Chapter ThreeEntrepreneurs, Managers, and Employees

3- *

The Role of the EntrepreneurEntrepreneur a person ready to supply the enterprise energy, boldness, courage, spirit, expertise necessary to start and grow a businessSee the qualities of an entrepreneur at sideroad.com

3- *

Commercial OpportunitiesFirst mover advantage the competitive advantage gained by being first to develop a new product or process

3- *

Organizational OpportunitiesIntrapreneurship Entrepreneurial activity that takes place inside an established company

3- *

Risks of EntrepreneurshipEntrepreneurs often overestimate their ability to create new productsEntrepreneurs underestimate how difficult it is to reach prospective customersEntrepreneurs may not realize how much ready cash is needed to see a small business through its critical birth period

3- *

Why Be an Entrepreneur?Entrepreneurs are often driven by the challenge of creating valuable new goods and servicesMany entrepreneurs are intrinsically motivated

3- *

Creative DestructionThe process by which old, inefficient companies are driven out of business and replaced by new more efficient ones.

Smaller companies with cutting edge products often become takeover targets of larger, more established companies.

3- *

The Agency ProblemDelegate giving up decision-making authority to other peopleAgency problem the problem that arises because of the separation of the ownership and control of a business

3- *

The Agency Theory ProblemFigure 3.3

3- *

The Agency ProblemManagers employees to whom a companys owners delegate responsibility for using its resources to create profitable goods and servicesStock options the right o buy a stock at a certain price and to benefit from increases in the stocks value in the future by selling it

3- *

Levels of ManagersBoard of directors experienced business executives from inside and outside of a company who are elected by their companys shareholders to act as their representatives

3- *

Levels of ManagersChief executive officer a companys top manager, responsible for overseeing the operations of the companyTop managers employees who are responsible for developing a companys business model and ultimately responsible for its success or failure

3- *

Levels of ManagersMiddle managers employees in charge of a companys various functions responsible for using resources productively to increase its profitability

3- *

Levels of ManagersFirst-line managers employees at the base of the managerial hierarchy often called supervisors

3- *

Levels of ManagementFigure 3.4

3- *

Profitability: Efficiency and EffectivenessEfficiency a cost-focused measure of how productively a companys resources are being used to produce goods and servicesEffectiveness a revenue-focused measure of how competitive the firms business model is

3- *

The Relationship Between Efficiency, Effectiveness, and ProfitabilityFigure 3.6

3- *

Four Functions of ManagersFigure 3.7

3- *

Managerial FunctionsPlanning a process that managers use to select the best business model and goals for their company

3- *

Managerial FunctionsOrganizing a process managers use to create a companys organizational structureOrganizational culture the set of values, norms, and beliefs shared by members of an organization that determine how well they work together to further the companys goals

3- *

Managerial FunctionsLeading the ability to develop a plan and motivate others to pursue itCross-functional team a group of people from different functions who work together on a particular project

3- *

Managerial FunctionsControlling the process of evaluating whether or not a company is achieving its goals and taking action if it is notBenchmarking the practice of comparing a businesss strengths and weaknesses to those of its competitors

3- *

The Role of the EmployeeRole the set of tasks a person is expected to perform because of the position he or she holds in an organization

3- *

Career ManagementMentor a person who provides advice, guidance, and technical knowledge to other people (mentees) in order to help them advance their careers

Choose which business model to pursueDecide how to allocate the organizations resourcesSelect the goals and targets that will be used to measure how efficiently and effectively the business model is working