Introduction to Entrepreneurship EDC:101

Introduction to Entrepreneurship

• Course title: Introduction to Entrepreneurship
• Course code: EDC:101
• Lecture dates: 6-8
• Instructor: Mustaqim Muhib Haque (MQMH)
• Institution: East West University
• Entrepreneurship Development Center

News of the Day

• Unemployment statistics: Approximately 8 lakh graduates unemployed.
• Unemployment rate (by education level): Data provided in percentage form for 2017 - 2022
• Population: 16.98 crore in 2022 and 16.13 crore in 2017
• Labour force: 7.28 crore in 2022 and 6.35 crore in 2017
• Unemployed population (aged 15 or older): 25.82 lakhs in 2022 and 27 lakhs in 2017
• Youth labour force (aged 15-29): 2.68 crore in 2022 and 2.01 crore in 2017

Basic Forms of Business Ownership

• Sole Proprietorship: A business owned and usually managed by one person.
• Partnership: A legal business form with two or more owners.
• Corporation: A separate legal entity distinct from its owners.

Sole Proprietorship

• Advantages: Ease of starting and ending the business, being your own boss, pride of ownership, leaving a legacy, retention of company profits, no special taxes.
• Disadvantages: Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span.

Procedure for Starting a Proprietorship in Bangladesh

• Choose a name for the business
• Rent commercial space
• Fill out trade license application form
• Obtain a trade license from city corporation
• Obtain e-tin certificate
• Open a bank account in business name

Partnerships

• Definition: A legal business form involving two or more owners.
• Types: General partnership (all owners share in operating the business and liability), limited partnership (one or more general and limited partners).
• General partner: An owner with unlimited liability who actively manages the business.
• Limited partner: An owner who invests in the business but has limited liability (for losses beyond investment) and no management responsibility.
• Advantages: More financial resources, shared management and pooled complementary skills and knowledge, longer survival, no special taxes.
• Disadvantages: Unlimited liability (for general partners), division of profits, disagreements, difficulty of termination

Corporations

• Definition: A legal entity separate from its owners, possessing legal rights and responsibilities like an individual.
• Ownership: Usually owned by multiple individuals/organizations holding shares (stock).
• Stockholders: Corporate owners, can buy, sell, give, receive as gifts, or inherit shares.
• Stock types: Common stock (voting rights), preferred stock (no voting rights, dividends paid first).
• Dividends: Cash profits distributed to stockholders.
• Board of Directors: Governing body elected by stockholders who appoint corporate officers.
• Advantages: Limited liability, ability to raise capital, perpetual life, ease of ownership change, attracting talented employees, separation of ownership and management.
• Disadvantages: Initial cost, extensive paperwork, double taxation, size, difficulty of termination, possible conflicts between stockholders and board of directors.

Private Limited Company & Public Limited Company

• Open (public limited): Corporation whose stock is bought/sold on exchanges and individuals can purchase shares.
• Closed (private limited): Corporation owned by a relatively small number of people.
• Key differences: Maximum number of members, whether public can subscribe to shares, commencement of business after incorporation.

The Corporate Hierarchy

• Owners influence management by electing the board of directors.
• The board hires officers, sets their pay, and establishes company objectives.
• Officers hire managers and staff, usually with human resources department support.

Types of Business Activities

• Manufacturing: Raw materials are converted to finished goods based on customer demand (e.g., water bottling).
• Trading: Finished goods from a manufacturing unit are sold to the consumer (e.g., pharmacy).
• Service: Expertise is provided instead of a physical product (e.g., personal services, medical services).

Mergers & Acquisitions

• Merger: Two or more companies combine to create a new entity, usually a separate corporation.
• Acquisition: One company buys another (usually through stock purchase).

Types of Mergers

• Vertical: Combining companies involved in related business stages (e.g., a raw material supplier merging with a manufacturer).
• Horizontal: Joining firms in the same industry (e.g., two soft drink companies combining).
• Conglomerate: Bringing together companies in unrelated industries.

Franchises

• Franchise agreement: An arrangement where an individual buys the rights to use a business’ name, product concept, and sell products in a given territory.
• Franchisor: The company that develops the product/idea.
• Franchise: The right to use the franchisor's name and sell products in a specific area.
• Franchisee: The individual who buys a franchise.
• Advantages: Personal ownership, management and marketing assistance, nationally recognized name, financial advice, lower failure rate.
• Disadvantages: Large start-up costs, shared profits/royalty, management regulations, coattail effects, restrictions on selling, fraudulent franchisors.

Questions?