Chapter One: Main Concepts of Entrepreneurship PDF

]27[ Chapter One: Main Concepts of Entrepreneurship Table (1-1) The difference between the entrepreneur and the small businessman Factor Small enterpriser Entrepreneur the idea of the regular or duplicate...

]27[ Chapter One: Main Concepts of Entrepreneurship Table (1-1) The difference between the entrepreneur and the small businessman Factor Small enterpriser Entrepreneur the idea of the regular or duplicate completely new and enterprise “copy and rip” original added value simple very high risk low, may be new in very high, rich in idea execution and execution realised income reasonable a wealth effect of the good or minor major service on humanity wealth enterprise ongoing income that aims at a great and aims to generate satisfies the owner and lasting wealth beyond is better than a job simple dreams the speed of making made during the made by the wealth lifetime of its owner entrepreneur in a and takes a long time to relatively short time make (5-10) years creativity and ordinary enterprises not characterized by innovation characterized by creativity and creativity or innovation innovation compared to small enterprises competitive Simple very high advantage example restaurant Facebook clothes factory Google number of relatively small exceeds thousands jobs created Impact on Minimal Huge national economy image of ordinary person Hero owner Source: Prepared by the author Entrepreneurship ]28[ Sixth: Types of Entrepreneurial Enterprises An individual who wants to set up a small entrepreneurial enterprise but has no creative idea ready for a product or service might ask, “What activity would I prefer to start my business with?” This is perhaps the first question to be answered. The main sectors where an individual can establish a small pilot enterprise are: 1. The industrial sector There are many industrial activities a beginner can start, including a printing press, a bakery, a pastry enterprise, a toy factory, pickles and jams, furniture, clothes of all kinds (children - men - women), and feeder industries of major industries such as cars. Toyota, for example, among many other major industries, does not make cars, but relies on thousands of small enterprises, each specializing in making certain parts of the car. Almost all of the previously mentioned enterprises do the same tasks--converting a range of inputs (raw materials, machinery, workers) into a range of outputs, which are finished products of a quality acceptable to the market and offered for an adequate price. Any of these enterprises will certainly not continue unless it offers products of more value than those of its current major competitors in terms of excellence, quality and price. 2. The commercial sector The second type of a small pilot enterprise is the commercial sector, both wholesale and retail. The wholesaler buys the goods from the industrial sector (previously referred to) and then sells them to the retailer. The retailer, who buys from a wholesaler, is the supermarket, the car dealer, the pharmacy, or the furniture store etc., from which we as consumers buy our needs directly. 3. The service sector It is the new and attractive sector for future small enterprisers. The chances of setting up small enterprises are increasing rapidly. Examples include dry cleaning shops, shoe repair shops, hairdressers, restaurants, tourism and petroleum enterprises, selling online, etc…. These enterprises do not require large investments when compared, for example, to the industrial sector enterprises. 4. Electronic enterprises sector It is the future for entrepreneurs who have ideas but don't have money. Creative ideas bring money. The owner of the site Otlob designed his own site, and then sold the idea when it had turned into a successful ]29[ Chapter One: Main Concepts of Entrepreneurship enterprise for one million pounds. The site was lately sold for 300 million dollars. E-commerce, which does not need much capital, is an attractive field for entrepreneurs, especially if we know that the volume of e- commerce in the world reached $ 3.8 trillion in 2016, and that e-commerce markets in the Middle East, North Africa, Central Europe, and India account for 2.5% of global e-commerce expenditure and represent a huge potential for growth. It is predicted that the number of Internet users worldwide will rise from 3.2 billion users ( 43 percent of the world population) to 3.8 billion users by 2020, which means that the global stretch rate will rise to 49%. More than $106 billion have been invested in technology and e-commerce companies since 2012 (Saudi Communications and Information Technology Commission, 2018) Seventh: Misconceptions about Small Enterprises among Egyptian Youth Due to the importance of small enterprises for the economy through their innovative products and services and the job opportunities they create, countries are beginning to be concerned about them, but they are challenged by a set of misconceptions outlined in a study by Aida Rizkallah in 1997, and can be summarized as follows: 1. Technical expertise is the first requirement for the success of a small enterprise. 2. The small size of a enterprise is an obstacle to creativity; 3. Inability to carry out marketing activities due to lack of financial resources. 4. No marketing plan is needed at the beginning of a small business. 5. A women is less capable than a man to manage a small business. Below are the practical responses to these beliefs: (1) Technical expertise is not the only requirement for the success of a small enterprise The results of the study indicated that 91.7% of the study sample had a misconception that the technical ability of the enterpriser is the most important requirement for starting a small enterprise. Technical knowledge in the field of a small business is only one dimension. There are three basic dimensions: (a) entrepreneurship, (b) the technical dimension, (c) and the administrative dimension. The relative importance of these dimensions varies. ]47[ Chapter Two: Characteristics and Capabilities of the Entrepreneur A Success Story Mahmoud El-Araby: Receiving the Order of the Rising Sun from the Emperor of Japan A self-made business man started from scratch. He started a journey that involved a struggle and persistence, until he became one of the prominent men of trade, industry and economics in Egypt. He is a humble man and the positions he held did not change him. He did not accept the political prestige that he was offered, believing that economics has its proponents and politics has its own. He managed to build a big industrial fortress and have a prominent economic status without anyone’s support. He is a good role model for whoever has the ambition to succeed. Mahmoud El-Araby started working at the age of six with a capital of thirty piasters. He opened the first store in his own name in 1964 because the fixed job did not satisfy his ambitions. Al-Araby said, “The secret of success is to function with knowledge and logic, and to avoid being a swindler.” His Life and Upbringing: He was born in 1932 in one of the villages of the governorate of Menoufia. His father was a farmer who earned his living by cultivating land he did not own. He sent his son to the Kuttab at the age of three, so his son studied the Qur’an, but could not get a formal education because of his father’s financial condition. The Young Merchant Al-Araby started to trade at a very young age. About this stage he said, “I used to save forty or fifty piasters every year to give them to my brother to buy me products from Cairo before Eid El-Fitr (Feast of Breaking the Fast). These were fireworks and balloons that I displayed on a stone bench in front of our home to sell them, earning around fifteen piasters. I Entrepreneurship ]48[ would give all the money I collected to my brother to buy me similar products for the Bairam Feast. I continued doing this until the age of ten. At that time my brother suggested to my father that I go to Cairo to work in a perfume factory in 1942. I did this for only one month because I do not like jobs, closed places and routine work.” Al-Araby had his own philosophy concerning the term ‫ تاجر‬tager, meaning merchant, who carried out an activity that he believed in and practiced. For him, each of the four letters of the Arabic word had a significance: “‫ ”ت‬refers to taqua ‫ تقوى‬meaning piety; “ ‫ ا‬refers to amana ‫أمانة‬ meaning honesty; “‫ ”ج‬refers to gara’a ‫ جرأة‬meaning audacity; and “‫”ر‬ refers to rahma ‫ رحمة‬meaning mercy. Al-Araby later worked in a store in Al-Hussain district. His salary was 120 piasters a month and he continued working in this store until 1949. His salary became 320 piasters. At this point he decided to work in a wholesale rather than a retail store in order to develop his expertise in trade. His first salary from the new store was four pounds and he worked for this store for fifteen years. His salary increased to twenty seven pounds. In 1963, Al-Araby wanted to trade independently, but he did not have the means to start. Together with one of his colleagues at work, he thought about joining forces with a rich person. He and his colleague would contribute their time and effort, and the contribution of the other party would be financial. The budget of the enterprise was five thousand pounds. This is how he established his first store in Al-Mousky in Cairo, which he still owns until now. The Secret of the Profession Al-Araby said that the time he was drafted into the army taught him the value of strength, how important it is to own weapons to protect oneself, and not to wait for others to protect you. Al-Araby trade was based on school supplies, but in the 1960s the Egyptian government decided to provide the students with these supplies for free. This implied that Al-Araby trade was of no use, so he traded in electrical appliances instead. In the 1970s, Al-Araby shifted completely to electrical appliance at the time of the launching of the Open-Door Policy. He considered becoming the agent for one of the international companies. He met one of the Japanese students studying at the American University in Cairo who worked for the Japanese Company Toshiba and visited his store often. He wrote a report to his mother company and assured them that Al- ]49[ Chapter Two: Characteristics and Capabilities of the Entrepreneur Araby can be the best in representing Toshiba in Egypt. The company agreed to have him as an agent. In 1975, Al-Araby visited Japan and saw the factories of the company that he represents, stating “I do not deserve to live or the food that I eat.” When he saw the progress in Japan when he visited the Toshiba factories, he asked those in charge to build a factory for the manufacture of electrical appliances in Egypt. This happened based on the arrangement that 40 % of the components of the products would be locally made, which was later raised to 60 %, and then 65 % and now 90 %. With the development of production, the Toshiba Al-Araby Company was established in 1978. Al-Araby started his business with one employee, but now has twenty-two thousand employees that he calls his partners. He said, “Thank God I started in 1964 with one laborer. I was hoping I had ten, and when they became ten, I was hoping they became one hundred. In the year 2000 we had twenty thousand, now in 2018 we have twenty-five thousand and in 2010 we will have forty thousand. Having money is not what is important, what money! What is important is to serve others, employ human beings and help people.” He explained that the mother company in Japan employs one hundred and eighty thousand, and he hopes this will be the case in Egypt in order to help the youth and help overcome the problem of unemployment. The Social Role of the Company The Al-Araby Firm was established to serve the community. It makes use of Zakat and gives some people monthly support. This firm is also in charge of enterprises, like those concerned with the cleanliness of water in Asyut governorate. This enterprise will move on from Asyut to Suhag to the New Valley governorate. The Japanese Award The business man Mahmoud Al-Araby, who received the Order of the Rising Sun from the Emperor of Japan, said “I took an award from the Emperor of Japan known as the Order of the Rising Sun, not because I am handsome, since they make no undeserved compliments, but because I had an impact on the Japanese economy; thank God.” Source: Interview with Mahmoud Al-Araby. Al-Masry Al-Youm, 2018. Entrepreneurship ]50[ ]51[ Chapter Two: Characteristics and Capabilities of the Entrepreneur Chapter Two Characteristics and Capabilities of the Entrepreneur Introduction Since the entrepreneur is at the heart of entrepreneurship, this chapter will focus on the characteristics and capabilities that an entrepreneur ought to have. It is necessary to know that the entrepreneur is creative by nature and that creativity is the synonym of entrepreneurship. Creativity could be in having a new idea, service, material, enterprise or a new method of marketing. An entrepreneur must learn what entrepreneurship is, its basics and constituents because entrepreneurship involves a scientific and rational process that has firm foundations, as discussed in the previous chapter. Everyone would like to be rich by means of having a pioneering enterprise, but before hoping to be rich, we have to make sure that we have the tools for it. The number of enterprises that fail are more than those that succeed. In order to become a successful entrepreneur, you must know that there are requirements other than luck for the enterprise to succeed and be sustainable. Among these requirements are serious work and that the work environment can best be described as being enigmatic and is characterized by a great deal of uncertainty. The entrepreneur must understand well the environment in which s/he works and must interpret the needs in terms of unique and creative products and services. Many contemporary entrepreneurs like Al-Araby whose story is presented in the opening section of each chapter, and future entrepreneurs, often raise three difficult and strategic questions, namely, 1. Am I actually an entrepreneur? 2. Do I have the capabilities, characteristics and factors that will lead to success? 3. Do I have the background and enough experience to start and manage a new entrepreneurial enterprise? Accordingly, the purpose of this chapter is to measure how far the individual is capable of having a pioneering enterprise through answering these questions and others. The fact is that the requirements of the entrepreneurial enterprise must be in harmony with the aptitude, capabilities, desires and ambitions of the entrepreneur; and that the enterprise will fulfill these ambitions. The conclusion of this chapter will deal with the privileges that the individual will reap from the entrepreneurial enterprise, shedding light on the challenges that will be faced in order to address them. Entrepreneurship ]52[ First: Characteristics and Special Traits of the Entrepreneur For the entrepreneur to succeed in turning a creative idea into a successful innovative enterprise, several features, and cognitive, personal and leadership capabilities are needed. The following are the most important: 1. Technical Competence in the Specific Field One of the most important factors that leads to the success of a small entrepreneurial enterprise is excellence and efficiency in a specific field of business. The entrepreneur needs to have creative ideas that are new in the market and that can be transformed into a product that is different or innovative services. The implication is the owner must have a comprehensive view of what he is doing, and it should be done in a creative way. Although this seems simple, in fact it is not. We daily hear of dozens of enterprises that fail because the owner does not have the efficiency and awareness of what the business requires. The first factor, therefore, that leads to the success of small entrepreneurial enterprises is how the business is run. 2. Mental Ability The entrepreneur is the one who guides others and is the source of new ideas in the business. Thus, the entrepreneur uses this ability in formulating comprehensive and competitive plans for the enterprise. In order to be able to do this, he must have a broad vision of the enterprise. If the entrepreneur’s technical ability and expertise in the business helps him in figuring out how every activity can be carried out, his mental ability helps him in connecting these activities together in order to have a final product or service. At times the entrepreneur plays the role of the leader, indirectly by supporting the employees who face problems at work, by pushing them forward through advice and not letting them down. 3. Human Relations The human element is a determining factor in any organization because it is the factor that leads to success through utilizing and bringing together all aspects of the business. Therefore, one of the most important qualities of a successful entrepreneur is to be able to figure out the strengths of each employee and guide him/her in the right direction. In addition to this, the entrepreneur must be able to have harmony between his employees, followers, consumers and his surrounding environment. In short, s/he should be skilled in communicating with those who work with him/her, in ]53[ Chapter Two: Characteristics and Capabilities of the Entrepreneur encouraging them in ways that suit them, and in leading them to have a sense of belonging for the success of the enterprise. The entrepreneur ought to encourage his employees to disagree with him/her, listen to their advice with an open mind, so that they would not hesitate to voice their own point of view, and to be honest and truthful when there is a problem. Finally, the entrepreneur must have a strong relationship with his employees because this will enhance their dedication and hard work. Remembering their birthdays and sharing his/her private car or supporting them during crises can be effective (Abou Naaem, 2018). 4. High Achiever Successful entrepreneurs often have great accomplishments and can take decisions. They are thus wo/men of action not words. They assess what they do through results and always ask the following question: Did my efforts succeed? The motivation to be an achiever is identified by how far the individual strives and perseveres in order to achieve his/her goals and succeeds, resulting in satisfaction. This is the case in contexts that involve assessing one’s performance with a view to a level of excellence. Atkinson identified the most important indicators that are motivations for achievement as follow,  Trying to reach a goal with persistence.  Competing with others and knowing the effort and speed needed to achieve the goal.  Achieving what must be accomplished according to standards of excellence at work.  Avoiding doing anything that is below standard.  Feeling responsible for the results of one’s actions and the level of one’s work.  Gathering information and understanding it well.  Being concerned about the future and working towards a level of performance that influences the future. 5. Independence This refers to the desire of the individual to perform the activities independently and with confidence that this is the way to achieve the goals. The one who seeks to be independent refuses to follow the group that s/he belongs to in every way. Such groups force individuals to play specific roles and act in specific ways. This hinders individuals from being independent. Entrepreneurship ]54[ 6. Curiosity Being curious is to be inclined to search for what is new, or the desire deal with contexts that are different and somehow unusual in order to discover and raise questions about these contexts. In more general terms, these are known as follows,  to be inclined to deal with events or situations that are attractive and relatively new and exploring details about them.  to be inclined to deal with exciting events or situations that are unusual and finding out about them.  to be inclined to deal with varied attractive operations. 7. Risk-taking This is one of the characteristics that reflects how far the person desires to act in a way that involves a high level of risk-taking. It is interesting that risk-taking is closely linked to creative thinking. Torrance defines creativity as adventurous thinking which is characterized by avoiding traditional and dogmatic ways of thinking. If a risk-taker chooses to take risks rather than a traditional route, s/he in this case is a creative person who seeks to get rid of stereotypes and avoids rigidity. Therefore, researchers claim that risk-taking is a decisive quality of character in the creative behavior of the entrepreneur. 8. Persistence Persistence is the inclination of the individual to continue trying in order to accomplish a certain mission, despite the hardships and difficulties one faces, and holding on to the goal despite negative results and frustrations. Simply put, it is the ability of the person to endure adversities and challenges to achieve the goal. In this sense, persistence is a feature that is closely linked to creative thinking that leads to original ideas for innovative enterprises. The role of persistence is not limited to how efficient the individual is in dealing with traditional problems, but is extended to how to face unusual or unconventional problems. (Moataz Abdallah 2007) 9. Non-conformism By nature, those who are creative tend to avoid conforming to what is prevalent in society in terms of standards and strict molds. The results of various studies have shown that there is a positive link between creativity and non-conformism. The results also show that creativity and adhering to the prevailing traditions in different fields brings about a negative outcome. The person who is prone to creative thinking generally criticizes the ]55[ Chapter Two: Characteristics and Capabilities of the Entrepreneur conformity that others follow, the stereotypes and molds that are prevalent in society. Such a creative person has special interests that are different in content from those that pertain to the clear and general concerns of the society. 10. Self-actualization Maslow defined the motive to self-actualization as “the full realization of one’s potential” and of one’s “true self.” It is the desire of the individual to achieve what s/he would like to accomplish. This is the context in which the individual uses all capabilities, talents and expertise to the best of his/her ability in order to improve him/herself. This also means that the individual can make use of what is available to accomplish the goal, through achieving the peak of one’s potential. A self-actualized person reaches the apex of what s/he would like to be. Maslow identifies a group of characteristics that distinguish those who achieve self-actualization. Some of these are, they  Perceive reality efficiently and can tolerate uncertainty;  Accept themselves and others for what they are;  Are spontaneous in thought and action;  Are problem-centered (not self-centered);  Have an unusual sense of humor;  Can look at life objectively;  Are highly creative;  Are resistant to enculturation, but not purposely unconventional;  Are concerned with the welfare of humanity;  Are capable of deep appreciation of basic life-experience;  establish deep satisfying interpersonal relationships with a few people;  Have peak experiences;  Need privacy;  Have a democratic attitude;  Have strong moral/ethical standards. Maslow (1968 5) 11. Creativity A. Originality This is the most important quality needed for creative production. It refers to producing something new, unique, not a duplication. This is accompanied with the use of the imagination and behaving in an unexpected