AEM1200-02.11 - AEM1200, Introduction to Business...

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Unformatted text preview: AEM1200, Introduction to Business Management AEM1200, Friday 2/11 Business and Entrepreneurship What is business? Profits, risk and business Entrepreneurship Succeeding in entrepreneurship and small Succeeding business business What is business? What Activity seeking profit Activity profit Provides goods/services Satisfy standard of living- quality of life Objectives of Business Objectives Survival Growth Profit Social Social Responsibility Responsibility The Five Factors of Production The Profit and Risk Profit Revenue – Expense = Profit (Loss); The higher the risk, the higher the probability of The losing a large amount of money; amount Investment of factors/resources/capital will occur Investment only if there is a equally large or larger only probability of winning a large amount of money. winning Risk vs. Uncertainty Risk Risk Known likelihood of losing a large amount of money; money; Known unknown Uncertainty Unknown likelihood of losing a large amount Unknown of money; of Unknown unknown Forms of Participation in a Business Enterprise Forms Entrepreneurship An entrepreneur is a person who risks time and An entrepreneur money to start and manage a business money Personal Institutional Ownership Employment Others Customer Supplier Government Entrepreneurship Entrepreneurship Accepting the risk of starting and running a business. Entrepreneurial attitudes s Self-Directed & Self-Disciplined s Self-Nurturing s Action-Oriented s Highly Energetic s Tolerant of Uncertainty Types of entrepreneurship Types High growth entrepreneurship “Incremental” entrepreneurship Micropreneurship Home-based businesses Web-based businesses Intrapreneurship Small and Medium Enterprise Small Privately owned Privately operated Not dominant in its industry Relative (to the industry) small revenue and/or # Relative of employees of Small Business: Types Small Lifestyle businesses Intended to provide the owner with a comfortable Intended lifestyle lifestyle Low tech: beauty saloons, restaurants, specialized retail; High tech: providers of specialized capabilities and services. High growth ventures Businesses with ambitious sales, profit, and growth Businesses objectives objectives Low tech: franchising, retailing, marketing orientation; High tech: disruptive technologies, venture capital. Small Business Small Personalized Service/ Personalized Personal Contact Personal Flexibility Lower Costs Innovation Innovation Opportunities Opportunities - Limited Experience Long Hours Insufficient Capital High Failure Rate Internationalization of small business Internationalization 1. World Market 1. Absorb Excess Absorb 1. Financing Difficult 1. How to Get Started? 1. Lack of Cultural Lack 1. Soften U.S. Soften Inventory Inventory Understanding Understanding 1. Paperwork 1. Extend Product Life Downturns Downturns Successful small businesses Successful Have a clear and detailed plan of the activities of Have the business the Firmly engage in marketing Monitor and control operations closely Cope with red tape Adjust to growth Seek advice & assistance Remember that: Larger businesses that are more heavily capitalized, organized as corporations, started on a full-time basis by a team of entrepreneurs who have a written business plan and are seeking to provide products to customer missed by others will, on average, be more successful than other new businesses… Such things as emphasizing marketing and financial controls, focusing their activities on a single market, and not competing on price will enhance a new venture performance… Start-ups founded by people who obtain an education and then get experience working in the industry in which they plan to start a business, and who are starting their businesses with the goal of making money, have better financial performance, on average, than other startups… The Illusions of Entrepreneurship, Scott Shane, 2008 Take-aways Take-aways Entrepreneurs combine their own, or others, land, labor, Entrepreneurs capital and knowledge to create businesses. Businesses are organizations oriented towards offering products and services with the objectives of surviving, growing, and serving the public while making a profit. serving Business obtains resources and legitimacy from society, Business and it is therefore responsible to it. This responsibility is discharged through service to stakeholders. stakeholders All businesses run risks, a chance that a business will All risks chance not succeed and, therefore, lose its stakeholders their resources and work. There is a positive correlation between intelligent risk taking and control, and profit. between ...
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