Presentation on theme: "Introduction to Entrepreneurship,"— Presentation transcript:
1 Introduction to Entrepreneurship, Chapter 1The Revolutionary Impact of EntrepreneurshipAndSuccessful Entrepreneur
2 Chapter ObjectivesTo examine the historical development of entrepreneurshipTo explore and debunk the myths of entrepreneurshipTo define and explore the major schools of entrepreneurial thoughtTo explain the process approaches to the study of entrepreneurshipTo set forth a comprehensive definition of entrepreneurshipTo examine the Entrepreneurial Revolution taking place todayTo illustrate today’s entrepreneurial environment
3 Entrepreneurs—Challenging the Unknown Recognize opportunities where others see chaos or confusionAre aggressive catalysts for change within the marketplaceChallenge the unknown and continuously create the future
4 Entrepreneurs versus Small Business Owners: A Distinction Small Businesses OwnersManage their businesses by expecting stable sales, profits, and growthEntrepreneursFocus their efforts on innovation, profitability and sustainable growth
5 Entrepreneurship: A Mindset Entrepreneurship is more than the mere creation of business:Seeking opportunitiesTaking risks beyond securityHaving the tenacity to push an idea through to realityEntrepreneurship 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.
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 danmengharamkan riba (B2:275)2. Sembilan daripada sepuluh bahagian rezeki adalahdari perniagaan 3. Tidak ada dosa mencari kurnia / rezeki hasilperniagaan 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 EntrepreneurshipA 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 ThinkersMyth 2: Entrepreneurs Are Born, Not MadeMyth 3: Entrepreneurs Are Always InventorsMyth 4: Entrepreneurs Are Academic and Social MisfitsMyth 5: Entrepreneurs Must Fit the “Profile”Myth 6: All Entrepreneurs Need Is MoneyMyth 7: All Entrepreneurs Need Is LuckMyth 8: Ignorance Is Bliss For EntrepreneursMyth 9: Entrepreneurs Seek Success But Experience High Failure RatesMyth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)
15 Macro View: External Locus of Control The Environmental School of ThoughtConsiders the external factors that affect a potential entrepreneur’s lifestyle.The Financial/Capital School of ThoughtBased on the capital-seeking process—the search for seed and growth capital.The Displacement School of ThoughtAlienation drives entrepreneurial pursuitsPolitical 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 ThoughtFocuses on identifying traits common to successful entrepreneurs.Achievement, creativity, determination, and technical knowledgeThe Venture Opportunity School of ThoughtFocuses 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 ModelDefinitionMeasuresQuestions“Great Person”“Extraordinary Achievers”Personal principlesPersonal histories ExperiencesWhat principles do you have?What are your achievements?Psychological CharacteristicsFounderControl over the means of productionLocus of control Tolerance of ambiguityNeed for achievementWhat are your values?ClassicalPeople who make innovations bearing risk and uncertainty“Creative destruction”Decision makingAbility to see opportunitiesCreativityWhat are the opportunities?What is your vision?How do you respond?ManagementCreating value through the recognition of business opportunity, the management of risk taking through the communicative and management skills to mobilize . . .ExpertiseTechnical knowledgeTechnical plansWhat are your plans?What are your capabilities?What are your credentials?Leadership“Social architect”Promotion and protection of valuesAttitudes, stylesManagement of peopleHow do you manage people?IntrapreneurshipThose who pull together to promote innovationHow 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 ViewStrategic formulation is a leveraging of unique elements:Unique Markets—mountain gap strategiesUnique People—great chef strategiesUnique Products—better widget strategiesUnique Resources—water well strategies
19 Process Approaches to Entrepreneurship Integrative ApproachBuilt 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 ApproachStresses making assessments qualitatively, quantitatively, strategically, and ethically in regard to the entrepreneur, the venture, and the environmentMultidimensional ApproachViews 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 BusinessesNew 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 MasaDewasaPekerjaanKolej danUniversitiSekolah Menengah RemajaSekolah RendahPra Sekolah Kanak-KanakTaman Asuhan Kanak-KanakPertumbuhan danPengembangan (growth)Penakatan (Survival) Memula Perniagaan ( Start-up)BudayaKeusahawanan(Cultural development)
28 ENTREPRENEURSHIP DEVELOPMENT Entrepreneurship can be developed:EducationTrainingExperience
31 Business Start-UpThings to be considered before start-up your business.Self mampuCapital and financial needsStrategic locationLegal and Government RulesRaw material and equipment supplyCompetitors
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; ATAUPUNJUMLAH HASIL JUALAN SESEBUAH PERNIAGAAN DALAM TEMPOH SETAHUN.
33 Berasaskan jumlah pekerja sepenuh masa : I. Jumlah PekerjaBerasaskan jumlah pekerja sepenuh masa :PERTANIAN ASASPERKILANGAN(TERMASUK ASAS TANI) DANPERKHIDMATAN BERKAITANSEKTORPERKHIDMATAN(TERMASUK ICT*)MIKROKURANGDARIPADA 5ORANGPEKERJAKURANG DARIPADA 5 ORANGORANG PEKERJAKECILANTARA 5HINGGA 19ANTARA 5 HINGGA 50 PEKERJAANTARA 5 HINGGA19 PEKERJASEDERHANAANTARA 20HINGGA 50ANTARA 51 HINGGA 150 PEKERJA
34 II. Jumlah Jualan Tahunan Berasaskan jumlah jualan tahunan : PERTANIAN ASASPERKILANGAN(TERMASUK ASAS TANI) DANPERKHIDMATAN BERKAITANSEKTORPERKHIDMATAN(TERMASUK ICT*)MIKROKURANGDARIPADARM200,000KURANG DARIPADA RM250,000KECILANTARAHINGGARM1 JUTAANTARA RM250,000 HINGGAKURANG DARIPADA RM10 JUTAANTARA RM200,000HINGGA KURANGSEDERHANAANTARA RM1JUTA HINGGARM5 JUTAANTARA RM10 JUTA HINGGARM25 JUTAANTARA RM1 JUTAHINGGA 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 problemsFinancial difficultiesManagerial problems
36 Product / market problems Product Market OrientationPoor timing – premature entry into market placeProduct design problemsInappropriate distribution strategyOver reliance on one customer
37 Financial difficulties Initial undercapitalization –Assuming debt too early – too soon and toolargeVenture capital relationship problem –Differing goals, vision and motivations-
38 Managerial Problemshiring and firing based on nepotism rather than qualificationspoor relationship with parent companies and venture capitalistsfounders who focused on their weaknesses rather than their strengthincompetent 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. Theyspecialize.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.
43 Entrepreneurial Characteristics (Timmons and Spinelli) Commitment and determinationTenacious, decisive, and persistent in problem solvingLeadershipSelf-starters and team builders who focus on honesty in their business relationshipsOpportunity obsessionAware of market and customer needsTolerance of risk, ambiguity, and uncertaintyRisk takers, risk minimizers, and uncertainty toleratorsCreativity, self-reliance, and adaptabilityOpen-minded, flexible, uncomfortable with the status quo, and quick learnersMotivation to excelGoal oriented and aware of their weaknesses and strengths
44 CIRI USAHAWAN BERJAYA ABAD KE-21 Dapat melihat dan mengambil peluangMempunyai maklumatKreatifInovatifMempunyai visiBerfikiran bebasBerdaya majuoptimistik
45 CIRI USAHAWAN BERJAYA ABAD KE-21 Mengambil risiko yang diperhitungkanSifat kepimpinanSumber: Soo Ji Min (1999)
46 Ciri-ciri Usahawan Berjaya Berdasarkan kajian Mc Clelland (1995), Koa (1991), Scar & Zimmerer (1999) dan lain2….Kreatif dan InovatifKerajinan, keazaman dan ketabahanBerinisiatifMengambil Risiko yg diperhitungkanBertanggungjawabKejujuran dan Menepati JanjiMotivasi Untuk Kejayaan & Berkembang MajuBerorientasikan peluangBerorientasikan Matlamat & WawasanBerorientasikan Masa Depan
47 Ciri-ciri Usahawan Berjaya SambunganKebolehan Menyelesaikan MasalahMenitikberatkan Mutu Kerja yang TinggiLokus Kawalan DalamKeupayaan MengurusMementingkan pencapaian daripada wangBerkeyakinan Diri dan OptimistikSanggup Belajar drpd KesilapanTahap Tenaga yang TinggiMenggunakan strategi2 Pengaruh
48 THE MOST IMPORTANT CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS (10 DS) DreamEntrepreneurs 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.DecisivenessThey don’t procrastinate. They make decisions swiftly. Their swiftness is a key factor in their success.
49 DoersOnce they decide on a course of action, they implement it as quickly as possible.DeterminationThey implement their ventures with total commitment. They seldom give up, even when confronted by obstacles that seem insurmountable.
50 DedicationThey 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.DevotionsEntrepreneurs 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 DetailsIt 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.DestinyThey 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 FinancingSocial EntrepreneurshipCorporate EntrepreneurshipTrends in Entrepreneurship ResearchEntrepreneurial CognitionGlobal Entrepreneurial MovementFamily BusinessesWomen and Minority EntrepreneursEntrepreneurial 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.EntrepreneurA 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.