AMERICAN COLLEGE OF TECHNOLOGY

Department of Business Administration

Course: ENTREPRENEURSHIP

Title : Assignment 2

Course Instructor: Buzeye Zegeye Abebe (Ph.D., MBA, MPA, BA, BED)

Submitted to: American College of Technonolgy

Student Name Teketel Tarekegn Ambaye

Student ID 277-21A

May, 2022

Addis Ababa, Ethiopia

General Instruction

 This assignment focuses on conceptual and critical thinking ability (20%).

 The assignment needs to be done individually.

 The assignment should submit before three days before your final exam date. Late
submission will never be tolerated.

 Any similar answers among students’ individual work will definitely make the result
zero.

 For the conceptual and critical thinking part, you are not allowed to have more than two
pages of answers for each question.

Part I: Conceptual and Critical Thinking

Read the following questions and put your answers in a precise manner accordingly.

1. According to J. Schumpeter, the entrepreneur is an innovator, who introduces

something new into the economy, a new method of production not yet tested by
experience in the branch of a manufacturing concern, a product with which the
consumers are not familiar, a new source of raw materials or of new market
hitherto unexploited. Associate this definition with the concept of the economic
prosperity of a nation?

Answer

Entrepreneurship is basically concerned with creating wealth through production of goods and
services. This results in a process of upward change whereby the real per capita income of a
country rises overtime or in other words economic development takes place. Thus
Entrepreneurial development is the key to economic development. In fact it is one of the most
critical inputs in the economic development of a region. It speeds up the process of activating
factors of production leading to a higher rate of economic growth, dispersal of economic
activities and development of backward regions. If a region is unable to throw up a sufficient
number of entrepreneurs then alien entrepreneurs usually step in to provide goods and services
needed by the people. However the profits earned by these entrepreneurs are usually not
ploughed back but repatriated to their place of origin. As a result development in that region
cannot take place.’. The above reiterates the importance of entrepreneurship development for
fuelling economic growth of a region.

Entrepreneurship begets and also injects entrepreneurship by starting a chain reaction

when the entrepreneur continuously tries to improve the quality of existing goods and services
and add new ones. E.g. when computers came into the market there was continuous
improvement in the models, their functions etc. like first generation computers, personal
computers, laptops, palmtops etc. Not only had this fostered the development of the software
industry, computer education institutes, computer maintenance and stationery units etc. but also
other industries like banking, railways, education, travel, films, medical and legal transcriptions,
business process outsourcing [BPOs] etc. In this manner by harnessing the entrepreneurial talent
a society comes out of traditional lethargy to modern industrial culture. Ethiopia needs
entrepreneurs to capitalize on new opportunities and to create wealth and new jobs.

2. According to David McClelland People are generally motivated by Achievement,

power, and affiliation. Explain what with example and which one of the three
mainly motivates successful entrepreneurs?

Answer

McClelland’s Acquired Needs Motivation Theory says that humans have three types of
emotional needs: achievement, power and affiliation. Individuals can have any mix of these
needs. Their motivations and behaviors are shaped by the strength and blend of their specific
needs.

Power

If an individual’s predominant motive is power, they are motivated to influence others and take
control. While the extreme example of Hitler in Nazi Germany may come to mind, this motive
actually takes on a more mild form of coach or leader. They do not seek to implement a
dictatorship but hope to motivate others, delegate responsibility and influence those around them.
A coach is a good example because it perfectly illustrates the idea of letting the players (or in this
case, employees), do their job while they assess the situation and make decisions. The players
and employees are aware of their responsibilities and are highly skilled to perform them.

McClelland found that power-motivated individuals were best suited for leadership positions
within a company. If they were able to effectively delegate tasks in the workforce, they were
often able to be successful leaders. This does not mean that all power-motivated individuals will
make good leaders. Each personality is unique and those who are aggressive and authoritative
may actually decrease the work performance of their employees.

The Power Motive is not without its own disadvantages. Individuals who are motivated by power
are often flighty and frustrate easily. They have no problem moving locations or changing
situation if the opportunity presents itself. They have a reputation for being “ladder climbers,” or
working their way up the organization as soon as a better position presents itself. Some believe
that they are not invested in their role, but just simply biding their time until the next one is
available. As they will simply abandon their position in their search for fame, recognition and
wealth, it is difficult to dispel those ideas.

The Achievement Motive

If an individual’s predominant motive is achievement, they are motivated to do better for the
sake of doing so. They hope to exceed expectations and are pleased when they surpass their
peers. These individuals like challenges and want to be in charge of their success.

Achievement-oriented individuals will change the situation or the location if they feel like it is
not meeting their needs. The do not like working in groups because they do not like having
limited control over the outcome. Instead, they prefer to do work where the results are clear and
visible.

Many entrepreneurs are motivated by achievement. They have the drive to be successful and this
is, in turn, vital to the economy. However, this may not mean that they are the best bosses to
their employees. Achievement-motivated individuals often prefer to do things themselves,
leading them to micromanage things in a business. They prefer not to work in a team and often
fail to share the workload and responsibility. It is a double-edged sword: they experience success
and rise to management positions, but this same personality is what keeps them from being
successful in those roles.

The Affiliation Motive

If an individual’s predominant motive is affiliation, they are essentially motivated by social

connections. They are primarily motivated to fit in and please others, and value their
relationships with their peers. These individuals appreciate familiar situations and are unlikely to
leave their work location. They also do not like working alone and try to avoid disappointing
their coworkers and managers at all costs.

Even though affiliation-motivated individuals work well in a team, they are often not the best
employees. They are not motivated to do better as they are content to stay in their position. There
is no drive to improve their employee status or their personal position, which makes them, in
effect, the least effective workers.

3. According to Peter Drucker: Successful entrepreneurs are good at developing

relationships with customers, staff, suppliers, and all the stakeholders in the
business. They are able to form loyal relationships with customers. They tend to
manage their staff by developing strong personal relationships rather than relying
on formal structures and hierarchies. Explain the necessity with an example.

Answer

Within an organization, there needs to be effective and transparent communication. More than
anything, building rapport and developing relationships with all stakeholders is considered the
core of building valuable long-term business partnerships.

The ability to build long-term and trusting relationships with stakeholders is an essential element
that defines the success of entrepreneur. A wide range of stakeholders directly influences your
business, whether you like it or not.

In the contemporary interconnected business world, companies that have entrepreneur who are
able to foster a deep level of connection with their stakeholders have a significant competitive
advantage.
By maintaining good relationships, one lays the groundwork for the creation of an atmosphere of
support and trust as well as the establishment of cooperation network. As the result, the
organization can anticipate potential problems and manage expectations of stakeholders more
effectively.

By learning and embracing critical strategies of building and strengthening relationships with
stakeholders, organizations solidify their long-term success.

4. It was Bill Drayton who first coined the phrase social entrepreneur in 1972 when he
helped an Indian named Vinoba Bhave redistribute land so that more farmers could
become landowners, contributing to their local communities – a process that
eventually resulted in some seven million acres of land being given away. Today, he
is the founder and CEO of Ashoka, an organization that was created to help
support, connect and build up social entrepreneurs and their ideas. From this
statement, what is the basic essence of social entrepreneurship and how it differs
from commercial entrepreneurship?

Answer

The main differences between social and commercial entrepreneurship

1. Emergence Purpose:

Social-purpose organizations emerge when there is social-market failure, which means that
commercial market forces do not meet a social need, such as in public goods. A problem for the
commercial entrepreneur is an opportunity for the social entrepreneur. This implies that market
failure will create different entrepreneurial opportunities for social and commercial
entrepreneurship.

2. Mission:

The fundamental purpose of social entrepreneurship is creating social value for the public good,
whereas commercial entrepreneurship aims at creating profitable operations resulting in private
gain.

3. Resource Mobilization:
The economics of a social entrepreneurial venture often makes it difficult to compensate staff as
competitively as in commercial markets. In fact, many employees in social entrepreneurial
organizations place considerable value on no pecuniary compensation from their work.
Therefore, human, material and financial resource mobilization is done and is managed in
different manner in both the entrepreneurships.

4. Performance Measurement:

The social purpose of the social entrepreneur creates greater challenges for measuring
performance than the commercial entrepreneur. The commercial entrepreneur can rely on
relatively tangible and quantifiable performance parameters such as profit, market share,
customer satisfaction, and quality. Performance measurement of social impact is difficult to
measure. Many times, the impact is intangible and even slow which makes accountability and
stakeholder relations a tough task.

5. Governmental Support:

The social entrepreneurs receive support from governmental agencies in many ways whereas the
similar support is not received by a commercial entrepreneur. Even the interest rates on loan by
banks differ substantially in both cases.

6. Advertisements:

All advertisements by social entrepreneurs on TV, radio, newspaper get a heavy discount where
as a commercial entrepreneur has to pay through his nose for the prime time commercials.

However, the fact is that the charitable activity must still reflect economic realities, while
economic activity must still generate social value. Although social entrepreneurship is
distinguished primarily by its social purpose and occurs through multiple and varied
organizational form. A social- purpose commercial enterprise may differ less on these
dimensions from its commercial counterparts than a social enterprise that does not have any
commercial aspect to its operations
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https://worldofwork.io/2019/02/mcclellands-motivation-theory/

https://educationlibrary.org/mcclellands-three-needs-theory-power-achievement-and-affiliation/

https://www.ukessays.com/essays/leadership/similarities-and-differences-between-social-
entrepreneurship-and-commercial-entrepreneurship.php

http://www.differencebetweenarticles.com/business/entrepreneurship/difference-social-and-
commercial-entrepreneurship-business/14390