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Entrepreneurial small businesses are the mainstay of economies around the world.
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Entrepreneurial companies are domestic and global, as are their potential benefits and problems.
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What is Entrepreneurship?
Entrepreneurship can be practiced by individuals or companies.
entrepreneurship the process of starting up a new company or business
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Individual Entrepreneurs
When an entrepreneur starts a business, one of four results can occur:
1. The company survives but stays small.
2. The company grows and becomes a major corporation.
3. The company is purchased and merges with another company.
4. The company fails, which is the most common result.
entrepreneur a person who starts a new business
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Advantages of Entrepreneurship
Innovation and frustration can motivate individuals to start new businesses.
An entrepreneur is a risk manager, not a risk taker.
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Advantages of Entrepreneurship
Self-Direction and
Self-Reliance
Potential
Profits
Advantages of
Entrepreneurship
Flexibility
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Advantages for Others
In the United States, small businesses and entrepreneurial operations provided nearly 75 percent of all new jobs in the 1990s.
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Advantages for Others
Most new products and services reach the market through entrepreneurships.
Small business ownership is an alternative to corporate America.
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Disadvantages of Entrepreneurship
Disadvantages of Entrepreneurship
Long hours and complete responsibility for the business
Owners at work or at home worrying about work
Complete responsibility including potential for liability lawsuits
Complete financial risk
Potential problems with employees
Potential loss of personal funds and investment
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Intrapreneurship
The primary advantages of intrapreneurship involve financing and expertise.
intrapreneurship the process of starting a new business that is spun off from an existing business
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Intrapreneurship
A corporation has access to both internal and external capital.
A corporation has access to well-skilled and knowledgeable employees.
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Entrepreneurial Trends The world’s cultures include both individualistic
(self-oriented) and collectivist
(group-oriented) cultures. Within all types of cultures, research has shown that many people would prefer to be their own bosses.
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Global Entrepreneurship
A domestic company’s owner or management team may decide to engage in global entrepreneurship .
global entrepreneurship the process of selling new products, starting a new operating division, or starting up a new company in another country
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Ability to Compete
A company should consider its ability to compete globally on four different levels.
Country Level Company Level
Industry Level Product Level
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Ability to Compete
Country-
Level Ability
A company must examine the target country’s natural, human, and capital resources.
Industry-
Level Ability
A company must analyze the success of its industry within the target country.
Company-
Level Ability
A company must have enough capital, staff, and relationships with companies in the target country.
Product-
Level Ability
A company must consider competing products that already exist in the target country.
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Benefits of Global Entrepreneurship
Benefits of Global Entrepreneurship
Gain increased sales
Enter new and potentially profitable markets
Smooth out sales by selling out-of-season goods overseas
Smooth out sales by selling older versions of products overseas
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Risks of Global Entrepreneurship
Political or
Country Risk
A government could take over the company, or the government might change laws affecting the business.
Economic
Risk
Time
Risk
Economic risks include higher interest rates and rising unemployment.
There is a greater risk of losing money when recovering an investment; or getting the money back, takes a long time.
Product
Risk
Certain products can be risky if they are not accepted, or if competition is strong.
Financial
(or Cost) Risk
Recovering an investment in a business and making a profit can take several years.
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Support Systems
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International Support
The World Bank helps countries develop and participate in international trade.
The World Bank also supports joint ventures with companies or governments.
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International Support
International exchange organizations include:
The Asian Development Bank (AsDB)
The European Bank for Reconstruction and
Development (EBRD)
The Inter-American Development Bank
(IDB)
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Local Support
Local support can come from:
The local chamber of commerce
State governments
The U.S. Department of Commerce
The Small Business Administration
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