Entrepreneurship

BBA – 2008 – Spring Semester

Salmaan Rahman
Lecture 1
What is Business? A thumbnail view
What is a Business?
• The state of being “busy” either as an individual, or as
part of an organization, doing commercially viable and
profitable work.
– Profits are usually financial, or may be even-trade
• Most commonly, a business is a legally recognized
organization designed to provide goods, services, or
both to consumers.
• The main objective is to generate and receive financial
return in exchange for work, and risk.
• Businesses can be non-profit, or state-owned.
Business categories
• Single owners – Sole Proprietorship – may operate on his
own or employ others.
– Personal liability for debts.
• Partnership – owned by two or more people
– Limited or shared personal liability
– May also be known as a company
• Corporation: - separate legal personality from its owners
– Can be privately or publically (state) owned
– Privately owned corporations might have multiple shareholders,
and overseen by a board of directors who hire the managerial
staff
– Can be for profit or non-profit.
Business ownership:
• Most Businesses are owned by private individuals
– Capitalist Society
• Some are owned by the Government
– Postal services, transportation etc.
– Nationalized businesses
• In some societies, all businesses are owned by the
government. Private ownership is discouraged. State
provides both goods and services, and keeps profits
– Socialism, communism.
What do businesses do?
• Businesses either provide goods, or services to consumers
• Classifications:
– Raw Material production: agriculture, mining
– Utility – electricity, gas etc.
– Capital generation: Banking, investment, management of money
– Manufacturing: production of physical goods from raw materials
– Retailers and distributors – middlemen, sell goods manufactured by
others
– Service Businesses – offer intangible goods,
• Profit generated from labor. Customers: consumers, govt, other buisnessess
– Information businesses - resell intellectual property
• Software, movies etc.
– Others – real estate, transportation
The business world
• What is a “market”?
• What is a “market sector”?
• What is an “industry”?
Markets
• Market – the world of commercial activity where goods, services,
or information are bought and sold
– Any arrangement that allows buyers and sellers to exchange goods
– Is there a difference between “market” and “trade”?
– What are the different types of markets?
• What is a “free market”? A virtual market? Black market? “Prediction market”?
– In marketing – a group of consumers that is interested in one product,
has the resources, and is permitted to acquire the product

• Market Sector - a set of businesses that are buying and selling

such similar goods and services
– share similar characteristics
– In direct competition with each other.
– can be treated similarly - E.g. for the purposes of advertising
Industry
• A basic category of business activity.
– Involves all the people or companies engaged in a
particular kind of commercial enterprise
– Banking industry, telecom industry, music industry

• Compound form: all activity by the community

(suppliers, manufacturers, etc)
– Agribusiness, Mining, etc.
Commercial law
• Most commercial transactions are governed by a very detailed and well-
established body of rules
• Laws govern:
– treatment of labor
– safety and protection issues,
– anti-discrimination laws (age, gender, disabilities, race, and in some jurisdictions, sexual
orientation),
– minimum wage laws
– workers compensation laws,
– annual vacation or working hours time.
• License and trademark laws.
• Minimum qualification laws
• Some businesses are subject to ongoing special regulation
– investment securities, banking, insurance,
– health care providers.
– Broadcast
What are Entrepreneurs?
And how do they fit into the business world?
• Loan word from French – “entreprendre” – to undertake
• Related words: enterprise
– An undertaking, especially one of some scope, complication, and
risk.
– A business organization.
– Industrious, systematic activity, especially when directed toward
profit: Private enterprise is basic to capitalism.
– Willingness to undertake new ventures; initiative

• A person who organizes, operates, and assumes the risk

for a business venture
Who are entrepreneurs?
• Classically, entrepreneurs are those people
who are willing– or able – to take a creative
idea and transform it into a commercially
viable business.

• Entrepreneurship is a cohesive process

involving creativity, innovation, risk taking, and
planning.
Some facts about entrepreneurship
• All economies are based upon entrepreneurship
• Entrepreneurship has a somewhat paradoxical
relationship with the economy – when the
economy takes a downturn, its usually
entrepreneurship that brings it back
– Entrepreneurs are individual who see opportunity
where others see chaos and confusion
– They are often aggressive catalysts for change
– They often challenge and break barriers.
Is there a difference between
entrepreneurs and small business owners?
• The words are often used interchangeably and
many aspects are similar
• However. . .
– Small business owners usually do not engage in
new or innovative practices
– Usually expect stable sales, predictable profits,
and growth, and a non-aggressive approach.
– Small business owners may be considered as
managers of business rather than entrepreneurs.
Entrepreneurial Ventures
• Usually involves some degree of innovation, the
potential for higher profitability, and much more rapid
growth
– And naturally, much higher risk
• Entrepreneurs usually have a different perspective
than SBO’s
– Might seek rapid growth, immediate profits, or even the
sale of their business for large capital gains.
• Entrepreneurship studies often focus on the particular
type of growth associated with innovation and change
Entrepreneurship
• Is more than the mere creation of a business
• Often characterized by:
– Seeking opportunities
• 14% of entrepreneurs report that their product has no competitor
– Taking risks beyond security
– Having the tenacity or persistence to push an idea through barriers to
reality

• Entrepreneurship
– can occur within an organization (intrapreneurship)
– be for profit or non-profit
– Be unrelated to business entirely (social entrepreneurs)