FSPU 0022 Entrepreneurship PDF

FSPU 0022 CO-CURRICULUM (ENTREPRENEURSHIP) WEEK 1 – WEEK 2 LECTURE 1 TOPIC 1: OVERVIEW OF ENTREPRENEURSHIP Prepared by: Siti Nur Shahida, AFHEA PPI, SPACE-UTM  LEARNING OBJECTIVES To describe the evolution and conc...

FSPU 0022 CO-CURRICULUM (ENTREPRENEURSHIP) WEEK 1 – WEEK 2 LECTURE 1 TOPIC 1: OVERVIEW OF ENTREPRENEURSHIP Prepared by: Siti Nur Shahida, AFHEA PPI, SPACE-UTM  LEARNING OBJECTIVES To describe the evolution and concepts of entrepreneurship. To discuss the importance of entrepreneurship. To explain the development of entrepreneurship in Malaysia.  INTRODUCTION The study of entrepreneurship has gained significant importance in countries with free market Entrepreneurial activities serve as economies. In these nations, the backbone of a nation's economy, entrepreneurial development is a fostering innovation, job creation, critical component of nation-building, and competitive markets. driving economic progress, growth, and prosperity. Entrepreneurs play a vital role in A society with a strong advancing economic development entrepreneurial culture tends to be by introducing new products and more productive, competitive, and services, optimizing resources, and prosperous. stimulating market dynamics. Successful entrepreneurs are often This journey not only creates wealth rewarded with substantial profits, for the entrepreneurs but also and many have transformed their contributes significantly to the overall small businesses into large, economic health and stability of their influential corporations. nations.  WHAT IS ENTREPRENEURSHIP? Academic Definition Academic Definition Venture Capitalist (Ariffin & Hamidon): (Stevenson & Jarillo): (Fred Wilson): "Entrepreneurship is the "Entrepreneurship is the "Entrepreneurship is the art activity of setting up a process by which of turning an idea into a business or businesses and individuals pursue business." taking on financial risks in opportunities without regard Key Points: the hope of making profit." to resources they currently Idea Realization: Key Points: control." Focuses on transforming Business Setup: Key Points: innovative ideas into Involves the creation and Opportunity Pursuit: viable commercial establishment of new Entrepreneurs actively enterprises. businesses. seek and exploit Creative Process: Financial Risk: business opportunities. Highlights the Entrepreneurs must Resource Independence: imaginative and strategic invest their own or Successful elements of borrowed capital with no entrepreneurs do not let entrepreneurship. guarantee of return. limited resources hinder Business Creation: Profit Motive: their ambitions; they find Involves developing a The primary goal is to ways to acquire what structured plan to bring achieve financial gain they need. ideas to market. and profitability. Innovative Approach: Emphasizes creativity and innovation in leveraging opportunities.  INTEGRATING DEFINITIONS Initiating and Managing Ventures: Entrepreneurs set up and manage new businesses, taking calculated financial risks. Opportunity-Driven: They are adept at identifying and pursuing Combining these opportunities, regardless of initial resource perspectives provides a constraints. comprehensive Innovation and Creativity: understanding of Entrepreneurship involves the creative entrepreneurship: process of turning ideas into practical, marketable solutions. Value Creation: Ultimately, entrepreneurs aim to create value, both for themselves and for society, through profitable and sustainable business practices. BASIC ASPECTS OF ENTREPRENEURSHIP Involves creating something new of value. Requires devotion of necessary time and effort. Assumes risks around financial, psychological and social areas. Involves the rewards of independence, personal satisfaction and monetary (A sign of success). THE EVOLUTION OF ENTREPRENEURSHIP The Earliest The Middle The 17th Period Ages Century The 19th and The 18th 20th 21st Century Century Centuries  THE EARLIEST PERIOD These early entrepreneurs Entrepreneurial activities date back engaged in barter trade, travelling to ancient civilizations such as the vast distances to exchange goods Phoenicians, who were known for like textiles, spices, and precious their extensive trade networks metals, laying the groundwork for across the Mediterranean. modern economic systems.  THE MIDDLE AGES This period saw individuals like Marco Polo, who managed large-scale trading The term "entrepreneur" During the Middle Ages, expeditions along the originates from the the concept of Silk Road, and French word entrepreneurship began merchants in medieval "entreprendre," meaning to take shape. guilds who organized to undertake. production and trade, showcasing early forms of organized entrepreneurship.  THE 17TH CENTURY The 17th century marked significant progress in entrepreneurship with the rise of joint-stock companies and colonial ventures. Notable examples include the Dutch East India Company and the British East India Company, which expanded trade routes, established new markets, and drove global economic integration. These companies were early examples of large-scale, state- supported entrepreneurial ventures.  THE 18TH CENTURY Innovators such as James Watt, who improved the steam The 18th century, often engine, and Eli Whitney, who referred to as the Age of invented the cotton gin, Enlightenment, saw the rise of introduced groundbreaking industrial entrepreneurship. technologies that fuelled the Industrial Revolution. This period emphasized the importance of innovation and the role of entrepreneurs in driving industrial growth and economic expansion.  THE 19TH AND 20TH CENTURIES The post-Industrial Revolution The 19th and 20th centuries era brought about rapid witnessed a dramatic technological advancements transformation in and the establishment of entrepreneurship. major corporations. Entrepreneurs like Henry Ford The emergence of venture revolutionized the automotive capital in the mid-20th century industry with mass production spurred a new wave of start- techniques, while Thomas up culture, exemplified by Edison’s numerous inventions, companies like Intel and including the electric light bulb, Apple. transformed everyday life.  THE 21ST CENTURY Companies like Amazon and The 21st century has seen Modern entrepreneurs operate Alibaba have revolutionized e- entrepreneurship evolve in in a highly connected world, commerce, while social media unprecedented ways, driven by leveraging digital platforms to giants like Facebook and globalization, digital create innovative business Twitter have transformed technology, and the internet. models. communication. The gig economy, represented Sustainable business practices by companies like Uber and and a focus on social impact Airbnb, and the rise of social have become central to entrepreneurship, with contemporary entrepreneurial organizations like TOMS endeavors, addressing both Shoes, reflect the dynamic and economic and societal ever-changing nature of the challenges. global economy.  WHO IS AN ENTREPRENEUR? The term “entrepreneur” originates from the French word “entreprendre,” which means “to do Origin of the Term: something” (Swedberg, 2000) or “to undertake” the risk of new ventures (Kuratko & Hodgetts, 2001). An entrepreneur is someone who creates and runs a business. Definition: This involves identifying opportunities, developing a business plan, and mobilizing resources to establish and grow the enterprise. Starting a new business involves significant risk. Entrepreneurs face the chance of losing their investment and other resources. Risk Involvement: Unlike employees, entrepreneurs work for themselves and therefore bear the full brunt of the risks associated with their business ventures.  WHO IS AN ENTREPRENEUR? (CONT.) Entrepreneurs must assemble and integrate various resources needed to transform an idea into a viable business. This includes: Money: Securing capital from personal savings, loans, or investors. People: Building a team with the necessary skills and Resource Assembly: expertise. Business Model: Developing a sustainable business model that outlines how the business will generate revenue and profit. Strategy: Crafting a strategy that includes marketing, operations, and growth plans to ensure the business’s success. By effectively managing these elements, entrepreneurs turn innovative ideas into successful businesses, driving economic growth and contributing to societal progress.  WHO IS AN ENTREPRENEUR? (CONT.) Definition: Entrepreneurs are economic agents who have the foresight and willingness to take advantage of realized and unrealized profit opportunities through buying and selling activities. Richard Cantillon (1755) Key Contribution: Cantillon highlighted the role of entrepreneurs in the economy as risk-takers who capitalize on market inefficiencies and opportunities. Definition: Entrepreneurs act as agents in transforming demand into supply. Key Contribution: Adam Smith (1776) Smith emphasized the entrepreneurial function of balancing market demand and supply, contributing to economic equilibrium and resource allocation. Definition: Entrepreneurs are individuals who shift resources from areas of low productivity to areas of high productivity. Jean-Baptiste Say (1803) Key Contribution: Say introduced the concept of resource allocation efficiency, where entrepreneurs play a critical role in optimizing the use of resources to maximize productivity. Definition: Entrepreneurs are innovators who introduce new products, services, or methods, replacing old ones. Joseph Schumpeter (1900) Key Contribution: Schumpeter focused on the entrepreneurial role in driving economic development through innovation, leading to creative destruction and industrial transformation. WHO IS AN ENTREPRENEUR? (CONT.) These seminal thinkers have shaped our understanding of entrepreneurship, each emphasizing different aspects: Cantillon: Risk-taking and market Summary opportunities. Smith: Balancing demand and supply. Say: Resource optimization and productivity. Schumpeter: Innovation and economic transformation.  WHY BECOME AN ENTREPRENEUR? Desire to be their own Entrepreneurs often seek independence and autonomy, preferring to make their own decisions and lead their ventures without answering to superiors. boss Desire to pursue their Many entrepreneurs are driven by a passion for their own ideas and innovations. They want to bring their unique vision to life and solve problems in new and creative ways. own ideas The potential for substantial financial gain is a significant motivator. Financial rewards Successful entrepreneurs can achieve financial independence and accumulate wealth. Entrepreneurship allows for flexible working hours. Control over time Entrepreneurs can set their own schedules, balancing their personal and professional lives as they see fit. Building and growing a business can be deeply fulfilling. Fulfillment Entrepreneurs often find satisfaction in overcoming challenges, achieving their goals, and seeing their ventures succeed. The opportunity to create something from scratch and own it is a powerful incentive. Creation/ Ownership Entrepreneurs take pride in building businesses that reflect their values and vision. Control over Entrepreneurs have the ability to directly influence their earnings based on the success of their business, unlike employees who typically have fixed salaries. compensation Control over working Entrepreneurs can design their own work environments and create a company culture that aligns with their preferences and values. conditions  BENEFITS OF BECOMING AN ENTREPRENEUR Entrepreneurs enjoy the freedom to make their own decisions and control their own destiny. Independence Example: Having the ability to set your own schedule and determine the direction of your business. Achieving personal and professional satisfaction from building something of your own. Satisfaction Example: Taking pride in the success and growth of your business. Engaging in work that you are passionate about and finding joy in it. Doing What You Enjoy Example: Turning a hobby or interest into a successful business venture. The potential to reap impressive profits and achieve financial independence. Financial Reward Example: Growing a start-up into a lucrative enterprise, such as a tech company or retail brand. Building self-confidence and a sense of accomplishment from overcoming challenges and achieving goals. Self-Esteem Example: Successfully launching a new product or service and receiving positive market feedback.  BENEFITS OF BECOMING AN ENTREPRENEUR (CONT.) Making a positive impact and being recognized for your efforts in the community or industry. Contribution to Society Example: Creating jobs and contributing to economic growth, or developing products that improve people's lives. Shaping your future and directing the course of your career. Creating Your Own Destiny Example: Innovating in a niche market and establishing yourself as a leader in the field. Having the opportunity to make a meaningful impact on the world or a specific cause. Making a Difference Example: Developing eco-friendly products or services that promote sustainability. Realizing your abilities and maximizing your talents through entrepreneurial activities. Reaching Full Potential Example: Leveraging your skills in a way that traditional employment might not allow.  CHALLENGES OF BECOMING AN ENTREPRENEUR The risk of the business not succeeding, leading to financial loss and other repercussions. Business Failure Example: Investing time and money in a venture that ultimately does not become profitable. Facing numerous challenges and setbacks along the entrepreneurial journey. Obstacles Example: Dealing with market competition, regulatory hurdles, or supply chain issues. Experiencing isolation due to the solitary nature of making key business decisions. Loneliness Example: Feeling alone when facing tough decisions or during periods of stress. The risk of losing your entire investment and dealing with fluctuating income. Financial Insecurity Example: Having to personally finance the business and facing potential bankruptcy if it fails. Working extended hours, often far beyond the standard workweek. Long Hours/Hard Work Example: Sacrificing personal time to manage and grow the business.  CHALLENGES OF BECOMING AN ENTREPRENEUR (CONT.) The demands of entrepreneurship can put stress on family and social relationships. Strain on Personal Example: Relationships Missing family events or not having time for friends due to business commitments. Not having a stable or predictable income, especially in the early stages. Uncertainty of Income Example: Facing periods of low or no revenue and struggling to cover personal and business expenses. Experiencing a lower standard of living until the business becomes profitable. Low Quality of Life Until Example: Established Living frugally and cutting personal expenses to keep the business afloat. Managing the stress associated with running a business and handling multiple responsibilities. High Levels of Stress Example: Dealing with constant pressure to perform and meet business goals. Bearing the full responsibility for the success or failure of the business. Complete Responsibility Example: Being accountable for every aspect of the business, from operations to finances. Facing discouragement from failures and setbacks that can affect motivation. Discouragement Example: Experiencing multiple rejections or failures and questioning your ability to succeed. IMPORTANCE OF ENTREPRENEURSHIP Opportunity to control direction in life Entrepreneurship allows individuals to chart their own course, pursuing ventures aligned with their passions, values, and goals. This autonomy fosters personal growth and fulfilment as they navigate their chosen path. Opportunity to maximize self-potential By taking on the challenges and responsibilities of entrepreneurship, individuals continually push their boundaries, learn new skills, and overcome obstacles. Self-Development This journey of self-discovery and growth enables them to realize their full potential and develop as individuals. Opportunity to obtain unlimited financial rewards Unlike traditional employment where income may be capped, entrepreneurship offers the potential for unlimited financial rewards. Successful ventures can generate substantial wealth, providing entrepreneurs with financial security and the means to pursue their desired lifestyle. IMPORTANCE OF ENTREPRENEURSHIP (CONT.) Increases family income Successful entrepreneurship often leads to increased income streams, which can significantly boost the financial stability of the entire family. Additional revenue can be used to support various needs and aspirations, from education to healthcare to leisure activities. Raises living standards Entrepreneurial success can elevate the living standards of the family by enabling investments in better housing, transportation, healthcare, and other essentials. Family Development Improved living conditions contribute to overall well-being and quality of life for family members. Improves social status Entrepreneurial achievements can enhance the social status of the family within their community and broader society. As successful entrepreneurs, family members may gain respect, recognition, and influence, opening doors to new opportunities and networks. IMPORTANCE OF ENTREPRENEURSHIP (CONT.) Improves the standard of living and lifestyle of the society Entrepreneurial ventures often introduce innovative products, services, and solutions that enhance the quality of life for communities. These advancements can range from technological innovations to sustainable practices that benefit society as a whole. Opportunity to contribute to society Entrepreneurs have the opportunity to address societal needs and challenges through their ventures. Whether it's providing access to essential services, addressing environmental concerns, or supporting local communities, entrepreneurship can make a Society/Community meaningful impact on society. Development Fulfills society’s needs and wants Successful entrepreneurs are adept at identifying and fulfilling unmet needs and desires within society. By addressing these gaps, entrepreneurs contribute to the overall well-being and satisfaction of individuals and communities. Creates choices through innovation and creative production techniques Entrepreneurship fosters innovation and creativity, leading to the development of diverse products, services, and solutions. This abundance of choices empowers individuals within society, allowing them to select options that best align with their preferences and values.  IMPORTANCE OF ENTREPRENEURSHIP (CONT.) Produces new products of high quality Entrepreneurial endeavors often result in the creation of new products and services that meet high standards of quality and innovation. These offerings contribute to the nation's reputation for excellence and competitiveness in the global marketplace. Creates large-scale job opportunities Entrepreneurship is a significant driver of employment generation, creating job opportunities across various sectors and skill levels. By fostering entrepreneurship, nations can combat unemployment and stimulate economic growth. Catalyst to national development Entrepreneurial activity fuels economic growth, fosters innovation, and drives progress in various sectors, making it a crucial catalyst for national development. National Development Successful entrepreneurial ventures contribute to the overall prosperity and advancement of the nation. Generates income for the economy Entrepreneurship generates income through business activities, investments, and taxation, thereby contributing to the overall economic prosperity of the nation. This income fuels further development and investment in infrastructure, education, healthcare, and other essential sectors. Backbone of heavy industries In many economies, entrepreneurship forms the backbone of heavy industries and manufacturing sectors. Entrepreneurs drive innovation, efficiency, and productivity in these sectors, contributing to industrial growth and development.  IMPORTANCE OF ENTREPRENEURSHIP (CONT.) Opportunity to put religious/ spiritual faith into practice Entrepreneurship offers individuals the opportunity to align their business practices with their religious or spiritual beliefs. This alignment allows entrepreneurs to conduct their business in a manner that reflects their values and principles. Spiritual Development Opportunity to continuously perform religious obligations Entrepreneurship provides flexibility in terms of work schedules and priorities, allowing individuals to balance their professional responsibilities with religious obligations. This flexibility enables entrepreneurs to fulfill their spiritual duties while pursuing their entrepreneurial endeavors.  ACTIVITY 1: GROUP DISCUSSION & PRESENTATION (15 MINS) You are an entrepreneur who is about to open a franchise restaurant. What should you do before you start your business? Present your ideas in class.  ENTREPRENEURSHIP DEVELOPMENT IN MALAYSIA: THE HISTORY Entrepreneurship traces its roots back to the pre-colonial era, particularly during the Malacca Sultanate, where the region served as a vital trading hub attracting foreign Pre-Colonial Era: merchants. This period saw the development of entrepreneurial activities among local traders, facilitated by the exchange of goods and ideas with foreign traders. With the arrival of the British in the Malay Peninsula, significant changes occurred in the socio-economic landscape. The colonial administration implemented policies that segregated society along racial lines, known as the British Colonial Period: "divide and rule" system. Malays were predominantly involved in administration and agriculture, while Chinese immigrants were encouraged to participate in mining and business activities, and Indians were primarily engaged in rubber plantations. The British colonial policies had a profound impact on the development of entrepreneurship in Malaysia. The "divide and rule" system created distinct economic roles for different ethnic groups, with the Chinese Impact on community emerging as leaders in business and Entrepreneurship: commerce. They leveraged their expertise in trading, entrepreneurship, and financial acumen to establish thriving businesses, trade networks, and economic dominance in various sectors.  ENTREPRENEURSHIP DEVELOPMENT IN MALAYSIA: THE HISTORY (CONT.) In contrast, Malays and Indians faced challenges in accessing economic opportunities and developing entrepreneurial ventures under colonial rule. Challenges for Malays and The socio-economic structure favored the Chinese community, leading to disparities in wealth, business Indians: ownership, and economic influence. Malays primarily focused on agricultural activities, while Indians were predominantly employed in the rubber plantation sector, limiting their entrepreneurial prospects. Following Malaysia's independence in 1957, efforts were made to address economic disparities and promote inclusive entrepreneurship. The government implemented policies aimed at fostering Post-Independence economic development, reducing poverty, and empowering all ethnic communities to participate in Period: entrepreneurial activities. Initiatives such as the New Economic Policy (NEP) aimed to rectify socio-economic imbalances and promote greater participation of Malays in business and entrepreneurship.  ENTREPRENEURSHIP DEVELOPMENT IN MALAYSIA: THE PRESENT The Malaysian government has implemented numerous policies and programs to support entrepreneurship. These initiatives include grants, tax incentives, and regulatory reforms aimed at easing the process of starting Government Initiatives: and scaling businesses. Government agencies such as Malaysia Digital Economy Corporation (MDEC) and Malaysian Global Innovation & Creativity Centre (MaGIC) play pivotal roles in driving entrepreneurship-related activities. Malaysia has seen the emergence of a dynamic start-up ecosystem, characterized by incubators, accelerators, co- working spaces, and networking events. Start-up Ecosystem: Cities like Kuala Lumpur, Penang, and Johor Bahru have become hubs for entrepreneurial activities, attracting local and international talent. Access to financing is crucial for the success of entrepreneurial ventures. Malaysia has witnessed the proliferation of venture capital firms, angel investors, and crowdfunding platforms, providing funding opportunities for start-ups across Access to Financing: various stages of growth. Additionally, government-backed financing schemes such as Cradle Fund and Malaysia Venture Capital Management Berhad (MAVCAP) support early-stage entrepreneurs.  ENTREPRENEURSHIP DEVELOPMENT IN MALAYSIA: THE PRESENT (CONT.) Recognizing the importance of entrepreneurial education, Malaysia has introduced entrepreneurship courses and programs at universities and vocational institutions. Education and Skill These initiatives aim to nurture a new generation of Development: entrepreneurs equipped with the necessary skills, knowledge, and mindset to succeed in the business world. The digital economy has become a focal point for entrepreneurship in Malaysia. The government has spearheaded initiatives to promote digital entrepreneurship, including the Digital Free Trade Digital Transformation: Zone (DFTZ) and various e-commerce development programs. These efforts aim to harness the power of technology and innovation to drive business growth and competitiveness. Malaysia has also shown a growing interest in social entrepreneurship, which seeks to address social and environmental challenges while generating sustainable Support for Social business solutions. Entrepreneurship: Various organizations and initiatives provide support and resources to social entrepreneurs, enabling them to create positive impact alongside financial sustainability.  REFERENCES Ariffin, S. & Hamidon, S. (2017). “Introduction to Entrepreneurship”. Shah Alam: Selangor, Oxford Fajar Sdn. Bhd. Ariffin, S., Ab Wahab, I., & Hambali, Zarida (2013). “Fundamentals of Entrepreneurship”. Shah Alam: Selangor, Oxford Fajar Sdn. Bhd. Aman Shah, S. H., Sh’afie, S. Z., Teik Lan, C. S., Mokhtar, N. S., & Mohamed, M. (2018). “Entrepreneurship”, 5th Ed., Shah Alam: Selangor, Oxford Fajar Sdn. Bhd. Jamaludin, A., Mohd Yusoff, A.R., Mohd Rusli, M.H., Che Mat, S., & Abdul Majid, Z. (2011). “Introduction to Entrepreneurship”. Shah Alam: Selangor, Oxford Fajar Sdn. Bhd.