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Introduction to Entrepreneurship,

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Presentation on theme: "Introduction to Entrepreneurship,"— Presentation transcript:

1 Introduction to Entrepreneurship,
Chapter 1 The Revolutionary Impact of Entrepreneurship And Successful Entrepreneur

2 Chapter Objectives To examine the historical development of entrepreneurship To explore and debunk the myths of entrepreneurship To define and explore the major schools of entrepreneurial thought To explain the process approaches to the study of entrepreneurship To set forth a comprehensive definition of entrepreneurship To examine the Entrepreneurial Revolution taking place today To illustrate today’s entrepreneurial environment

3 Entrepreneurs—Challenging the Unknown
Recognize opportunities where others see chaos or confusion Are aggressive catalysts for change within the marketplace Challenge the unknown and continuously create the future

4 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

5 Entrepreneurship: A Mindset
Entrepreneurship is more than the mere creation of business: Seeking opportunities Taking risks beyond security Having the tenacity to push an idea through to reality Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.

6 The Evolution of Entrepreneurship
Entrepreneur is derived from the French entreprendre, meaning “to undertake.” The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject.

7 EVOLUSI KEUSAHAWANAN

8 The Evolution of Entrepreneurship
In MALAYSIA. When it started? How? Do you think Entrepreneurship is essential to our country? Why?

9 KEUSAHAWANAN PERSPEKTIF ISLAM
-Agama yang menyokong pembangunan keusahawanan dikalangan umatnya; *Islam mengajar manusia membentuk budaya keusahawanan dengan cara hidup dan cara kerja yang diterima oleh Allah *Islam ialah agama yang menggalakkan aktiviti keusahawanan dengan menggariskan etika keusahawanan, menjanjikan ganjaran di dunia dan akhirat

10 PERKARA PENTING BAHAWA ISLAM MENYARANKAN KEUSAHAWANAN
1. Allah telah menghalalkan jualbeli dan mengharamkan riba (B2:275) 2. Sembilan daripada sepuluh bahagian rezeki adalah dari perniagaan  3. Tidak ada dosa mencari kurnia / rezeki hasil perniagaan dari tuhanmu (B2:198) 4. Keusahawanan merupakan jihad fisabilillah   5. Keusahawanan dijadikan sebagai satu ibadah

11 A Summary Description of Entrepreneurship
Entrepreneurship (Robert C. Ronstadt) The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service. The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources.

12 An Integrated Definition
Entrepreneurship A dynamic process of vision, change, and creation. 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. The fundamental skills of building a solid business plan. The vision to recognize opportunity where others see chaos, contradiction, and confusion.

13 The Myths of Entrepreneurship
Myth 1: Entrepreneurs Are Doers, Not Thinkers Myth 2: Entrepreneurs Are Born, Not Made Myth 3: Entrepreneurs Are Always Inventors Myth 4: Entrepreneurs Are Academic and Social Misfits Myth 5: Entrepreneurs Must Fit the “Profile” Myth 6: All Entrepreneurs Need Is Money Myth 7: All Entrepreneurs Need Is Luck Myth 8: Ignorance Is Bliss For Entrepreneurs Myth 9: Entrepreneurs Seek Success But Experience High Failure Rates Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)

14 Figure 1.1 Entrepreneurial Schools-of-Thought Approach

15 Macro View: External Locus of Control
The Environmental School of Thought Considers the external factors that affect a potential entrepreneur’s lifestyle. The Financial/Capital School of Thought Based on the capital-seeking process—the search for seed and growth capital. The Displacement School of Thought Alienation drives entrepreneurial pursuits Political displacement (laws, policies, and regulations) Cultural displacement (preclusion of social groups) Economic displacement (economic variations)

16 Micro View: Internal Locus of Control (cont’d)
The Entrepreneurial Trait School of Thought Focuses on identifying traits common to successful entrepreneurs. Achievement, creativity, determination, and technical knowledge The Venture Opportunity School of Thought Focuses on the opportunity aspect of venture development—the search for idea sources, the development of concepts, and the implementation of venture opportunities. Corridor principle: New pathways or opportunities will arise that lead entrepreneurs in different directions.

17 Table 1.2 Definitions And Criteria Of One Approach To The Micro View
Entrepreneurial Model Definition Measures Questions “Great Person” “Extraordinary Achievers” Personal principles Personal histories Experiences What principles do you have? What are your achievements? Psychological Characteristics Founder Control over the means of production Locus of control Tolerance of ambiguity Need for achievement What are your values? Classical People who make innovations bearing risk and uncertainty “Creative destruction” Decision making Ability to see opportunities Creativity What are the opportunities? What is your vision? How do you respond? Management Creating value through the recognition of business opportunity, the management of risk taking through the communicative and management skills to mobilize . . . Expertise Technical knowledge Technical plans What are your plans? What are your capabilities? What are your credentials? Leadership “Social architect” Promotion and protection of values Attitudes, styles Management of people How do you manage people? Intrapreneurship Those who pull together to promote innovation How do you change and adapt? Source: Adapted from J. Barton Cunningham and Joe Lischeron, “Defining Entrepreneurship,” Journal of Small Business Management (January 1991): 56.

18 Micro View… (cont’d) The Strategic Formulation School of Thought
Emphasizes the planning process in successful venture development. Ronstadt’s View Strategic formulation is a leveraging of unique elements: Unique Markets—mountain gap strategies Unique People—great chef strategies Unique Products—better widget strategies Unique Resources—water well strategies

19 Process Approaches to Entrepreneurship
Integrative Approach Built around the concepts of inputs to the entrepreneurial process and outcomes from the entrepreneurial process. Focuses on the entrepreneurial process itself and identifies five key elements that contribute to the process. Provides a comprehensive picture regarding the nature of entrepreneurship that can be applied at different levels.

20 Figure 1.2 An Integrative Model of Entrepreneurial Inputs and Outcomes
Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship: An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31.

21 Process Approaches… (cont’d)
Entrepreneurial Assessment Approach Stresses making assessments qualitatively, quantitatively, strategically, and ethically in regard to the entrepreneur, the venture, and the environment Multidimensional Approach Views entrepreneurship as a complex, multidimensional framework that emphasizes the individual, the environment, the organization, and the venture process.

22 Figure 1.3 Entrepreneurial Assessment Approach
Source: Robert C. Ronstadt, Entrepreneurship (Dover, MA: Lord Publishing Co., 1984), 39.

23 Our Entrepreneurial Economy— The Environment for Entrepreneurship
Entrepreneurship is the 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.

24 Predominance of New Ventures in the Economy
Entrepreneurial Activity: Growth in Small Businesses New business incorporations average 600,000 per year over the past decade. There are over 25 million small businesses; the number continues to grow 2% annually. One of every 150 adults participates in the founding of a new firm each year. Approximately 600,000 to 800,000 are added each year.

25 Effects of Entrepreneurship
The Global Entrepreneurship Monitor (GEM) Provides an annual assessment of the entrepreneurial environment of 42 countries. Latest GEM study: the U.S. outranks the rest of the world in important entrepreneurial support. Entrepreneurs lead to growth by: Entering and expanding existing markets. Creating entirely new markets by offering innovative products. Increasing diversity and fostering minority participation in the economy.

26 TAHAP PEMBANGUNAN KEUSAHAWANAN
1) Entrepreneurship Cultural Development Level (Tahap pembangunan budaya keusahawanan) 2) Start-up Level (Tahap memula perniagaan) 3) Survival Level (Tahap penakatan) Growth Level (Tahap pertumbuhan dan pengembangan)

27 Rajah : Tahap Pembangunan Keusahawanan
Masa Dewasa Pekerjaan Kolej dan Universiti Sekolah Menengah Remaja Sekolah Rendah Pra Sekolah Kanak-Kanak Taman Asuhan Kanak-Kanak Pertumbuhan dan Pengembangan (growth) Penakatan (Survival)   Memula Perniagaan ( Start-up) Budaya Keusahawanan (Cultural development)

28 ENTREPRENEURSHIP DEVELOPMENT
Entrepreneurship can be developed: Education Training Experience

29 Business Idea

30 Business Environment

31 Business Start-Up Things to be considered before start-up your business. Self mampu Capital and financial needs Strategic location Legal and Government Rules Raw material and equipment supply Competitors

32 PERUSAHAAN KECIL DAN SEDERHANA
PERUSAHAAN KECIL DAN SEDERHANA (PKS) PKS DI MALAYSIA BOLEH DITEMPATKAN DALAM TIGA KATEGORI, IAITU: MIKRO, KECIL, ATAU SEDERHANA. KETIGA-TIGA KUMPULAN INI DITETAPKAN BERASASKAN KEPADA: JUMLAH PEKERJA SESEBUAH PERNIAGAAN; ATAUPUN JUMLAH HASIL JUALAN SESEBUAH PERNIAGAAN DALAM TEMPOH SETAHUN.

33 Berasaskan jumlah pekerja sepenuh masa :
I. Jumlah Pekerja Berasaskan jumlah pekerja sepenuh masa : PERTANIAN ASAS PERKILANGAN (TERMASUK ASAS TANI) DAN PERKHIDMATAN BERKAITAN SEKTOR PERKHIDMATAN (TERMASUK ICT*) MIKRO KURANG DARIPADA 5 ORANG PEKERJA KURANG DARIPADA 5 ORANG ORANG PEKERJA KECIL ANTARA 5 HINGGA 19 ANTARA 5 HINGGA 50 PEKERJA ANTARA 5 HINGGA 19 PEKERJA SEDERHANA ANTARA 20 HINGGA 50 ANTARA 51 HINGGA 150 PEKERJA

34 II. Jumlah Jualan Tahunan Berasaskan jumlah jualan tahunan :
PERTANIAN ASAS PERKILANGAN (TERMASUK ASAS TANI) DAN PERKHIDMATAN BERKAITAN SEKTOR PERKHIDMATAN (TERMASUK ICT*) MIKRO KURANG DARIPADA RM200,000 KURANG DARIPADA RM250,000 KECIL ANTARA HINGGA RM1 JUTA ANTARA RM250,000 HINGGA KURANG DARIPADA RM10 JUTA ANTARA RM200,000 HINGGA KURANG SEDERHANA ANTARA RM1 JUTA HINGGA RM5 JUTA ANTARA RM10 JUTA HINGGA RM25 JUTA ANTARA RM1 JUTA HINGGA RM5 JUTA

35 WHY NEW VENTURE FAILS (research by Bruno, Leidecker and Harder. 1987
WHY NEW VENTURE FAILS (research by Bruno, Leidecker and Harder Why firms fail?, Business Horizons) 3 major categories of causes for failure: product/market problems Financial difficulties Managerial problems

36 Product / market problems
Product Market Orientation Poor timing – premature entry into market place Product design problems Inappropriate distribution strategy Over reliance on one customer

37 Financial difficulties
Initial undercapitalization – Assuming debt too early – too soon and too large Venture capital relationship problem – Differing goals, vision and motivations-

38 Managerial Problems hiring and firing based on nepotism rather than qualifications poor relationship with parent companies and venture capitalists founders who focused on their weaknesses rather than their strength incompetent support

39 Ingredients For A Successful New Business (The Nine Fs)
Founders Every startup company must have a first class entrepreneurs. Focused Entrepreneurial companies focus on niche markets. They specialize. Fast They make decisions quickly and implement them swiftly. Flexible They keep an open mind. They respond to change. Forever- Innovating They are tireless innovators. Flat Entrepreneurial organizations have as few layers of management as possible. Frugal By keeping overhead low and productivity high, entrepreneurial organizations keep cost down. Friendly Entrepreneurial companies are friendly to their customers, suppliers and workers. Fun It’s fun to be associated with an entrepreneurial company. Sumber: William D. Bygrave (1997)

40 Perniagaan mungkin gagal. Tetapi…. Usahawan tidak pernah gagal.
Bagi Usahawan, Perniagaan mungkin gagal. Tetapi…. Usahawan tidak pernah gagal.

41 Entrepreneurial Characteristics

42

43 Entrepreneurial Characteristics (Timmons and Spinelli)
Commitment and determination Tenacious, decisive, and persistent in problem solving Leadership Self-starters and team builders who focus on honesty in their business relationships Opportunity obsession Aware of market and customer needs Tolerance of risk, ambiguity, and uncertainty Risk takers, risk minimizers, and uncertainty tolerators Creativity, self-reliance, and adaptability Open-minded, flexible, uncomfortable with the status quo, and quick learners Motivation to excel Goal oriented and aware of their weaknesses and strengths

44 CIRI USAHAWAN BERJAYA ABAD KE-21
Dapat melihat dan mengambil peluang Mempunyai maklumat Kreatif Inovatif Mempunyai visi Berfikiran bebas Berdaya maju optimistik

45 CIRI USAHAWAN BERJAYA ABAD KE-21
Mengambil risiko yang diperhitungkan Sifat kepimpinan Sumber: Soo Ji Min (1999)

46 Ciri-ciri Usahawan Berjaya
Berdasarkan kajian Mc Clelland (1995), Koa (1991), Scar & Zimmerer (1999) dan lain2…. Kreatif dan Inovatif Kerajinan, keazaman dan ketabahan Berinisiatif Mengambil Risiko yg diperhitungkan Bertanggungjawab Kejujuran dan Menepati Janji Motivasi Untuk Kejayaan & Berkembang Maju Berorientasikan peluang Berorientasikan Matlamat & Wawasan Berorientasikan Masa Depan

47 Ciri-ciri Usahawan Berjaya
Sambungan Kebolehan Menyelesaikan Masalah Menitikberatkan Mutu Kerja yang Tinggi Lokus Kawalan Dalam Keupayaan Mengurus Mementingkan pencapaian daripada wang Berkeyakinan Diri dan Optimistik Sanggup Belajar drpd Kesilapan Tahap Tenaga yang Tinggi Menggunakan strategi2 Pengaruh

48 THE MOST IMPORTANT CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS (10 DS)
Dream Entrepreneurs have a vision of what the future could be like for them and their business. And , more important, they have the ability to implement their dreams. Decisiveness They don’t procrastinate. They make decisions swiftly. Their swiftness is a key factor in their success.

49 Doers Once they decide on a course of action, they implement it as quickly as possible. Determination They implement their ventures with total commitment. They seldom give up, even when confronted by obstacles that seem insurmountable.

50 Dedication They are totally dedicated to their business, sometimes at considerable cost to their relationships with their friends and families. They work tirelessly. Twelve hour days, and seven day work weeks are not uncommon when an entrepreneur is striving to get a business off the ground. Devotions Entrepreneurs love what they do. It is that love that sustains them when the going gets tough. And it is love of their product or `service that makes them so effective at selling it.

51 Details It is said that the devils resides in the details. That is never more true than in starting and growing a business. The entrepreneur must be on top of the critical details. Destiny They want to be in charge of their own destiny rather than dependent on an employer

52 Entrepreneurs in the United States
Reasons for the exceptional entrepreneurial activity in the U.S. include: A national culture that supports risk taking and seeking opportunities. Americans’ alertness to unexploited economic opportunity and a low fear of failure. U.S. leadership in entrepreneurship education at both the undergraduate and graduate level. A high percentage of individuals with professional, technological or business degrees who are likely to become entrepreneurs.

53 The Age of Gazelles A “Gazelle” Gazelles as leaders in innovation:
A business establishment with at least 20% sales growth in each year for five years, starting with a base of at least $100,000 in annual sales. Gazelles as leaders in innovation: Produce twice as many product innovations per employee as do larger firms. Have been responsible for 55% of the innovations in 362 different industries and 95% of all radical innovations. Obtain more patents per sales dollar than do larger firms.

54 Table 1.3 Mythology Associated with Gazelles
Gazelles are the goal of all entrepreneurs. Gazelles receive venture capital. Gazelles were never mice. Gazelles are high-tech. Gazelles are global. Source: NFIB Small Business Policy Guide (Washington, D.C., November 2000), 31.

55 Survival of Gazelles How many gazelles survive?
The simple answer is “none.” Sooner or later, all companies wither and die. The Common Myth of Failure: 85% of all firms fail in the first year—in actuality, about half of all start-ups last between 5 and 7 years.

56 Entrepreneurial Firms’ Impact
Entrepreneurial components of the U.S. Economy: Large firms have increased profitability by returning to their “core competencies through restructuring and downsizing. New entrepreneurial companies have been blossoming in new technologies and new markets. Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy.

57 Entrepreneurial Firms’ Impact Cont’d)
Entrepreneurial firms make two indispensable contributions to an economy: They are an integral part of the renewal process that pervades and defines market economies. They are the essential mechanism by which millions enter the economic and social mainstream of society.

58 21st Century Trends in Entrepreneurship Research
Venture Financing Social Entrepreneurship Corporate Entrepreneurship Trends in Entrepreneurship Research Entrepreneurial Cognition Global Entrepreneurial Movement Family Businesses Women and Minority Entrepreneurs Entrepreneurial Education

59 21st Century Trends in Entrepreneurship Research
Major Research Themes: Venture Financing: venture capital and angel capital financing and other financing techniques strengthened in the 1990s. Corporate Entrepreneurship and the need for entrepreneurial cultures has drawn increased attention. Social Entrepreneurship has unprecedented strength within the new generation of entrepreneurs. Entrepreneurial Cognition is providing new insights into the psychological aspects of the entrepreneurial process. Women and Minority Entrepreneurs appear to face obstacles and difficulties different from those that other entrepreneurs face. The Global Entrepreneurial Movement is increasing.

60 21st Century Trends… (cont’d)
Major Research Themes (cont’d): Family Businesses have become a stronger focus of research. Entrepreneurial Education has become one of the hottest topics in business and engineering schools throughout the world.

61 Key Concepts Entrepreneurship Entrepreneur
A process of innovation and new-venture creation through four major dimensions—individual, organizational, environmental, process—that is aided by collaborative networks in government, education, and institutions. Entrepreneur A catalyst for economic change who uses purposeful searching, careful planning, and sound judgment when carrying out the entrepreneurial process.

62 Key Concepts Entrepreneurial Management
The discipline of entrepreneurial management: Entrepreneurship is based upon the same principles. It matters not who or what that the entrepreneur is—an existing large institution or an individual, for-profit business or a public-service organization, a governmental or non-governmental institution. The rules are much the same: things that work and those that don’t are much the same, and so are innovations and where to look for them.


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