SHD3412 / UHS 3102 WEEK 1 Introduction to Entrepreneur and Entrepreneurship

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. 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.

What is Entrepreneurship? 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.

Pierre Omidyar Founder of eBay eBay Case All these qualities were exemplified by Pierre Omidyar, the founder of eBay. Omidayar saw an opportunity to create a marketplace where people could find each other online, he risked his career by quitting his job to work on eBay full time, and he worked hard to build a profitable company that delivers a creative and useful service to its customers. Pierre Omidyar Founder of eBay

Entrepreneurs Add Value to Scarce Resources All resources (wood, coal, oil, etc.) that cost money are “scarce.” Entrepreneurs add value to scarce resources by shifting them from areas of lower to higher productivity.

The Economic Questions An economy is a country’s financial structure. It is the system that produces and distributes wealth. What should be produced? When will it be produced? How will it be produced? Who will produce it? Who gets to have what is produced?

Why Be an Entrepreneur? Fulfillment Control over time Creation / Ownership Control over Compensation Salary, Wage, Dividend & Commission Control over Working Conditions

Costs and Benefits of Entrepreneurship Business failure Obstacles Loneliness Financial Insecurity Long Hours/Hard Work Benefits Independence Satisfaction Financial Reward Self-Esteem Contribution to Society

Sources of Opportunity Use new technology to produce a new product. Use an existing technology to produce a new product. Use an existing technology to produce an old product in a new way. Find a new source of (cheaper) resources. Develop a new market for an existing product.

Where others see problems, entrepreneurs recognize opportunities. 5 Roots of Opportunity Problems Changes Inventions Competition Technological advances Where others see problems, entrepreneurs recognize opportunities.

Use ‘SWOT’ to Evaluate Business Ideas

2 Classes of Opportunities External—generated by outside circumstances noticed by the entrepreneur. Internal—generated by an interest or hobby of the entrepreneur.

7 Rules for Building a Successful Business Recognize an opportunity Evaluate it with critical thinking (SWOT) Build a team Write a business plan Gather resources Decide ownership Create wealth

Respect Intellectual Property-Ethics Do not sell counterfeit knockoffs of popular brands. Do not take graphics, music, or content from the Web without permission. Know the source of goods you sell, to avoid the risk of selling stolen property.

What Is a Business Plan? A document that you can use to start and operate your business. A document you can show investors and bankers to raise money (capital) for your business.

Entrepreneurship development in Malaysia Entrepreneurship has existed in Malaysia since the interaction of Malacca with foreign traders. When the British colonized in Malay Peninsular, they practiced the ‘divide and rule’ system : Malays – engaged in administration and agriculture Chinese – engaged in mining and business Indians – engaged in rubber plantations

Entrepreneurship development in Malaysia After independence, the Malaysian government has been focusing on the field of entrepreneurship until today. Several agencies established to manage and promote the growth of entrepreneurship are SME Corp, TEKUN, MARA, PUNB, MTDC and etc. Others: The New Economic Policy (1971-1990), The National Development Policy (1990 – 2000), Vision 2020

What is Islamic Entrepreneurship?

EIGHT PRINCIPLES OF ISLAMIC ENTREPRENEURSHIP 1. Entrepreneurship is an integral part of Islam. 2. By virtue of human nature, the Muslim entrepreneurs are 'khalifah' and have the reponsibilities to develop prosperity and sees business as part of ibadah or good deed. 3. Motivation - success in Islam is not merely measured by the end result but also the way and means of achieving them. 4. Ibadah - business activity is part of ibadah or “good deed”

EIGHT PRINCIPLES OF ISLAMIC ENTREPRENEURSHIP 5. Islamic Economic System - Islamic entrepreneurship should operate within the domain of the Islamic economic system and act as the vehicle towards global acceptance of the Islamic economic system. 6. Position of Entrepreneurship & Business in Islam- encouraged to venture into business. Prophet Muhammad (PBUH) expounded that 9 out 10 sources of sustenance are via business 7. Guiding Principles of Islamic Entrepreneurship is by the al-Quran and al-Hadith 8. Entrepreneurial Ethics based on exemplary conducts of Prophet Muhammad S.A.W

SUMMARY: EIGHT PRINCIPLES Integration Human Nature Motivation Ibadah Position of Business and Entrepreneurship System Guidelines Exemplary Conducts

INTEGRATION HUMAN NATURE Islam is a complete way of life. There is no separation between business and religion. Islam has its own entrepreneurship culture. HUMAN NATURE By virtue of the human nature, the person must firstly be a Muslim, then an entrepreneur. He has the responsibility to perform ‘ibadah’ and be a ‘khalifah’. Muslim entrepreneur should search for God’s blessings above all other factors. A Muslim entrepreneur perform business not solely for profit, but above all, to fulfill the ‘fardhu kifayah’.

MOTIVATION The successful path and means for achieving success for entrepreneurs are unique. Success in Islam is not merely measured by the end result, but also the means and ways of achieving them. The pursuit of wealth must be accompanied by intention, means, management and usage as stipulated by Islam

The type of success according to Al-Qurtubi Halal (Rightful means of living) Qanaah (Satisfying) Taufiq (Guidance) Sa’adah (Tranquility/Happy) Jannah (Heaven)

Entrepreneurship as Ibadah Muslim entrepreneurs involvement in business is to fulfill an obligation known as “fardhu kifayah” Fardhu kifayah~ Unless and until there is an entrepreneur in a community, the entire community is deemed to be sinful. Muslim entrepreneurs bear the responsibility to provide goods and services primarily to the Muslim community and to others

POSSESSION OF WEALTH IS ALLOWED BASED ON THE FOLLOWING PRINCIPLES Allah s.w.t is the absolute owner of wealth Allah created wealth in abundance and sufficient for all Wealth is created for mankind Wealth is entrusted to mankind

Islamic Economic System Islamic entrepreneurship is part of the framework of the Islamic Economic System. Islamic economic system involves: Islamic banking Islamic insurance (Takaful) Islamic capital markets Islamic economic system is based on Islamic jurisprudence.

POSITION OF BUSINESS AND ENTREPRENEUR ISLAMIC ENTREPRENEURSHIP MODEL Islam Proposed (Business Venture) E X A M P L E X A M P L Allah Prepared (Facilities) Islam Outlined (Rules and Regulation) Allah Promised (Reward)

GUIDELINES Guidelines for Islamic Entrepreneurship activities are wide and comprehensive.

Entrepreneurial Ethics Prevent laziness Eradicate fear/shyness Search for legitimate ventures Avoid unlawful sources of income Show gratitude and thankfulness Grow and develop wealth Diversify business ventures Avoid greediness

Entrepreneurial Ethics Avoid malicious behavior Avoid squandering (elakkan membazir) Avoid stinginess (elakkan kedekut) Pay zakat and alms (sedekah) Be trustworthy Pray consistently Tawakkal Patience Qanaah

Exemplary Conducts of Muslim Entrepreneurs Business is secondary to the call of jihad (crusade) Never use power or influence for self-interest Afraid of accumulated wealth Leadership qualities in all aspects Practice moderate way of life