Entrepreneurship: successfully launching new ventures

594 Pages·53.883 MB·English

by  Barringer, Bruce R;Ireland, R Duane

The enTrepreneurial process
Decision to Managing and
Developing Successful Moving from an Idea
Become an Developing Successful Business Ideas Growing an
Business Ideas to an Entrepreneurial Firm
Entrepreneur Entrepreneurial Firm
Introduction to Recognizing
entrepreneurship opportunities CHAPTER 11
and generating
ideas Unique
CHAPTER 1
Feasibility marketing
analysis issues
CHAPTER 2
CHAPTER 3 Developing an CHAPTER 12
effective business
model The importance
of intellectual
CHAPTER 4
property
Industry and
competitor
analysis CHAPTER 13
Writing a Preparing the Preparing for
CHAPTER 5
business plan proper ethical and evaluating
the challenges
and legal
of growth
foundation
CHAPTER 6
Assessing a
CHAPTER 7 CHAPTER 14
new venture’s
financial Strategies
strength and for firm
viability growth
Building a new-
venture team Getting
CHAPTER 8 financing or CHAPTER 15
funding
CHAPTER 9 Franchising
CHAPTER 10
Passion Plus
Passion Plus
Decision to Managing and
Developing Successful Moving from an Idea
Become an Developing Successful Business Ideas Growing an
Business Ideas to an Entrepreneurial Firm
Entrepreneur Entrepreneurial Firm
Introduction to Recognizing
entrepreneurship opportunities CHAPTER 11
and generating
ideas Unique
CHAPTER 1
Feasibility marketing
analysis issues
CHAPTER 2
CHAPTER 3 Developing an CHAPTER 12
effective business
model The importance
of intellectual
CHAPTER 4
property
Industry and
competitor
analysis CHAPTER 13
Writing a Preparing the Preparing for
CHAPTER 5
business plan proper ethical and evaluating
the challenges
and legal
of growth
foundation
CHAPTER 6
Assessing a
CHAPTER 7 CHAPTER 14
new venture’s
financial Strategies
strength and for firm
viability growth
Building a new-
venture team Getting
CHAPTER 8 financing or CHAPTER 15
funding
CHAPTER 9 Franchising
CHAPTER 10
Where a great idea meets a great process
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Entrepreneurship
SucceSSfully launching new VentureS
FiFth Edition
Global Edition
Bruce R. Barringer
Oklahoma State University
R. Duane Ireland
Texas A & M University
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© Pearson Education Limited 2016
The rights of Bruce R. Barringer and R. Duane Ireland to be identified as the authors of this work
have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Authorized adaptation from the United States edition, entitled Entrepreneurship: Successfully
Launching New Ventures, 5th edition, ISBN 978-0-13-379719-0, by Bruce R. Barringer and R.
Duane Ireland, published by Pearson Education, Inc. © 2016.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
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this book by such owners.
ISBN 10: 1-292-09537-7
ISBN 13: 978-1-292-09537-0
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
10 9 8 7 6 5 4 3 2 1
14 13 12 11
Typeset in 10/12 ITC Bookman Std by Integra Software Services
Printed and bound by Courier Kendallville in the USA
Dedication
To my wife, Jan. Thanks for your never-ending encouragement and
support. Without you, this book would have never been possible. Also,
thanks to all the student entrepreneurs who contributed to the chap-
ter opening features in the book. Your stories are both insightful and
inspiring.
—Bruce R. Barringer
To my family: I am so proud of each of you and so blessed by your per-
severance and never-ending love and support. I know that sometimes it
seems as though “we lose ourselves in work to do and bills to pay and
that it’s a ride, ride, ride without much cover.” But you are always in my
heart, a gift for which I remain deeply grateful.
—R. Duane Ireland
Brief Contents
Preface 13
Part 1 Decision to Become an Entrepreneur 23
ChaPter 1 Introduction to Entrepreneurship 25
Part 2 Developing Successful Business Ideas 61
ChaPter 2 Recognizing Opportunities and Generating
Ideas 63
ChaPter 3 Feasibility Analysis 97
ChaPter 4 Developing an Effective Business Model 133
ChaPter 5 Industry and Competitor Analysis 171
ChaPter 6 Writing a Business Plan 203
Part 3 Moving from an Idea to an Entrepreneurial Firm 239
ChaPter 7 Preparing the Proper Ethical and Legal
Foundation 241
ChaPter 8 Assessing a New Venture’s Financial Strength and
Viability 281
ChaPter 9 Building a New-Venture Team 317
ChaPter 10 Getting Financing or Funding 349
Part 4 Managing and Growing an Entrepreneurial Firm 385
ChaPter 11 Unique Marketing Issues 387
ChaPter 12 The Importance of Intellectual Property 425
ChaPter 13 Preparing for and Evaluating the Challenges of
Growth 463
ChaPter 14 Strategies for Firm Growth 495
ChaPter 15 Franchising 529
Glossary 570
Name Index 580
Company Index 582
Subject Index 586
6
Contents
Preface 13 Economic Impact of Entrepreneurial Firms 44
Entrepreneurial Firms’ Impact on Society 46
Entrepreneurial Firms’ Impact on Larger Firms 46
Part 1 Decision to Become an
the Entrepreneurial Process 47
Entrepreneur 23
Decision to Become an Entrepreneur
(Chapter 1) 47
ChaPter 1 Introduction to
Developing Successful Business Ideas
Entrepreneurship 25 (Chapters 2–6) 47
Opening Profile—SUPERJAM: The Classic Moving from an Idea to an Entrepreneurial Firm
Entrepreneurial Story 25 (Chapters 7–10) 48
introduction to Entrepreneurship 27 Managing and Growing an Entrepreneurial Firm
What is Entrepreneurship and Why is it (Chapters 11–15) 48
important? 28 Chapter Summary 50 | Key Terms 51
Review Questions 51 | Application Questions 52
Why do People become Entrepreneurs? 29
You Be the VC 1.1 53 | You Be the VC 1.2 53
Be Their Own Boss 29
CASe 1.1 54 | CASe 1.2 57
Pursue Their Own Ideas 30 Endnotes 59
Pursue Financial Rewards 30
Characteristics of Successful Entrepreneurs 31
Part 2 Developing Successful Business
Passion for the Business 31
Ideas 61
What WEnt WronG? Prim: How a Lack of Passion
and Resolve Can Kill a Business 33
ChaPter 2 Recognizing Opportunities
Product/Customer Focus 34
and Generating Ideas 63
Tenacity Despite Failure 34
Opening Profile—ICRACKEd: Solving a Problem and
Execution Intelligence 35
Building a Business in an Exploding Industry 63
Savvy EntrEPrEnEurial Firm: Pandora:
the differences between opportunities and
What’s Possible When an Entire Company Has
ideas 65
“Tenacity” 36
three Ways to identify opportunities 66
Common myths about Entrepreneurs 36
Observing Trends 66
Myth 1: Entrepreneurs Are Born, Not Made 37
Savvy EntrEPrEnEurial Firm: How to Learn
Myth 2: Entrepreneurs Are Gamblers 37
About Emerging Trends Through the Effective Use
Myth 3: Entrepreneurs Are Motivated Primarily
of Social Media 72
by Money 38
Solving a Problem 72
Myth 4: Entrepreneurs Should Be Young and
Finding Gaps in the Marketplace 75
Energetic 39
Personal Characteristics of the Entrepreneur 76
Myth 5: Entrepreneurs Love the Spotlight 39
What WEnt WronG? Why a Company that
types of Start-up Firms 40
Solved a Problem With a Great Product Went Out
PartnErinG For SuCCESS: Start-up Incubators
of Business 77
and Accelerators: A New Way of Gaining Access
Prior Experience 78
to Mentors, Partners, Investors, and Other Critical
Start-up Resources 41 Cognitive Factors 78
Changing demographics of Entrepreneurs 42 Social Networks 79
Women Entrepreneurs 42 Creativity 79
techniques for Generating ideas 81
Minority Entrepreneurs 43
Senior Entrepreneurs 43 Brainstorming 81
Young Entrepreneurs 43 Focus Groups 82
the Positive Effects of Entrepreneurship and Library and Internet Research 83
Entrepreneurial Firms 44 Other Techniques 84
7
8 CONTENTS
Encouraging the development of new ideas 84 Savvy EntrEPrEnEurial Firm: Quirky: How One
Establishing a Focal Point for Ideas 84 Company Creates, delivers, and Captures Value for
Its Stakeholders 136
Encouraging Creativity at the Firm Level 84
General Categories of business models 137
PartnErinG For SuCCESS: Want Help Fine-Tuning
a Business Idea? Find a Mentor 85 Standard Business Models 137
Chapter Summary 86 | Key Terms 87 What WEnt WronG? Peer-to-Peer Business
Review Questions 87 | Application Questions 88 Models: Good for Some, Not So Good for
You Be the VC 2.1 89 | You Be the VC 2.2 89 Others 139
CASe 2.1 90 | CASe 2.2 92
Disruptive Business Models 140
Endnotes 94
the barringer/ireland business model
template 141
ChaPter 3 Feasibility Analysis 97
Core Strategy 142
Opening Profile—LUMINAId: The Value of Validating Resources 146
a Business Idea 97
Financials 148
Feasibility analysis 99
Operations 151
Product/Service Feasibility analysis 100
PartnErinG For SuCCESS: Odesk, Elance, and
Product/Service Desirability 100 Guru: Platforms That Facilitate the Forming of
Product/Service Demand 105 Partnerships with Freelancers 154
industry/target market Feasibility analysis 107 Chapter Summary 155 | Key Terms 156
Review Questions 156 | Application Questions 157
Savvy EntrEPrEnEurial Firm: How Learning
You Be the VC 4.1 158 | You Be the VC 4.2 158
from Customers Caused a Successful Firm to
CASe 4.1 159 | CASe 4.2 163
Make a 180-degree Turn on the Positioning of
Appendix 1 167
a Product 108
Endnotes 168
Industry Attractiveness 109
Target Market Attractiveness 110
ChaPter 5 Industry and Competitor
organizational Feasibility analysis 111
Analysis 171
Management Prowess 111
Resource Sufficiency 111 Opening Profile—GREENVELOPE: Occupying a Unique
Position in an Evolving Industry—and Thriving 171
What WEnt WronG? How Feasible Was Standout
Jobs from the Beginning? 112 industry analysis 173
PartnErinG For SuCCESS: Finding the Right Studying Industry Trends 174
Business Partner 113 PartnErinG For SuCCESS: Three Ts That Are
Financial Feasibility analysis 114 Important for Becoming Active in an Industry: Trade
Associations, Trade Shows, and Trade Journals 175
Total Start-Up Cash Needed 114
the Five Forces model 176
Financial Performance of Similar Businesses 115
Threat of Substitutes 177
Overall Financial Attractiveness of the Proposed
Venture 116 Threat of New Entrants 178
a Feasibility analysis template 116 Rivalry Among Existing Firms 179
Chapter Summary 117 | Key Terms 118 Bargaining Power of Suppliers 180
Review Questions 119 | Application Questions 119 Bargaining Power of Buyers 181
You Be the VC 3.1 121 | You Be the VC 3.2 121
the value of the Five Forces model 182
CASe 3.1 122 | CASe 3.2 124
industry types and the opportunities they
Appendix 3.1 127
offer 184
Appendix 3.2 129
Emerging Industries 185
Endnotes 131
Fragmented Industries 185
ChaPter 4 Developing an Effective Mature Industries 185
Business Model 133 Declining Industries 186
Global Industries 187
Opening Profile—HER CAMPUS MEdIA: Executing on
an Established Business Model and Preparing for the Competitor analysis 187
Future 133 Identifying Competitors 187
business models and their importance 135 Sources of Competitive Intelligence 188