What is entrepreneurship?

Various authors define entrepreneurship differently, but their definitions somewhat amount to the same
meaning.
The following are some of the definitions of entrepreneurship:
Appleby (1989) defines entrepreneurship as the process of bringing together creative and innovative ideas
and coupling these with management and organizational skills in order to combine people, money and
other resources to meet an identified need and thereby create wealth.
Whereas Appleby defines entrepreneurship as such, Stoner & Freeman (1992) view entrepreneurship as
seemingly a discontinuous process of combining resources to produce new goods and services.
Analysis of definitions
Both definitions do not fall short of the fact that entrepreneurship is a systematic and logical event as
shown by the term „Process‟. That is entrepreneurship is not a haphazard activity. However, Stoner &
Freeman have moved a step further in an attempt to distinguish entrepreneurship from management as
they look at entrepreneurship as a discontinuous process. That is, it is a discontinuous phenomenon
appearing then disappearing until it reappears to initiate another change, unlike management which is a
continuous event.
The idea of „creative and innovative ideas‟ shows that the two definitions are complete. In business,
entrepreneurs should be able to come up with changes or new approaches, means, processes, machinery,
tools or techniques and new products in order to meet the needs of turbulent and dynamic market
environments. When a new venture is being contemplated on, risks arise involving uncertainties which
require initiativeness and process innovation.
Whereas Appleby clearly states, the idea of “management and organizational skills” in his definition,
Stoner & Freeman have remained silent about it. Organizational skills and management are crucial for
successful entrepreneurs. These relate to the ability of the entrepreneur to plan, organize, lead and control
the organizational members‟ activities and resources in order to achieve the stated goals of the enterprise.
In other words, the emphasis here is the ability to organize the other factors of production or resources
into creative combination for the purpose of producing goods and services in order to satisfy human needs
and wants profitably.

Entrepreneurship distinguished from Intrepreneurship

Investor's or entrepreneurs are innovative and creative but not all of them are able to come up with
innovations, and as such they leave innovations to innovative managers or employees. An employee or
manager who is innovative and creative in an existing organization is known as an I
ntrepreneur. Managers or employees who carry out entrepreneurial roles are aware of opportunities and
they initiate changes to take full advantage of them.
The fundamental issue about the entrepreneur is that he/she has to have innovative ideas and transforms
them to profitable activities within an existing organization. In other words, he/she is an initiator or
originator of the commercial undertaking.
The word entrepreneurship is attributed to Gordon Pinchott an American who founded a school for
entrepreneurs to help managers from large corporations to take responsibility for creating innovations and
turning ideas into profitable reality.
Relationship between entrepreneurship and Patriotism
Patriotism is the spirit of supporting loyally one‟s nation. The major thrust of patriotism in the context of
entrepreneurship in an economy is to refrain from corruption and sabotage or subversion. Thus, the
relationship between entrepreneurship and patriotism is reflected in the following roles that a patriotic
entrepreneur plays to the nation that is the entrepreneur should have the spirit of:
a) Creating jobs without oppressing fellow citizen workers i.e. the entrepreneur will be expected to
provide good working conditions and be worker – centered.
b) Charging fair and affordable prices
c) Producing quality products which compare with international standards
d) Conserving natural resources
e) Practicing good ethics and social responsibility in business and the community
f) Generating foreign currency without externalizing it or taking it to the black or parallel market for
exchange, but to the registered banks for official exchange
g) Generating government revenue through paying corporate tax.
h) Playing supportive role to the giant firms by being subcontracted in construction, manufacturing and
distribution
i) Reducing anti-social activities such as theft, robbery, murder, promiscuity by creating employment for
self and other citizens
j) Reducing rural to urban migration by creating employment opportunities in rural areas

1.3 Entrepreneurial characteristics

In a new business, the entrepreneur is the most important person. The entrepreneur has the responsibility
to initiate, manage and see the success of the business. The success of a business largely depends on the
entrepreneurial or personal characteristics. The following are some of the characteristics of successful
entrepreneurs. 5
Action oriented
Successful entrepreneurs are action oriented, that is, they want to start producing results immediately. The
critical ingredient is getting off business and doing something. A lot of people have ideas but they are a
few who decide to do something about them now and not tomorrow.
Success oriented/optimism
Successful entrepreneurs are optimistic, that is successful entrepreneurs do not have „ifs‟ or „buts‟ about
succeeding. All they think about is how they are going to succeed and not and not what they are going to
do if they fail.
Perception of opportunity or opportunity seeking
Entrepreneurs should be able to see the unfilled areas or gaps in products, process and application of
services. That is successful entrepreneurs are able to see and act on new business opportunities.
Moderate risk taking
Entrepreneurs are expected to be able to take moderate and calculated risks. This is contrary to the
stereotype that entrepreneurs are gamblers or high-risk takers.
Goal setting
In setting a new business, entrepreneurs are expected to have the ability to set goals which are specific,
measurable, achievable, realistic and time bound (SMART) basing on their strengths, weaknesses,
opportunities and threats (SWOT).
Moreover, their goals must be consistent with their interests, values and talents in order to achieve the.
Their belief in the reality of their goals is the primary factor in the fulfillment of those goals. Their plans
may seem illogical to others but they are perfectly logical in the context of their own personal values and
desires.
Long-term perspective
Successful entrepreneurs can tolerate considerable amount of frustration and delay in need gratification
and they devote a lot of time and effort in goals that often yield profits at a distant point in the future.
Entrepreneurs should be able to accommodate hurdles, difficulties and temporary failures in business.
Self-motivation/self esteem/self faith/self confidence
Effective entrepreneurs have solid and stable self-esteem and self-motivation which stem from healthy
feeling of self worth and self-acceptance. Entrepreneurs with a positive self-image are basically satisfied
to be the type of people they are. This self-faith is even important than self-confidence especially when
serious setbacks and failure occur.
Innovativeness/initiative ness/creativeness
Effective entrepreneurs have the ability to come up with new products, methods or techniques of
production and the accompanying machinery and tools.
Adventuresome ness
Successful entrepreneurs are adventuresome i.e. they are interested in testing out and experimenting
phenomena in an endeavor to come up with solutions to the needs and wants of people.
Commitment
To succeed in business, you must be committed. Commitment means that you are willing to put your
business before almost everything else.
Some of the characteristics of an entrepreneur include; patience, friendliness, hardworking, reliability,
dedicated ness, responsibility, objectivity, rationality, honesty, determination, courage, flexibility,
imaginativeness and knowledge. 6
In a word, successful entrepreneurs must have appropriate personal characteristics, business skills where
necessary.
1.4 Entrepreneurship environment

Entrepreneurship environment relates to the factors or variables which directly or indirectly affect the
activities of the entrepreneur either positively or negatively.
The environment is split into two. That is macro and microenvironments.
Macro – environment
This is also known as external environment. This environment consists of all those factors, which
indirectly affect the business activities of the entrepreneur either positively or negatively. The external
environment involves PEST analysis and natural phenomena.
PEST stands for Political, Economic, Social and Technological environmental variables.
Political Environment
Political factors may provide initiative situations towards the success of the entrepreneur especially where
the political climate is not stable. Political disturbances may result in the closure of business either
permanently or temporarily. Extreme political disturbances or instability such as tribal or civil conflicts
may cause permanent closure of enterprises. However, this depends on the nature of the business of the
entrepreneur. Some political climates may promote the success of the entrepreneur. At first glance, it
would seem that domestic politics should pose no threat and that a company should have minimal
problems at home. This is often not the case. Although a company‟s major political problems usually
derive from political conditions overseas, it must still pay close attention to political developments at
home. Knowledge of the philosophies of all major political parties within the country is very important
since any of them might come to power and alter prevailing attitudes. It is important to know the direction
each is likely to take for example in Britain the Labour party have traditionally tended to be more
restrictive on both foreign and home trade.
Economic nationalism is another factor which leads to an unfavourable business climate e.g. Econet is
said to be sponsoring foreign media which are said to be anti-government. If the entrepreneur is not
nationalistic in his or her business activities he/she may lose his/her business license.
Political sanctions form yet another crucial factor that may hinder the entrepreneur‟s progress in business
for instance in Zimbabwe there is fuel and foreign currency crisis due to political sanctions based on the
allegations by Britain and America that there is lack of rule of law, democracy and violation of human
rights. South Africa also faced political sanctions based on allegations that there were apartheid , foreign
currency crisis and fuel shortage can grossly affect the entrepreneur‟s business activities negatively.
Economic environment
The macroeconomics focuses on aggregate economic conditions that may affect the business either
positively or negatively e.g. inflation, exchange rates, lending or interest rates, and unemployment.
Macro-economic issues set the environment within which a business operates. Because of this,
entrepreneurs should keep abreast with developments in the macro-economic environment to enable them
make informed decisions. Thus, a full understanding of those issues enhances the ability of an
entrepreneur to make sound business decisions and to avoid surprises.
*For instance, inflation is the general upraise of the prices of commodities. If the prices of commodities
rise it means that the entrepreneur can now afford to buy less supplies or raw materials or producer goods
than he/she used to. That is, his/her business is being affected negatively. If the inflationary rate drops, it
means that the entrepreneur can now buy more producer goods. 7
Exchange rates are yet another factor of macroeconomics which may affect the activities of the
entrepreneur. Exchange rate defines the price for getting foreign currency. If the exchange rate rises, the
entrepreneur will afford to buy less of the foreign currency and vice versa. Foreign currency is essential
for the purchase of foreign products such as spare parts, ingredients, raw materials and fuel.
Lending rates are an important aspect of macroeconomics. Lending rate is the price of borrowed funds or
a loan. This is also known as interest rate. If the loan interest rises, it means that it is expensive to get a
loan for investment and vice-versa.
Thus, given these macro-economic issues, the entrepreneur is expected to have a predictive mind for
efficient management of the enterprise.
Microeconomics is another fact of the economic environment which focuses on the economic forces that
influence the decisions made by individual consumers, firmsadwe3s and industries. These decisions are
often made in an instinctive way, yet consistent economic forces underlie them. Entrepreneurs are
encouraged to keep track of the trends of the behaviours of individual consumers, firms and industries in
business as their (entrepreneurs) investment activities are based on them.
Social environment
This relates to the cultural values, beliefs and artifacts of a group of people or society. These determine
the consumption patterns of consumers. Social environment also involves the religious values. Thus, the
products that people buy, the attributes they value, and the opinions they have are based on culture. Food
consumption, acquisition and preparation are interrelated with other aspects of culture such as religious
values and beliefs. For example, Christians consider pork unclean. Thus, to the entrepreneur it is evident
that customer‟s actions in the society are shaped by their lifestyles and behaviours which stem from their
society‟s culture. That is people of different social classes have different lifestyles and bahavioural
patterns.
Language is another aspect of culture which has influence on the entrepreneur‟s activities. Thus, a
successful entrepreneur must achieve expert communication. This requires a thorough understanding of
the language of the customer‟s language as well as the ability to speak or write clearly.
Technological environment
Today, we are living in a global village which requires entrepreneurs to move with technological
breakthroughs and changes. Entrepreneurs are expected to be well versed with Internet systems for
effective communication with suppliers, customers and the publics in general.
Technology relates to the processes, techniques, tools and machinery used in business to produce or offer
products to customers. Poor technology results in inefficiency and ineffectiveness. Thus, the advice to the
entrepreneurs is that they should keep track of the technological trends in the business if they are afraid of
being out-competed by their rivals.
Natural phenomena
These are the situations or conditions which can adversely or positively affect the entrepreneur‟s
activities. These may include natural disasters such as road accidents, fire outbreaks, floods, drought,
earthquakes, good rains and natural resources such as minerals. Entrepreneurs are advised to study the
natural phenomenal trends as these provide threats or opportunities to the business.
Microenvironment
This relates to those conditions which directly affect the entrepreneurial investment activities either
positively or negatively. The microenvironment is made up of employees, providers of finance, suppliers,
customers and government among others.
Employees
These are the people who work for the entrepreneurs and those who are likely to work for him/her
(potential employees). People today have wider expectations of the quality of working life 8
including: justice in treatment, democratic functioning of the organization and opportunities for
consultation and participation, training in new skills and technologies effective personnel and industrial
relations policies and practices and provision of social and leisure facilities. Entrepreneurs should give
due consideration to the design of work methods and job satisfaction, make every reasonable effort to
give security of employment. If employees are not treated well, the entrepreneur will lose them to his/her
rivals.
Providers of finance
These are the financial institutions which supply financial services to the entrepreneurs. Entrepreneurs
need to consider the interest or lending rates together with the accompanying finance changes fixed on
them by the financial institutions as these costs of financial services have adverse effect on their
investment activities. Apart from that, the entrepreneurs also need to consider return on investment in
terms of the funds which they may need to invest with the financial institutions. On the other hand, the
entrepreneurs are expected to prove their credit worthiness and credibility by paying back the borrowed
funds (loans) within the contractual time frame as this will enable the entrepreneurs to even receive
preferential treatment and favour in times of need.
Customers
To many entrepreneurs, responsibilities to customers may be seen as no more than a natural outcome of
good business. Customers are people who make the business successful. The entrepreneurs need to
understand the needs and wants of customers first before production activities take place in order to avoid
wastage of resources by producing goods and services for unknown customers. Customers must be put
first by providing:
 Good value for money
 The safety and durability of products
 Prompt and courteous attention to queries and complaints
 Long-term satisfaction e.g. serviceability, adequate supply of products and replacement of parts
 Full and unambiguous information to potential customers

If customers feel that they are ill treated, the entrepreneur loses them to the customer-driven enterprises.
Suppliers
These are firms that supply the entrepreneur with raw materials. These can affect the entrepreneur‟s
activities adversely or positively in terms of prices, reliability, quality, delivery services and convenience
among others. Thus, a supplier of competitive prices, quality, delivery services and convenience must be
chosen. On the other hand, the entrepreneur should also prove creditworthiness by settling accounts
within the contractual time frame if future deferred payment business transactions are to be upheld.
Government
Entrepreneurs should of course, respect and obey the law even where they regard as not in their best
interest. If certain laws are not followed the entrepreneur‟s business may be forced to closedown but what
is debatable is the extent to which organizations should co-operate with actions requested by the
government. Some examples are restraint from trading with certain overseas countries and the acceptance
of controls over imports or exports, price controls designed to combat inflation e.g. limits on the level of
wage settlement and assisting in the control of potential social problems such as advertising and display
of health warnings.
Competitors
These are the rivals of the entrepreneurs who produce substitute products or the same products. The
entrepreneur must keep track of the price levels, technology, quality, and delivery services, among others
of the competitors as these may pose negative impact on the acceptability of the entrepreneur‟s products
by customers.
1.5 Entrepreneurship Strategies
9
GROWTH STRATEGIES
A. Intensive Growth Strategies

According to Ansoff‟s product market expansion grid, a company is exposed to growing dimensions
under intensive growth
1. Market penetration
- Gaining more market share with the current company market products in their current markets.
- The strategy can be implemented as follows.
a) promoting more usage of the product
b) attracting competitors‟ customers
c) convincing non users to use the existing product

2. Market development strategy

- company efforts to find or develop new markets for its current products
a) This can be done by identifying potential uses in the current sales area where interests for a product or
services can be stimulated.
b) Selling new products to existing or current markets.
c) Seeking additional distribution channels in its present location.

3. Product development
- in addition to penetrating and developing markets management should consider new product
possibilities
- Company develops a product‟s new features; different quality levels and also tries to come up with a
technological breakthrough a potential product.

B. Integrative Growth
- business sales and profits can be increased through
a) Backward integration
b) Forward integration
c) Horizontal integration

Ansoff‟s Growth Strategies Grid:

Current products. New products.
Market penetration Products development
strategy
Strategy
Market development Diversification
strategy strategy