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Enterpreneurship

Enterpreneurship

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TABLE OF CONTENTS

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1.0 Introduction 2.0 Research Objective 3.0 Literature review 4.0 Foundations of Entrepreneurship:

2 2 3 4

5.0 Small and Medium Enterprise (SME) Industry Sector:

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6.0 Factors Influencing The Probability Of New Venture Success

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7.0 Conclusion

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8.0 References

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´ The entrepreneur carries out ³new combinations.0 OBJECTIVE OF THIS RESEARCH: The research which aims to answer the following questions:  What are the Principles and Foundations of Entrepreneurship?  What are the nature and role of Entrepreneurial function in a Business/Organisational Context?  What are the applications of Entrepreneurship to a designated Industry sector? 2 . Established ways of doing business are destroyed by the creation of new and better ways to do them. economist Joseph Schumpeter (1883-1950) focused on how the entrepreneur¶s drive for innovation and improvement creates upheaval and change.To some economists.0 INTRODUCTION: The concept of entrepreneurship was first established in the 1700s. government support for entrepreneurship is a crucial strategy for economic development.Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. In the 20th century.´ thereby helping render old industries obsolete. and exploits change as an opportunity. A quick look at changes in communications²from typewriters to personal computers to the Internet²illustrates these ideas. Most economists believe it is more than that. the entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. and the meaning has evolved ever since. Therefore. 2. successful small businesses are the primary engines of job creation.Business expert Peter Drucker (1909-2005) took this idea further. Schumpeter viewed entrepreneurship as a force of ³creative destruction. In the developing world.ENTREPRENEURSHIP 1. Still other economists say that entrepreneurs develop new goods or processes that the market demands and are not currently being supplied. and poverty reduction. Many simply equate it with starting one¶s own business. Others emphasize the entrepreneur¶s role as an innovator who markets his innovation. income growth. describing the entrepreneur as someone who actually searches for change. responds to it.

is typically not the kind that can be brought about simply by deciding to create it. the formaland informal attributes associated with the entrepreneurs who have led theircompanies successfully to growth-stage.0LITERATURE REVIEW: Drucker identified entrepreneurs as people who see ³change´ as the standard. Begley and Boyd (1987) found that entrepreneurs (founders)scored significantly higher than small business managers (non-founders) inneed for achievement. Evidently. the Greek philosopher who said. personalitytraits and circle of network. Many studies have included risk taking as a majorentrepreneurial characteristic. Within corporations. The common research areas citedin the literature are such as entrepreneurs¶ leadership. Brockhaus and Horwitz¶s (1986) empiricalfindings showed that entrepreneurs with internal locus of control strive forhigh achievement. entrepreneurialorientation. management skills. competencies.´ Entrepreneurs regard change as essential and welcome it as beneficial to the lives of big corporations and small businesses alike. ³The only constant in life is change. layers and silos inhibit employee creativity. human capital. as well as thwart efforts to improve thecustomer experience. Corporate organizationalstructures. leaving employeesno longer agile enough to cope with change. It is believed that entrepreneurs take greaterdegree of risk especially in areas where they have control or competencies inrealizing the profit. 3 . those who look for change are considered thetroublemakers who often end up starting their own companies. McClelland (1961) asserted that qualitiesassociated with a high need for achievement contribute to the success of newventure. it is created by entrepreneurs who actively go looking for existing change in order to exploit it. In many cases. 3. and tolerance of ambiguity. the kind of change implied here. they are programmed for inflexibility. this has amplified the studies on smalland medium enterprises¶ (SME) growth and more importantly. echoing Heraclitus of Ephesus. internal locus of control and a risktakingpropensity as attributes contributing to the success of new businessstart-ups. risk-taking propensity. Drucker clarified. However. Entrepreneurship is not solely basedon purposeful information. Rather.In order to understand the Principles and Foundations of Entrepreneurship we are to undergone the case study where issue on the Entrepreneurship and solution over that issues are analysed.Brockhaus (1982) reviewed a number of psychological characteristics andconclude that need for achievement. On the other hand.Mill (1984) suggested that risk taking is a key factor in distinguishingentrepreneurs from managers.The opportunity to create wealth and being their own boss has attractedmany to be entrepreneurs.

including:         Creativity Dedication Determination Flexibility Leadership Passion Self-Confidence ³Smarts. But customers wanted to 4 . after nine have yielded nothing. But research indicates that most successful entrepreneurs share certain personal attributes. even seven days a week. A story is told about an entrepreneur who started a fancy shop selling only French pastries.0 FOUNDATIONS OF ENTREPRENEURSHIP: There is no one definitive profile. to get the endeavour off the ground. Flexibility: is the ability to move quickly in response to changing market needs. and thinking outside of prescribed formulas. Dedication makes it happen. As far as innovativeness is concerned. It is the push for innovation and improvement. money is the reward. Robinson & Sexton. For the true entrepreneur. Planning and ideas must be joined by hard work to succeed. It is being true to a dream while also being mindful of market realities. Dedication: is what motivates the entrepreneur to work hard. and race. 1992. especially in the beginning. Determination: is the extremely strong desire to achieve success. Success is the motivator. gender. thus theentrepreneurial inclined individuals are expected to display more toleranceof ambiguity than others. It persuades the entrepreneur to make the 10th phone call.Mitton (1989) confirmed that entrepreneurseagerly undertake the unknown and uncertain circumstances. money is not the motivation. income levels. Mittonsuggested that it is the focal point of entrepreneurship and an essentialentrepreneur characteristic. It is continuous learning. questioning. 1994). They differ in education and experience. Indeed entrepreneurial literatures show thatentrepreneurs are significantly more innovative than non-entrepreneurs (Ho&Koh. Successful entrepreneurs come in various ages. 4. It includes persistence and the ability to bounce back after rough times. 12 hours a day or more.´ Creativity: is the spark that drives the development of new products or services or ways to do business.

from sales to business operations and customer response. Leadership: is the ability to create rules and to set goals. the entrepreneur modified her vision to accommodate these needs.The most important strategy is to be aware of strengths and to build on them.  Entrepreneurship offers a greater possibility of achieving significant financial rewards than working for someone else.buy muffins as well.  It gives an individual the opportunity to build equity. from concept to design and creation. which reduces uncertainty and the level of risk. The former gives a person good instinct. as well as what to pay and whether to take vacations. It gives entrepreneurs the ability to convince others to believe in their vision. some people are attracted to entrepreneurship by the advantages of starting a business. education. Self-confidence: comes from thorough planning.  It provides the ability to be involved in the total operation of the business. the latter. but it will help them to stay focused and to get others to look at their plans. It can¶t substitute for planning. A person who successfully keeps a household on a budget has organizational and financial skills. Many people have smarts they don¶t recognize. Rather than riskingthe loss of these customers. They make the decisions. They decide what hours to work. and life experiences all contribute to smarts. which can be kept. 5 . It also comes from expertise. sold. Passion: is what gets entrepreneurs started and keeps them there. These include:  Entrepreneurs are their own bosses. ³Smarts´: consists of common sense joined with knowledge or experience in a related business or endeavour.  It offers the prestige of being the person in charge. They choose whom to do business with and what work they will do. It is the capacity to follow through to see that rules are followed and goals are accomplished. Every entrepreneur has these qualities in different degrees. Self-confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated. expertise. or passed on to the next generation. Employment. In contrast.

Most new entrepreneurs help the local economy. A few²through their innovations² contribute to society as a whole.Through careful analysis of entrepreneurs¶ 6 . small and medium-scale enterprises (SMEs) make important contributions to economic andsocial development. social andstakeholder environment.0 FACTORS INFLUENCING THE PROBABILITY OFNEW VENTURE SUCCESS Entrepreneurship is an attractive career choice. 5. Some people evaluate the possibilities for jobs and careers where they live and make a conscious decision to pursue entrepreneurship. they provide thebest illustration of the changes in ownership structures. and the subsequent revolution in desktop computers. In all economies they constitute the vast majority of business establishments areusually responsible for the majority of jobs created and account for one third to two thirds of the turnoverof the private sector. In transition economies. Micro. In developing countries they are seen as a major µself-help¶ instrument forpoverty eradication. who cofounded Apple in 1976.0 SMALL AND MEDIUM ENTERPRISE (SME) INDUSTRY SECTOR: Micro and small or medium-sized enterprises (SMEs) make important contributions to development. and making arrangements to obtain that capital. In many countries they have been the major engine of growth in employment and outputover the last two decades. no matter its size. competitive SME sector will be maximised when here is a strong enterpriseculture in the society at all levels.maximum potential for growth of existing small businesses: and a highly supportive economic. One example is entrepreneur Steve Jobs. preparing a good business plan. the main target countries of this publication. 6. The entrepreneur¶s challenge is to balance decisiveness with caution²to be a person of action who does not procrastinate before seizing an opportunity²and at the same time. a continuous growth in the quality stock of independent business.The growth of a healthy. business culture and entrepreneurial behaviour overthe past decade. developing the product or service. Entrepreneurship creates an opportunity for a person to make a contribution. Preparatory work includes evaluating the market opportunity. to be ready for an opportunity by having done all the preparatory work possible to reduce the risks of the new endeavour. figuring out how much capital is needed. But many decisions have to be made before launching and managing a new business.

Blackberry provides a good example. paying them no attention can precipitate the downfall of a new enterprise. Realistic Vision:Is there a realistic vision of the enterprise¶s potential? Insufficient operating funds are the cause of many failed businesses. But. Some analysts advise adding 50 per cent to final cost estimates and reducing sales projections. 1.As a 7 . coming up with a slightly more desirable option. However. CASE STUDY: Issues on entrepreneurship and Solutions or Ideas for those Issues. Withthe undeniably compelling nature of mobile e-mail. money is almost always tight in the start-up and early phases of a new business. Taking them into account can reduce risk. Entrepreneurs often underestimate start-up costs and overestimate sales revenues in their business plans. now thecompany is being squeezed and needs to redefine its marketing strategy. Strategy: What is the strategy for distinguishing the product or service? Is the plan to compete solely on the basis of selling price? Price is important. In contrast. Instead it takes something just created by somebody else and improves upon it. the difference was found in the iPhone¶s revolutionary product design. it was no big surprise that the (RIM)Blackberry unit became popular so fast.successes and failures. its premium pricing didn¶tseem as expensive as it does in today¶s much more competitive landscape. Large firms that produce huge quantities have the advantage in lowering costs. The entrepreneur aims at leadership ifnot at dominance of a new market or industry.Hit Them Where They Aren¶t: In this strategy the innovator doesn¶t create a major newproduct or service. Motivation:What is the incentive for starting a business? Is it money alone? True. many entrepreneurs achieve great wealth. but most economists agree that it is extremely risky to compete on price alone. Drucker called it ³creative imitation´ because the innovator reworksthe product or service. Being first-to-market. Only then can the entrepreneur examine cash flow projections and decide if he or she is ready to launch a new business. But. Take the iPhonefor example. 2. Apple entered the market of mobile phones at a time when it was matureand saturated. economists have identified key factors for up-and-coming business owners to consider closely. Being Fastest with the Most: Here the aim from the start is to eventually land a Leadership position being the first with the most. Many entrepreneurs do not even take a salary until they can do so and still leave the firm with a positive cash flow.

most providerscharged access for it. its value and itseconomic characteristics. then it probably meant the firmfocused on the high end of the market. 3. Entrepreneurial Strategies(Corpedia Online Program). etc. In Drucker¶s Innovation and Entrepreneurship. gaveaway internet access because it was paid for by advertisers who ran ads the customerswould see when they went online. the company actually converts anexisting product or service into something new by changing its utility. Pricing is one of the most successful ways to change the economiccharacteristics of a product or service. too.cross between a mobile phone and a lap top computer.automobiles. 5. hosting an email address). thestrategy itself is the innovation. Using this strategy. for example. the innovator has to create an innovative product or service. Yahoo. copiers. Drucker used the example of Yahoo¶s situation few years back. With the internet designed as an information network. the strategy¶s success feeds on what is unfortunatelyhighly common among American companies: complacency.) they always used the same strategy.S. ³Who is the customer?´ The answer wasthat the customer is the supplier who wants access to a potential customer. If. In the most successful of the ecological niche strategies.. This changedthe characteristics of the industry. Post conversion. machine tools. Ecological Niche: This strategy aims at control. Yahoo asked.Changing Economic Characteristics: Under all of the other strategies presented byDrucker. It¶s a commonly used strategy in the high-techindustry.g. It takes what the marketleader considers its strengths and turns those strengths into the very weaknesses thatdefeat it. markets (e. The Japanese moved in with low-cost products that had minimum featuresand the American companies didn¶t even put up a fight. no one will likelytry to compete. It didn¶t take long before they dominated both. 4. the whole point is to be soinconspicuous that despite the product¶s being essential to a process. Three distinct nichestrategies fall 8 . he gives this example: When the Japanese became theleaders in numerous U. making them virtually immune to competition. leaving the mass market undersupplied andunderserviced. but no new product or service. However. consumer electronics. the Phone took the marketstandard and turned it on its head. among others.g.Entrepreneurial Judo: In this case. In this one. there is new economic value and newcustomers. It obtains a practical monopoly in a smallarea. an Americancompany saw its high profitability as its greatest strength. (e. because the Japanesehad taken over the mass market. But. they soon had the cash flow to then move in on the highendmarket.

with technological or operational changes. create jobs. an Israeli company that developed the firstingestible video camera at a size so small it fits inside a pill. An example comes from Givun Imaging. Givun Imaging was the first. administrator of the U. it is in such high demand no one will do withoutit. 7. it¶s important to make sure it¶s the right One. ³The entrepreneur always searches for change.Entrepreneurs create new businesses.´Entrepreneurs innovate and innovation is a central ingredient in economic growth.Others agree that the benefits of small businesses go beyond income. As Peter Drucker said.In addition to his list of strategies. ‡ Each strategy fits certain kinds of innovation and does not fit others.0 CONCLUSION: Most economists agree that entrepreneurship is essential to the vitality of any economy.S. doctors couldn¶t do without it. developed or developing. In many cases. Used across the world. Some entrepreneurial strategies fit better in certain situations. while other strategies work betterin combination with another. Stated differently.under this category. Being in a toll-gate position means oncethe product is developed and patented. These are his guidelines: ‡ The strategies are not mutually exclusive. ‡ Each strategy has its own limitations and carries its own risks.before implementing one of Drucker¶s strategies. Drucker offered several important caveats toemphasize the connection between entrepreneurial strategy and innovation.More importantly. price was not an issue. and give people a stake in the future. it can increase productivity as well. Baretto. The device enables doctorsto view the small intestine from the inside. ³Small businesses broaden the base of participation in society. explains.One of these is called the ³toll-gate´ strategy. helping medical professionals to diagnosecancer and digestive disorders. Small Business Administration (SBA). entrepreneurial activity increases competition and. decentralize economic power.´ Entrepreneurs are responsible for 9 . Hector V. ‡ Each strategy requires specific behaviour on the part of the entrepreneur. responds to it. One entrepreneur may combine two or even three into one strategy. putting itself inone of the most desirable positions a company could occupy. generating jobs for themselves and those they employ. ‡ The strategies are not always sharply differentiated. and exploits it as an opportunity.

W. 141-188 Drucker.The psychology of theentrepreneur. 243-254..). Terpstra. Entrepreneurship: Theory and Practice. S. Cambridge. H. T. Differences in psychological characteristicsbetween entrepreneurially inclined and non-entrepreneurially inclinedaccounting graduates in Singapore. R. (1982).. Vesper (Eds. L. M. New York. Entrepreneurship. R. (1985) ³Entrepreneurial Strategies´.. and Smilor. H. 25-48 Drucker.. 17. P. (1993). MA: Ballinger. R. Harper & Row. Englewood Cliffs. Encyclopedia ofEntrepreneurship. 79-93.). Harper & Row. Sr. 19-33 Drucker. Brockhaus. Innovation and Entrepreneurship Practice and Principles. The Art andScience of Entrepreneurship. Entrepreneurial start-up and growth: Aclassification of problems..F. B. Innovation andChange: An International Journal. D.In D. H. Harper & Row. (1985) ³The Practice of Innovation´. P. (1992). S. T.5-20. (1987). D.F. D.A. D. pp. G. Psychological characteristicsassociated with Performance in entrepreneurial firms and smallbusinesses. 2. P. ones that revolutionized how people live and work. (1989). & Boyd.. H. Psychology of the Entrepreneur. Entrepreneurship: Theoryand Practice. P.F. The complete entrepreneur. pp. SextonKent. In Sexton. C. From the automobile to the airplane to personal computers ± individuals with dreams and determination developed these commercial advances. 9-19. L. NJ: Prentice-Hall. 10 . pp. New York.. C. Journal of Business Venturing. &Horwitz. 8.0 REFERENCES: Begley. (Eds. Innovation and Entrepreneurship Practice and Principles. & Olson. &Koh. New York. and for opening new markets. (1986). Mitton. Brockhaus.the commercial introduction of many new products and services. 1. A look at recent history shows that entrepreneurs were essential to many of the most significant innovations. P. and K. 13. 39-71. Innovation and Entrepreneurship Practice and Principles. (1985) ³The Practice of Entrepreneurship´. Inc. 207-243 Ho.

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