentially more important than almost any other
type of marketing.
Mobile social media applications can be
differentiated based on location-sensitivity. The most
sophisticated forms of mobile social media
applications are those that account for both time and
location simultaneously.
The overall mobile social media strategy can be
complicated, but following the “Four Is” (integrate,
individualize, involve, and initiate) will help one grasp
the overall strategy.
6.5 The Components of Effective Marketing
Marketing Philosophy
• A production-driven philosophy—based on the
belief “produce efficiently and worry about sales
later.”
o A sales-driven philosophy—focuses on
personal selling and advertising to persuade
customers to buy the company’s output.
o A consumer-driven philosophy—relies on
research to discover consumer preferences,
desires, and needs before production
actually begins
Market Segmentation
Market segmentation is the process of identifying a
specific set of characteristics that differentiate one
group of customers from the rest.
Consumer Behavior
There are many types and patterns of consumer
characteristics. Marketing experts have tied these
characteristics to the five types of consumers: (1)
innovators, (2) early adopters, (3) early majority, (4)
late majority, and (5) laggards.
Five common ways consumers view a product or
service: as convenience goods, shopping goods,
specialty goods, unsought goods, and new products.
6.6 Pricing Strategies
The following factors affect entrepreneurs in the
pricing of their products or services:
• The degree of competitive pressure
• Availability of sufficient supply
• Seasonal or cyclical changes in demand
• The costs of distribution
• The product’s life-cycle stage
• Changes in production costs
• Prevailing economic conditions
• Customer services provided by the seller
• Amount of promotion done
• The market’s buying power
Views of Pricing
Pricing can be viewed as value, variable, variety,
visible, and virtual.
6.7 Understanding the Key Financial Statements
Basic financial statements an entrepreneur needs to
be familiar with are; the balance sheet, the income
statement, and the cash-flow statement.
The Balance Sheet Reports buness’s financial
position at a specific time.
The balance sheet is divided into two parts:
o The financial resources owned by the firm
o The claims against these resources
The financial resources the firm owns are
called assets.
The claims creditors have against the company are
called liabilities.
o Short-term liabilities must be paid during
the coming 12 months.
o Long-term liabilities are not due and
payable within the next 12 months.
The residual interest of the firm’s owners is known
as owners’ equity.
UNDERSTANDING THE BALANCE SHEET
The balance sheet has three sections:
▪ assets (Current, Fixed)
▪ liabilities, and
▪ owners’ equity.
Current Assets
Cash and other assets expected to be turned into
cash, sold, or used up during a normal operating cycle
(cash, accounts receivable, inventory, prepaid
expenses)
Fixed Assets
Land, building, equipment, and other assets expected
to remain with the firm for an extended period; they
are not totally used up in the production of the firm’s
goods and services.
Current Liabilities
Obligations due and payable during the next year or
within the operating cycle (accounts payable, notes
payable, taxes payable, and loans payable).
Long-Term Liabilities
Obligations not due or payable for at least one year
or not within the current operating cycle (bank
loans).
Contributed Capital
When a corporation is owned by individuals who
have purchased stock in the business; various kinds of
stock can be sold by a corporation, the most typical
being common stock and preferred stock.
Retained Earnings
The accumulated net income over the life of the
corporation to date; every year this amount increases
by the profit the firm makes and keeps within the
company.
WHY THE BALANCE SHEET ALWAYS BALANCES
The balance sheet always balances because if
something happens on one side of the balance sheet,
it is offset by something on the other side.
A Credit Transaction
When a company orders materials from a supplier,
their inventory goes up and accounts payable also
goes up by the amount the supplier charged. The
increase in current assets is offset by an increase in
current liabilities.
When the bill is paid by the company by issuing a
check, cash declines by the billed amount. At the
same time, accounts payable decreases by this same
amount. Again, these are offsetting transactions, and
the balance sheet remains in balance.
A Bank Loan
A company may have an outstanding bank loan of
$200,000 in 2018. If the company increases this loan
by $110,000 in 2016, cash goes up by $110,000, and
bank loan increases by the same amount. In addition,
if the firm uses this $110,000 to buy new
machinery, cash decreases by $110,000
and equipment increases by the same amount.
A Stock Sale
A company issues and sells shares of common stock.
The balance sheet action shows that common
stock increases as well as cash.
The Income Statement
Shows the change that has occurred in a firm’s
position as a result of its operations over a specific
period.
Revenue: obtained every time a business sells
a product or performs a service
Expenses: major expenses, inclusive of costs of
goods sold
Net income: excess of revenue over expenses
UNDERSTANDING THE INCOME STATEMENT
The typical income statement has five major sections:
(1) sales revenue, (2) cost of goods sold, (3) operating
expenses, (4) financial expense, and (5) income taxes
estimated.
Revenue—sales revenue is often referred to as gross
revenue.
Cost of Goods Sold—the cost of goods for a given
period equals the beginning inventory plus any
purchases the firm makes minus the inventory on
hand at the end of the period.
Operating Expenses—major expenses, exclusive of
costs of goods sold, are classified as operating
expenses. Expenses often are divided into two broad
subclassifications: selling expenses and administrative
expenses.
Financial Expense—financial expense is the interest
expense on long-term loans.
Estimated Income Taxes— corporations pay
estimated income taxes.
The Cash-Flow Statement
The cash-flow statement shows the effects of a
company’s operating, investing, and financing
activities on its cash balance.
Key questions answered by the cash-flow statement:
o How much cash did the firm generate from
operations? Operating cash flows: cash
generated from or used in the course of
business operations of the firm.
o How did the firm finance fixed capital
expenditures? Financing activities: cash flow
effect of financing decisions of the firm (sale
of stocks and bonds, repurchase of
securities, and payment of dividends)
o How much new debt did the firm
add? Investing activities: cash flow effects
from long-term investing activities, such as
purchase or sale of plant and equipment
Module 6 Summary
The new marketing logic requires a fundamental
rethinking of the old rules and realizes that today’s
marketing is dynamic and happening in real-time
where the customer is in control. This new marketing
for entrepreneurs includes knowing what a market
consists of, the understanding of marketing research,
the development of a marketing plan, the effective
understanding and application of social media
marketing, and the proper approach to a pricing
strategy.
Marketing research involves the gathering of
information about a particular market, followed by
analysis of that information. The marketing research
process has five steps: (1) Define the purpose and
objectives of the research, (2) gather secondary data,
(3) gather primary data, (4) develop an information-
gathering instrument (if necessary), and (5) interpret
and report the information.
Four major reasons that entrepreneurs may not carry
out marketing research are (1) cost, (2) complexity of
the undertaking, (3) belief that only major strategic
decisions need to be supported through marketing
research, and (4) belief that the data will be
irrelevant to company operations. Usually, they
misunderstand the value of marketing research or
fear its cost.
Social media marketing describes the use of social
networks, online communities, blogs, wikis, and other
online collaborative media for marketing purposes.
The most common social media marketing tools
include Twitter, blogs, LinkedIn, Facebook, Flickr, and
YouTube. A social media marketing plan should be
developed that details the venture’s social media
goals and the actions necessary to achieve them.
Mobile devices are now within everyone’s reach, and
thus people are connected with their social networks
constantly. Mobile social media marketing is a fast-
paced and high-impact marketing tool that many
companies have started to use very successfully as
part of their overall marketing strategy. Many
companies are now using mobile social media
applications as their standard communication
strategy to connect with consumers.

Because new start-up ventures are resource-

constrained, the chapter covered some innovative
methods for entrepreneurs to conduct market
research. From there we examined the development
of a marketing concept which has three important
parts. The first part is the formulation of marketing
philosophy. Some entrepreneurs are production-
driven, others are sales-driven, and still, others are
consumer-driven. The entrepreneur’s values and the
market conditions will help determine this
philosophy. The second part is market segmentation,
which is the process of identifying a specific set of
characteristics that differentiates one group of
consumers from the rest. Demographic and benefit
variables often are used in this process. The third part
is an understanding of consumer behavior. Because
many types and patterns of consumer behavior exist,
entrepreneurs need to focus on the personal and
psychological characteristics of their customers. In
this way, they can determine a tailor-made,
consumer-oriented strategy. This customer analysis
focuses on such important factors as general buying
trends in the marketplace, specific buying trends of
targeted consumers, and the types of goods and
services being sold.

A marketing plan is a process of determining a clear,

comprehensive approach to the creation of
customers. The following elements are critical for
developing this plan: current marketing research,
current sales analysis, a marketing information
system, sales forecasting, and evaluation.

Pricing strategies are a reflection of marketing

research and must consider such factors as marketing
competitiveness, consumer demand, the life cycle of
the goods or services being sold, costs, and prevailing
economic conditions. Today’s social media start-ups
are finding unique ways of generating revenue from
the very beginning. In the chapter, we presented
five revenue models including freemium, affiliate,
subscription, virtual goods, and advertising.