Chapter Outline • The Evolution of Entrepreneurship • Concept of Entrepreneurship • Who are Entrepreneurs? • Entrepreneurship • Intrapreneurship • Social-entrepreneurship • The Importance of Entrepreneurship • The Myths of Entrepreneurship • Entrepreneurship Development
Entrepreneurship • The word ‘entrepreneurship’ comes from the French verb “entreprendre” and the German word “unternehmen”, both means ‘one who undertakes’ – that is, a ‘manager’.
Common Man’s approach to life • Are very cautious – never want to make any risks • Assume that things are the way have to be • Like to be sure of the next month’s salary – and the one after…………. until retirement……….. perhaps the pension even after!!!!!!!
Entrepreneur • An entrepreneur is a person who is willing to put his/her career and financial security on the line and take risks in the name of an idea, spending time as well as capital on an uncertain venture.
What is Entrepreneurship?? • NOTsmall business management • NOTjustbusiness startups • NOT just for-profit firms
What is Entrepreneurship?? • IS ……………….
Entrepreneurship • Entrepreneurship is thus being taken as a value adding process of discovering, evaluating, organizing and exploiting opportunities.
Entrepreneurial Management • Universality of principals, rules, application and contexts in which entrepreneurship is considered as a discipline.
Entrepreneurship Process Exploring the entrepreneurial context – ‘rules’ of the game Identifying opportunities & possible competitive advantages Starting the venture Managing the venture
Level of Entrepreneurial activities Source: based on ‘Economic growth lined to level of business startups”, GEM 2000 report, adapted from Management-7th Ed. Stephen Robbins & Mary Coulter; Pearson Education, 2002.
Importance of Entrepreneurship • New ideas and inventions are developed and this enables continual improvement of societies and their organizations • Sky-scraping heights of apparent prospects; - the individual gets maximum scope for growth and opportunity • It is a challenging opportunity for the people • Entrepreneurship provides self sufficiency • Creates wealth for nation and for individuals as well • Provides employment to huge mass of people • Contributed towards research and development system
What motivates them Source: Adapted from material published by NatWest bank, IFF research, May 2007.
Role of an Entrepreneur An entrepreneur is a person who is ready to supply enterprise necessary to; • take advantage of business opportunities • acquire productive resources • Combine them & use them effectively & efficiently • create value in goods & services that customers want to buy which creates profits
What it takes to be an Entrepreneur? • ‘Train your self to see vacuum or gaps in the market and fill them’ - William Heinecke • ‘If something makes you angry, you have uncovered a gap in the market’ - Anita Roddick
Some examples …….. • Isaac Singer • Henry Ford • George Eastman • Ray Kroc • Stephen Jobs • And Dewitt and Lila Wallace
Sources where entrepreneurs get their ideas • Your job • Hobbies or interests outside work • ‘Pedestrian observation’ – spotting an opportunity through a casual encounter or an incident in your daily life
Once again some examples …….. • The idea for a Diners Club struck Ralph Schneider when he went out for dinner & discovered he had no cash!!!!!!!! • Leo Gerstenzag invented Q-tips (cotton buds) when he saw his wife using cotton wool wrapped around a toothpick to clean their baby daughter’s ears. • King C. Gillette got the idea of a disposable razor when he became annoyed that his razor blade was dull in one morning!!!!!
Entrepreneurship as ‘creative destruction’ • ‘The process drives ineffective companies out of business as they are replaced by new, more efficient ones’ - Joseph Schumpeter
Types of Entrepreneurs • Small businesses, lifestyle and family entrepreneurs • Franchise entrepreneurs • Professional fast growth and serial entrepreneurs • Corporate entrepreneurship or intrapreneurs • Creative disruptors or innovators • Extreme entrepreneurs • Social and non-profit entrepreneur
Intrapreneurship • Intrapreneurship or corporate entrepreneurship involves the developing of new business ideas and the birthing of a new business activity within the context of large and established companies. • Alearning organizationencourages employees to act as intrapreneurs to help, form: • Product Champions: person that takes ownership of a product from concept to market. • New Venture Division: allows a division to act as its own smaller company. • Rewards for Innovation: link innovation by workers to valued rewards.
Social - Entrepreneurship • Social entrepreneurs combine the passion of; • A social mission (explicit and central) • With business-like discipline, innovation, and determination
10 Myths of Entrepreneurship • Entrepreneurs are does, not thinkers • Entrepreneurs are born, not made • Entrepreneurs are always inventors • Entrepreneurs are academic and social misfits • Entrepreneurs must fit the profile
10 Myths of Entrepreneurship • All entrepreneurs need is money • All entrepreneurs need luck • Ignorance is bliss for entrepreneurs • Entrepreneurs seek success but experience high failure rates • Entrepreneurs are extreme risk takers, i.e. gambles
Shortcomings of entrepreneurs • Overestimation of their ability to create new products that customers desire • Underestimate how difficult it is to actually reach prospective customers & get them to try their products • Do not realize how much ready cash is needed to see a business through its critical, initial ‘birth’ period.
Entrepreneurship development in Maldives • Privatization • Loan schemes for SME’s • Entrepreneurship education
WHAT MAKES AN ENTREPRENEURIALECONOMY? • Competitive environment with a level playing field • Free and flexible markets that will enable the closing down of business that have run their course and be replaced by more efficient firms • Rule of Law: Protection of property rights & Contract enforcement • Availability of a financial system that provides the entrepreneurs with an easy access to capital • A quality educational system
Fundamental practices for entrepreneurship development of a country • Creating a national sense of mission • Creating customer / product competitiveness • Creating a nation of self-inspired people • Creating a national urgency to improve - Larry C. Farrell, ‘The Entrepreneurial age’ (2001)
Some concerns on Entrepreneurship • Ethical issues • Social responsibility