1. Introduction to Entrepreneurship.ppt - I Introduction to Entrepreneurship 1 Basics Five Best Ways to Get Rich Legally Inheritance Marry rich Win a

1. Introduction to Entrepreneurship.ppt - I Introduction to...

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Unformatted text preview: I. Introduction to Entrepreneurship 1 Basics: Five Best Ways to Get Rich Legally Inheritance Marry rich Win a state lottery Be a celebrity Start a company From Stolze, Start up Topics Covered in this Section 1. 2. 3. 4. 5. 6. 7. 8. The Importance of Entrepreneurship Role of Entrepreneurship in Economic Development Economic Impact of Entrepreneurial Firms Pillars of Entrepreneurship The Foundations of Entrepreneurship Who are Entrepreneurs What is Entrepreneurship Myths about Entrepreneurship 3 …….. Difference between Entrepreneurship and Small Business 10. Entrepreneurial Characteristic 11. Entrepreneurial Drives 12. Entrepreneurship’s Big Five 13. Entrepreneurship and the big five personality traits 14. The Type E Personality 15. 10 Ds of an Entrepreneurs 16. The Entrepreneur’s Mind-Set 17. Entrepreneurial Background/ Context 9. 4 …….. 18. Differing Motivations of Being Entrepreneur 19. Types of Start Ups 20. Why People Become Entrepreneurs 21. Stages / Process of Entrepreneurship 22. Four Stages of an Entrepreneur 23. Major stages of entrepreneurship 24. Rewards of Being and Entrepreneur 25. Positive and Negative Aspects of Entrepreneurship 26. Feeding the Entrepreneurial Fire 5 …….. 27.Challenges of Being an Entrepreneur 28.The Entrepreneurial Process 29.Manager Vs. Entrepreneur Vs. Intrapreneur 30.Corporate Entrepreneurship / Intrapreneurship 31.Establishing Intrapreneurship in the Organization 32.Nine Deadly Mistakes of Entrepreneurship 33.Entrepreneurial Success Formula 6 The importance of Entrepreneurship Economic development of every economic development of every country Through entrepreneurship new ideas and inventions are developed and this enables continual improvement of their organizations, societies and economy 7 Integral part of the renewal process that pervades and defines market economies. Play a crucial role in the innovations that lead to technological change and productivity growth. In short, they are about change and competition because they change market structure. Essential mechanism by which millions enter the economic and social mainstream 8 “Few Entrepreneurs Invent Things that change the way millions of people live and work” 9 Recruitment Retentio n Entrepreneurship 10 Role of Entrepreneurship in Economic Development Role of entrepreneurship in economic development involves more than just increasing per capita output and income It involves initiating change in structure of business and society. In spite of importance of investment and innovation there is still lace of understanding of product evolution process. Role of Entrepreneurship in Economic Development Iterative synthesis: Intersection of knowledge and social need that starts the product development process Ordinary innovation: New product with little technological change Technological innovations: New product with significant technological advancement. Breakthrough innovations: New product with some technological change. Regardless of the level of uniqueness each innovation evolves into and develops toward commercialization through one of three mechanisms. Role of Entrepreneurship in Economic Development Government as an Innovator Intrapreneurship: Entrepreneurship within existing organization Entrepreneurship Economic Impact of Entrepreneurial Firms Innovation Is the process of creating something new, which is central to the entrepreneurial process. Small entrepreneurial firms are responsible for 55% of all innovations in the U.S. Job Creation In the past two decades, economic activity has moved in the direction of smaller entrepreneurial firms, which may be due to their unique ability to innovate and focus on specialized tasks. 1-14 Economic Impact of Entrepreneurial Firms Globalization Today, over 97% of all U.S. exporters are small businesses with fewer than 500 employees. Export markets are vital to the U.S. economy and provide outlets for the sale of U.S. produced products and services. 1-15 Entrepreneurial Firms’ Impact on Society and Larger Firms Impact on Society The innovations of entrepreneurial firms have a dramatic impact on society. Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us in new ways. Impact on Larger Firms Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective. 1-16 To Sum up the Role Promotes Capital formation Optimum utilization of resources Promotion of employment opportunities Balances regional development Reduced concentration of economic power Backward and forward Linkage Promote foreign trade Industralization PILLARS OF ENTREPRENEURSHIP 18 The The Foundations Foundations of of Entrepreneurship Entrepreneurship 19 The World of the Entrepreneur A new business is born every 11 seconds in the United States Study of influential Americans – the defining issue of the 21st Century: Entrepreneurship! One of 12 Americans is actively involved in trying to start a new business. 20 Entrepreneurial Activity Across the Globe Percentage of Adult Population Working to Start a New Business 8.5% United States 6.8% Canada 5.4% Country Israel 3.4% Italy 3.3% Great Britain 2.2% Germany 2.0% Denmark France J apan Finland 0.0% 1.8% 1.6% 1.4% 2.0% 4.0% 6.0% Percent 21 8.0% 10.0% Entrepreneurship Statistics… Do You Know? US Situation About 1 million businesses are formed each year in the US Between 70 to 80% failed the first year of start-up 10% to 20% last through the next 5 years Venture investment 1:10 success rate Venture capitalists expects between 5 to 10 times return Source : US Statistics 22 Entrepreneurship Statistics Do You Know? 6 in a million with a high tech business idea eventually becomes a successful company that goes public / IPO. Fewer than 20% of the funded starts-up go public. Bankruptcies occur for 60% of the high tech companies that succeed in getting venture capital. Venture capital investors own a large part of the start-up by the time it goes public: 70 % of hardware companies, 60% of software companies and 50% of internet companies. Source: US Statistics 23 Introduction to Entrepreneurship There is tremendous interest in entrepreneurship around the world According to the GEM 2005 study, about 330 million people, or 14% of the adults in the 35 countries surveyed, are involved in forming new businesses 1-24 History of Theory 25 The Development of Entrepreneurship Theory 18th Century Entrepreneur bears risks and plans, supervises, organizes, and owns factors of production Richard Cantillon: Coins term entrepreneur (“go-between” or “between taker”) 26 The Development of Entrepreneurship Theory 19th Century Distinction made between those who supplied funds and earned interest and those who profited from managerial abilities Jean Baptiste Say: Proposed that profits from entrepreneurship were separate from profits of capital ownership 27 The Development of Entrepreneurship Theory 20th Century Joseph Schumpeter: Peter Drucker: Described the entrepreneur as someone who is an innovator and someone who “creatively destructs” Described the entrepreneur as someone who maximizes opportunity 28 WHAT IS ENTREPRENEURSHIP ? 29 Origin of the word ► Entreprendre: French for ?? ► To Undertake ► Enterpriser: One who initiates business 30 What is Entrepreneurship? ► Origin of the Word “Entrepreneur” The word was originally used to describe people who “take on the risk” between buyers and sellers or “undertake” a task such as starting a new venture. The “undertake” interpretation of the word has been central to its usage in English. ► Difference Between an Inventor and an Entrepreneur An inventor creates something new. An entrepreneur puts together all the resources needed—the money, the people, the strategy, and the risk-bearing ability to transform the invention into a viable business. 1-31 Entrepreneurship is Everybody’s Business Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. —Mark Twain 32 Are Entrepreneurs Born or Made Can it be Taught ? Can it be Learnt ? 33 ► “The entrepreneurial mystique? It’s not magic, it’s not mysterious, and is has nothing to do with the genes. It’s a discipline. And, like any discipline, it can be learned” (Drucker 1985). ► “Wealth in the new regime flows directly from innovation, not optimization; that is, wealth is not gained by perfecting the known, but by imperfectly seizing the unknown.” ► Creativity - “different is not always better, but better is always different!” 34 ► Entrepreneurial skills? You learn them through self-teaching, trial and error, and getting help and advice from mentors. ► Becoming an entrepreneur starts in your gut, not in a classroom. You feel it. You know you want to control your own destiny. ► Entrepreneurs have to be passionate on their own. From top corporate celebrities to the local franchisee, these folks make it happen without any outside influence. 35 ► Get passionate about your work, love it, and be inspired by it, and the money will come. And if you can’t get passionate about your work, do something else. ► Forget those books that tell you that working smart beats working hard. Believe me, success is much more perspiration than inspiration. ► The ones who truly make it don’t give up. That doesn’t mean you should continue with an obviously losing proposition. But nobody reaches his dreams without persistence. 36 ► Whatever I learned about business, I taught myself. The process never ends. The day you stop learning is the day you stop growing. 37 Who Are The Entrepreneurs? ► Paradigm shifters, innovators and opportunists – creative destroyers ► Key change catalysts and agents ► Wealth and employment creators ► Economic engine drivers ► Key actors of the Malaysian Economy ► ► Entrepreneurs are made and not born – entrepreneurial propensity 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”? ► Necessity and opportunity entrepreneurs 38 What Is Entrepreneurship? Nature of Entrepreneurship ► It is a socio-economic phenomenon. ► Engine of economic growth ► Creator of wealth and employment. What is Entrepreneurship? ► It is a creative and innovative human act. ► Ability to create and build a vision from practically nothing. ► Vision requires willingness to take calculated risks. ► It is a discipline, hence it can be learned – Peter Drucker 39 Definition, Meaning and Factors of Importance “Entrepreneurship 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. Essential ingredients include the willingness to take calculated risks- in terms of time, equity, or career; the ability to formulate an effective venture team; the creative skill to marshal needed resources; and fundamental skill of building solid business plan; and finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.” 40 Definition of Entrepreneurship “ Entrepreneurship is the ability to create and build a vision from practically nothing. Fundamentally, it is a human, creative act. It is the application of energy to initiating and building an enterprise or organization, rather than just watching or analyzing. This vision requires a willingness to take calculated risks – both personal and financial, and then to do everything possible to reduce the chances of failure. Entrepreneurship also includes the ability to build an entrepreneurial or venture team to complement your (the entrepreneur) own skills and talents. It is the knack for sensing an opportunity where others see chaos, contradiction, and confusion. It is possessing the know-how to find, marshal and control resources, often owned by others.” Professor Jeffrey Timmons (1990) 41 What is Entrepreneurship? Entrepreneurship Defined Entrepreneurship is the process by which individuals pursue opportunities without regard to the resources they currently control. The essence of entrepreneurial behavior is identifying opportunities and putting useful ideas into practice. The set of tasks called for by this behavior can be accomplished by either an individual or a group and typically requires creativity, drive, and a willingness to take risks. 1-42 An “entrepreneurial perspective” can be developed in individuals. This perspective can be exhibited inside or outside an organization, in profit or not-for-profit enterprises, and in business or non-business activities for the purpose of bringing forth creative ideas. Thus, entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. 43 “Entrepreneurs” are people who create and grow enterprises. “Entrepreneurship” is the process through which entrepreneurs create and grow enterprises. “Entrepreneurship development” refers to the infrastructure of public and private policies and practices that foster and support entrepreneurship. 44 Webster’s dictionary defines an entrepreneur as a “person who organizes and manages a business undertaking, assuming the risk for the sake of the profit.” The Kauffman Foundation’s version talks about “visionary entrepreneurs [that] develop innovations, create jobs, and contribute to a more vibrant national and global economy”. 45 “initiative, imagination, flexibility, creativity, a willingness to think conceptually, and the capacity to see change as an opportunity.” What he describes is a set of skills, traits and characteristics that could be useful in a variety of circumstances, not just as a business creator, but as a leader or employee in the private, public, or nonprofit sectors. 46 An entrepreneur sees an opportunity, figures out a way to acquire the needed resources, and acts to turn the opportunity into a reward. One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. 47 “Entrepreneurship is a management style that involves pursuing pursuit of opportunity without regard to resources controlled.” “Any attempt at new business or new venture creation, such as self-employment, a new business organization, or the expansion of an existing business, by an individual, a team, or an established business.” “A way of thinking and acting that is opportunity obsessed, holistic in approach and leadership balanced – for the purpose of value creation.” 48 Entrepreneurship Dynamic process of value addition 1. Grain in Field has very low value 2. Bulk grain from farmer has low value 3. Milled flour for baker has high value 4. Bread at bakery has higher value 5. Delivered bakery items have highest value “Entrepreneurship is a creative destruction force that sees the destruction of usual ways of doing things by the introduction of new improved ways” [Joseph Schumpeter, 1934, Austrian] 50 Entrepreneurship is a process, and the entrepreneur is an innovator who uses processes to challenge existing norms via combinations of new resources and methods in commerce. 51 Economist: Who brings resources, labor, materials and other assets into combination that make their value greater that before and also one who introduces change, innovation. Psychologist: Drive by certain force or need to attain something or to escape authority of others Businessmen: Competitor, or an ally or source of supply or customer 53 Common Themes in Definitions of Entrepreneurship Process The Entrepreneur Uniqueness Growth Profit or Nonprofit Defining Entrepreneurship Creating Value Innovation Organization Creation 54 Myths About Entrepreneurship 1. Successful entrepreneurship takes only a great idea. 2. Entrepreneurship is easy. 3. Entrepreneurship is a risky gamble. 4. Entrepreneurship is found only in small businesses. 5. Entrepreneurial ventures and small businesses are identical. 55 Common Myths About Entrepreneurs Myth 1: Entrepreneurs Are Born Not Made This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs. The consensus of many studies is that no one is “born” to be an entrepreneur; everyone has the potential to become one. Whether someone does or doesn’t become an entrepreneur is a function of the environment, life experiences, and personal choices. 1-56 Common Myths About Entrepreneurs Although no one is “born” to be an entrepreneur, there are common personality traits and characteristics of successful entrepreneurs • Achievement motivated • Alert to opportunities • Creative • Decisive • Energetic • Has a strong work ethic • Is a moderate risk taker • Optimistic disposition • Persuasive • Promoter • Resource assembler • Self-confident • Tenacious • Tolerant of ambiguity • Visionary Common Myths About Entrepreneurs Myth 2: Entrepreneurs Are Gamblers A second myth about entrepreneurs is that they are gamblers and take big risks. The truth is, most entrepreneurs are moderate risk takers. The idea that entrepreneurs are gamblers originates from two sources: Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs. Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking. 1-58 Common Myths About Entrepreneurs Myth 3: Entrepreneurs Are Motivated Primarily by Money While it is naïve to think that entrepreneurs don’t seek financial rewards, money is rarely the reason entrepreneurs start new firms. In fact, some entrepreneurs warn that the pursuit of money can be distracting. 1-59 Common Myths About Entrepreneurs Myth 4: Entrepreneurs Should Be Young And Energetic The most vibrant age range for early stage entrepreneurial activity is 25 to 34 years old. While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important criteria in making investment decisions. What makes an entrepreneur “strong” in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success. These criteria often favor older rather than younger entrepreneurs. 1-60 BEING AN ENTREPRENEUR Difference Between Entrepreneurship And Small Business Entrepreneurship Small Business Innovation Little innovation Fast growth Static growth Vision Little vision Employment creation Family business Money making Earning a livelihood machine Low or minimum Higher risk risk 62 Differences Between Small Businesses and Entrepreneurial Ventures Independently owned, operated, and financed Less than 100 employees Innovative practices Goals are profitability and growth Seeks out new opportunities Doesn’t emphasize new or innovative practices Willingness to take risks Little impact on industry Impacts industry, lifestyle, society etc 63 Characteristics of Entrepreneur Entrepreneurial Characteristics 64 Entrepreneurial Characteristics ► Passion ► Perseverance ► Credibility ► Enthusiasm ► Low Support Needs - "Burn Rate" ► Customer Driven 65 ► Desire for responsibility ► Preference for moderate risk ► Confidence in their ability to succeed ► Desire for immediate feedback ► High level of energy ► Future orientation ► Skilled at organizing ► Value achievement over money 66 Entrepreneurial Traits (1) Most Important for Success: ► Innovative & Opportunistic ► Willingness to take risk ► Initiative ► Self reliance ► Perseverance (keep trying to achieve something) ► Need to achieve ► Self confidence 67 Entrepreneurial Traits (2) Important for Success: • Leadership • Competitiveness • Good physical health • Creative • High level of energy • Versatility 68 Entrepreneurial Traits (3...
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