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   Course Title    Essentials of Entrepreneurship and Small Business Management
Lecturer    Dina Akhmetova
Institution    Yekaterinburg Ural State University of Economics
Country    Russia


Entrepreneurial initiative, development of small and medium-sized enterprises (SME) are a foundation for the stable and successful progress of a modern competitive economy. Small firms generate much of the market turbulence that not only creates an additional dimension of competition not captured in the traditional static measures of market structure, such as concentration, but also provides mechanisms of regeneration. Entrepreneurs are essential agents of change who accelerate the origination, application and spread of innovative ideas. They also create new social strata, which determine the social stability of a state.

During the 70 years of Soviet Power there was not a place for any legal private initiative or entrepreneurship. Political and economic liberalization in the mid 1980s changed this situation. Private entrepreneurship began to spread in Russia in the late 1980s and flourished at the beginning of the 90s, considered as the conventional starting point for the emergence of new entrepreneurship. A key task of a system of education is in training future and current entrepreneurs and managers of small and medium-sized enterprises.

Course Objectives.

This course is designed to develop skills, concepts, mental attitudes, and knowledge relevant to creating and managing a new venture. The capabilities gained will apply to potential entrepreneurs interested in starting a new business as well as in managing existing one. The course examines the nature of the entrepreneur and the entrepreneurial process, and some of the critical ingredients in success and failure. In particular, the course discusses the driving forces behind the process, namely the founders and the market opportunities. Considerable attention will be given to the screening and evaluation of ideas and new business opportunities. The course also examines how entrepreneurs obtain and utilize resources available to them.

Teaching Methods.

The course assumes the highest involvement of the student in the learning process. We believe that learning occurs best through learning by doing and by active interaction between the students and an instructor. An instructor is considered to be a facilitator of learning, rather then an expert that lectures on the nature of the world.

The course is a combination of reading, lectures and case analysis. The main pedagogical approach is in utilizing topical discussions, experiential exercises, and cases. It is important that the students realize that this philosophy places greater responsibility on the students to be prepared for class and to actively participate in the class exercises and discussions. The class will learn from each otherís education and experience, and encourage the students to express their knowledge in class discussions.

Course Rules:

Hard Work: Hard work and determination represent the foundation to personal progress and success.

Positive Attitude and Humor: A lighter, positive side exists to most daily activities and events; letís have some fun

Respect to Others: Itís recognized that the desire of others to be heard without interruption. When a person is speaking, the remainder of the class should remain attentive. During heated debates use appropriate timing when presenting your thoughts (allow others to complete their argument before speaking on your own opinion). This principle also implies that coming late to class is unacceptable since the interruption diminishes the learning environment for your peers.

Student Assignments and Grading

The grading will be based as follows:

I. Participation and Attendance 25%

II. Assignments 35%

Interview and Entrepreneur Report 15%

Case Analysis (3*5) 15%

Exercises 5%

III. Final Term Exam 40%

I. Participation and Attendance (25%)

Participation is a fundamental aspect of this course and crucial to your performance in the class. The emphasis here cannot be overstated. Since much of your learning will occur as a result of class discussion, the success of both you and the class is dependent upon being prepared and showing it. Please note that preference will be given to quality of contribution rather than quantity. It is also obvious that you cannot learn and participate in the class if you are not present. Thus each missed class reduces your participation grade. If you are unable to attend the class, please, let us know in advance if possible.

II. Assignments (35%)

It is required that you hand in a number of assignments throughout the course. These assignments are designed to promote your learning through personal experience and include the case notes, the interview an entrepreneur report and a number of class exercises.

Case notes (15%)

Each class, in which a case will be discussed, the students are required to submit two-three pages of notes on the case. The notes may be your response to the case questions (see seminar plan), a more complete response to one of the questions, or an integrated analysis of the case. Total number of cases is 3. Cases are available in the reading package for the course.

Interview on Entrepreneur Report. (15%)

You are asked personally to interview an entrepreneur according to the separate Memo you will find in the end of the syllabus, and write a brief report on the interview. An entrepreneur must be the original founder of the business or current owner, and should not be your close relative. The report should be 4-5 typed single-spaced pages accompanied with an interview body and cover three primary areas. First, it should discuss the background and characteristics of the entrepreneur, as well as the history and nature of the business. Second, the report should include discussion of lessons learned by the entrepreneur as related to you by the entrepreneur. Third, the report should include your evaluation of the entrepreneur, and what you personally take from the experience.

Class exercises (5%) Ė see seminar/tutorial schedule.

Course Content

This course offers a framework for understanding the entrepreneurial process and exposes the students to problems and issues faced by entrepreneurs.

Time Schedule for the classes:

Week No

Theme for Lecture

Week No

Theme for Seminar/Tutorial

1.

Introduction. Entrepreneurship Economics

2.

Discussion: Significance of small firms.

3.

The Entrepreneurial Process

4.

Discussion: Characteristics of a successful entrepreneur

5

New venture ideas and opportunities recognition

6.

Class exercise: new idea generation.

7.

Resources and capabilities. Entrepreneurial Finance

8.

Case. 1 Analysis due

9.

10.

Discussion: key factors for entrepreneur success Class exercise: evaluation resources needed

11.

Legal form of small business

12.

Case. 2 Analysis Due.

13.

The Business Plan

14.

Discussion: choosing a legal form for a new venture

15.

Entrepreneurial Strategies

16.

Case 3 Analysis Due. Interview an Entrepreneur Report Due

17.

Entrepreneurship inside a large corporation. Intrapreneurship

18.

Final Discussion. Class debates

Lecture description

Introduction. Entrepreneurship Economics.

Defining the term "Entrepreneurship". Theories of entrepreneurship Economics. Small business, innovation and uncertainty. The problem of survival. Exceptions to the failure rule. Small business in Russian Economy. Stage of entrepreneurship development in Russia. Historical background for entrepreneurship in Russia.

The Entrepreneurial Process.

Critical factors for starting a new business. Real-world environmental context and central driving forces of entrepreneurship. The benefits of entrepreneurship. The potential drawbacks of entrepreneurship. Critical stage in small business growth. Trends in entrepreneurship. Entrepreneurís philosophy. Enterprising man vs. executive manager.

New venture ideas and opportunities recognition.

The role of ideas in entrepreneurship. Pattern recognition. Finding ideas. Idea and opportunity. Recognizing opportunities. Opportunity characteristics: durable, situational, real. Screening opportunities Ė venture opportunity framework of analysis. Gathering information.

Resources and capabilities. Entrepreneurial finance.

Identifying attributes of strategic resources. Resource types: physical, reputational, organizational, financial resources, intellectual and human, technological.(PROFIT factors) Entrepreneur as a human resource: psychological and sociological approaches. Finance Ė crucial resource. Foundation of new venture finance. Determining financial needs. Working capital and cash-flow management. Across the Ventureís life cycle. Start-up financing. Sources of financing: debt-based financing, equity-based financing, venture capital. New-venture valuation. Asset-based valuation. Earning-based valuation. Discounted cash-flow models.

Legal form of small business.

Russian civil law and form of a new business. The sole proprietorship. The partnership. Corporations, close corporations. Specifics of taxation. Choosing an appropriate legal form for a new business.

The Business Plan.

Importance of the business plan for start-up Planing and a business plan. Business plan as a selling document. Targeting and writing the business plan. Structure of the business plan. Style of the business plan.

Entrepreneurial Strategies.

Entrepreneurship and strategy. Entry wedges: new product/service, parallel competition franchising, exploiting partial momentum, customer sponsorship, government sponsorship, parent company sponsorship. Isolating mechanisms and first-mover advantage. Types of isolating mechanisms. Sources of first-mover advantage: technological leadership, switching costs, obtaining resources more quickly than others. Growth strategies. Motivation for growth. Focus effect and synergy effect. Quality as a strategy. Strategy and industry environments.

Entrepreneurship inside a large corporation. Intrapreneurship

Definition of "Intrapreneurship". Reasons why some corporations adopt it. The differences between intrapreneurship and entrepreneurship. The needs and obstacles for intrapreneurship. The process of intrapreneurship.

Seminar/tutorial description.

Significance of Small Firms.

Question to discuss:

  • List the pros and cons of running your own business
  • List the political, economic, social and technological threats and opportunities facing small firms in Russia in the 21st century.
  • Why it is important to study the small business failure rate and the cause of business failure.
  • Search through recent business publications (especially those focusing on small companies) and find an example of an entrepreneur, past or present, who exhibits the entrepreneurial spirit of striving for success in face of failure. Prepare a brief report for your class.

Characteristics of a successful entrepreneur

Questions to discuss:

  • What is an entrepreneur? Give a brief description of the entrepreneurial profile.
  • How are entrepreneurs behaviorally different from managers? When can we expect entrepreneurs to behave managerially? When can we expect managers to behave as entrepreneurs?
  • Are you an entrepreneur? Self-testing (see separate Memo)

New idea generation (class exercise)

For this exercise divide your student group into teams of up to 5 students.

Before beginning the process of generating ides for new ventures, it is useful to reflect on an old German proverb that says, "Every beginning is hard". If you allow yourself to think creatively, you will be surprised at the number of interesting ideas you can generate once you begin.

The aim of this exercise is for you to generate as many interesting ideas as possible. While generating your ideas, do not evaluate them or worry about their implementation. Discussion and exercises in the rest of the class will allow you to evaluate these ideas to see if they are opportunities and to consider your own entrepreneurial strategy.

And remember Ė in any creative endeavor there are no right answers.

Step 1. GENERATE A LIST OF AS MANY NEW VENTURE IDEAS AS POSSIBLE. Thinking about unmet or poorly filled customer needs you know of that have resulted from regulatory changes, technological changes, knowledge and information gaps, lags, asymmetries, and so forth, will help you generate such a list. Also think about various products and services (and their substitutes) and the providers of these products or services. If you know of any weaknesses or vulnerabilities, you may discover new venture ideas.

Step 2.EXPAND YOUR LIST MUCH AS POSSIBLE. Think about your personal interests, your desired lifestyle, your values, what you feel you likely to do very well, and contributions you would like to make.

Step 3. Jot down insights, observations, and conclusions that have emerged about your business ideas or your personal preferences.

Step 4. Sort the ideas into the 10 best, and make the concepts more original.

At the end of the exercise you should have 20 Ė 30 truly creative new business ideas.

Case "From the space to the ground"

Questions:

  • Evaluate business opportunities for proposed business in context of real world and real time.
  • How would you define competitive advantage of the Laboratory?
  • Should Mr. Maydanik and his team start the business?
  • Would you invest in the business? Join the venture? As a private investor, what valuation would you accept, and what would your position be in negotiating with the Laboratory team?

Key factors for entrepreneur success (resources)

  • Explain how entrepreneurial approach to resources differs from managerial?
  • Define crucial resources for entrepreneur success
  • Exercise: Inventory your personal resource base using the six types of resources. Evaluate these resources employing the four criteria. Comment on your individual potential to start a business that has the prospect of achieving sustainable competitive advantage.

Evaluation resources needed (class exercise)

Look at the results of your previous exercise (idea generation).

For each of the groupís best ideas, do the following short assignments:

  • Describe the business in 25 words or less. The description should include the product/service, the customer, and the technology employed
  • Describe the opportunity that you believe this business exploits. In other words, why do you think this is a great business idea?
  • Describe resources you believe you would need to execute this new venture idea. Use the six categories. Which resource(s) will be the source of your competitive advantage?
  • Estimate how much money it would cost to actually get this business started. The estimate will be very rough, but try to make an educated guess.

Case "The Ural Roof"

Questions:

  • Evaluate overall marketing position of the firm.
  • What are the firmís strengths and weaknesses?
  • How would you characterize firm-owners?
  • What is the main constraint for growth?

Choosing a legal form for a new venture

  • What factors should an entrepreneur consider before choosing a form of ownership?
  • How does personal conflict affect partnership?
  • Can one partner commit another to a business deal without the otherís consent? Why?

Case "Two brothers"

Questions:

  • Define the business strategy.
  • What is the source of competitive advantage of the company?
  • Give a entrepreneurial profile of the brothers.
  • What stage is the business in now?
  • Define threats and opportunities for the business.

Interview an Entrepreneur Report Presentation

Final Discussion. Class debates

You will compete in teams of 4-6. The top three teams will receive some extra points. Each team begins with 100 points. Teams will take turns challenging the other group with questions based on the course materials. For example, your group might challenge another group for 5 points. The other group will have 2 minutes to write the answer on a blackboard. If they answer correctly, they get 5 of your points, if not, you get 5 of their points. There will be a final bonus round with a 20-point limit. In the end, of course, the teams with the greatest number of points win.

Preparation

Each team should develop a set of at about 20 questions (please be prepared to turn in one copy though you will not be graded on it). In addition, as described above, there will be a final bonus round Ė save your toughest one for this. When preparing questions, precision is very important. Vague questions, which can be answered in more than one way, will be disqualified.

Domain for Challenge Questions

The Challenge questions may come from reading materials, class discussion/lectures, films or videos. However, case materials and specific examples are not acceptable. As such, you need to stick to the models and theory presented throughout the course materials. Thus example 1 is unacceptable while example 2 is appropriate:

1. Inappropriate question:

Q: Who was Al Abramís boss

A: Bill Eden

2. Appropriate question:

Q: In which stage of growth must a company put the most emphasis on managing its corporate culture?

A: Stage IV Ė Consolidation

Readings:

Required:

  1. Busyguin V. L. 1999 Entrepreneurship. Delo Press, Moscow
  2. Ciropolis N. 1997 Small Business Management Sovremennik Press, Moscow

Periodicals:

  1. Maloe predprinimatelístvo (Small Entrepreneurship)
  2. Rossiyiskiyi economicheskiyi journal (Russian economical journal)
  3. Obschestvo i economica (Society and Economy)
  4. Jounal dlya aksionerov (Journal for shareholders)



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