introduction to entrepreneurship. the evolution of entrepreneurship concept of entrepreneurship...
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Introduction to EntrepreneurshipIntroduction to Entrepreneurship
CHAPTER OUTLINE The Evolution of Entrepreneurship Concept of Entrepreneurship
Who are Entrepreneurs?Entrepreneurship IntrapreneurshipSocial-entrepreneurship
The Importance of Entrepreneurship The Myths of Entrepreneurship Entrepreneurship Development
ENTREPRENEURSHIPENTREPRENEURSHIP
The word ‘entrepreneurship’ comes from the French verb “entreprendre” and the German word “unternehmen”, both means ‘one who undertakes’ – that is, a ‘manager’.
EVOLUTION OF ‘BUSINESS’EVOLUTION OF ‘BUSINESS’3,000 B.C. – Origin of
Organized business activities
• Emergence of Aristocracy
• A.D. 500 – 1,500
• Growth of enterprise – A.D. 1,600
• Industrial Revolution – late A.D. 1,800
THE EVOLUTION OF ENTREPRENEURSHIP
THE EVOLUTION AND DEVELOPMENT OF THEORY OF ENTREPRENEURSHIP
WHO ARE ENTREPRENEURS?WHO ARE ENTREPRENEURS?
COMMON MAN’S APPROACH TO LIFECOMMON MAN’S APPROACH TO LIFE
Are very cautious – never want to make any risks
Assume that things are the way have to be
Like to be sure of the next month’s salary – and the one after…………. until retirement……….. perhaps the pension even after!!!!!!!
ENTREPRENEUR- “DEFINED”ENTREPRENEUR- “DEFINED”A self-employed person with uncertain returns Richard Cantillon,
1730
A leader of men, a manager of resources, an innovator of ideas, including new scientific ideas, and a risk taker
Abbe nicollas, 1767
A co-ordinator of production with managerial talent
Jean-Baptise Say, 1803
A manager responsible for direction & control, who bears uncertainty
Frank Knight, 1921/1961
A creative innovator Joseph Schumpeter, 1934
A moderate risk taker J.E. Stepanek, 1960
A person with high need for achievement McClelland, 1961
An arbitrageur Israel Kirzner, 1973
Internal locus of control J.B. Rotter, 1976
ENTREPRENEUR- “DEFINED”ENTREPRENEUR- “DEFINED”
A person always searches for change, responds to it, and exploits it as an opportunity Peter Drucker, 1986
Person who exercises strategic creativity through a business venture
McMullan and Long, 1990
Person who undertakes a wealth-creating activity and value-adding process, through incubating ideas, assembling resources and making things happen
Raymond W.Y. Kao, 1993
A person who creates a new business in the face of uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources
Scarborough & Zimmerer, 1998
One who undertakes to organize, manage and assume the risks of a business
Kuratko & Hodgetts, 2004
ENTREPRENEURENTREPRENEUR An entrepreneur is a person who is willing to put his/her career and financial security on the line and take risks in the name of an idea, spending time as well as capital on an uncertain venture.
THE NEW ENTREPRENEURTHE NEW ENTREPRENEUR
Then Now
Small business founder True entrepreneur who innovates, changes to infuse new value
Boss Leader
Lone-ranger Networker
Secretive Open
Self-reliant Inquisitive
Seat of the pants Business plans
Snap decisions Consensus
Male ownership Mixed ownership
Automate Innovate
ENTREPRENEURSHIP- “DEFINED”ENTREPRENEURSHIP- “DEFINED”
Bearing Uncertainty Richard Cantillon, 1730 & Frank Knight, 1921
Bringing together factors of production Jean-Baptise Say, 1803
Innovation through the process of ‘creative destruction’
Joseph Schumpeter, 1934
Responsible decision making Frank Knight, 1961
Exploration of opportunities- being an arbitrageur and an equilibrating agent Israel Kirzner, 1973
Creation of organizations Gartner, 1988
ENTREPRENEURSHIP- “DEFINED”ENTREPRENEURSHIP- “DEFINED”
The dynamic process of creating incremental wealth by individuals who assume major risks in terms of equity, time and career commitment or provide value for product or service
Histrich and Peter, 1998
Is a dynamic process of vision, change, and creation. It requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions
Kuratko & Hodgetts, 2004
WHAT IS ENTREPRENEURSHIP??WHAT IS ENTREPRENEURSHIP??
NOT small business management
NOT just business startups
NOT just for-profit firms
WHAT IS ENTREPRENEURSHIP??WHAT IS ENTREPRENEURSHIP??
IS ……………….
ENTREPRENEURSHIPENTREPRENEURSHIP
Entrepreneurship is thus being taken as a value adding process of discovering, evaluating, organizing and exploiting opportunities.
ENTREPRENEURIAL MANAGEMENTENTREPRENEURIAL MANAGEMENT
Universality of principals, rules, application and contexts in which entrepreneurship is considered as a discipline.
BASIC ASPECTS OF ENTREPRENEURSHIPBASIC ASPECTS OF ENTREPRENEURSHIP
Basic Aspects
Creation of something
new of value
Devotion of necessary
time & effort
Assumption of various forms of
risks
Involvement of rewards
ENTREPRENEURSHIP PROCESSENTREPRENEURSHIP PROCESS
Exploring the entrepreneurial context – ‘rules’ of the game
Identifying opportunities & possible competitive advantages
Starting the
venture
Managing the
venture
LEVEL OF ENTREPRENEURIAL ACTIVITIESLEVEL OF ENTREPRENEURIAL ACTIVITIES
Top Middle Lowest
USA Argentina France
Canada Belgium Japan
Australia Brazil
Korea Finland
Norway Israel
Italy
India
Singapore
Spain
UK
Source: based on ‘Economic growth lined to level of business startups”, GEM 2000 report, adapted from Management-7th Ed. Stephen Robbins & Mary Coulter; Pearson Education, 2002.
IMPORTANCE OF ENTREPRENEURSHIPIMPORTANCE OF ENTREPRENEURSHIP New ideas and inventions are developed and this enables
continual improvement of societies and their organizations
Sky-scraping heights of apparent prospects; - the individual gets maximum scope for growth and opportunity
It is a challenging opportunity for the people
Entrepreneurship provides self sufficiency
Creates wealth for nation and for individuals as well
Provides employment to huge mass of people
Contributed towards research and development system
WHY BE AN ENTREPRENEUR? WHY BE AN ENTREPRENEUR?
WHAT MOTIVATES THEMWHAT MOTIVATES THEM
Could not find a job
To make money
More redundant
Building on experience as employer
Spotted an opportunity
Control over my working life
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
2%
6%
9%
15%
16%
17%
Source: Adapted from material published by NatWest bank, IFF research, May 2007.
ROLE OF AN ENTREPRENEURROLE OF AN ENTREPRENEUR An entrepreneur is a person who is
ready to supply enterprise necessary to;
take advantage of business opportunities
acquire productive resources
Combine them & use them effectively & efficiently
create value in goods & services that customers want to buy which creates profits
WHAT IT TAKES TO BE AN ENTREPRENEUR?WHAT IT TAKES TO BE AN ENTREPRENEUR?
‘Train your self to see vacuum or gaps in the market and fill them’
- William Heinecke
‘If something makes you angry, you have uncovered a gap in the market’
- Anita Roddick
SOME EXAMPLES ……..SOME EXAMPLES ……..
Isaac Singer Henry Ford George Eastman Ray Kroc Stephen Jobs And Dewitt and Lila Wallace
SOURCES WHERE ENTREPRENEURS GET THEIR IDEASSOURCES WHERE ENTREPRENEURS GET THEIR IDEAS
Your job
Hobbies or interests outside work
‘Pedestrian observation’ – spotting an opportunity through a casual encounter or an incident in your daily life
ONCE AGAIN SOME EXAMPLES ……..ONCE AGAIN SOME EXAMPLES ……..
The idea for a Diners Club struck Ralph Schneider when he went out for dinner & discovered he had no cash!!!!!!!!
Leo Gerstenzag invented Q-tips (cotton buds) when he saw his wife using cotton wool wrapped around a toothpick to clean their baby daughter’s ears.
King C. Gillette got the idea of a disposable razor when he became annoyed that his razor blade was dull in one morning!!!!!
ENTREPRENEURSHIP AS ‘CREATIVE DESTRUCTION’ENTREPRENEURSHIP AS ‘CREATIVE DESTRUCTION’
‘The process drives ineffective companies out of business as they are replaced by new, more efficient ones’
- Joseph Schumpeter
TYPES OF ENTREPRENEURSTYPES OF ENTREPRENEURSSmall businesses, lifestyle and family
entrepreneurs
Franchise entrepreneurs
Professional fast growth and serial entrepreneurs
Corporate entrepreneurship or intrapreneurs
Creative disruptors or innovators
Extreme entrepreneurs
Social and non-profit entrepreneur
INTRAPRENEURSHIPINTRAPRENEURSHIP Intrapreneurship or corporate entrepreneurship
involves the developing of new business ideas and the birthing of a new business activity within the context of large and established companies.
A learning organization encourages employees to act as intrapreneurs to help, form:
Product Champions: person that takes ownership of a product from concept to market.
New Venture Division: allows a division to act as its own smaller company.
Rewards for Innovation: link innovation by workers to valued rewards.
SOCIAL - ENTREPRENEURSHIPSOCIAL - ENTREPRENEURSHIP Social entrepreneurs combine the passion of;
A social mission (explicit and central)With business-like discipline, innovation,
and determination
10 MYTHS OF ENTREPRENEURSHIP10 MYTHS OF ENTREPRENEURSHIP
1. Entrepreneurs are does, not thinkers
2. Entrepreneurs are born, not made
3. Entrepreneurs are always inventors
4. Entrepreneurs are academic and social misfits
5. Entrepreneurs must fit the profile
10 MYTHS OF ENTREPRENEURSHIP10 MYTHS OF ENTREPRENEURSHIP
6. All entrepreneurs need is money
7. All entrepreneurs need luck
8. Ignorance is bliss for entrepreneurs
9. Entrepreneurs seek success but experience high failure rates
10. Entrepreneurs are extreme risk takers, i.e. gambles
WHAT MAKES AN ENTREPRENEUR???WHAT MAKES AN ENTREPRENEUR???
People who aren’t entrepreneurs
Bad entrepreneurs Good entrepreneurs
Are very cautious – never want to make any risks
Ignore risks – assume their own charisma/skill will guarantee success
Take calculated risks – weighing up to potential risks & resources
Assume that things are the way have to be
Rush to bring in something new or made huge changes
Launch new ideas in response to change in consumer’s tastes & attitudes
Like to be sure of the next month’s salary – and the one after…………. until retirement……….. perhaps the pension even after!!!!!!!
Trust that things will go as planned, spend freely at the start as they are sure of cash will start flowing tomorrow
Accept that the early days of a new business may be very tough, so try to spend as little as possible
SHORTCOMINGS OF ENTREPRENEURSSHORTCOMINGS OF ENTREPRENEURS
Overestimation of their ability to create new products that customers desire
Underestimate how difficult it is to actually reach prospective customers & get them to try their products
Do not realize how much ready cash is needed to see a business through its critical, initial ‘birth’ period.
ENTREPRENEURSHIP DEVELOPMENT IN MALDIVESENTREPRENEURSHIP DEVELOPMENT IN MALDIVES
Privatization Loan schemes for SME’s Entrepreneurship education
WHAT MAKES AN ENTREPRENEURIALECONOMY?
1. Competitive environment with a level playing field
2. Free and flexible markets that will enable the closing down of business that have run their course and be replaced by more efficient firms
3. Rule of Law: Protection of property rights & Contract enforcement
4. Availability of a financial system that provides the entrepreneurs with an easy access to capital
5. A quality educational system
FUNDAMENTAL PRACTICES FOR ENTREPRENEURSHIP DEVELOPMENT OF A COUNTRY
FUNDAMENTAL PRACTICES FOR ENTREPRENEURSHIP DEVELOPMENT OF A COUNTRY
Creating a national sense of mission
Creating customer / product competitiveness
Creating a nation of self-inspired people
Creating a national urgency to improve
- Larry C. Farrell, ‘The Entrepreneurial age’ (2001)
SOME CONCERNS ON ENTREPRENEURSHIPSOME CONCERNS ON ENTREPRENEURSHIP
Ethical issues Social responsibility