1
The Winning Hand of Entrepreneurship
LEARNING OBJECTIVES
Discuss the availability of entrepreneurial opportunities and give examples of successful
businesses started by entrepreneurs.
1
 Where a business idea is often a concept in search of an application, an entrepreneurial
opportunity is a desirable and timely innovation that creates value.
 Successful entrepreneurs pursue opportunities by first identifying value-creating innovations
with market potential.
 Marketplace Holdings, the largest supermarket chain owned by an African-American in the
United States, became successful through offering innovative services.
 Auntie Ann’s, an example of a successful franchise, grew from humble beginnings to provide
business opportunities to hundreds of others.
 Roto Zip Tool Corporation, a company typical of an inventor-based business, grew out of a
frustration with a type of tool needed for the inventor’s own use.
 No matter what a person’s background may be, opportunities for successful entrepreneurial
ventures must be recognized and grasped with enthusiasm.
2
Explain the entrepreneurial challenges presented by e-business and global
changes.
 Two powerful forces at work in the business community are e-business and globalization.
 Entrepreneurs can be founders of business firms, active owner-managers, or even secondgeneration members of family-owned firms.
 Entrepreneurs are risk takers who provide impetus for change, innovation, and progress in
economic life.
3
Explain the nature of entrepreneurship and how it is related to small business.
 Economic impact defined by the Small Business Administration (SBA) is as follows: 1) 25
million small businesses, 2) employ more than 52% of the private workforce, 3)principal
source of new jobs (more than 20 million since 1993), 4) generate more than 51% of private
sector gross domestic product.
 A small business usually is financed by a small group, is geographically localized, smaller than
competitors, and usually employs fewer than 100 people.
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Entrepreneurship and Small Business
Identify motivators or rewards of entrepreneurial careers.
 Entrepreneurs are pulled by powerful incentives.
 Entrepreneurs expect a return that will not only pay them for the time and money they invest but
also reward them with profits.
 The freedom to operate independently is another reward of entrepreneurship.
 Another reward is the personal fulfillment that is achieved when entrepreneurs own their own
business.
 Foreign refugees escape political, religious, or economic constraints of their homeland.
 Corporate refugees flee corporate bureaucratic environment.
 Other refugees include parental, feminist, housewife, society and educational.
5
Describe the various types of entrepreneurs and entrepreneurial
ventures.
 Entrepreneurship is marked by great diversity.
 Entrepreneurs may be classified into three types: founders, administrative entrepreneurs, and
franchisees.
 Businesses that have glowing prospects for growth are called high-potential ventures or
gazelles.
 Attractive small firms offer substantial rewards to their owners, representing a strong segment of
small business.
 Small firms that provide very modest returns to their owners are called microbusinesses
 Entrepreneurial teams, or plural entrepreneurs, offer a broad range of managerial talents.
 The education of an artisan entrepreneur is limited to technical training. They are paternalistic,
reluctant to delegate authority, have few capital sources for firm creation, use personal selling
efforts, and have a short planning horizon.
 Opportunistic entrepreneurs avoid paternalism, delegate authority, employ various marketing
strategies and types of sales efforts, obtain original capitalization from several sources, and
plan for future growth.
 Women now own 9.1 million businesses and represent 38% of all firms in the US.
6
Identify ways to gain a potential competitive edge for small entrepreneurial
firms.
 Good customer service can be provided by a small business.
 A small business has the potential to produce quality goods and show integrity in customer
relationships.
Chapter 1 The Winning Hand of Entrepreneurship
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 New, small businesses have been responsible for 50 percent of all innovations and 94 percent of
all radical innovations since World War II.
 Small firms can offer low-cost advantages to a smaller customer base.
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
 The ideal age for entrepreneurship seems to lie between the mid-20s and the mid-30s when there
is a balance between preparatory experiences and family obligations.
 An entrepreneur usually has a high need for achievement, a willingness to take moderate risks,
strong self-confidence, and a passion for the business.
 Entrepreneurs have a higher internal locus of control than does the general population.
 Precipitating events, such as job termination, job dissatisfaction, or an unexpected opportunity,
often cause individuals to become entrepreneurs.
QUICK IDENTIFICATION AND EXPLANATION
1
Discuss the availability of entrepreneurial opportunities and give
examples of successful businesses started by entrepreneurs.
1. entrepreneurial opportunity: a value-creating innovation with market potential
2. entrepreneur: a person who starts and/or operates a business
4
Identify motivators or rewards of entrepreneurial careers.
3.
refugee: a person who becomes an entrepreneur to escape an undesirable situation
4. foreign refugee: a person who leaves his or her native country and becomes an entrepreneur
in a new country
5. corporate refugee: a person who leaves big business to go into business for himself or
herself
5
Describe the various types of entrepreneurs and entrepreneurial
ventures.
6. founder: an entrepreneur who brings a new firm into existence
7. administrative entrepreneur: an entrepreneur who oversees the operation of an ongoing
business.
8. franchisee: an entrepreneur whose power is limited by a contractual relationship with a
franchising organization
9. high-potential venture (gazelle): a small firm that has great prospects for growth
10. attractive small firm: any small firm that provides substantial profits to its owner
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Entrepreneurship and Small Business
11. microbusiness: a small firm that provides minimal profits to its owner
12. entrepreneurial team: two or more people who work together as entrepreneurs
13. artisan entrepreneur: a person who starts a business with primarily technical skills and little
business knowledge
14. opportunistic entrepreneur: a person who starts a business with both sophisticated
managerial skills and technical knowledge
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
15. internal locus of control: belief that one’s success depends on one’s own efforts
16. external locus of control: belief that one’s life is controlled more by luck or fate than by
one’s own efforts
17. precipitating event: an event, such as losing a job, that moves an individual to become an
entrepreneur
TRUE/FALSE QUESTIONS
Mark each statement with a T, if it is true, or with an F, if it is false.
1
Discuss the availability of entrepreneurial opportunities and give
examples of successful businesses started by entrepreneurs.
___ 1. Some individuals begin their entrepreneurial careers because of disappointing experiences
as employees.
___ 2. A successful entrepreneur must be able to recognize opportunity and act on it.
2
Explain the entrepreneurial challenges presented by e-business and
global changes.
___ 3. Two powerful forces at work in the business community are globalization and innovation.
3
Explain the nature of entrepreneurship and how it is related to small
business.
___ 4. Small business has little economic impact on employment in the United States.
___ 5. Small business is usually financed by a small group of owners.
___ 6. The marketing function of a small business is usually geographically localized.
___ 7. Typically, the number of employees in a small business is fewer than 100.
4
Identify motivators or rewards of entrepreneurial careers.
Chapter 1 The Winning Hand of Entrepreneurship
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___ 8. Many entrepreneurs use their independence to achieve flexibility in their personal lives and
work habits.
___ 9. Foreign refugees are individuals who escape the political, religious, or economic constraints
of their homeland by crossing national boundaries.
___ 10. Individuals who leave small firms to join the bureaucratic environment of big business are
called corporate refugees.
5
Describe the various types of entrepreneurs and entrepreneurial
ventures.
___ 11. Founders may be inventors who initiate a business on the basis of new or improved
products or services.
___ 12. Franchisees differ from general managers in the degree of their independence.
___ 13. Firms that have great prospects for growth are called gazelles.
___ 14. Microbusinesses provide very large profit returns to their owners.
___ 15. Entrepreneurial teams are declining in popularity in ventures of substantial size.
___ 16. The education of the artisan entrepreneur is limited to technical training.
___ 17. The opportunistic entrepreneur has supplemented technical education by also studying
nontechnical subjects.
___ 18. The number of women becoming entrepreneurs has declined during the last decade.
6
Identify ways to gain a potential competitive edge for small entrepreneurial firms.
___ 19. Small firms have great potential for providing good customer service.
___ 20. If a small business is consistently ethical, it can earn the loyalty of a skeptical public.
___ 21. Studies by the U.S. Department of Commerce indicate that 94 percent of all radical
innovations since World War II came from large firms.
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
___ 22. The ideal age for entrepreneurship appears to be the late 40s.
___ 23. There is a negative correlation between the need for achievement and entrepreneurial
activity.
___ 24. Entrepreneurs must be willing to take risks.
___ 25. Entrepreneurs who believe that their success depends on their own efforts have an external
locus of control.
___ 26. Some entrepreneurs decide to launch their own businesses because of precipitating events,
such as job termination, job dissatisfaction, or unexpected opportunities.
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Entrepreneurship and Small Business
MULTIPLE-CHOICE QUESTIONS
Circle the letter that appears in front of the correct response.
1
Discuss the availability of entrepreneurial opportunities and give
examples of successful businesses started by entrepreneurs.
1. The term entrepreneur
a. only includes founders of business firms.
b. includes all active owner-managers, members of family-owned firms, and ownermanagers who buy out founders of existing firms.
c. includes all managers of giant corporations.
d. includes all foreign businesspeople.
2
Explain the entrepreneurial challenges presented by e-business and
global changes.
2. The trend toward a global economy
a. has reduced opportunities for small businesses.
b. has created a new kind of competition and opened up opportunities.
c. has been decreasing.
d. has negatively impacted large, resource-rich companies.
3
Explain the nature of entrepreneurship and how it is related to small
business.
3. Which is NOT a criteria for small business in the text?
a. financed by a large group of investors
b. is geographically localized
c. in relation to competitors, is considered small
d. usually employs fewer than 100 people
4
Identify motivators or rewards of entrepreneurial careers.
4. In a recent survey of business owners, 38 percent of those who left jobs at other companies
said the main reason was that they wanted
a. to be their own boss.
b. more free time.
c. higher financial rewards.
d. a better life-style.
5. Which of the following is NOT a reward of entrepreneurship?
a. profit
b. less work
c. independence
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d. personal fulfillment
6. What type of refugee flees the bureaucratic environment of big business?
a. foreign
b. society
c. corporate
d. educational
7. What type of refugee experiences discrimination and elects to start a firm free of interference
by the opposite gender?
a. housewife
b. society
c. parental
d. feminist
5
Describe the various types of entrepreneurs and entrepreneurial
ventures.
8.
Which of the following is NOT a classification for entrepreneurs?
a. founders
b. administrative entrepreneurs
c. franchisees
d. corporate executive
9. Which of the following produce modest returns to their owners?
a. microbusinesses
b. gazelles
c. attractive small firms
d. high-potential ventures
10. ______________ combine the resources and talents of two or more individuals to concentrate
on one endeavor.
a. Administrative managers
b. Entrepreneurial teams
c. Opportunistic entrepreneurs
d. Artisan entrepreneurs
11. The education of what type of entrepreneur is limited to technical training?
a. opportunistic
b. franchisee
c. general manager
d. artisan
12. Which of the following is NOT a characteristic of artisan entrepreneurs?
a. They are paternalistic.
b. They delegate authority well.
c. Their sales efforts are personal.
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Entrepreneurship and Small Business
d. Their time orientation is short.
13. During the last decade, the number of women-owned businesses
a. decreased.
b. increased.
c. stayed about the same.
d. increased in traditional industries.
6
Identify ways to gain a potential competitive edge for small
entrepreneurial firms.
14. Which of the following is NOT an area in which small firms have the potential for advantage over
large firms?
a. financing
b. service
c. radical product/service innovations
d. integrity and responsibility
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
15. The optimal age for beginning entrepreneurship is
a. the mid-20s to mid-30s.
b. the mid-30s to mid-40s.
c. the mid-40s to mid-50s.
d. over 50.
16. Which of the following is NOT a characteristic of entrepreneurs?
a. a high need for achievement
b. extremely high willingness to take risks
c. strong self-confidence
d. a passion for the business
17. Entrepreneurs who believe their success depends on their own efforts have an
a. external locus of control.
b. excellent ability to delegate.
c. internal locus of control.
d. excessive amount of confidence.
18. Which of the following is NOT a precipitating event?
a. job promotion
b. job termination
c. job dissatisfaction
d. unexpected opportunities
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FILL-IN-THE-BLANK QUESTIONS
Write the correct word in the blank provided.
1
Discuss the availability of entrepreneurial opportunities and give
examples of successful businesses started by entrepreneurs.
1. _______________ are founders of business firms, active owner-managers, members of
family-owned firms, and owner-managers who buy out founders of existing firms.
2
Explain the entrepreneurial challenges presented by e-business and
global changes.
2. An important economic change is the trend toward a _______ economy, opening up business
opportunities.
3
Explain the nature of entrepreneurship and how it is related to small
business.
3. Entrepreneurs are ____________ who provide impetus for change, innovation, and progress in
economic life.
4. _______________ are the principal source of new jobs in the country, more than 20 million
since 1993.
5. The number of employees in a small business is usually fewer than _______________.
4
Identify motivators or rewards of entrepreneurial careers.
6. The three basic rewards of entrepreneurship are _______________, _______________, and
personal fulfillment.
7. Some _______________ is necessary for a firm’s survival.
8. Entrepreneurs frequently speak of the ___________ they experience in their own business.
9. Individuals who flee the bureaucratic environment of big firms are called _______________
refugees.
10. The _______________ refugee senses some alienation from the prevailing culture and
expresses it through entrepreneurial activity.
11. The _______________ refugee tires of academia and decides to go into business.
5
Describe the various types of entrepreneurs and entrepreneurial
ventures.
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Part 1
Entrepreneurship and Small Business
12. _______________ may be inventors who initiate businesses on the basis of new or improved
products or services.
13. ___________ ______________ preside over the operation of successful ongoing business
firms.
14. An entrepreneurial _______________ is formed by bringing together two or more individuals
to function in the capacity of entrepreneurs.
15. Firms with great prospects for growth are called high-potential ventures or _______________.
16. The education of the _______________ entrepreneur is limited to technical training.
17. The _______________ entrepreneur has supplemented a technical education by studying such
nontechnical subjects as economics, law, or English.
18. The number of women becoming entrepreneurs has _______________ during the last decade.
19. Lack of access to _______________ has been a problem frequently cited by women
entrepreneurs.
20. A barrier for some women is the limited opportunity they find for business _______________
with others in similar positions.
6
Identify ways to gain a potential competitive edge for small
entrepreneurial firms.
21. Small firms have _______________ potential for good customer service than do larger firms.
22. Customers respond to evidence of _______________ because they are aware of ethical issues.
23. Approximately 94 percent of all radical innovations since World War II have come from
_______________ firms.
24. In many situations, small firms can find ways to operate that give them a _______ advantage.
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
25. The ideal time for entrepreneurship is somewhere between the ages of _______________.
26. Psychologists recognize that people differ in the degree of their need for _______________.
27. On average, entrepreneurs have a/an _______________ need for achievement than do
members of the general population.
28. People who feel that their lives are controlled to a great extent by luck or fate have an
_______________ locus of control.
29. Some entrepreneurs are stimulated by _______________ events, such as job termination, job
dissatisfaction, or unexpected opportunities.
Chapter 1 The Winning Hand of Entrepreneurship
ESSAY QUESTIONS
Write your answers in the space provided.
1
Discuss the availability of entrepreneurial opportunities and give
examples of successful businesses started by entrepreneurs.
1. Define the term entrepreneur.
2
Explain the entrepreneurial challenges presented by e-business and
global changes.
2. Discuss the two powerful forces at work in the business community.
3
Explain the nature of entrepreneurship and how it is related to small
business.
3. Describe the economic impact if small business on the United States economy.
4. Define small business in the context of the textbook.
4
Identify motivators or rewards of entrepreneurial careers.
5.
List three rewards that pull individuals into entrepreneurship.
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6.
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Entrepreneurship and Small Business
Define the term “refugee” and give some examples.
Describe the various types of entrepreneurs and entrepreneurial
ventures.
7. How do founders differ from administrative entrepreneurs?
8. How do franchisees differ from general managers?
9. List the three potential types of business ventures.
10. List the characteristics of artisan entrepreneurs.
11. What is the basic difference between artisan entrepreneurs and opportunistic entrepreneurs?
12. Discuss the growing number of women becoming entrepreneurs.
Chapter 1 The Winning Hand of Entrepreneurship
13. What are some of the obstacles facing women entrepreneurs?
6
Identify ways to gain a potential competitive edge for small
entrepreneurial firms.
14. How can small businesses achieve a competitive edge?
7
Discuss factors related to readiness for entrepreneurship and getting
started in an entrepreneurial career.
15. Discuss the common stereotype of the entrepreneur.
16. List three precipitating events that lead to entrepreneurship.
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