Topic 1 Introduction to Entrepreneurship (1).pptx

UTU3012 Entrepreneurship Introduction to Entrepreneurship Dr. Suhaida Herni Suffarruddin  Learning Outcomes At the end of this chapter, students should be able to:  Define the terms “Entrepreneur” and “Entrepreneurship”  Explain th...

UTU3012 Entrepreneurship Introduction to Entrepreneurship Dr. Suhaida Herni Suffarruddin  Learning Outcomes At the end of this chapter, students should be able to:  Define the terms “Entrepreneur” and “Entrepreneurship”  Explain the differences between an entrepreneur and a small businessman  Discuss the theory of entrepreneurship  Discuss the types of entrepreneurs  Discuss the personal traits of entrepreneurs  Describe the characteristics of successful entrepreneurs  Elaborate the importance of entrepreneurship  Entrepreneur and Entrepreneurship Entrepreneurs: Richard Cantillon, 1775: “to undertake or to try” – refer to individuals who were undertakers or who undertook the risks of a new enterprise. In Malaysia – widely used in 1970s after NEP: Carland, 1984: Individual who establishes a Entrepreneur is someone who business and manages it to obtain profit and to establishes a new entity to offer a become successful. new or existing product or service into a new or existing market whether it is Kuratko & Hodgetts, 2001: Individual who for a profitable or non-profitable organizes, manages and assumes the risks of the outcome. business. Zimmerer & Scarborough, 2008: Individual who creates a new venture in the face of uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources.  Entrepreneur and Entrepreneurship Entrepreneurship: Process of seeking business opportunities under conditions of risk Process of creating soothing new of value by devoting time and effort, assuming financial, physical and social risks and receiving monetary reward, satisfaction and independence. The success of business venture depends on several aspects which are required by an entrepreneur, that include attitude, skills and knowledge.  Entrepreneur and Entrepreneurship Entrepreneurship: Identify business opportunities. Entrepreneurship is the ability, capability and tendency to Manage a business effort which bring profit. perform this activities: Obtain success and richness by fulfilling the society’s need and taking calculated risks. Manage and utilize the factors of production to bring economical development and enhance social welfare. Work hard and be prepared to make new changes that can increase production quantity and quality. Differences between an Entrepreneur and a Small Businessman Theories of Entrepreneurship Economic The term ‘entrepreneur’ was first used by a Frenchman named Richard Economic Perspective Cantillon (1775) to mean ‘a person who undertakes to do a job’. Perspective Entrepreneur as a person who pays a certain price for a product to resell it, value is added by transforming the goods. — Richard Cantillon (1775) Entrepreneur as a person who acts as an agent in transforming demand into supply. — Adam Smith (1776) Entrepreneurship is an evolution in which it will expand through time – from sole proprietorship to a public company. — Alfred Marshall (1776) Entrepreneur as a person who shifts resources from an area of low productivity to high productivity. — Jean-Baptiste Say (1803) Theories of Entrepreneurship Economic Economic Perspective Perspective Entrepreneur is a prime mover in private enterprise economic activities, where an entrepreneur is the fourth factor of production, after land, labour and capital. — John Stuart Mill (1848) The entrepreneur acts as an economic agent who transforms resources into products and services and gives added value. — Carl Menger (1871) Entrepreneur as an innovator who introduced new innovation to replace old products or old ways of doing things. — Joseph Schumpeter (1934) Entrepreneur is the one who identifies an opportunity that has been overlooked by others and resources that are unexploited by most people around. — Israel Kirzner (1978) Theories of Entrepreneurship The physiologists viewed the entrepreneur as a Psychological Psychological person who has a unique personality and Perspective behaviours – having initiative and ability to plan Perspective and sense opportunity A high need for achievement drives people to become entrepreneurs. — McClelland (1951) Entrepreneur tend to have a strong internal locus of control and strongly believe in their own ability to control consequences of their attempts and efforts by influencing social economic development. — Julian Rotter (1954) Theories of Entrepreneurship Sociological Sociological Perspective Perspective Entrepreneurs are the one who have incentives for maximum efficiency, and greater production through trade and specialization to gain profit. — Ibnu Khaldun (Abdul Rahman Mohamed Khaldun) (1406) Entrepreneur as the beholder of an instrumental rationality which make him capable of linking systematically certain goals. — Max Weber (1917) Entrepreneur emerge from a low-income group makes the effort to improve the situation with involve in various economic activities and venture in business to earn profit. — Everett Hagen (1957) Theories of Entrepreneurship Management Management Perspective Perspective Entrepreneur always search for change, respond and exploit these changes as an opportunity. — Peter F. Drucker (1985) Entrepreneurship is an approach to general management that begin with opportunity recognition and culminates with the exploitation. — Donald L. Sexton & Nancy Bowman-Upton (1991) Entrepreneur as a strategist and an opportunist. — Dylan Jones-Evans (1995) Entrepreneur as one who undertakes to organize, manage and assume the risk of a business. — Donald F. Kuratko & Richard M. Hodgetts (2004) Entrepreneurship as a dynamic process of creating something new with value. — Robert D. Hisrich, Michael P. Peters & Dean A. Shepherd (2005)  Types of Entrepreneurs An entrepreneur within a large organization, has a strong Intrapreneur desire to create something using his own initiative and creativity. An entrepreneur who involves himself in technological Technopreneur changes in producing goods and services for his organization. An individual or a group in association that creates a new Copreneurs organization or doing innovation within organization Someone who recognize a social problem and often works Social through a nonprofit organization, citizen group or private Entrepreneurs or governmental sectors. Someone who is starting or running a business in Cyberpreneur cyberspace by using the internet (online based business). Personal Traits of Entrepreneurs Persistence and Independence Self-confidence Creativity determination Organized and Risk-taking and Perseverance and Visionary goal-oriented tolerance for failure hard work Honesty and Commitment honour Characteristics of Successful Entrepreneurs Able to identify opportunities Able to tolerate tedium Action-oriented Able to rebound from disappointments Always seeking to improve Risk-takers Orient themselves to customer needs Locus of control Value their employees Able to face reality Independent and in control  Importance of Entrepreneurship Self-Development Family Development Freedom & flexibility, maximizing Part-time business – does not Opportunity have to depend entirely on monthly benefit and resources, full to control Increase salaries responsibility, performance target, direction in family income no restrictions by system and Full-time business – get profit, life regulation freedom to manage the household Can maximize skills and capabilities Able to afford better homes, quality Opportunity Able to overcome obstacles education, health services Raise living to maximize Work hard to be much better standards Stable environment for physical, self-potential position in future emotional and spiritual growth Opportunity Aims to obtain profit – benchmark of Success in business raise the to obtain success entrepreneur honour and prestige of a family Improves unlimited Profit can increase the confidence of social status Will serve as an example to others financial rewards employee, creditors and suppliers. and gain respect from the society  Importance of Entrepreneurship Society / Community Development National Development Improves the Produce innovative products helps Produces new Encourages the creation of a standard of society raise standard of living products of broader range of new products and living and Increase quality product at lower high quality services lifestyle prices Creates large- Venture into global market to scale job enhance economic performance, Opportunity opportunities provide large scale employment to contribute Financial reward can be utilized to the society Catalyst to Increasing national income through national tax revenue, import and export, Fulfils the Able to identify needs and wants, development diversification of products society’s make improvement existing needs and products and develop new products wants – fulfil demands Generates Contributing to pay customs duty income for Creates and income tax to the government the economy choices Identify opportunities and increase through activities that benefit to the society Backbone of Support heavy industries when innovative – growth of the economy. heavy become suppliers of raw materials and creative technique industries or component parts Importance of Entrepreneurship Spiritual Development Entrepreneur who strongly follows religious Opportunity to teaching will try to avoid exploitation, put religious discrimination, fraud and injustice to the faith into society. practice Entrepreneurship inculcates patience, gratitude and generosity. Opportunity to Provides an opportunity for entrepreneur to continuously perform welfare and religious obligation, perform charity and donation, help eradicate religious poverty and improve social status od a obligations community.