Chapter 5 Entrepreneurship Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002

Learning Objectives After reading this chapter, you should be able to:  Explain what entrepreneurs do and describe how the environment supports their activities  Describe the personal characteristics that contribute to an entrepreneur’s success  Describe the planning requirements associated with becoming a successful entrepreneur  Recognize intrapreneurs and the organizational characteristics that encourage intrapreneurship 5.1

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Advantages of Working in a Small Business  Greater opportunity to increase personal wealth  More likely to have “extremely satisfied” employees  Variety of skills and responsibilities  Personal performance affects company’s profitability 5.2

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Disadvantages of Working in a Small Business  Lower guaranteed pay  Fewer medical and other insurance benefits  Expected to use many skills and wear different hats (could be viewed as advantage)  Fluctuation in business size and condition is possible  May be difficult to move to a big company 5.3

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Characteristics of Entrepreneurs Personal Attributes Technical Proficiency Managerial Competencies Successful Entrepreneur Adapted from Figure

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Questions Addressed in a Business Plan  What are my motivations for owning a business?  Should I start or buy a business?  What and where is the market for my product or service?  How much will it cost to own the business, and where will I get the money?  Should my company be domestic or global?  How will growth be managed? 5.5

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Questions to Consider When Deciding to Start a Business  Is there a way to begin the enterprise in stages or with a limited investment?  Can I run the company at first as a home-based business?  Can I continue working for someone else and put in time after hours?  To what extent can I draw on relatives to help me? 5.6

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002 Considerations For Going Global  Are the best human resources dispersed among various countries?  Would foreign financing be easier or more suitable?  Do target customers require a venture to be international?  Will worldwide communication lead to quick responses from competitors in other countries?  Will worldwide sales be required to support the venture?  Will domestic inertia be crippling if internationalization is postponed? 5.7

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002  Clear job responsibilities  Clear hiring criteria for interested family members  Clear plan for management transitions  Committed to resolving conflicts quickly  Outside advisors are used to mediate conflicts 5.8 Adapted from Figure 5.4 Successful Family Businesses

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002  Ensuring equitable estate treatment  Preparing for ownership transfer  Minimizing estate taxes  Ensuring the financial security of the senior generation  Selecting and developing a successor 5.9 Strategic Factors for Survival to the Next Generation

Hellriegel, Jackson, and Slocum MANAGEMENT: A Competency-Based Approach South-Western College Publishing Copyright © 2002  Commitment from senior management  Flexible organization design  Autonomy of the venture team  Competent and talented people who exhibit entrepreneurial behaviors and attitudes  Incentives and rewards for risk taking  An appropriately designed control system 5.10 Characteristics of Intrapreneurial Firms