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CHAPTER 1

CHAPTER 1. THE BASIC OF ENTREPRENEURSHIP AND BUSINESS. Prepare by Mr. Muhammad Faisal Hamidi. Entrepreneurship.

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CHAPTER 1

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  1. CHAPTER 1 THE BASIC OF ENTREPRENEURSHIP AND BUSINESS Prepare by Mr. Muhammad Faisal Hamidi

  2. Entrepreneurship “…The scientist who cannot understand the way entrepreneurs think will find it extremely difficult to employ the business tools required to commercialize his or her technology. Entrepreneurs are not bound by formulas, rules, linear patterns of thinking…” Kathleen Allen

  3. Learning Objectives After studying this chapter you should be ready to describe: • The Basic of Entrepreneurship and It’s Risks • Types of Business Organizations • Types Of Entrepreneur According To Business Activity • Identifying, Analyzing, Evaluating and Choosing Business Opportunity. EUW 224 ENGINEERING ENTREPRENEURSHIP

  4. The Basic of Entrepreneurship and It’s Risks THE DEFINITION OF ENTREPRENEUR • The word ‘entrepreneur’ was originated from a French word ‘entreprende’ which means “willing to take responsibility or willing to try something new”. • In Bahasa Malaysia, the root word for usahawan (entrepreneur) is usaha which means effort or willingness to do or complete a task. • According to the Oxford Dictionary; entrepreneur is defined as someone who is handling a business and taking business risk. EUW 224 ENGINEERING ENTREPRENEURSHIP

  5. THE DEFINITION OF ENTREPRENEURSHIP • Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control (Barringer:2008). • According to Robert C. Ronstadt: • Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by individuals who assume the major risks in terms of equity, time, and/or career commitment of providing value for some product or service. The product or service itself may or may not be new or unique but value must somehow be infused by the entrepreneur by securing and allocating the necessary skills and resources. EUW 224 ENGINEERING ENTREPRENEURSHIP

  6. Why Become an Entrepreneur? • Be Their Own Boss • Pursue Financial Rewards • Pursue Their Own Ideas EUW 224 ENGINEERING ENTREPRENEURSHIP

  7. The Characteristic of an Entrepreneur From The Entrepreneur And Entrepreneurship, an individual who wants to be an entrepreneur should be an ‘all-rounder’ person. The characteristics to be an entrepereneur are as follows: • Good at seeking chances/opportunities. • Hard working • Plan and manage strategically • Learn from mistakes and experience EUW 224 ENGINEERING ENTREPRENEURSHIP

  8. Commited to his/her work • Always strive for excellence, • Focus on his/her work, • Confident to do business • Discipline • Innovative and creative • Able to lead and manage • Responsible and trustworthy • Has a mission and vision • Dare to take risk and never give up EUW 224 ENGINEERING ENTREPRENEURSHIP

  9. Characteristic of Successful Entrepreneurs Passion for the business Product/ customer focus SUCCESSFUL ENTREPRENEUR Tenacity despite failure Execution intelligent EUW 224 ENGINEERING ENTREPRENEURSHIP

  10. Characteristic of Successful Entrepreneurs • Passion for the business • Entrepreneurship isn’t for the person who is only partially committed. • Product / customer focus • Important for entrepreneurs to produce products or services based on customer requirement . • Tenacity Despite Failure • Failure is first step to success for tenacity entrepreneurs. Tenacity is important because it show a potential customer the commitment of the entrepreneur about his or her new products and services. • Execution Intelligence • - The ability to fashion a solid idea into a viable business . EUW 224 ENGINEERING ENTREPRENEURSHIP

  11. Common Myths About Entrepreneurs • Myths 1: Entrepreneurs Are Doers, Not Thinkers. • Myths 2: Entrepreneurs Are Born, Not Made. • Myths 3: Entrepreneurs Are Always Inventors. • Myths 4: Entrepreneurs Are Academic and Social • Misfits. • Myths 5: Entrepreneurs Must Fit the Profile. • Myths 6: All Entrepreneurs Need Is Money. • Myths 7: All Entrepreneurs Need Is Luck. • Myths 8: Entrepreneurship Is Unstructured and Chaotic. • Myths 9: Most Entrepreneurial Initiatives Fail. • Myths 10: Entrepreneurs Are Extreme Risk Takers or The Gamblers. EUW 224 ENGINEERING ENTREPRENEURSHIP

  12. Risks Of Being An Entrepreneur • Uncertainty of Income • Risk of Losing Entire Investment • Long Hours and Hard Work • High Stress Level • Difficulty in Obtaining Customers • Complete Responsibility • Difficulty in Obtaining Loans • Discouragement EUW 224 ENGINEERING ENTREPRENEURSHIP

  13. Types of Business Organizations There are three popular forms of business ownerships which are: • Sole proprietorship • Partnership • Company EUW 224 ENGINEERING ENTREPRENEURSHIP

  14. Sole Proprietorship • A sole proprietorship is an attractive form of legal status for a new business. • It is formed under the Business Registration Act 1956(Amendment 1978) and the Procedures of Business Registration 1957. • Solely owned and operated by an individual EUW 224 ENGINEERING ENTREPRENEURSHIP

  15. Sole Proprietorship Advantages : • Appropriate with sole proprietorship definition above, every profits coming from the business, will go straight to his pocket. Period. • Life time satisfaction, for he’s the decision maker for every little thing happens. Grande positione, isn’t it ? • Company Secrets are going to be safe most of the times. EUW 224 ENGINEERING ENTREPRENEURSHIP

  16. Disadvantages of Sole Proprietorship : • Appropriate with sole proprietorship definition above, for a reason or two, he got to risk everything, for he have no business partner around. • His financing ability is weak. • He got to deal with lots of business activities alone. Very complicated. • Have nothing to guarantee if the business will last forever or not. For he is only human, which is running the business alone, that can be dead anytime, anyhow. Not to mention : bankrupt, seriously ill, etc. EUW 224 ENGINEERING ENTREPRENEURSHIP

  17. Partnership • A partnership is formed under the Business Registration Act 1956 (Amendment 1978) and the Procedures of Business Registration 1957. • It is a business owned by at least two or more individuals but not exceeding 20 peoples. • Types of Partnership • General Partnership • All partners have unlimited liabilities. • They are personally liable for all obligations of the firm. • Limited Partnership • Some of the partners have limited liabilities, that is, they share the firm’s profit or losses but do not take an active role in managing the business. EUW 224 ENGINEERING ENTREPRENEURSHIP

  18. Company • All companies in Malaysia are governed by the Companies Act 1965. • There are two types of companies which are: a) Private limited companies. • Is a company limited by shares and owned by a group of people with at least two or more individuals but not exceeding 50 people. • The members’ personal liabilities are limited to the par value of their shares. • The name of a private limited company ends with the word ‘Sendirian Berhad’. EUW 224 ENGINEERING ENTREPRENEURSHIP

  19. b) Public limited companies. • Is a company limited by shares with at least seven or more individuals and there is no maximum limit in terms of membership. • The company shows its status by using the word ‘Berhad’ or ‘Bhd’ after the company name. • The term ‘public’ means publicly held. The shares of stock can be easily purchased or sold by investors. The public can also buy and sell the shares of the company. EUW 224 ENGINEERING ENTREPRENEURSHIP

  20. Identifying, Analyzing, Evaluating and Choosing Business Opportunity. There are four (4) major steps to be performed by an entrepreneur before starting the business.Step 1: Identifying Customer Needs and RequirementsStep 2: Analyzing Environmental Assessment, Personal and Social ValuesStep 3: Evaluate Business OpportunitiesStep 4: Selecting Business Opportunities and Develop Business Plan EUW 224 ENGINEERING ENTREPRENEURSHIP

  21. Step 1: Identifying Customer Needs and Requirements • Each business opportunity starting at the need and requirements of customers for a product. •  Basic needs is something that must be acquired, such as food, clothing, shelter, education and security. • However, people also have a requirement that a desire or a personal desire for something better than basic. • The requirement of a person can be influenced by culture, education level, level of ability and personality. EUW 224 ENGINEERING ENTREPRENEURSHIP

  22. Step 2: Analyzing Environmental Assessment, Personal and Social Values In search of business opportunities there are three important things that need to be considered. The environment, self-assessment and the community. 2.1EnvironmentPopulation structure, income and tastesStudies on the import & export dataStudies on local resourcesIndustrial chainGovernment and private development plansReview business opportunities through local and overseas media Research of local social problemsLaws and regulations EUW 224 ENGINEERING ENTREPRENEURSHIP

  23. 2.2 Self AssessmentExperienceKnowledge and skillsFinancial positionInterestNetworking 2.3 Social Values - Culture and norms - Local Ethics - Local perception - Taboo EUW 224 ENGINEERING ENTREPRENEURSHIP

  24. Step 3: Evaluate Business Opportunities • The process of evaluating business opportunities to help entrepreneurs choose one of the best business opportunities. •  With all this attention, commitment and efforts of entrepreneurs to focus on only a business opportunity only. •  Here are some processes that can be taken by entrepreneurs in evaluating the best business opportunities. • Legal •  Monopoly power and the level of competition •  Capital Requirement •  Risk EUW 224 ENGINEERING ENTREPRENEURSHIP

  25. Step 4: Selecting Business Opportunities and Develop Business Plan • After all the processes and measures undertaken, it is up to entrepreneurs to choose the best business opportunities. •  Further action after choosing the best business opportunity is to provide a (Business Plan) Administration and Operation Plan, Marketing Plan and Financial Plan. EUW 224 ENGINEERING ENTREPRENEURSHIP

  26. Q & A EUW 224 ENGINEERING ENTREPRENEURSHIP

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