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Introduction to Entrepreneurship.pdf

  2. Who is an Entrepreneur? Can be defined from: i) Functional approach based on what an entrepreneur does or ii) Indicative approach based on the characteristics and attributes. • Depending on how an entrepreneur is defined, he can be different persons wearing different hats.
  3. Definition of an Entrepreneur • Richard Cantillon introduced the word ‘entreprende’ in his essay ‘Essai sur la nature du commerce’ in 1755. - A French word = ‘to do something’ (Swedberg, 2000) or ‘to undertake the risk of new ventures’ (Kuratko & Hodgetts, 2001).
  4. Definition of an Entrepreneur SCHOLAR DEFINITION Adam Smith (1776) - Widened the definition scope to include the task of forming an organization for commercial purposes. - Described the dynamism of the personality of an ‘enterpriser’ such as the ability to foresee potential through changes in the economy and to take advantage of the opportunities created. Jean Babtiste Say (1803) Individuals with certain competencies who can influence society by forming enterprises and likewise were influenced by society to recognize needs and fulfil them through skillful management of resources.
  5. Definition of an Entrepreneur SCHOLAR DEFINITION Joseph Schumpeter (1934) - An entrepreneur is a sociologically distinct individual who is a creative and resourceful innovator as well as an agent of change. - Believed entrepreneurship plays a crucial role in triggering economic development: i) Introduction of a new product or ii) Introduction of a new method of production, iii) The opening of a new market or iv) Finding of a new source of the inputs supply or v) The establishment of a new organization - Argues that a person is an entrepreneur only when he/she actually carries out new combinations but loses that character as soon as he/she has built up his/her business and settles down to run it.
  6. Definition of an Entrepreneur European Commission (2005) An individual’s ability to turn ideas into action. It includes creativity, innovation and risk taking, as well as the ability to plan and manage projects in order to achieve objectives. This supports everyone in day-to-day life at home and in society, makes employees more aware of the context of their work and better able to seize opportunities, and provides a foundation for entrepreneurs establishing a social or commercial activity
  7. What Entrepreneurs Do? Assemble and then integrate all the resources needed –the money, the people, the business model, the strategy—needed to transform an invention or an idea into a viable business
  8. Personal Characteristics of an Entrepreneur Brockhaus (1982) identified 3 attributes that are consistently associated with entrepreneurial behaviour: i) The need for achievement, ii) The internal locus of control and iii) A risk-taking propensity.
  9. The 3 Attributes of an Entrepreneur (Brockhaus, 1982) Attributes of an Entrepreneur 1) Need for Achievement Doing something better over others and/or the individual’s earlier accomplishment (Hansemark, 2003) Individuals who score highly on the need for achievement would have a strong desire for success and are consequently more likely to behave entrepreneurially (Othman, Ghazali & Ong, 2005). 2) Internal Locus of Control A belief or disbelief that one can control or influence the environment in which one is found. Individuals with internal locus of control believe that they can make things happen as they are able to control and influence the environment around them. In contrast, individuals with external locus of control do not believe they can do this.
  10. The 3 Attributes of an Entrepreneur (Brockhaus, 1982) Attributes of an Entrepreneur 3) Risk-taking propensity Individuals with higher propensities for risk-taking are believed to be more likely to be involved in entrepreneurial activities (Cantillon, 1755; Knight, 1921). Empirical evidence also supports the view that risk-taking propensity serves as one of the attributes which influences entrepreneurial success and performance (Beugelsdijk & Noorderhaven, 2005)
  11. Personal Entrepreneurial Competencies (PEC) In 1985, McClelland with McBer & Co, had developed a measuring instrument to measure the personal entrepreneurial competencies (PEC) or inclinations among successful entrepreneurs in Malawi, India and Ecuador.
  12. Personal Entrepreneurial Competencies (PEC) 13 PECs Explanation 1) Initiative - Does things before being asked or forced to by events - Acts to extend the business into new areas, products, or services 2) Sees and Acts on Opportunities - Sees and acts on opportunities (business, educational, or personal growth) - Seizes unusual opportunities to obtain financing, equipment, land, work space, or assistance 3) Persistence Takes repeated action to overcome obstacles that get In the way of reaching goals 4) Information Seeking Takes action on one’s own to get information to help reach objectives or clarify problems 5) Concern for High Quality of Work Acts to do things that meet or beat existing standards of excellence
  13. Personal Entrepreneurial Competencies (PEC) 13 PECs Explanation 6) Commitment to Work Contract Places the highest priority on getting a job completed 7) Efficiency Orientation Finds ways to do things faster or with fewer resources or at a lower cost 8) Systematic Planning Develops and uses logical, step-by step plans to reach goals 9) Problem Solving Identifies new and potentially unique ideas to reach goals 10) Self-Confidence Has a strong belief in self and own abilities 11) Assertiveness Confronts problems and issues with others directly 12) Persuasion Successfully convince & persuades others 13) Use of Influence Strategies Uses a variety of strategies to affect others (Acts to develop business contacts, uses influential people as agents to accomplish own objectives)
  14. Types of Entrepreneurship Types of Entrepreneurship Corporate Entrepreneurship Coorperative Entrepreneurship Social Entrepreneurship Digital Entrepreneurship Conventional Entrepreneurship (Private / Independent) Franchise Entrepreneurship Public Sector Entrepreneurship
  15. Cooperative Entrepreneurship Are formed to serve specific economic goals of its members – farmers, fishermen, teachers, policemen, soldiers, government servants. In Malaysia, it’s registered under the Malaysian Co-operative Societies Commission Act (Amendment) Act 2014 (Act 1470), supervised by Malaysian Co-operative Societies Commission.
  16. Corporate Entrepreneurship/Intrapreneurship Corporate entrepreneurship refers to the entrepreneurial activities carried out within large corporations. Large companies have to continually expand and diversify their entrepreneurial activities in order to sustain its existence by creating new products or services to their customers. E.g. Konusuke Matsushita, founder of Matsushita Electric Company encouraged his executives ‘to think like an entrepreneur, not a hired hand’; creation of Panasonic
  17. Conventional Entrepreneurship (Private or Independent) Refers to the entrepreneurial activities of private or independent firms where the entrepreneurship process is most prevalent. The entrepreneurship process begins with: 1) Identification of business opportunity 2) Setting-up of the business entity 3) Growing the business to a higher level 4) Planning for the harvest’ strategy The majority of the small and medium-sized enterprises in this country belong to this kind of entrepreneurship. Independent entrepreneurship contributes to the nation’s economy in terms of providing jobs and value added initiatives.
  18. Public Sector Entrepreneurship • Refers to entrepreneurial activities carried out by government-linked companies (GLCs) or state-owned enterprises. • The majority of these companies were formed as part of the nation’s privatization programme which aimed at providing more efficient services to the people. • State-owned enterprises such as the SEDCs are engaged in certain entrepreneurial activities through joint-ventures, equity participation as well as management buyouts. • They are also entrusted with the task of entrepreneurship development in their respective states. • E.g. Khazanah Nasional Berhad
  19. Social Entrepreneurship Bill Drayton (1998) A model for bringing social change in a society by those individuals who combine the pragmatic, results and profit-oriented methods of a business entrepreneur with the goals of a social reformer. Social entrepreneurs are socially conscious individuals who can apply innovative business models to address society’s various socio- economic problems (education, health care, economic development, the environment, the arts) previously overlooked by business, governmental and non-governmental organizations (NGOs).
  20. Social Entrepreneurship The process involves recognition of a social problem and the application of the entrepreneurial approach to organize, create and manage a venture to achieve the social objectives or social ROI (return on investment). E.g. Economic based social entrepreneurship project: Grahmeen Bank in Bangladesh’s objective: to provide easy and cheap credit to poor women who are involved in micro business.
  21. 2017: Working with pepper farmer to convert into organic pepper farming 2019: First batch of chemical & pesticides-free peppercorns. The price for our farmer’s peppercorns per/kg is now 100% higher.
  22. WHAT WE DO We create market access for indigenous smallholder farmers from Sabah & Sarawak.
  23. Digital Entrepreneurship • Lean business – operate from home • Flexibility in working hours; part time or full time • Timeless access, i.e. 24 hours a day, 7 days a week • Borderless access, i.e. opportunities to manage business from anywhere in the world • Rapid & wide recognition with low advertising cost • No formal college/university education is needed
  24. Nur Iman Safiyah Mohammed Shahree Started selling soft toys online at 11. At 13, she expanded the business to selling shawls. 4 months after that, the business skyrocketed & at 13 years old, she launched her very own line called ‘Baluna Bawal’. Upon its 1st month, she sold 500 items. The following month, she had an order for more than 1,000 pieces
  25. Franchise Entrepreneurship • Consists of the franchisor who is the original owner, and the franchisee, who is the local owner who will run the franchise. • Franchisee must run business according to standard operating procedures (SOP) outlined by franchisor. • Will pay franchisor franchise fees and a royalty commission based on monthly sales. • E.g. KFC, Starbucks, McDonalds, Tiger Sugar, Subway.
  26. Types of Entrepreneurs Other Types of Entrepreneurs Lifestyle Entrepreneurs Venture into field of business they are passionate about, something that they love and at the same time achieve greater freedom through working for themselves rather than solely for profit. (Usually combine their personal interests and talents and the need to earn a living and probably create wealth along the way) Infopreneurs Refers to those who utilize information as a commodity for sale. - Sell information to those who want to use the information as a business strategy or simply for marketing and promotional activities. E.g. Google Necessity Entrepreneurs Start entrepreneurship activities not by their own choice. Majority of them are involved in starting up their own businesses out of necessity. Technopreneurs Refers to entrepreneurial persons who are technology savvy and earn a fortune using their expertise in the respective technologies. E.g. Steve Jobs, Bill Gates, Mark Zuckerberg
  27. The Entrepreneurial Process Consists of 4 Steps Step 1: Deciding to become an entrepreneur. Step 2: Developing successful business ideas. Step 3: Moving from an idea to an entrepreneurial firm. Step 4: Managing and growing the entrepreneurial firm.
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