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C2 ENTREPRENEURSHIP AND
MANAGEMENT
2.1. OWNERSHIP AND MANAGEMENT OF FIRMS
ENTREPRENEUR: A person who resolutely undertakes innovative actions

Entrepreneurship→ taking on and beginning a project, a business, or a venture,

especially if this involves difficulty or risk. An individual who creates a new enterprise
develops a new business or a new business opportunity. Individuals who discover, assess
and exploit business opportunities, innovate and develop new resources combinations of
resources in the face of uncertainty.
Both approaches: individual entrepreneur (new firms, startups) - corporate
entrepreneurship (corporate venturing or intrapreneurship).

Intrapreneur → the person who implements innovative projects within an already existing
company

OWNER: Person or group of people to whom a firm belongs ⇨ the owners of its capital.
When one or several families own a firm and, consequently, control decision-making
⇨
within it family-owned company. Entrepreneur/businessman-owner: the person who
creates the firm and manages it also owns it. Owner as an investor: he/she provides the
capital and delegates tasks to one or more people and does not perform any management
functions.

Relationship between the size and age of firms and whether the owners perform
management functions within them.

MANAGEMENT: A person or group of people who hold authority within it to set objectives
and make the relevant decisions to achieve said objectives.
The function of management within a firm focuses on:

Coordinating the factors of production to achieve efficiency, entering into contracts

with the individuals and groups comprising the firm's stakeholders, including the
system of incentives.

Capitalising on profit opportunities arising in the firm's current business operations,

Laying the ground for the process through which the firm can create and develop its
resources and potential.

CORPORATE GOVERNANCE OF THE FIRM

In large companies, particularly those in which the capital is provided by a large number of
owners or shareholders, or in listed companies, the separation between ownership and

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 management is much clearer.

Corporate governance:

The owners possess mechanisms through which to keep a check on what top
management does

To prevent any potential conflicts of interest and divergence between the interests of
owners and managers regarding the ultimate goal of a firm

To keep a check on what top management does to ensure that the goal is value creation.

Mechanisms: Board of directors, incentives, career within the firm, markets,

BUSINESS PERSON/ ENTREPRENEUR:

Entrepreneur and business person as synonyms. Reasons:

Literal translation from other languages. There is no equivalent term in

English(business-person, promoter, capitalist, or impresario), or French or German (the
same word is used for both terms).

Entrepreneurship has become very in vogue over the last few years

Euphemism: negative view, “impresario” - capitalist

BUSINESS PERSON:
Owner or manager of a business or company.

A person who, individually or collectively, sets the objectives and takes strategic
decisions regarding the goals, means, administration and control of a firm, assuming
liability about the world external to the firm.

A business person conducts business intending to meet the needs of others, and the
hope for an economic Entrepreneur is similar, their high-risk profile and confrontation of
challenges are more noteworthy.

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 2.2 ENTREPRENEURS AND BUSINESS CREATOR
THE ENTREPRENEUR IN ECONOMICS AND BUSINESS MANAGEMENT STUDIES:
Entrepreneurs are basic to economic development ⇨ The role of the entrepreneur has
aroused great interest as a subject of study. More attention has been paid in business
management studies to the role of management than to that of the entrepreneur ⇨
economic
theory scarcely paid attention to firms and entrepreneurs ⇨
markets and great influence by
ideas of Newtonian physics.

Conclusion ⇨ no conclusive ideas about the role of

Three approaches: risk-taking/innovator entrepreneur, manager/control entrepreneur and
owner/capitalist entrepreneur.

Risk-taking/innovator entrepreneur → he is the agent who buys raw material at a known

price to transform it into products which he can then sell at a price which was uncertain at
the moment he committed himself to his costs. The person who innovates, discovers,
evaluates and exploits business

Manager/control entrepreneur →coordinate the factors of production; estimate demand

by analysing and diagnosing the economic situation, and, organise and streamline the
factors of production available to them to achieve the greatest level of productivity
possible.

Owner/capitalist entrepreneur→ is the sole owner of a business that he personally

manages and controls, assuming the risk inherent to ownership; he is a speculator with
the sole motivation of seeking profit and accumulating capital.

Entrepreneurs have different traits, functions and behaviours from capitalists and managers:
they discover, create and exploit opportunities, face risks and uncertainty, promote innovation
and lead change.
It is not easy to propose a definition of entrepreneur:

the individual who creates a new enterprise and develops a new

what this person does: discovering, evaluating and exploiting opportunities.

Two types of entrepreneurs: the individual owner entrepreneur and the corporate
entrepreneur

THE PROFILE OF AN ENTREPRENEUR

Psychological and biographical traits:

Shrewdness, creativity and originality

A tendency towards action and proactiveness

Initiative, passion, persistence, determination, and need to achieve or for self-

improvement.

Optimism, a spirit of risk, self-confidence, and tolerance of ambiguity and uncertainty

Ability to learn from experience

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 Independence, autonomy and internal control of focus

Other traits: leadership, knowledge, organization, education, belonging to a network

created based on social, ethnic, religious or other type of link

Environmental factors:

Economic, Social, and Institutional (necessity/opportunity entrepreneurship, business

accelerators/incubators/coworking, FFF, business angels, venture capital, crowdfunding,
etc.).

International observers of entrepreneurship:

Global Entrepreneurship Monitor (GEM, org). Data from more than 100 countries.

Global University Entrepreneurial Spirit Students’ Survey (GUESSS, guesssurvey.org).

Evaluating the intentions and business activities of university students around the world.

UNICORN COMPANIES: A unicorn is a startup company valued at over US$1 billion which is
privately owned and not listed on a share market.

BUSINESS CREATION

IDEA: The starting point of a new firm is always an idea. This business idea must be based on
a business opportunity aimed at a need to be satisfied through the new firm.
The factors that determine the choice of the idea are:

Repetition of the experience of others

New business opportunities in undersupplied markets, newly established markets or high-

growth markets because gaps in the market (or niches) with unsatisfied demand to be
met are detected.

Knowledge about specific markets, industries or businesses.

The experience of the future entrepreneur, who has been a worker or manager in another
business and wishes to go it alone.

The entrepreneur has an innovative product which he/she believes may generate a
market.

Businesses or activities are undertaken which involve little complexity

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 The future entrepreneur should ask him/herself a few questions: Is it a realistic idea? Is it
technically feasible? Is it economically feasible? Am I in a situation to undertake the project?
Will the rate of return justify the effort needed to implement it?
The most important is enthusiasm and confidence in the idea.
To exploit a business opportunity: it is necessary to obtain, organise and efficiently combine
the different factors of production needed to produce the products or provide the services
that the new firm hopes to offer.

BUSINESS PLAN
It is a written document that encapsulates the contents of the business project that an
entrepreneur intends to put into practice. There is no standard format for a business

Business plans cover the following issues:

Description of the firm (business or business initiative).

Description of the product or service to be provided.

Commercial plan.

A possible business plan template: objectives of the business project and presentation of the
entrepreneur/s, the activity of the firm(product or service), the market, marketing, production,
location, people, funding, and formal aspects of the project.

SETTING UP THE FIRM:

Legal form: number of partners, the amount of initial share capital and other requirements,
etc. (Chapter 1).
Legal procedures (name, registration in the Commercial Register, licenses and permits, etc.)
Interesting and useful:

Enterprise Creation Advisory and Initiation Points (Puntos de Asesoramiento e Inicio de

Tramitación - PAITs) and One-Stop Corporate Shops (Ventanillas Únicas Empresariales
- VUEs).

The Ministry of Industry SME portal: perform an entrepreneurship self-assessment,

write up a business plan, business model simulators,

Business-creation and entrepreneurship websites run by their Autonomous

Communities, Local Authorities and local Chambers of Commerce.

Magazines and mass media publications, etc.

2.3 THE MANAGEMENT FUNCTION

The business administration (management) of a firm, understood as a function,
coordinates and integrates the set of factors of production that comprise the firm and,
particularly, its main asset, the people who work in it.

Managerial work essentially consists of getting all those people who make up the
organisation to work together in the same direction, providing them with objectives and

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 common values, a suitable structure and the continuous guidance that they require to
respond and adapt to change.

Management should .. foster the generation of new resources and the continuous
improvement of the organisation.

The use of the terms “administration” and “management” in Spain.

THE ADMINISTRATORS OF THE COMPANY

The owners of the company are responsible for deciding who will be administering or
managing the company.
The sole owner (entrepreneur/businessman): responsible for administering or managing the
company’s activity.

Following the Capital Companies Act (RD 1/2010, July 2) (private limited liability
companies and limited liability companies), the responsibilities of the administrative body
are the management and the representation of the company → single
administrator/several administrators or a board of directors.

Differences:

Size: micro, small, and medium-sized enterprises, and large companies.

Listed companies

The key functions of the Board of Directors are:

Serving as a link with the owners (communication responsibility).

Controlling management matters (supervisory responsibility),

Directing and driving company policy (strategic responsibility),

Characteristics of the board of directors:

Minimum size: 3 Chairman (executive or non-executive) and secretary.

Directors: Internal (executive) and External (proprietary and independent). Chief

Executive Officer (CEO).

Mandatory for listed companies (Code of Good Governance for Listed Companies,
National Securities Market, 2015).

The company’s maximum responsibility for decision-making (executive functions)

needs to be concentrated in one person (USA: CEO - Chief Executive Officer).

THE MANAGERS OF THE COMPANY:

The management functions will be vested in different individuals and specific or specialized
positions. According to the scope of the activities that managers perform:

General managers: They are the people who manage units or organisations (firm, division,
subsidiary) that employ specialists in their different functional areas (purchasing, sales,
production and R&D).

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 Functional managers: They are the people who head specialised functional units
(production, purchasing, sales, R&D, etc.).

According to the hierarchical level:

Top management: it is the top management's job to direct or steer the firm, set its
objectives and strategic guidelines, high uncertainty, loosely structured and long-term
decisions.

Middle management: link between the top management and the employees who form
the basic operating core of the firm, transmit information downwards and upwards,
more structured and routine problems, and more detailed and specific decisions,
middle managers in most direct contact with the workers in production are usually
called frontline managers.

MANAGERS AND DECISION-MAKING

Managers need skills and knowledge of a conceptual and technical nature, the ability to view
the organisation as a whole, whilst working with, understanding and motivating their
subordinates.
The essential task of a manager is to make decisions

Decision → any rational process through which information is converted into action, i.e. a
process that aims to solve any ambiguity surrounding matters.

Decision-making → problem-solving in the firm: diagnosing a problem, seeking and

evaluating alternatives, and finally choosing a decision

Decision-making→ Problem-solving in the firm: diagnosing a problem, seeking and

evaluating alternatives, and finally choosing a decision.

Type of decisions:
Strategic Those made by top management.

Tactical Those made by middle management.

Operational Those made by frontline managers.

THE NATURE OF MANAGERIAL WORK

The classic functions of the management process are:

Planning: deciding in advance what one wants to achieve (objectives), what needs to be
done to achieve it, what technical, financial, human and other means are to be used to
perform it, what results one expects to obtain and how these results are to be assessed

Organization: designing an organisational framework, e. the stable scheme of relations

between the members of the firm → organisation chart.

Commanding and leading: incorporates individuals that are going to work within an
organisational structure so that their behaviour is focused on achieving the objectives →
recruitment, selection, training, assigning people to posts and designing a system of
rewards.

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 Control: consists of measuring the results obtained and comparing them with those
expected, to identify any possible deviations and ensure that they are corrected.

There is very little difference between different managerial posts. A manager's work is highly
varied, comprising many different tasks, which are normally short, very fragmented and
subject to constant interruption. Each manager holds a position in the hierarchy, depending
on his/her post → which gives him/her formal authority and a specific status.
Ten different roles make up the content of a manager's work, grouped into:

Interpersonal roles: figurehead, leader and liaison

Informational roles: monitor, disseminator and spokesperson

Decisional roles: entrepreneur, disturbance handler, resource allocator and negotiator

LEADERSHIP IN THE COMPANY

The role of managers is to convince and influence to create a climate of trust. If he/she is not
just a manager, but also a leader, then the members will collaborate voluntarily and
enthusiastically. A leader is a person capable of influencing the attitudes and opinions of
others. A leader can be distinguished from a manager by identifying the type of power that
each relies on:

Formal power: formal authority.

Power to reward: influencing in the reward and promotion.

Coercive power: denying privileges, sowing contempt in public or dismissing them.

Legitimate power: which lies in their subordinates.

Referent power: subordinates wish to imitate or be like them.

Experience-based power: based on the experience and knowledge of the leader.

Formal power, power to reward, coercive power and some part of legitimate power are
associated with the manager; legitimate, referent and experience-based power are related to
leadership.

Knowing how to adapt to the different tasks involved in a firm and the characteristics of its
members is of great importance. The factors that influence the type of leadership include the
characteristics of the leader, the attitudes of followers, the environment, etc.
Particular attention has been paid to:

Characteristics that leaders assume their followers or employees possess (McGregor,

1969):

Theory X. People have to be forced to work and must be controlled and threatened
with punishment.

Theory Y. People can exercise enough self-control to achieve their objectives, and
they accept and seek responsibility.

Managers' concern for production and results and/or for people (Blake y Mouton, 1975).

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 2.4. KNOWLEDGE AND INFORMATION TECHNOLOGY IN
BUSINESS MANAGEMENT
THE DIGITIZATION OF BUSINESS AND ICTs
Progressive digitization of the economy and businesses, or the fourth revolution, is
characterized by the growing role of new technologies: robotics, artificial intelligence,
nanotechnology, IoT, etc.

Radical transformation of business: workers, customers, supply chain, processes, goods or

services, etc.
Information and communication technologies (ICTs) applied to different spheres of business
life:

To manage information inside a firm and its environment

Gather data, process them suitably to transform them into information and explicit
knowledge, and store any information for decision-making.

Benefits from ICTs: (i) optimise their resources and improve operations; (ii) greater insight
into customer needs to offer better services; (iii) reach more customers and new markets; and
(iv) enhance communication between employees, customers and suppliers.

INFORMATION AND KNOWLEDGE IN BUSINESS MANAGEMENT

Knowledge (information and technology) is a key factor in the success of firms and nations.
Knowledge is also a basic input for the decision-making process at all managerial levels.
Data, information and knowledge are different. Basic types of knowledge: explicit and tactic

In the context of a firm, knowledge is amassed in different people and parts of the firm:
talent.

Big Data + Business Intelligence

Digitalization of business and economy

INFORMATION AND COMMUNICATION TECHNOLOGIES AND BUSINESS

MANAGEMENT
The ICTs are most commonly used in :

Sales and Customer Relations: Customer Relationship Management (CRM).

Logistics: Supply Chain Management (SCM).

Operations: Materials Resource Planning (MRPI, MRPII).

Integration of operations, marketing, finance and human resources: Enterprise Resource

Planning (ERP).

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