Presentation on theme: "ENT 422 The Role of Entrepreneurship in Value Creation in Large and Small Enterprises Lecture 2."— Presentation transcript:
ENT 422 The Role of Entrepreneurship in Value Creation in Large and Small Enterprises Lecture 2
Highlights of September 19 Entrepreneurship consists of five phases but our focus will be on the first – determining if an idea can become an opportunity. The remaining phases will be discussed during the course. To help evaluate ideas we will use the “Idea Generation Guide”, the “Quickscreen” exercise and the “Venture Opportunity Screening” exercises (VOSE) Entrepreneurship has its genesis in older disciplines: law, economics social sciences, finance, etc. After this course students will be prepared for other entrepreneurship offerings. Teams are critical in developing businesses. We ask students to form teams of two or three
Corporate Venturing Block and Macmillan Chapter I Corporate Venturing – What Is It? Why Do It?
What Is It? A New Venture Begun Internally Involves Risk – For the corporation – For the individuals involved and their careers
Why Do It? Corporations start new businesses because – The base business is maturing To meet strategic goals New ideas from employees Pressure for revenue/profit growth Attempt to commercialize IP
Track Record Varies From Excellent to Disastrous Successful Ventures Are – – Often more rewarding than acquisitions – Usually profitable in 2 to 3 years – Achieve greater ROI levels than base business The Key To Success – – Today? – Tomorrow?
Track Record (cont.) The Reasons for Failure – Inadequacy of management team Lack or organizational mentor Inadequate evaluation of the idea Project is inadequately resourced; forced to play under rules of base business Career path – uncertain for the team
Should All Companies Attempt Venturing? The Short Answer Is ― Yes! Key management/mentor support critical. A significant opportunity for younger employees. It could be you!!
Personal Experiences Ingersol Products, Division of Borg Warner Corp. Manufacturer of Agricultural Components Chief engineer had an idea – Motorize the functions of hospital beds – A. T. Kearney asked to evaluate idea – Secondary and primary research was conducted – Conclusion: an “opportunity” existed Resources were assembled including preparation of a business plan A new business was launched After launching typical enhancements were added It became the largest hospital bed supplier The chief engineer was handsomely rewarded
Personal Experiences (cont.) Sarah Coventry, Intl., manufacturer and marketer of costume jewelry Used party plan method of selling Two managers had an idea – Sell Jewelry By Direct Mail – Four Countries – Selected As Test Markets – Germany, France, Italy and Spain – Consultants Hired To Conduct The Study All countries found fairly equal in terms of – Population – Receptivity to direct mail and catalogue purchasing – Disposable income – Conclusion: an “opportunity” existed – Germany was selected as first among equals Resources were assembled including a business plan A new business was launched under the two managers who came up with the idea It was successful and breakeven reached in 18 months
Peter may want to add some personal experiences.
Entrepreneurship Baron and Shane Chapter 2: “Uncovering Opportunities” Selected Highlights from the Chapter
Major Changes Occurring Causing Opportunities for Entrepreneurs Technological – makes it possible to do things in new and different ways Political and regulatory – makes it possible to develop business ideas that are more productive Social and demographic – changes in preferences provide opportunities for new offerings
Established Firms Often Find Difficulty Inventing New Technologies New technologies may not satisfy present customers New technology of little use to satisfied customers and may cause them to change suppliers New firms may have nothing to lose by inventing new technology
Three Industry Components Influencing New Venture Success 1. Knowledge conditions – complexity of information required for success demand conditions – attributes that create desire on the part of purchasers. 2. Industry life cycles – the stage of an industry influences the success of new ventures. 3. Industry structure – those industries requiring a lot of capital, heavy advertising, concentration in few companies and high average size bad for startups.
Impact of Dominant Design on New Ventures New firms more successful when adopting their own When dominant mode present startups must adopt in order to compete
Entrepreneurship Baron and Shane Chapter 3: “Cognitive Foundations of Entrepreneurship” Selected Highlights from the Chapter
Entrepreneurs And the Illusion of Control They tend to assume a greater control of events than is realistic. These include economic conditions, competition customer’s reactions, effects of laws/regulations.
Creativity and Prototypes Prototypes may interfere with creativity: people may tend to regard them as the “final” design or product. But they can be helpful by providing a framework conveying new information.
What Is Creativity? Defined as creating something new and useful. Important because it provides knowledge, advances improving quality of life.
Three Components of Intelligence First Analytical: Ability to think critically. Second Creative: Ability to formulate ideas and insights in problem solving. Third Practical: Being intelligent in a realistic sense. We encourage reading both chapters for in-depth understanding of the issues
Sources of Ideas Hisrich (handout) Chapter 5 “Creativity and the Business Idea” Selected Highlights from the Chapter
Sources of New Ideas Some of the more frequent are – Consumers – entrepreneurs should consider them both formerly an informally for ideas and needs Existing products and services – should closely monitor competitive offerings for opportunities Distribution channels – rich source because of familiarity with market needs Federal government – patent office files and response to government regulations are good idea sources Research and development – entrepreneur’s own efforts are the single largest possibility
Methods for Generating Ideas Even many sources already mentioned – sometimes difficult to come up with ideas. Some suggestions – Focus groups – open, in-depth discussions. I’ve often used them successfully Brainstorming – uninhibited development of ideas Problem inventory analysis – obtaining ideas by focusing on problems There are other techniques less frequently used which the chapter describes. Read at your leisure.
Workshop Hand in list of team members Hand in completed student biographical form Discuss idea generation guide, the Quickscreen exercise and the 12 venture opportunity screening exercises (VOSE) Readings (handout materials) Work on selecting two ideas” using the idea generation exercise
Assignment for September 28 Guest Speaker: Jim Doyle, Jr., Executive Director Proventure (Far East) Ltd. Topic: “How We Evaluated Ideas, Selected One And Built a Company” Lecture: sources of information for evaluating ideas readings: Baron, Chap. 4: “Acquiring Information”, (handout materials); Alreck, Chap. 1: “Initiating a Survey”; Chap. 2: “Planning the Project”; The Market Research Encyclopedia; Business Plan; Competition Resources; Conjoint Analysis; Internet sources including Google; Business Week article, “Get Creative” Workshop: – Hand in and discuss the idea generation guide for two ideas – Work on the application of Quickscreen exercise for two ideas, deciding on one for further study (due at the next class)