Entrepreneurship

The Entrepreneurial Mindset

Level 1

Prepared by: RHR First Prepared on: September 10, 2006 Last Modified on:Quality checked by: MOH

Copyright 2004 Asia Pacific Institute of Information Technology

Professional & Enterprise DevelopmentCT024-3-1

CT024 PDT Introduction

Structure of the Lesson

Explore the entrepreneurial characteristics and individual

CT024 PDT Introduction

Learning Outcomes

Define the entrepreneurs as an individual

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–4

Entrepreneur

• Entrepreneurs

Recognize opportunities where others see confusion

Are aggressive catalysts for change within the marketplace

Challenge the unknown and continuously create the future

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–5

Our Entrepreneurial Economy—The Environment for Entrepreneurship

• Entrepreneurship is the dynamic process of creating wealth.

• Symbol of business tenacity and achievement.• Entrepreneurs are the pioneers of today’s business

successes.• Two perspectives on entrepreneurship:

– Statistical: numbers that emphasize the importance of entrepreneurs to the economy.

– Academic: trends in entrepreneurial research and education.

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–6

Entrepreneurs versus Small Business Owners: A Distinction

• Small Businesses Owners–Manage their businesses by

expecting stable sales, profits and growth

• Entrepreneurs–Focus their efforts on innovation,

profitability and sustainable growth

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–7

Entrepreneurship: A Perspective

• Entrepreneurship is more than the mere creation of business.

– The characteristics of seeking opportunities, taking risks beyond security, and having the tenacity to push an idea through to reality combine into a special perspective that permeates entrepreneurs.

• Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–8

Effects of Entrepreneurship

• Entrepreneurs lead growth by:–Entering and expanding existing

markets.–Creating entirely new markets by

offering innovative products.–Increasing diversity and fostering

minority participation in the economy e.g. Ikea

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Entrepreneurs

Name any 3 Young Entrepreneurs that you know

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Entrepreneurs

• Blake Ross of Mozilla Firefox

• Some Top Entrepreneurs - Steve Jobs, Bill Gates, Thomas Edison, Henry Ford, Li Ka Shing, Lakshmi Mittal, Robert Kuok

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1–11

Entrepreneurial Firms’ Impact

• Entrepreneurial firms make two indispensable contributions to the economy:

1. Integral part of the renewal process that pervades and defines market economies.

2. Essential mechanism by which millions enter the economic and social mainstream of society.

Visit the National Federation of Independent Business (NFIB) website for more information about entrepreneurs.

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–12

Research and Education

• The entrepreneurial and managerial domains are not mutually exclusive.

• Venture financing (venture capital and angel capital financing) and other innovative financing techniques strengthened in the 1990s.

• Intrapreneurship (entrepreneurship within large organizations) and the need for entrepreneurial cultures has increased.

• Entrepreneurial entry strategies have been shown to share common denominators, issues and trade-offs.

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Venture Financing

• Venture capital is funds for new or small businesses that typically have no access to capital markets.

• The funds come from venture capital partnership firms or wealthy individuals/investment banks/pension funds/ insurance companies who wish to foster new products and technologies (VC Firms)

• Fund-raising is through a prospectus to potential investors who agree to commit money to the fund.

• It typically entails high risk for the investor, but it has the

potential for above-average returns.

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• Angel Investor

• Venture capitalists or large VC (Venture Firms)

• Small Startup

Businesses

• Invest in a proven business concept seeking established innovative companies

Venture Financing – Con’t

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Research & Education – con’t• Comes from a group of wealthy investors, investment banks and other financial

institutions• Capital Market - a market where individuals and institutions trade financial securities e.g.

bonds and stocks. • Organizations/institutions in the public and private sectors often sell securities on the

capital markets in order to raise funds.• Both the stock and bond markets are parts of the capital markets• Capital markets help channelise surplus funds from savers to institutions which then

invest them into productive use.• Capital market consists of primary markets and secondary markets. Primary markets:

trading of new stock issue and secondary market deals with the existing or previously-issued securities.

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–16

Research and Education – con’t

• Entrepreneurs have been the subject of keen research interest.

• Women and minority entrepreneurs have emerged in unprecedented numbers.

• The entrepreneurial spirit is universal.

• Entrepreneurs’ economic and social contributions are significant for job creation, innovation and economic renewal.

• Entrepreneurial education is one of the hottest topics at U.S. business and engineering schools

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

4–17

Common Characteristics of Entrepreneurs

Commitment, determination, perseverance

Drive to achieveOpportunity orientationInitiative, responsibilityPersistent problem solvingSeeking feedbackInternal locus of controlTolerance for ambiguity

Calculated risk takingTolerance for failureHigh energy levelCreativity and

InnovativenessVisionSelf-confidence and

optimismIndependenceTeam building

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4–18

Entrepreneurs: Type A Personalities

• Chronic and severe sense of time urgency.

• Constant involvement in multiple projects subject to deadlines.

• Neglects all aspects of life except work.

• A tendency to take on excessive responsibility, combined with the feeling that “Only I am capable of taking care of this matter.”

• Explosiveness of speech and a tendency to speak faster than most people.

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

4–19

The Dark Side of Entrepreneurship

• The Entrepreneur’s Confrontation with Risk

– Financial risk versus profit (return) motive varies in entrepreneurs’ desire for wealth.

– Career risk i.e. loss of employment security

– Family and social risk i.e. competing commitments of work and family

– Psychic risk - psychological impact of failure on the well-being of entrepreneurs

CT024 PDT Introduction© 2007 Thomson/South-Western. All rights reserved.

1–20

Advantages And Challenges Of E-Commerce For Entrepreneurial FirmsADVANTAGES

1. Ability of small firms to compete with other companies, locally and nationally (promotional tools)

2. Creation of the possibility and opportunity for more diverse people to start a business

3. Convenient and easy way of doing business transactions (not restricted to certain hours of operation, open 24 hours a day, seven days a week)

4. An inexpensive way (compared to the cost of paper, printing, and postage prior to the Internet) for small business to compete with larger companies and for U.S. firms to make American products available in other countries

5. Higher revenues for small businesses that utilize the Internet, averaging $3.79 million compared to $2.72 million overall (IDC research)CHALLENGES

1. Managing upgrades (anticipating business needs/application)

2. Assuring security for a Web site and integration with existing company systems

3. Avoiding being a victim of fraudulent activities online - security

4. Handling the costs required to maintain the site - maintenance

5. Finding and retaining qualified employees - employabilitySource: E-Commerce: Small Business Ventures Online (Washington, D.C.: U.S. Small Business Administration, Office of Advocacy, July 1999).

Note

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1–21

Entrepreneurial Opportunities

• Free Enterprise– The economic basis for all entrepreneurial

activity - any individual is free to transform an idea into a business.

• Opportunities

–Opportunities for potential entrepreneurs are unlimited.

–Opportunities during this century will be immense.

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Con’t

• Entrepreneurial opportunities will continue to arise for individuals willing to take the risk.

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Q & A

Question and Answer Session

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Topic and Structure of next session

Next Session

Organizational Structure