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TOPIC 1

OVERVIEW OF ENTREPRENEURSHIP

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Learning Outcomes

• At the end of this chapter, students are given the following competencies:

• Understand how the economic environment influence the selection of new business ventures.

• Use of relevance information to help screening potential new business venture.

• Able to use basic SWOT Analysis technique to review options of new business venture.

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Contents

Environmental Screening Analysis of Business Opportunities Selection of Business Opportunities Development of new Business

Concept Initial Plan for New Business Ventures

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Entrepreneurship:

is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.

Definition

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WHO ARE THE ENTREPRENEURS?

Paradigm shifters, innovators and opportunists Key change catalysts and agents Wealth and employment creators Economic engine drivers Key actors of the Malaysian Economy Entrepreneurs are made and not born You can be the entrepreneur - if you have what it

takes People who like to be their own boss People who has experienced a “social disruption”?

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WHY BECOME ENTREPRENEURS? Definition of an entrepreneur – French word

“entreprende” meaning ‘go between’ or ‘enter to undertake’. A person who undertakes to organize, manage and assume risks of business

How people become entrepreneur ? – by design and default.

Entrepreneurs are created in good and bad economic times - Creative Destruction.

Challenges and rewards for an entrepreneur.

Many begins but few make it big.

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Screening the environment

Country Economic Scenario (Malaysia)

Historical ( 5 years trend) Current economic scenario

GDP growth Industrial Growth –

Manufacturing / Services

Economic Policy Five Years Plan – RMK -9 Promoted Industry

Biotechnology ICT Food – Halal Food SMEs

Promoting Human Capital

Knowledge based Industry

Agriculture as a viable business

Other Policy / Priority Improve delivery

services Improve maintenance of

Assets R&D and innovation

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MALAYSIA: A MOST ENTERPRISING CULTURE AND NATION

1960’sLabourDriven

Export of rubber, tin, palm oil & timber

1970’s

LabourDriven

Manufacture of import substitution goods

1980’s

InvestmentDriven

Export textile & electronic goods

1990’s

ProductivityDriven

Export high value added electrical & electronic goods

2000’s

Knowledge Driven

Knowledge-based goods & services

Agriculture Era

Industrial Era

Technology Era

Knowledge Era

Agriculture-based

led by Government

Knowledge-based led by Private Enterprises

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Screening Environment

Government Policy / Initiatives

Regional Economic/ Business trend

Global Economic/ Business trend Private Sectors

Initiatives

Other Issues ( Education, Health, Social, Political, Culture)

OPPORTUNITIES

Strength Weakness

ENTREPRENEUR

THREATS

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Steps to select new ventures

Step1 – Identify Customers needs and wants

Step 2 – Screening environment, evaluating self, community & society, value and

culture of the potential target group.

Step 3 – Analyze specific opportunities which are

feasible to venture.

Step 4 – Select one which is suitable to the

entrepreneur and develop business concept.

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Step 1 : Identifying customer needs & wants

Needs & Wants

Products Services

Something physical which can satisfied customer needs and wants.

Non-physical but able to fulfill customer

needs and wants

Needs : something basic which people must have. Example: clothing, house, food, health, basic education, protection etcs.

Wants: desire to have more than basic needs. Wants will be fulfill after the basic needs were being fulfilled. Examples: cars, bigger house, traveling, golf club, latest fashions, jewelry etcs.

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Step 2 : Screening environment, evaluating self, community & society, value and culture of the potential target group.

Analyze

Environment Self Community

•Population structure, Income, taste, preferences

•Country export & imports

•Local resources and new technology

•Industry linkages

•Government and Private development projects

•Global and Regional development

•Currents issues, social, rules & regulations.

•Experience

•Knowledge & skills

•Financial standing

•Interest

•Networking

•Norm

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Step 3: Analyzing the feasibility of Opportunities

Legal perspective

Market Competition level

Funding

Technology availability

Raw material supply

Logistic

Expertise & manpower

Sustainability

Risks Level

Analyze

?Feasibility

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Step 4: Select New Ventures

Market Competition level / Marketing Plan

Funding ( working

capital, fixed assets)

Operational Plan ( Technology, Supply Chain)

Organizational & Admin. Plan ( Expertise & manpower )

Profitability ( ROI, ROE, Pay back, Cash Flow, Risks Level

Analyze

?Viability

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Step 4 ( cont: )

New venture selected.

Prepare Details Business Plan.

Execute Plan

Monitor and Improvement.

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Example business opportunities

Forestry Poultry

AGRICULTURE

Fishery Plantation

Veneer PlywoodLoggingFurnitureSawn timber

Fishing EquipmentDeep-sea fishingFish ProcessingWholesales/ distributions

Clearing plantationPlantingProcessingWholesale/ distributionNursery

Poultry farmingProcessingWholesales/ Supplies

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Industrial Linkages

Explorations engineeringSteel Fabrications

Oil Rigs constructionEngineering Servicing

Equipment components

Petroleum RefineryPetroleum TradingEngine Oil products

Hydrocarbon raw materialPlastic / resin products

BACKWARD FORWARD

OIL INDUSTRY

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Business Opportunities

High Risks

Business Risk Financial Risk

•Risk could be transfer – insurance (fire, loss etc)

•Controlled risk but not 100% - market forecast quality products,

•Uncontrolled risk : economy recession, currency value, disaster

•Liquidity level

•Loan

•Credit

•Currency exchange

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Business and Level of Risks

Alternatives Entry Level of Risk

Expectedreturns

Examples

A Easy Low LowFood StallTailorGen. Trading

B Medium Medium MediumMini MarketAuto Services

C Difficult High HighPublic TransportConstructionsHeavy Industry

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Conclusion

SWOT ANALYSIS. S = Strength W = Weakness O = Opportunity T = Threat

SWOT is use to evaluate new business opportunities.

Entrepreneur will choose one which is fit to his /her objective / vision.

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SWOT Analysis