If there is one coefficient of entrepreneurial success, it is energy. You may have all the ambition in the world, gobs of capital, a gambling man`s soul, and business degrees covering an entire wall, but if you are not a human dynamo, forget it.

Joseph R. Mancuso

Entrepreneurship History of entrepreneurship

The entrepreneur is an actor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the mid-16th century, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1940s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate, description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw.

For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horsedrawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency.

Different scholars have described entrepreneurs as, among other things, baring risk. For Schumpeter, the entrepreneur did not bare risk: the capitalist did.

Some notable persons and their works in entrepreneurship history.

For Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty.

• Risk, which is measurable statistically (such as the probability of drawing a red colour ball from a jar containing 5 red balls and 5 white balls).

• Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls).

• True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other coloured balls).

The acts of entrepreneurship is often associated with true uncertainty, particularly when it involves bringing something really novel to the world, whose market never exists. However, even if a market already exists, there is no guarantee that a market exists for a particular new player in the cola category.

The place of the disharmony-creating and idiosyncratic entrepreneur in traditional economic theory (which describes many efficiency-based ratios assuming uniform outputs) presents theoretic quandaries. William Baumol has added greatly to this area of economic theory and was recently honored for it at the 2006 annual meeting of the American Economic Association.

The entrepreneur is widely regarded as an integral player in the business culture of life, and particularly as an engine for job creation and economic growth.

Exercises

1. Answer the questions based on the text.

1. What is the definition that Shumpeter gives to an entrepreneur?

2. What economist was the first to dwell on entrepreneurship?

3. What according to Shumpeter should entrepreneurship be resulted in?

4. The goal of entrepreneurship is creating a new product, isn`t it?

5. Is entrepreneurship closely connected with taking risks?

6. The behavior of the entrepreneur reflects a kind of person willing to take risks in the name of an idea, spending much time as well as capital on an uncertain venture, doesn`t it?

7. Can we consider entrepreneurship as the means of bringing something new in our life?

8. What was William Baumol honored for?

9. The entrepreneur is widely regarded as an engine for job creation and economic growth, isn`t it?

10. Do you think everyone can become an entrepreneur?

2. Find the equivalents

ответственный	entrepreneur
улучшение	innovation
вклад	supposition
возрождение	to be willing to do smth
предприятие	improvement
безопасность	venture
двигатель	contribution
изобретение	resurgence
развитие	long-run
преобразовывать	responsible
создание	estimate
предположение	сonvert
стремиться что-либо сделать	security
долгосрочный	predict
новшество	engine
предприниматель	invention
предсказывать	creation
увеличение	growth

3. Make up sentences with the following word-combinations

- to be responsible for

- a successful innovation

- to be able to

- to be impossible to estimate

- to convert a new idea

- an uncertain venture

- financial security

- to be widely regarded as

- to bear risks

- in the name of an idea

4. Translate the following sentences into English

- Впервые проблемой предпринимательства заинтересовались Ричард Кантиллон и Адам Смит в 16 веке. Однако к содержанию работ этих экономистов обратились только в период расцвета деловой активности.

- Понимание вопросов, касающихся предпринимательства, в значительней мере связано с работами таких известных экономистов, как Джозеф Шумпетер, Карл Менгер, Людвиг фон Мизес и Фридрих фон Хайек.

- Согласно представлению Д. Шумпетера, предприниматель – человек, желающий и способный превратить идею в жизнь.

- По мнению И. Кирнзера, большинство инноваций влекут улучшение чего-либо, например, замену бумажной упаковки на пластиковую в производстве напитков.

- Предпринимательство способствует образованию новых сфер деятельности, а также объединению уже существующих.

- Предприниматель – человек, готовый рисковать карьерой и финансовым положением во имя своей идеи.

- Деятельность предпринимателя зачастую связана с неопределенностью, особенно когда она направлена на привнесение чего-то нового в повседневную жизнь.

What is economics?

It is difficult to give a full and accurate definition of economics, but it is possible to indicate what problems economists are interested in. They are factors that affect prices of goods and services and also resources necessary to produce them. Economists are also interested in seller’s and buyer’s behaviour in the market, in the relationship between price system and market mechanism.

Now economics is more complex. There are three main approaches to economics: microeconomics, macroeconomics, and development economics. There are also several specialized areas of study. Among them are money economics, international economics, labour economics, industrial economics agricultural economics, growth economics, mathematical economics, etc.

Like many other sciences, economics uses models to understand economics problems. A model often helps an economist to make correct prediction. The economist usually follows several rules when he makes a model of economic behaviour.

First, real life is complex and it is not possible for an economist to include all the details in a model. So, a model is an abstruction from real life. A model usually includes only essential element and relationship of a particular economic situation.

Second, if an economist has two different models of one phenomenon, he always chooses the model that predicts the results of a particular phenomenon more accurately.

Third, although models are helpful in economic analysis, an economist always studies the actual economic situation before he makes decisions.

It is not enough to make models, it is also necessary to collect and study actual data in order to know how accurate a model is.

There are three main approaches to economics: microeconomics, macroeconomics, and development economics.

Microeconomics focuses on individual economic units. The economic behaviour of either individual consumers or firms or industries is studied by microeconomics. The distribution of products and income among these units is also analyzed by microeconomics. In this field of economics individuals are considered both as suppliers of labour and consumers of goods. Firms are also studied both as suppliers of products and as consumers of labour and capital.

There was a long period on the 19^th and early in the 20^th centuries when microeconomic questions dominated in economics. In the 20^th century economists’ interest in forces that affect income, employment and prices grew. They considered economy in all its relationships.

The term “macroeconomics” was first used in the 1930s. The world depression that began in 1929 required the study of such macroeconomic questions as achievement of full employment and economic growth by means of proper government policies. This area of economics was developed by the British economist John Maynard Keynes.

The third main field of economics that is development economics studies the factors of economic growth and how these factors are used by governments in order to achieve high living standards.

Exercises

1. Answer the questions based on the text.

1. Why is it difficult to give a definition of economics?

2. What problems are economists interested in?

3. What are three main approaches to economics?

4. What specialized areas of economics do you know?

5. Why do economists use economic models?

6. Why is it not possible to include all the details in a model?

7. What does a model usually include?

8. Which of the models does an economist always choose?

9. Why is it necessary for an economist to collect and study actual data?

10. Do macroeconomics and microeconomics have different spheres of investigation?

2. Find the equivalents

занятость	definition
макроэкономика	prediction
высокий уровень жизни	microeconomics
подход	consumer
поведение продавца и покупателя	to indicate
достигать	relationship
правительственная политика	essential
точно	depression
необходимый	accurately
депрессия	government policies
определять	approach
отношение	seller’s and buyer’s behaviour
микроэкономика	achieve
потребитель	macroeconomics
определение	employment
предположение	high living standard
доход	development
развитие	income

3.Make up sentences with the following word-combinations

- the economic behaviour

- studied by microeconomics

- the distribution of products

- economists’ interest

- full employment

- proper government policies

- in order to achieve

- to make correct prediction be widely regarded as

- to understand economic problems

- high living standards

4.Translate the following sentences into English

- Несмотря на то, что дать точное определение тому, что должно называться экономикой, весьма сложно, определить круг проблем, связанный с экономикой, представляется возможным. Это такие проблемы, как: факторы, влияющие на изменение цен на товары и услуги, поведение продавца и покупателя на рынке, отношение между ценовой системой и ситуацией на рынке.

- Существует три основных раздела экономики – макроэкономика, микроэкономика и экономика развития; предмет изучения этих разделов различный.

- Как и многие другие науки, экономика использует модели для понимания экономических проблем.

- Модель абстрактна от жизненной ситуации; в нее включается необходимый элемент, и в ней рассматривается конкретное положение в определенной экономической ситуации.

- Микроэкономика изучает потребительское поведение как индивидуального покупателя, так и фирмы или отдельной отрасли промышленности.

- Возникновение термина «макроэкономика» связано с именем известного британского экономиста Кейнса. Великая Депрессия, начавшаяся в 1929г., поставила экономистов перед необходимостью изучения проблем макроэкономики, таких как достижение полной занятости и высокого уровня экономического развития.

- Экономика развития изучает факторы экономического роста, а также то, как воздействовать на данные факторы с целью достижения высокого жизненного уровня.

The importance of economics to business

Any change in the economic or political system has a major influence on the success of the business system. The world economic situation and world politics also have a major influence on business. Therefore, to understand business, one must also understand basic economics courses before they take business courses, because economic concepts are the basis for most business decision making.

Economics says Paul Samuelson, is the study of how society chooses to employ scarce productive resources to produce various goods and services and distribute them for consumption among various competing groups and individuals. You understand what it means to «economize» in your own life. It means we have to learn to «make do» because we do not have all that we want. The world is in a similar situation. There are factors of production available: land and natural resources, human labor, capital (machines, tools, and buildings), and entrepreneurship (the willingness by business owners to take risks and introduce new products and services to the market). Those resources are used to produce goods and services to satisfy our need for food, shelter, and clothing, and other needs. The economic quiestions are: «Who decides how to allocate those resources?» and «How should they be allocated?»

What causes one country to prosper and grow while other countries, with similar resources, remain poor? What causes unemployment? How much of a country`s wealth should be spent on government programs such as defence, welfare, and education? These and other similar questions are the subject of macroeconomics. Macroeconomics is the study of a nation`s economy as a whole. Macroeconomics can be a fascinating subject to study, because it looks at such impottant issues as whether or not taxes should be raised, the problems of inflation and depression, and much more. Nearly every major social, political, or economic issue can be discussed more intelligently and objectively once one understands basic macroeconomics.

What happens to the price of corn when there is a drought in the Midwest? What happens to the supply of farm products when the government subsidizes farmers or keeps farm prices artificially low? What is the impact of income taxes versus sales taxes on consumers? How does one determine the value of leisure time? These and other similar questions are the subject of microeconomics. Micreeconomics is the study of the behaviour of people and organizations in particular markets. It looks at how prices are determined and how people and businesses respond to changes in the market (for example, changes in the demand for and supply of products). Microeconomics can also be challenging to study because it teaches principles that can be used in everyday buying and selling transactions with others.

Exercises

1. Answer the questions based on the text.

1. Does any change in the economic or political system have a major influence on the success of the business system?

2. What is economics by Paul Samuelson?

3. How are individuals considered by microeconomics?

4. When did microeconomic approach dominate in economics?

5. When did economists’ interest in macroeconomics grow?

6. How is economy considered in macroeconomics?

7. Economics and business are closely interrelated, aren`t they?

8. What factors of production can you describe?

9. Are the economic concepts the basis for most business decision making?

10. Why must one understand basic economics courses before he takes business courses?

2. Find the equivalents

владелец бизнеса	political system
потребление	economic concepts
человеческий труд	to employ
производственные ресурсы	influence
нанимать	business owner
политическая система	unemployment
экономические понятия	to distribute
инфляция	human labor
безработица	consumption
влияние	productive resources
налог	decision making
процветать	success
субсидировать	economic analysis
распределять	to allocate
принятие решения	inflation
экономический анализ	to prosper
успех	tax
размещать	to subsidize

3. Make up sentences with the following word-combinations

- to have a major influence on

- business decision making

- to understand business

- to be interested in

- success of the business system

- seller’s and buyer’s behaviour in the market

- productive resources

- to satisfy our need

- factors of production

- a nation`s economy

4.Translate the following sentences into English

- Изменения в политической и экономической ситуации оказывают влияние на бизнес.

- Для того чтобы хорошо представлять различные ситуации в деловом мире, следует предварительно уяснить основы экономической теории.

- Согласно представлению П. Самуэльсона, экономика изучает способы распределения факторов производства и размещение произведенных товаров для потребления индивидуальными покупателями.

- К существующим факторам производства относятся следующие: земля, природные ресурсы, труд, капитал (оборудование, здания, техника), а также предпринимательская активность.

- Ресурсы используются для производства товаров и услуг с целью удовлетворения потребностей людей в еде, жилище, одежде и др.

The importance of entrepreneurship to an economy

Entrepreneurship is accepting the calculated risk of starting a business to make all profit. At one time, entrepreneurship was not included in the factors of production. Economics texts tended to focus on land, labor, and capital. It became clear over time, however, that a country that had little land and few other natural resources could prosper if it had brilliant entrepreneurs. The best examples today are Japan and South Korea. The United States has both natural resources and entrepreneurs, but the success of the United States is more dependent on entrepreneurs than it is on natural resources. An entrepreneur is an innovator who organizes, manages, and assumes the risks of starting a business to make a profit.

Entrepreneurs are special people, the driving force behind innovation growth. Entrepreneurs are not the same as inventors. An entrepreneur may invent a product, but he or she also has the ability to develop that invention into a successful business product.

The history of the United States is the history of its entrepreneurs. Considei just a few of the many entrepreneurs who have helped shape the American economy:

Du Pont was started in 1802 by Eleuthcre Irenee du Pont. Some 18 shareholders provided $36,000 in start-up money.

Campbell Soup began in 1869 as a partnership of Joseph Campbell and Abraham Anderson. (We could all be warming ourselves with a steamy bowl of Anderson`s Soup.)

Avon started in 1886 on $500 David McConnell borrowed from a friend.

Kodak was launched by George Eastman in 1880 with a $ 3,000 investment.

Procter&Gamble was formed in 1837 by William Procter and James Gamble with a total of $ 7,000 in capital.

Forg Motor Company began with an investment of $ 28,000 by Henry Ford and 11 associates.

These entrepreneurs left their imprint on U.S. business.

Exercises

1. Answer the questions based on the text.

1. Entrepreneurship can be considered as accepting the calculated risk of starting a business to make al profit, can`t it?

2. Originally entrepreneurship was not included in the factors of production, was it?

3. What factors of production were economics texts focused on?

4. Can a country that has little land and few other natural resources prosper if it has brilliant entrepreneurs?

5. Is it true that the United States is more dependent on entrepreneurs than on natural resources?

6. What does the welfare of a country depend on to your mind?

7. How do we define a person who organizes, manages, and assumes the risks of starting a business to make a profit?

8. Must an entrepreneur have the ability to develop the invention into a successful business product?

9. Why is it considered that the history of the United States is the history of its entrepreneurs?

10. Will you name the American entrepreneurs who left their imprint on U.S. business?

2. Find the equivalents

принимать	imprint
зависимый	shareholder
природные ресурсы	investment
начинать бизнес	partnership
отпечаток	inventor
выдающиеся предприниматели	to borrow
просчитывать риск	profit
акционер	successful
занимать	natural resources
включать	brilliant entrepreneurs
вклад	dependent
успешный	include
выгода	to calculate risk
изобретатель	to accept
товарищество	to start a business

3.Make up sentences with the following word-combinations

- to accept the calculated risk

- make a profit

- to be included in

- brilliant entrepreneurs

- to invent a product

- innovation growth

- to leave imprint on

4.Translate the following sentences into English

• Изначально предпринимательство не было включено в список факторов производства.

• Перед тем как начать бизнес, предприниматель просчитывает соотношение предполагаемого риска с предполагаемой выгодой.

• Спустя некоторое время стало ясно, что страна, имеющая небольшую территорию и небогатая в отношении запасов природных ресурсов, может процветать, если на ее территории живут и работают талантливые предприниматели.

• Яркими примерами стран, имеющих небольшую территорию и незначительные запасы природных ресурсов, но процветающих в современном мире, являются Япония и Корея.

• США имеют богатые природные запасы, однако успех страны связан скорее с активной предпринимательской деятельностью, распространенной среди американского населения, нежели с количеством естественных запасов страны.

Corporate versus small-business enterpreneurship

The defenition of an entrepreneur given above applies to all people who start a business to make a profit. However, when you read articles about entrepreneurship in magazines such as Nation`s Business, Entrepreneur, black Enterprise, and inc., they are talking mostly about small-business owners and managers. These small-business entrepreneurs are quite different from the entrepreneurs mentioned above: Henry Ford, George Eastman, and the like.

Actually, the term entrepreneur has evolved to mean two rather different but related things. It is true that anyone who accepts the risk of starting a small business for profit can and must be considered an entrepreneur. But what do you call a person who has the vision and drive to start and develop a major new business that will go to employ thousands of people and become a major influence in the economy? Today, we use the same word: entrepreneur. The major difference between the two groups is that one group, small-business entrepreneurs, is often quite content to start a small business and remain small. In other group have visions of much greater size and scope. Both groups are vital to an economy and both are fascinating to study. For purposes of clarity, however, let`s give a new name to those entrepreneurs who take the risk of starting and developing major corporations. Let`s call them corporate entrepreneurs.

Corporate entrepreneurs, past and present, seem to share characteristics that distinguish them from small-business entrepreneurs:

1. Corporate entrepreneurs may start their business as a small business, but that is not their ultimate goal.

2. Corporate entrepreneurs may begin their organizations as sole proprietorships or partnerships, but eventually most from corporations to get more capital and to expand.

3. Corporate entrepreneurs have vision and drive and are innovators with great leadership ability.

A manager builds a niche in a major corporation he or she would never think of leaving the securify of corporate life. Right? Wrong! Thousands of salaried Americans decide every year to leave the corporate nest and try running businesses of their own. In addition to these executives who volunteer to fly solo, 17 percent of actitives displaced by corporate mergers and acquisi­tions choose to start their own companies rather than return to corporate life. Consultant Gary Blake, who ad­vises would-be entrepreneurs, says die principal reasons more and more corporate managers are spreading their own wings and leaving the nest are "dissatisfaction with their present prospects, a need for independence, auton­omy and growth, and a feeling they would be willing to make sacrifices to build a business they could enjoy and would reward them directly."

Dalian Peterson spent 13 years as a corporate em­ployee, rising to head a major division of a national com­pany before he opted for the insecurity of entre-preneurship. "It was like going from renting a house to owning your own home—all of a sudden you see the dandelions in the front yard." Dalian did know about perseverance. After leaving his corporate home as a divi­sion manager for a national food company, he had to go into business twice to find lasting success. Despite his first setback with a snack food company, he rejected a return to corporate life. "I had a taste of running my own business and I liked that feeling of'I did it on my own.'" Peterson then started anodier business in a brand new field, profes­sional home cleaning. Today, his company, Merry Maids, is die biggest operation of its kind, with franchise opera­tions in 42 states. He also likes to point out that more than half of his 400 franchises are operated by former corporate employees who wanted to get into businesses of their own.

Exercises

1. Answer the questions based on the text.

1. Are small-business entrepreneurs different from such entrepreneurs as Henry Ford, George Eastman, and the like? What is the difference?

2. Is it true that anyone who accepts the risk of starting a small business for profit can and must be considered an entrepreneur?

3. Who are the corporate entrepreneurs?

4. Those entrepreneurs who take the risk of starting and developing major corporations are known as corporate entrepreneurs, aren`t they?

5. What characteristics distinguish corporate entrepreneurs from small-business entrepreneurs?

6. Why do you think thousands of salaried Americans decide every year to leave the corporate nest and try running businesses of their own?

7. Will you retell Dalian Peterson`s story?

2. Find the equivalents

замысел	small-business owners
расширять	scope
владельцы малого бизнеса	different
конечный	vital
объем	term
существенно важный	goal
заработная плата	difference
разный	corporate entrepreneurs
различать	to sacrifice
цель	dissatisfaction
неудовлетворенность	distinguish
термин	salary
жертвовать	ultimate
объединенные предприниматели	to expand
разница	vision

3.Make up sentences with the following word-combinations

- to apply to

- small-business entrepreneurs

- to be different from

- to be fascinating to study

- to be considered

- to spread their own wings

- to get into businesses of one`s own

4.Translate the following sentences into English

- Предпринимательство – это самостоятельная деятельность физических и юридических лиц, связанная с финансовыми рисками и материальной ответственностью, направленная на получение прибыли. Переход к рыночным отношениям ставит перед обществом много задач, среди которых важное место занимает развитие предпринимательства.

- Сфера деятельности предпринимательства может быть любой: производство, коммерция, услуги.

- В роли коллективных предпринимателей (партнёров) выступают объединения граждан, использующие как собственное, так и приобретённое имущество.

- Предпринимательская деятельность ведётся от имени предпринимателя.

- Предприниматель рискует потерять материальные вложения в случае банкротства.

- Различают предпринимательство государственного типа и частное предпринимательство.

- Предпринимательство является индивидуальной деятельностью частной формы собственности.

What does it take to be an entrepreneur?

Would you succeed as an entrepreneur? You can learn the managerial and leadership skills needed to run a firm. However, you may not have the corporate entrepreneurship personality to assume the risks, take the initiative, create the vision, and rally others to follow your lead. Those traits are harder to learn or acquire. A list of attributes you would look for in youself includes:

1. Self-directed. You should be thoroughly comfortable and thoroughly self-disciplined even though you are your own boss. You will be responsible for your success or possible failure.

2. Self-nurturing. You must believe in your idea when no one else does, and be able to replenish your own enthusiasm. When Walt Disney suggested the possibility of a full-length, animated feature film, Snow White, the industry laughed. His personal commitment and enthusiasm caused the Bank of America to back his venture. The rest is history.

3. Action-oriented. Great business ideas are not enough. The most important thing is a burning desire to realize, actualize, and build your dream into reality.

4. High energy level. It's your business, and you must be emotionally, mentally, and rVivsically able to work long and hard.

5. Tolerant of uncertainty. Successful entrepreneurs take only calculated risks (if

they can help it). Still, they must be able to take some risks. Remember,

cntrepreneurship is not for the squeamish nor the person bent on security.

Here is more advice for would-be entrepreneurs to follow:

1.Research your market, but do not take too long to act.

2.Work for other people first and make your mistakes on their money.

3.Start out slowly. Start your business when you have a customer. Maybe try

your venture as a sideline at first.

4.Set specific objectives, but don't set your goals too high. Remember, there's

no easy money.

5.Plan your objectives within specific time frames.

6.Surround yourself with people who are smarter than yourself—including an

accounant and an outside board of directors who are interested in your well-

being and who will give you straight answers.

8.Do not be afraid to fail.

Exercises

1. Answer the questions based on the text.

1. Do you know anyone who seems to have the entrepreneurial spirit?

2. What about him or her makes you say that?

3. Are there any similarities between the charac­teristics demanded of an entrepreneur and those of a professional athlete?

4. Would an athlete be a good prospect for entrepreneurship? Why or why not?

5. Could teamwork be important in an entrepreneurial effort?

6. Do you think you would succeed as an entrepreneur?

7. What attributes should you have to become a successful entrepreneur?

8. Must you believe in your idea when no one else does if you want to become an entrepreneur?

9. Is a burning desire to realize, actualize, and build your dream into reality the most important thing in entrepreneurship?

10. Successful entrepreneurs take only calculated risks, don`t they?

2. Find the equivalents

бухгалтер	succeed
характеристики	accountant
совет	managerial
деятельный	failure
неопределенность	skills
восполнять	self-directed
организаторский	initiative
окружать	to replenish
неудача	attributes
обязательство	commitment
щепетильный	advice
инициатива	uncertainty
дисциплинированный	action-oriented
способности	to surround
удаваться	squeamish

3. Make up sentences with the following word-combinations

- to be afraid to fail

- board of directors

- to plan one`s objectives

- to have a customer

- entrepreneurial spirit

- to be bent on security

- to build one`s dream into reality

- leadership skills

- to run a firm

4. Translate the following sentences into English

- Считается, что можно изучить качества, необходимые для успешного ведения предпринимательской деятельности.

- Людей, от природы наделенных качествами предпринимателя, не очень много.

- Настоящий предприниматель должен обладать способностью проявлять инициативу, не бояться риска, создавать идею, ставить цель и организовывать других людей на достижение этой цели.

- Предприниматель берет на себя ответственность за реализацию идеи и несет личные потери в случае неудачи.

- Важным для предпринимателя является наличие у него страстного желания осуществить свою идею, перевести мечту в реальность.

- Удачливые предприниматели всегда просчитывают бизнес-идеи.

Entrepreneurs of the 1990s

Entrepreneurship can be learned. Witness the rapid growth of entrepreneurial courses at leading colleges all across the country. Management specialist Peter Druckcr feels that in the future people with college training and some corporate-experience will do much better as entrepreneurs in the long run. Druckcr feels this college and corporate training will give the new entrepreneurs certain tools (skills). The more tools you have, the greater your chance for success.

If you want to describe what the entrepreneur of the 1990s will be like, you could not do better than to write the biography of Mary Anne Jackson. Jackson is both an M.B.A. (she has a Masters degree in business) and a C.P.A. (she is certified in public accounting). For eight years, she did financial and strategic planning at Beatrice Companies. Before that, she worked at two leading accounting firms. What is most interesting about Jackson is that she is quite different from the entrepreneurs of the 1980s. They tended to be visionaries who were young, self-made, intuitive, rash, and better at starting a firm and creating excitement about a project than planning, organizing, and controlling. Jackson has strong manage­ment as well as leadership skills. (A manager is good at planning, organizing, and controlling while a leader inspires people and brings out the best in them by presenting them with a vision and being a model.)

As a result of a leveraged buyout, Jackson found herself without a job, but with excellent managerial experience. She began looking about for a market oppor­tunity. She surveyed the market and found a great demand for nutritious, quick meals that busy active and working mothers could serve their children. After extensive market research, she determined just what those meals should look like and contracted with experienced firms to make those products. She called them My Own Meals because young people could easily identify with the plastic pouched meals that are popped into a microwave oven or boiled.

The development of My Own Meals, Inc., is a lesson in planning and careful management. Jackson broke the start-up process into 20 separate steps: setting up an office, developing the product, testing the market, and so forth. She imple­mented those steps in a professional and controlled manner. She also has long-range plans, and growth rates will be strictly controlled. Sales are expected to be $1 million in the first year, $10 million the second, and $60 million in the fifth year. Entrepreneurs like Maty Anne Jackson are different than the entrepreneurs of the 1980s such as Steve Jobs (Apple Computer), Nolan Bushnell (Atari and Pizza Time), and Bill Gates (Microsoft). Some of the differences between the en­trepreneur of the 1980s and the entrepreneur of the future are likely to be:

• More education. The new entrepreneur is likely to have a business degree or an M.B.A.

• More experience. Future entrepreneurs are likely to come from major corpo­rations where they learned managerial skills.

• Age. New entrepreneurs will be older since they will be starting their businesses later in life.

• More reliance will be placed on deliberation and considered judgment than on instinct and reflex as in the past.

• More planning, organization, and control will be used and less reliance will be placed on emotion and seat-of-thc-pants decision making (that is, react­ing to crises as they occur).

New entrepreneurs will have the same enthusiasm, drive, and leadership ability, but will also have the education and managerial skills to carry out the venture for the long run.

The fact that we can name the successful corporate entrepreneurs from the past indicates that it is not easy to be such a person. It makes sense, docs it not, that several people together may have a better chance of having all the skills and experience needed to start a new venture? That is what we shall discuss next.

Exercises

1. Answer the questions based on the text.

1. Can you give the differences between traditional entrepreneurs and those that are emerging in the 1990s?

2. Why is it acknowledged that entrepreneurship can be learned?

3. It is supposed that in the future people with college training and some corporate-experience will do much better as entrepreneurs in the long run, isn`t it?

4. What does the success in business depend on?

5. Will you describe the difference between a manager and a leader? What specific attributes must each of them have?

6. What were the steps Jackson broke the start-up process into?

7. Future entrepreneurs are likely to come from major corpo­rations where they learned managerial skills, aren`t they?

8. Will the new entrepreneurs be older since they will be starting their businesses later in life?

9. Is it easy to become a successful entrepreneur?

10. Do several people together have a better chance of having all the skills and experience needed to start a new venture?

2. Find the equivalents

рыночная возможность	experience
вдохновлять	market research
самостоятельно добившийся успеха	training
работа	accounting
исследование рынка	tools
определять	extensive
фантазер	degree in business
исчерпывающий	self-made
обдумывание	inspire
доверие	market oppor­tunity
ученая степень по бизнесу	visionary
инструменты	deliberation
подготовка	job
бухучет	identify
опыт	reliance

3. Make up sentences with the following word-combinations

- the successful corporate entrepreneurs

- to have a better chance

- skills and experience

- to carry out the venture

- chance for success

- leadership ability

- excellent managerial experience

- to start a new venture

- to have a business degree

4. Translate the following sentences into English

- Предполагается, что в будущем предпринимателями могут стать люди, имеющие среднеспециальное образование и некоторый опыт организаторской работы.

- Человеку, у которого от природы имеются организаторские способности и лидерские качества, проще стать предпринимателем.

- Тщательное исследование рынка – неотъемлемое условие для начала любого вида предпринимательской деятельности.

- Согласно представлениям специалистов, предприниматели будущего – очень грамотные и высокообразованные люди.

- Предприниматели будущего будут больше полагаться на здравый смысл и твердый расчет, нежели на интуицию и чувства.

- Предприниматели будут осуществлять строгое планирование, жесткий контроль, четкую организацию и будут меньше доверять эмоциям.

- Иными словами, предприниматели будущего будут обладать той же энергией, теми же лидерскими и организаторскими качествами, но это будут управленцы более высокого уровня, способные не прекращать деятельность компании в случае возникновения тех или иных сложностей.

Entrepreneurial team

An entrepreneurial team is a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product. A team may be better than an individual entrepreneur because it combines creative skills with production and marketing skills right from the start. The team assures more cooperation and coordination among functions.

One of the exciting new companies that developed in the 1980s was Compaq Computer. It was started by three senior managers at Texas Instruments: Bill Murto, Jim Harris, and Rod Canion. All three were bitten by the entrepreneurial bug, and decided to go out on their own. They debated starting a Mexican restaurant, a company to produce hard disks for computers, or a business built around a beeping device for finding car keys. However, they finally decided to build a portable personal computer compatible with the IBM PC.

The key to Compaq's success was that it was built around this "smart team" of experienced managers. The chief executive officers in such firms are not order givers, but coordinators whose main task is to tap the potential of their "teams." A study of 90 West Coast companies found that a strong management team was the top priority for success. At Compaq, the team wanted to combine the discipline of a big company with an environment where people could feel they were participat­ing in a successful venture. The trio of corporate entrepreneurs recruited seasoned managers with similar desires. They recruited a 14-year veteran from Texas Instru­ments to set up a state-of-the-art accounting system. A senior vice president from Datapoint became operations manager, and an IBM veteran became the sales and resource manager.

All the managers work as a team. That is, the company's treasurer and top engineer contribute to production and marketing decisions. Everyone works to­gether to conceive, develop, and market products. In its first year, Compaq generated $11 million in sales, the hottest performance in the history of American business. Compaq's sales soared 95 percent to $1.2 billion, and soon Compaq ranked fifth in Fortune magazine's list of the 25 fastest-growing U.S. corporations. The success of Compaq can be traced to its entrepreneurial team.

Exercises

1. Answer the questions based on the text.

1. What are the advantages of entrepreneurial teams?

2. What are the major differences between corporate entrepreneurs and small-business entrepreneurs?

3. What is an entrepreneurial team?

4. Does the entrepreneurial team combine creative skills with production and marketing skills right from the start?

5. The team assures more cooperation and coordination among functions, doesn`t it?

6. Which of the exciting companies that developed in the 1980s can you dwell on?

7. Should the people from an entrepreneurial team be of different skills and abilities?

2. Find the equivalents

преимущество	to combine
исполнительный	creative
миллиард	join together
восходить к	cooperation
окружение	needed
устройство	to develop
творческий	entrepreneurial team
вкладывать	area
область	executive
совмещать	to contribute
команда предпринимателей	device
сотрудничество	priority
развивать	to trace to
объединять вместе	environment
необходимый	billion

3. Make up sentences with the following word-combinations

- experienced people

- to be traced to

- different areas of business

- coordination among functions

- an order giver

- to form a managerial team

- creative skills

4. Translate the following sentences into English

- Группа предпринимателей – объединение специалистов, имеющих разные виды предпринимательского опыта, согласованно работающие с целью получения лучшего продукта.

- Группа предпринимателей – лучший способ разграничения и координации функций внутри кооператива.

- В группе предпринимателей ведется слаженная работа специалистов по развитию, производству и сбыту продукции.

- Все без исключения участники группы предпринимателей работают с целью получения лучшего продукта в условиях минимизации затрат.

Entrepreneurial opportunities

In the past, small-business entrepreneurs tended to be middle-aged white males who often came from a business background and had a significant amount of capital to invest. Today, other groups have been successfully entering the field. Women, minorities, immigrants, and young people have greatly changed the face of entrepreneurship.

No group has taken more advantage of the entrepreneurial spirit than women. They are not just joining the labor force; they are the fastest-growing segment of the nation's small-business entrepreneurial explosion. More than 90 percent of these female entrepreneurs are involved in sole proprietorships (small-business entrepreneurs). In fact, the number of female sole proprietors has increased at a rate three times that of men over the past five years.

The Small Business Administration has started an experimental program de­signed to give women entrepreneurial advice. The Women's Network for En­trepreneurial Training operated initially in California, Illinois, and New York. For example, in California, 12 successful women who run small businesses have volun­teered to counsel 12 women who are just starting. They agree to meet once a week for a year until the new business gets started. Similar programs are being started all across die country.

Entrepreneurship has been so successful in small firms that larger corporations are I trying to imitate the results. But how do you create an atmosphere of innovation and daring in a stodgy old firm? The answer is to break away from the traditional tight organization structures and create small, creative entrepreneurial centers where innovative ideas are developed.

The name given to highly innovative, fast-moving entrepreneurial units oper­ating at the fringes of the corporation is skunkworks. The term comes from the I I'il Abner comic strip and was first used at the Lockheed California Company. A man named Clarence L. "Kelly" Johnson organized a division of the company in 1943 to design, build, and test the first tactical jet fighter in the United States—the XP 80. The plane was designed, built, and flown 143 days after the project was started. Johnson's philosophy was, "Do the best possible job in the simplest way, at the cheapest cost, in the quickest time." He handpicked a few good workers, shared his vision, asked for their best, and provided the leadership needed to make the project work. Today, skunkworks describes any highly motivated entrepreneurial team in a large corporation that emphasizes innovation. The latest product to come from Lockheed's skunkworks is the "stealth" fighter.

Exercises

1. Answer the questions based on the text.

1. What did the small-business entrepreneurs use to be?

2. Should an entrepreneur have a business background and a significant amount of capital to invest?

3. In the past, small-business entrepreneurs tended to be middle-aged white males, didn`t they?

4. What groups of people have greatly changed the face of entrepreneurship?

5. What is the fastest-growing segment of the nation's small-business entrepreneurial explosion?

6. When did the number of female sole proprietors increase at a rate three times that of men?

7. Was entrepreneurship very successful in small firms? What was the result of this phenomenon?

8. Is it possible to create an atmosphere of innovation and daring in a stodgy old firm? How can it be done? Should it be done to your mind?

2. Find the equivalents

разрабатывать	middle-aged
взрыв	advantage
женщины-предприниматели	fringe
увеличение	to imitate
мотивированный	background
преимущество	skunkworks
подбирать	significant
продвинутая команда предпринимателей, работающая в руководстве компании	labor force
происхождение	sole proprietorships
край, периферия	explosion
индивидуальный предприниматель	to handpick
среднего возраста	increase
рабочая сила	motivated
значительный	female entrepreneurs
повторять	to design

3. Make up sentences with the following word-combinations

- to emphasize innovation

- to share one`s vision

- to make the project work

- in the simplest way

- at the fringes of the corporation

- atmosphere of innovation and daring

- entrepreneurial advice

- the nation's small-business

- entrepreneurial explosion

- capital to invest

- a significant amount

5. Translate the following sentences into English

- В недавнем прошлом предпринимателями становились, как правило, мужчины среднего возраста, имеющие определенные предпринимательские способности и достаточный капитал.

- В настоящее время в числе предпринимателей появляется все больше женщин и молодежи.

- За последние пять лет число женщин-предпринимателей выросло в три раза больше, чем предпринимателей-мужчин.

- Согласно некоторым исследованиям, небольшие формы бизнеса являются более успешными, чем крупные производства.

- Причиной большого успеха малого бизнеса, по-видимому, является активное внедрение инновационных идей.

Entrepreneuring

Entrepreneurship in a large organization is often reflected in the efforts and achievements of intrapreneurs. An intrapreneur is a person with entrepreneurial skills employed in a corporation. The idea is to use a company's existing re­sources—human, financial, and physical—to launch new products and generate new profits. At 3M Company, for example, managers are expected to come up at least 25 percent new products for 3M every five years.

Have you seen those yellow Post-it note pads people use to stick messages up on a wall? That product was developed by Art Fry, a 3M employee. He needed a piece of sticky paper so he could mark the pages of a hymnal widiout the marker falling out. The 3M labs soon produced a sample, but distributors thought the product was silly, and market surveys were negative. Nonetheless, 3M kept sending samples to secretaries of top executives. Eventually, after 12 years, the orders began pouring in, and Post-its became a $12 million winner.

Hewlett-Packard calls their entrepreneurial approach the Triad Development Process. The idea is to link the design engineer, the manufacturer, and the marketer (the Triad) in a team from the design phase on. Everything, even the assembly line, shuts down if the Triad team wants to test an innovation.

Some business schools are now teaching courses on how big corporations can develop new products and adapt to changing markets by using intrapreneuring. Many of you who seek the security of a large corporation but worry about a lack of creativity might focus your future toward intrepreneurship. The first school for intrapreneurs was started in Sweden in 1980 by the Foresight Group. They now have a similar school in the United States.

Do the benefits of entrepreneurship outweigh the benefits of intrapreneurship? That's a decision you would have to make yourself. However, as you might suspect, there are certain advantages of working as an intrapreneur within an organization. Several advantages of intrapreneuring include:

Employee morale. It is fun and exciting to be able to work on your own

products with much freedom.

Marketing clout. P. D. Estridge developed a good personal computer, but it

was infinitely more attractive with the IBM name on it.

Technology base. The research laboratories at major corporations have every­thing one needs to launch a product.

Financial backing. An obvious point, but entrepreneurs can find much

venture capital, too, outside of major firms.

People to help. Some of the best minds are already in corporations where they

can be of great help.

Information resources. It is expensive to set up the complex computer systems

that are already available in major firms.

Well, would you? If you are interested in this subject, a good book to read is Gifford Pinchot's I77intrapreneuring (New York: Harper & Row, 1985). Pinchot defines an intrapreneur as: Any of the "dreamers who do." Those who take hands-on responsibility for creating innovation of any kind within the organization. The intrapreneur may he the creator or inventor but is always the dreamer who figures out how to turn an idea into a profitable reality.

Another interesting piece about intrapreneuring appears in the February 1989 issue of Black Enterprise. The author explores three forms of intrapreneuring: (1) establishing an entirely new entity to handle short-term projects, (2) stimulating and devising new services, and (3) creating an entirely new division for a new product.

A familiar intrapreneur cited by Pinchot is Lee Iacocca. In the 1960s, Mr. Iacocca set his mind to producing a new, innovative car for the market. However, he knew the perfect car would not just fall in his lap. What Mr. Iacocca did was put together a team from sources both inside and outside the Ford Motor company. His team met at a location beyond the corporate boundaries to avoid any type of interference from inside the company. The end result of this intrapreneurial venture was the development of the Ford Mustang. Of course, Iacocca went on to great success at Chrysler.

Exercises

1. Answer the questions based on the text.

1. How can you characterize an intrapreneur?

2. What is the difference between an entrepreneur and an intrapreneur?

3. An intrapreneur is a person with entrepreneurial skills employed in a corporation, isn`t he?

4. What is the idea of entrcpreneuring?

5. Do some business schools teach courses on how big corporations can develop new products? What do they do this for?

6. What do they advice for those people who seek the security of a large corporation?

7. Entrcpreneuring is much more difficult than intrapreneuring, isn`t it?

8. Do the benefits of entrepreneurship outweigh the benefits of intrapreneurship to your mind?

9. What are the certain advantages of working as an intrapreneur within an organization?

10. Are there any advantages of intrapreneuring?

2. Find the equivalents

вырабатывать	to adapt
граница	perfect
приспосабливать	research laboratories
исследовательская лаборатория	boundary
совершенный	to test
испытывать	interference
достижение	market survey
вмешательство	responsibility
решение	effort
исследование рынка	expensive
очевидный	achievement
ответственность	obvious
дорогой	decision
усилие	to generate

3. Make up sentences with the following word-combinations

- achievements of intrapreneurs

- employed in a corporation

- to generate new profits

- the design engineer

- to worry about

- to be able to work on your own products

- to be of great help

4. Translate the following sentences into English

- Идея предпринимательства в крупной организации состоит в том, чтобы, используя финансовые, человеческие и физические ресурсы компании, производить новые товары и разрабатывать новые источники доходов.

- Первая школа предпринимательства в крупной организации была открыта в Швеции в 1980г.

- В числе преимуществ предпринимательства в крупной организации могут быть названы следующие: технологическая база, финансовая поддержка, помощь квалифицированных специалистов, информационное и техническое обеспечение.

- Согласно мнению отдельных экспертов, существуют такие виды предпринимательства в крупной организации, как 1) учреждение кооператива для осуществления недолгосрочных пректов, 2) развитие и продвижение новых услуг, 3) создание нового подразделения для нового продукта.

The internal environment of a small business

The small business.

Today small businesses are the heart of the market economy. There are a great number and variety of small businesses. People beco­me owners and operators of small business firms in one of three ways; start a new firm, buy a franchise, buy or inherit an existing firm.

Small firms have been established to do just about any kind of business imaginable. They have been established to manufacture and distribute goods, to sell them at retail, and, of course, to provide all kinds of needed services. Some serve only the local community, while others function in national and international markets.

The vast majority of small firms concentrate on selling material products, although an increasing number of firms provide a service. Although an increasing number operate in local markets, services too are exported. In recent years there has been a great increase in the export of services, such as management consulting, medical, and tech­nological services.

The existence of a strong, healthy small business community has always been recognized as the best way to preserve competition, prevent monopolistic control of any industries, and thus assure the population of the benefits of competition through better prices and quality products. Incentives have been provided to assist small firms. The government of the US created the Small Business Administration (SBA) in 1954 to provide financial, management, and procurement assistance for small firms.

There are some facts that illustrate the importance of small business. According to the Small Business Administration:

-99% of all businesses in the US can be classified as small;

-43% of the gross national product is contributed by small business;

-while large business has been cutting back employment, small business has been creating new jobs;

-many of new products and services in the US are created by small businesses.

Numerous definitions of the term "small business" exist. A small business is one which is independently owned and operated and not dominant in its field of operation. A small business is one which possesses at least two of the following four characteristics: 1) mana­gement of the firm is independent. Usually the managers are also the owners; 2) capital is supplied and the ownership is held by an indi­vidual or a small group; 3) the area of operation is mainly local, with the workers and owners living in one home community. However, the markets need not be local; 4) the relative size of the firm within its industry must be small when compared with the biggest units in its field. Of the characteristics cited, most scholars believe that the fourth, relative size, is the most important.

The SBA traditionally uses the following criteria for defining small business: retailing (sales volume), service (sales volume), wholesaling (sales volume), manufacturing (number of employees).

The following is a list of terms that can be used to describe a business. Each term tells something about the size of a business.

Total assets - all that a business owns.

Net worth - business assets less what is owed.

Gross profits - money left from sales after all expenses (except taxes) have been paid.

Net profits - what is left from gross profit after business income taxes are paid.

Employees - total number of workers and managers listed on the payroll^.

Income - net receipts, the total sales' less returns, allow­ances, and discounts.

It is necessary to keep records of a business for tax purposes and as a measure of growth. Some businesses fail because they are improperly expanded. Other businesses are unsuccessful because they expand too quickly and cannot handle problems that come with rapid growth. Many businesses remain small and provide excellent income throughout their lifetime.

Business operations are subject to review by local, state, and federal authorities. These reviews insure that rules and regulations are being obeyed and standards maintained. Some of the operations subject to review are listed here.

Income. Business income must be reported for income tax purposes. Other reasons for reporting business income include providing information for bank loans attracting investors, making equitable distribution of profits in partnership, and as a measure of business growth. The records are usually subject to an audit.

Working conditions. Clean and safe working conditions must be provided for employees and if required, medical and safety equipment must be provided.

Wages and hours. Work regulations and announcements must be posted where employees can read them. Employers must pay at least the minimum wage that applies to their employees.

Advertising, labelling, and packaging. Businesses must not be guilty of false advertising, mislabeling, or providing less than the labeled weight in a package.

Unfair practices. Laws prevent business persons from engaging in various unfair practices, such as price fixing and other means of restraining trade.

Discrimination. Federal and state regulations prevent an employee from being discriminated against because of colour, race, sex, religion, or national origin.

Liability and compensation. Employers are required to carry insurance and provide adequate compensation for workers injured on the job and customers injured on the business premises.

Exercises

1. Answer the questions based on the text.

1. How do people become owners and operators of small business firms?

2. What are the aims of establishing small firms?

3. What has always been recognised as the best way to reserve competition, prevent monopolistic control of any industries?

4. What facts illustrate the importance of small business?

5. Can you define a small business?

6. What is the most important characteristic of a small business?

7. What criteria are used for defining small business?

8. What terms describe the size of a small business?

9. What operations of a small business are subject to review?

10. Why is it necessary to keep records of a business?

2. Find the equivalents

существование	announcement
предпосылка	population
справедливый	condition
население	variety
экспорт	regulation
заверять	discriminate
владеть	discount
объявление	equitable
франчайзинг	to possess
правило	franchise
скидка	to assure
разнообразие	existence
различать	export
условие	premise

3. Make up sentences with the following word-combinations

- unfair practices

- to prevent from

- to carry insurance

- to provide adequate compensation

- to provide a service

4. Translate the following sentences into English

- Сегодня считается, что малый бизнес – это сердце рыночной экономики.

- Люди становятся владельцами или управляющими малым бизнесом вследствие одной из трех процедур: 1) открытие новой фирмы, 2) приобретение франчайзинга, 3) наследование существующего бизнеса.

- Существование сильного и здорового малого бизнеса всегда считалось лучшим средством борьбы с конкуренцией и предотвращения монополистического контроля в той или иной отрасли промышленности.

- Малый бизнес – это независимое частное владение или управление, не доминирующее в своем производственном секторе.

- Малый бизнес, как правило, обладает следующими характеристиками: независимое управление фирмой, капитал предоставляется владельцем фирмы, узкая специализация, размер фирмы должен быть малым по сравнению с крупными предприятиями в той же отрасли.