ENT 211 Synopsis PDF

ENT-211 SYNOPSIS Joseph Schumpeter(1933) defined an entrepreneur as “one who applies innovations within the context of the business to satisfy unfulfilled market demands”. Liebenstein(1955) sees an entrepreneur as an innovator who implements change within market through trying out new combinatio...

ENT-211 SYNOPSIS Joseph Schumpeter(1933) defined an entrepreneur as “one who applies innovations within the context of the business to satisfy unfulfilled market demands”. Liebenstein(1955) sees an entrepreneur as an innovator who implements change within market through trying out new combinations. There can take different forms: (I) Product development: introduction of a new good or product or improving the quality of existing ones. (II) Introduction of novel method of production (technical innovation) (III) Open of new market to enhance productivity. (IV) Acquisition of a new source of materials supply or integrating the product & distribution system. (V) Carrying out of a new organization in any industry, via organizational development. Drucker(1985) perceives entrepreneurship as the creation of a new organization, regardless of its ability to sustain itself, let alone make profit. Entrepreneurship has to do with setting up business, keeping different facts in mind and it also involves creation of economic values. Entrepreneurship is usually led by innovation. Entrepreneurship drives economic growth, creates new jobs, encourages innovation by bringing new ideas, products & services to the market, contributes to social change by developing products or services that reduces people’s dependence on outdated technology. Entrepreneurship also increase stands of living, impacts on society & community development & supports research research & development. Characteristics of an entrepreneur involves the ability to take risk, innovation, open- mindedness, flexibility, visionary & leadership quality and knowing the product. What motivates the entrepreneur: cash, curiosity, creativity, challenge, change. Theories of entrepreneurship include: economic, social, psychological, cultural, resource-based, effectuation, social network, human capital, institutional, knowledge spill over, profit, opportunity, ownership & entrepreneurship innovation theory. Entrepreneurship involves mixing input in varied proportions to give a certain business output.  An entrepreneur is a manager of output. Entrepreneurship is a dynamic process created & managed by individuals. It is not static. It is a process of creation of value(Robert Istrich, 2002). Pillars of entrepreneurship: innovation, creativity, discovery, invention & idea. Approach to entrepreneurship quality: trait & innovative/organizer approach. Trait approach include: self confidence, task & result oriented, risk taking(primary), leadership, originality/uniqueness & future oriented. Innovative/organizer approach include: planning, organizing, good coordination, leading, deligating roles, directing, controlling men & machine. An entrepreneur can be a manager but a manager cannot be an entrepreneur. The venture capital is provided by the entrepreneur. Entrepreneurship is different from business formation. Entrepreneurs are special creatures & not as the same as ordinary men in the street. Entrepreneurs are realistic in the view of possibilities. Entrepreneurs are positive thinkers They do not entertain fear of the unknown. “NO” to the entrepreneur means next opportunity. Where others see a problem, an entrepreneur sees opportunities. Entrepreneurial thinking involves possibility & positivity. Entrepreneurs are fault finders & fault menders. Businesses is an activity by an individual to earn a living & make profit. It is also a sum total of activity that involves buying & selling of goods to contribute to economic development. Businesses ownership is a legal structure under which a business can be organized. There are five(5) forms of business ownership: (I) Sole proprietorship (II) Partnership (III) Corporations  (IV) Limited liability companies(which can be private & public) (V) Cooperative (multipurpose business). Owners of corporations are called shareholders while owners of limited liability companies are called stockholders. T.I.N means Tax Identification Number. Steps to business registration: (I) Choosing business name (II) Choosing legal structure (III) Registering with appropriate authority (IV) Obtaining TIN (V) Securing license & permit (VI) Registration of tax (VII) Opening of business account. C.A.C means Corporate Affairs Commission. Registering business to CAC separates the business owner from business liability. Purpose of registering business: (I) Legal recognition (II) Business unique identity (III) Tax compliance: To contribute to economic growth. (IV) Access to funding (V) Credibility: Consumers’ trust in the business Benefits of registering include: (I) Legal recognition (II) Tax advantage (III) Brand protection (IV) Expansion opportunity. (V) Application of grants/loans. Challenges of registration include: (I) Cost of registering (II) Complexity of form & procedure. (III) Delay in registration.  Alliance formation is a formal agreement between two or more organization to form an industry. Types of alliances: (I) strategic, political & (ii) community alliances. Joint ventures is 2 or more companies coming together & pooling resources to undertake a specific project. Types of joint venture: (I) Equity based (pooling of capital to form business) (II) Contractual based(without forming a new business). Steps to form joint ventures: (I) Identification of partners. (II) Definition of objectives. (III) Draft of agreement. (IV) Legal structuring(whether to form new business or not). (V) Operational planning. Type of e commerce business models: (I) B2C(Business to Consumer) (II) B2B(Business to Business) (III) C2C(Consumer to Consumer) (IV) C2B(Consumer to Business) (V) B2G(Business to Government) (VI) G2B(Government to Business) (VII) M-Commerce(Mobile Commerce) (VIII) D2G(Direct to Consumer). Advantages of e commerce business models include: (I) Global outreach (II) Effective interaction (III) Convenience (IV) Cost efficiency. Disadvantages: (I) Cyber crime (II) Logistics & return management (III) Competition  (IV) Environmental scanning/technological updates. The word "entrepreneur" was first used by Richard Cantillon to describe a “go-taker” or “between-taker”. “ Entre” means between” & “pentre” means “to take”. Entrepreneurship involves risk because the entrepreneur buys goods at a certain price & sells at an uncertain price. The intrapreneur works for the entrepreneur. He makes use of his initiative & acts within the firm. Components of entrepreneurship: (I) Individual (II) An act (III) Innovation (IV) Opportunity (V) Organization (VI) Risk. Entrepreneurial process: (I) Identification of businesses opportunity/problems (II) Development of business plans (III) Determination of required resources (IV) Managing resulting business enterprise (day-to-day running). Entrepreneurial corporations recognize individuals within the firm to be innovative. Habitual entrepreneurs establish businesses from time to time and have several experiences. Entrepreneurial teams: 2 or more people who establish several organizations & give people to manage. Small scale businesses decline due to (I) Low patronage (II) Trade debts (III) Low productivity (IV) Low business return (V) Incompetence (VI) Bad management  (VII) Neglect (VIII) Poor health of entrepreneur (IX) Poor record keeping. These are the 4 roots of business opportunity: (I) Problems (II) Change (III) Invention (IV) Competition. Sourced of business ideas: (I) Personal (II) Fomal search for business opportunity (III) Agent sources (IV) Brainstorming (V) Reverse brainstorming (VI) Synectic (VII) Gordon method (VIII) Checklist method. To decide on what kind of business to embark on, a new entrant must ask the following questions: (I) Do I have the talent? (II) Do I have the specialist knowledge? (III) Do I have interest in this particular activity? Prof. Jeffry A. Timmons, the author of the Entrepreneurship for the 21st century suggest 4 characteristics for when an idea is a business opportunity: (I) It is attractive to customers/consumers (II) It will work in your business environment (III) It can be executed in the window of opportunity that exist (IV) You have the resources & skills to create the business or know someone who dies & might want to work with you. In a Delphi study, Garter (1990) found some elements expressed by the participants that constitute the nature of entrepreneur. These are “innovation”, “ organization creation “, “creating value”, “ profit or non profit “, “ growth “, “ uniqueness “, & the “ owner-manager. Feasibility study precedes feasibility reports.  Feasibility reports give a “yes” or “no” response to the idea of the entrepreneur. Feasibility study is a comprehensive analysis embarked upon by the before establishing a business to ascertain as much accurately as possible, information & indications as to whether the business is viable, profitable & possible. It provides accurate information about the target consumers & feasibility of resources. It can be carried out by the new entrepreneur & also, by an existing organization with the help of innovation. Feature of feasibility reports: (I) Description of venture (II) A detailed project objective (III) Economic & social justification of the project (IV) Organization & management (V) Cost of project (VI) Risk analysis (VII) Technical – production consideration (VIII) Demand & supply outcome: how to meet up with the demand of consumers (IX) Financial projection & profitability Importance of feasibility study: (I) It helps to ascertain whether or not a project is worth undertaking. “Yes” or “no” response to the idea. (II) It ascertains the viability, profitability & technical practicality of the project (III) It influences business decisions in the area of investment & financing (IV) It supports investors in quest for credit facilities from financial institutions (V) It provides a report which largely gives first-hand ideas & information about the viability & profitability of the project (VI) It determines the setup & gestation period indicating the possible time duration to break even & start making profit Steps to conducting feasibility reports: (I) Conducting a preliminary analysis (initial evaluation of project) (II) Analysis of technical specifications (III) Conducting commercial analysis (knowing the consumers) (IV) Market assessment (knowing if similar products exist- competition) (V) Preparation of income statement (VI) Analysis of feasibility alternatives  (VII) Making of project goals: whether to continue with the business venture or not(final step). Feasibility reports & business planning are important documents that guide entrepreneurs in venture creation Business plan comes after the feasibility report. It is the feasibility report that gives the go ahead for the business plan. Business plan is a written document from the entrepreneur that involves the internal & external requirements to start a new business venture. It is also summary document that outlines how & why a new business is being created and how to achieve the aim of the venture. Potential investors look at the business plan to evaluate a risk exposure of a particular startup business venture and try to attract employees and investors to use the business plan two solidify their claims regarding the potential profitability of a business idea. Reasons for preparing a business plan: (I) Entrepreneurs use business plan to understand the feasibility of a particular business idea (II) It is important to contextualize the worth of the proposed project the current market before committing resources such as the availability of time and financial resources. (III) Business plan formulate a corporate plan of action that enables an organized manner of conducting business. (IV) It is a road map that guides implementation of a project. (V) It acts as reference tools for management and employees & to solidify the ground of authority and tax allocation. (VI) The preparation of the business plan often create many unintended yet desired results. It helps to ascertain future hurdles. (VII) It is an effective way of communicating with the potential investors. (VIII) It analyzes the chance of business success and helps to raise capital. Contents of a business plan: (I) Executive Summary: It who is the key aspect of a business plan and gives structure to the document. It must contain the ownership and formation of the business by describing the entire plan, the mission statement and division, the  characteristics and core functions of the business. ***It describes the goods and services that a business is providing.*** (II) Business Description: describes the vision & mission of the organization (III) Market Strategy: this presents the target consumer group on the strategies needed to tap into it. It requires meticulous analysis of the aspect of the market. (IV) Competitive Analysis: It describe the entry barriers one could face due to other competitors in the market. (V) Design Development: it outlines the technical details of the product and its development cycle within the realm of production. (VI) Operations & Management Plans: It describe the cycle of business function needed for survival and growth which includes management functions such as tax division hierarchy, employee management process, the operational function among others. (VII) Financial Analysis: It includes the company’s balance sheet & cash flow projection & financial data which is imperative to provide credibility to any assertion or claim.