Entrepreneurship

1. Entrepreneurship

2. Entrepreneurship The concept of entrepreneurship has a wide range of meanings. Entrepreneur is a person of very high aptitude, possessing characteristics found in only a very small fraction of the population. Anyone who wants to work for themselves is considered to be an entrepreneur.

3. Joseph Schumpeter (Feb. 8, 1883- Jan.8, 1950) • Schumpeter was probably the first scholar to develop theories about entrepreneurship. For instance, the European Union's innovation program, and its main development plan, the Lisbon Strategy, are influenced by Schumpeter. The International Joseph A. Schumpeter Society awards the Schumpeter Prize.

4. Schumpeter was probably the first scholar to develop theories about entrepreneurship. • His definition of entrepreneurship placed an emphasis on innovation, such as: • new products • new production methods • new markets • new forms of organization

5. Success • . The ultimate goal would be to provide a product with all factors considered that would result generating superior monetary returns. Thus, success measured by the creation of wealth.

6. Entrepreneurial ventures differ from small businesses in these ways: • Amount of wealth creation - rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth. • Speed of wealth creation - while a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for example, within 5 years. • Risk - the risk of an entrepreneurial venture must be high; otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity no longer would exist. • Innovation - entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it.

7. Starbucks • Zev Siegl is a Jewish-American entrepreneur. In 1971 he, Jerry Baldwin, and Gordon Bowker founded the original Starbucks Coffee store, near Pike Place Market, in Seattle, Washington. Siegl, a former history teacher, was the only paid employee in the early days of the company. In 1980 he sold his share of the business, which by then had expanded to four stores. • Howard Schultz showed up at Starbucks. The founders didn’t share Schultz’ bigger picture to roasting coffee, but hired him in 1982. Starbucks instantly became a hit and now serves fifteen million customers a week in almost 4,000 stores.

8. Starbucks Coffee Company • c. Executives: • Howard Schultz, Chairman, president, and CEO • Troy Alstead, EVP, CFO, and Chief Administrative Officer • Stephen Gillett, SVP and CIO. • d. Competitors: • Gourmet coffee companies: • Peets Coffee • Caribou Coffee • The Coffee Bean.

9. Comparisons • “Bargain” coffee competitors: • Dunkin’ Donuts • McDonalds • Einstein’s Bagels • Starbucks Stock is overvalued by the general public, but has successfully sustained profitability beyond the a few drops, namely the financial crisis that occurred (is occurring) since late 2007.

10. Public Opinion • Starbucks brand image: the word Starbucks is synonymous with coffee. This implies that that even though Starbucks has taken a financial hit, the executives believe that the public will buy the product because it is perceived as a quality product.

11. Economy Concerns Starbucks has increased their debt substantially since 2006. From 2006 to 2007 Starbucks increased its debt by over $500,000. In 2005 the company had very little debt, and the increase in debt may be attributed to the close of over 600 stores. This increase in debt has been decreasing since 2008, which shows that the key decision makers have faith that the company will survive this recession.

12. Stress Test Assumptions: • The amount of debt the company has actually does not affect the company's stock price all that much. When I changed the debt to $0, the stock price only went down by about a dollar. Perhaps the price does not have that much to do with the key-decision-makers belief in the company. • Working Capital has nothing to do with the payout rate to stockholders and investors. There is not an way to stress-test this assumption • Brand Image of Starbucks might be best tested by a perceptual map, but cannot financially be tested aside from the money people are willing to spend on the Starbucks product. • There seems to be a trend in how Starbuck's stock performs. I am sure if I went back far enough I would see a similar trend in the 90s and the 80s.

13. Stock---Money----Profits---

14. Starbucks Starbucks: This stock is hot and based off the current trend of the stock rising (I traced it back the actual stock price over the last several months). I would say it is wise to buy this stock and wait to sell it until the price increases. Starbucks Stock has been very high throughout the last decade, and I would not be surprised that as the economy continues to improve that there is potential for individuals to make a lot of money!The inventory turnover is high, which is a positive attribute to for a company. The inventory turn of Starbucks is not as high as Caribou Coffee but the net income is much higher for Starbucks than for Caribou. Based off the competitors,

17. Entrepreneurship ! • With the current state of affairs it is reported that the majority of Americans believe that Entrepreneurs and Small Business owners will be responsible for bringing about economic recovery through innovation and job growth.

18. Conclusion • I feel that the founders of Starbucks exemplify true entrepreneurship principals. Entrepreneurships original father Joseph A. Schumpeter would find the techniques used by Starbuck executives in line with his philosophy.