The Meaning of Entrepreneurship

This function that is specific to entrepreneurs is the ability to take the factors of production – land, labor, and capital and use them to produce new goods or services. The entrepreneur perceives opportunities that other business executive do not see or do not care about.

Some entrepreneurs use information that is generally available to produce something new. Henry Ford, for example, invented neither the automobile nor the division of labor, but he applied the division of labor to the production of auto mobiles in a new way – the assembly line. Other entrepreneurs see new business opportunities. Akio Morita, the president of Sony, the Japanese consumer electronics giant, saw that this company’s existing products could be adapted to create a new one – the Walkman personal stereo. Basically the entrepreneur sees a need and then brings together the manpower, materials and capital required to meet that need. Grinding coffee beans and selling brewed coffee are not new. What is new is the quality and ambience that Starbucks gives to these activities. Essentially an entrepreneur creates an organization as a way of offering something new to customers, employees, or other stakeholders.

The greeting card industry offers an example of how entrepreneurs can find a niche by offering something different. In the $5.3 million retail card market , the biggest three companies – Hallmark Cards, American Greetings, and Gibson Greetings have 85 percent of the sales. However, more than a thousand smaller publishers are trying to out do each other with creativity and innovation for the remaining 15 percent. Responding to complaints of sometimes boring nature of traditional cards, some start ups target particular niches to the market. One such company is Send Inc., one of the small numbers of African American owned US greeting card companies. The founder Mark Norris started his company in response to frustration with the quality and variety of greeting cards available to ethnic consumers. His cards are sold in card shops, museums, and up scale retailers to four continents, and he has plans to expand the company’s focus to include the general market. Cardthartic of Chicago is a company aimed at the gay and lesbian market. Its first line of cards addresses such occurrences as adaptations by same sex couples or the less of someone to AIDS. Its president, Jodee Stevens launched the Ventures venture with $90,000 in personal funds and posted first year revenues of less than $100,000. Stevens expects the company to break even in two or three years.

One of major trends driving many companies of any size is the increasingly high standards of the industrial customers (both domestic and international), who demand exceptional quality from vendors who supply them with materials and components. In this demanding competitive environment Pro Fasteners Inc., a 55 employee San Jose, California, distributor of industrial hardware and components to the electronics industry, has emerged as a market leader, a world class competitor, and a model for others. Since its beginning a decade ago it has thrived, snapping up market share in a very competitive market. From 1990 to 1992 Pro garnered more than 50 quality awards. It has won acceptance as a prime vendor to ‘A’ list customers such as Applied Materials Inc., a big semi conductor equipment manufacturer. Applied is a world class producer that operates on tight just in time schedules and demands world class quality levels. To meet the needs of such customers, Pro must produce no more than a few wrong or faulty or late parts out of every million shipped.

Managers at Pro appear to be making all the right moves, using a continuous improvement quality push to achieve records of near perfect performance. To accomplish this level of quality, Pro uses a state of the art computer system, promotes communication and training and utilizes cross functional teams. All of this has not been accomplished without growing pains, as the company reinvents itself as it goes along, and everyone adjusts to new ways of managing. As more and more organizations strive to enter the arena of world class quality, much can be learned from both the successes and the growing pains of companies like Pro Fasteners.