Entrepreneurship

2 credit hours
Sara Sultana

1
 Course Description
• This course will introduce you to the concepts
of entrepreneurship so that you have the
necessary skill set to explore entrepreneurial
opportunities in order to create value, generate
wealth and serve society.

2
 Course Outcomes
After completing this course, you should be able to:
•Explain the nature of entrepreneurship
•Analyze the environment and develop an
entrepreneurial perspective by recognizing
entrepreneurial opportunities
•Know the components of a business model canvas and a
business plan
•Identify the sources of capital for a business venture
•Set up a business organization
3
 Course Learning Outcomes
Upon completion of the course, students will:

1. Recognize the entrepreneurial potential within themselves and others in their

environment
2. Apply idea generation techniques to better create and shape ideas into
opportunities
3. Appreciate the role of entrepreneurship within society, at the level of an
organization and their own personal life
4. Grasp the fundamental importance of key values in explaining entrepreneurial
success
5. Identify the many ways in which entrepreneurship manifests itself, including
start-up context, corporate context, social context, and others
6. Develop an appreciation of opportunity, how to recognize it, and how to
evaluate it
7. Appraise the nature of creative new business concepts that can be turned into
sustainable business ventures
 Textbook
• Entrepreneurship: Strategies and Resources by
Marc J. Dollinger, Third or Fourth Edition
(Pearson Education)
• Entrepreneurship- Successfully Launching
New Ventures 5th Edition (Bruce R. Barringer;
R. Duane Ireland)

5
 Reference Books
• Entrepreneuring Pakistan. Azhar Rizvi, 1st
Edition (Azhar Rizvi)
• Essentials of Entrepreneurship and Small
Business Management, Thomas W. Zimmerer,
Norman M. Scarborough, Pearson Education
• Think and Grow Rich, Napoleon Hill. eBook
distributor: OpportunityInformer.com

6
 Grading (Tentative)
• 30% 2 OHTs
• 40-50% Final Exam
• 10-20% Project/Assignments
• 10% Quizzes
• Class Participation (if deemed necessary)

7
 Plagiarism
• Collaboration and group work is encouraged
but each student is required to submit his/her
own contribution.
• Your writings must be your own thoughts.
• Cheating and plagiarism will not be tolerated
and will be referred to the Dean for appropriate
actions.

8
 Quiz/Assignment Policy
• Quizzes will be announced/unannounced.

• Late submission of assignments will either not

be entertained or will result in the deduction of
marks.

9
 Project/Class Assignment
• Group Work

• Presentations will be required

10
 Tentative Weekly Schedule
Week Topic

1 Introduction to Course and Entrepreneurship

2 A Framework for Entrepreneurship (Chapter 1)

3 Resources and Capabilities (Chapter 2)

4 Entrepreneurship Environment Analysis (Chapter 3)

5 Entrepreneurship Environment Analysis continued (Chapter 3)

Business Model Canvas

6

7 OHT-1 11
Tentative Weekly Schedule
Week Topic
8 Value Proposition

9 Entrepreneurial Strategies (Chapter 4)

10 Business Plan Components (Chapter 5)

11 Writing a Business Plan (Chapter 5)

12 Writing a Business Plan (Chapter 5)

13 OHT-2

12
 Tentative Weekly Schedule
Week Topic

14 Venture Financing (Chapter 7)

15 Securing Investors (Chapter 8)

16 Business Organizations (Chapter 9)

17 Intellectual Property

18
Enduring Organizations
Final Exams
19

13
During Class… Don’t
 Entrepreneurship Definitions

• 17th century, French economist Richard Cantillon coined the

term, “entrepreneur”.
• The literal definition of (entrepreneur) is “to undertake” or “go
between” referring to the position an individual assume when
pursuing an opportunity.
• Knight (1921) Profits from bearing uncertainty and risks
• Cole (1952) Purposeful activity to initiate and develop a
profit-oriented business
• McClelland (1961) Moderate risk taking

15
 Entrepreneurship Definitions
• Casson (1982) Decision and judgments about the coordination of
scarce resources
• Stevenson et al (1989) The pursuit of opportunity without regard
to resources currently controlled
• Kuratko & Hodgetts (2004) A dynamic process of vision, change
and creation…
• Allen (2006) A mindset or way of thinking that is opportunity
focused, innovative and growth-oriented. Can be found in large
corporations and socially responsible not-for-profits…
 Common Elements
• Creation: a founding and an origin
• Innovation: a new way of doing something
• Economic Organization: an organization whose purpose is to
allocate scarce resources.
• Risk: variability of outcomes or returns
• Uncertainty: confidence in the estimates of how the world
works; of the causes and effects of the environment

17
US3682216A
United States
 Entrepreneurship
• The creation of an innovative economic
organization for the purpose of gain or growth
under conditions of risk and uncertainty.

19
 Entrepreneur

• "An entrepreneur is someone who jumps from a

plane without a parachute, and figures out how
to build one on the way down." 
http://f-st.co/yuLY5Gv
 Why Teach Entrepreneurship
• Entrepreneurship is now considered as a major
contributor to global economic growth (McStay,
2008)
• To counter academic inflation and increasing
rate of graduate unemployment
• Raising awareness of self-employment as a
career option
 Why Teach Entrepreneurship
• To train people who can innovate, create, invent
and employ themselves and others.
• Promoting the development of personal
qualities that are relevant to entrepreneurship
such as creativity, risk taking and responsibility
• To create entrepreneurial competencies based
on relevant knowledge, skills and attitude
• Kissi Ernest et al (Jan 21, 2015)
 Entrepreneurial Competencies
Skills Attitude Knowledge
Creativity Sense of initiative Understanding of
entrepreneurship
Analysing Risk taking propensity Role of entrepreneurs
Motivating Self efficacy Determinants of successful
entrepreneurship
Networking Need for achievement
Adaptability Structural behavior
Financial Management
 Approach to Entrepreneurship
• Causal vs Effectual
• Algorithmic vs Heuristic
• Causal: Based on prediction and control.
Entrepreneurs will determine goals to achieve and look
for the resources to do so (Wikipedia)
• Effectual: Start with the means and look at possible
goals. Entrepreneurs will determine goals according to
the resources in their possession (Wikipedia)
• Reason is market uncertainty
 Entrepreneurial Thought & Action ®
• Central theme of teaching entrepreneurship at
Babson
• Teaches students to be entrepreneurial in behavior;
explore and create opportunities rather than plan
and predict the outcome to every problem
• Predictive: Think-Learn-Do (use historical data to
solve problems)
• CrAactive: Do-Learn-Think
• Practical Example: Jigsaw vs Quilts
 Entrepreneurship Definitions

• 17th century, French economist Richard Cantillon coined the

term, “entrepreneur”.
• The literal definition of (entrepreneur) is “to undertake” or “go
between” referring to the position an individual assume when
pursuing an opportunity.
• Knight (1921) Profits from bearing uncertainty and risks
• Cole (1952) Purposeful activity to initiate and develop a
profit-oriented business
• McClelland (1961) Moderate risk taking

26
 Entrepreneurship Definitions
• Casson (1982) Decision and judgments about the coordination of
scarce resources
• Stevenson et al (1989) The pursuit of opportunity without regard
to resources currently controlled
• Kuratko & Hodgetts (2004) A dynamic process of vision, change
and creation…
• Allen (2006) A mindset or way of thinking that is opportunity
focused, innovative and growth-oriented. Can be found in large
corporations and socially responsible not-for-profits…
 Common elements in definitions
• Creativity and Innovation

• Resource gathering and the founding of an

economic organization

• The chance for gain (or increase) under risk and

uncertainty

28
 Common Elements

• Creation: a founding and an origin

• Innovation: a new way of doing something
• Economic Organization: an organization whose purpose is to
allocate scarce resources.
• Risk: variability of outcomes or returns
• Uncertainty: confidence in the estimates of how the world
works; of the causes and effects of the environment

29
 Resource Based Theory
• Entrepreneur uses resources that are:
– Rare
– Valuable
– Hard to copy
– Have no good substitutes
to obtain a sustainable competitive advantage

– “The nature and quality of the resources, capabilities

and strategies the entrepreneur possesses and can
acquire can lead to long-term success.”
30
 Conditions for Entrepreneurship
• Freedom:
– To establish an economic venture
– To be creative and innovative

• Prosperity:
– Favourable economic conditions
– Gain and grow

31
 Wall Street Index of Economic Freedom – 2018
http://www.heritage.org/index/about

1. Hong Kong
2. Singapore
3. New Zealand
4. Switzerland
5. Australia
131. Pakistan 145
130. India 120
110. China 116
• Rule of Law (property rights, government integrity, judicial effectiveness)
• Government Size (government spending, tax burden, fiscal health)
• Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
• Open Markets (trade freedom, investment freedom, financial freedom)
Small Business vs Entrepreneurship
• Amount of wealth created is substantial

• Wealth creation is rapid

• Risk is high

• Innovation is substantial

33
 New Generation Entrepreneurs
• Technologically savvy
• Easy to become an entrepreneur specially on the
internet
• Passionate, inquisitive, and challenging. Change
and progress is welcomed
• Think differently. Inexperience is the powerful
force
• They are independent. Skills are portable.
 New Entrepreneurs
• Academia contribution
• Corporate dropouts
• From downsized companies
• Quest for status
• Control over personal life
• College dropouts
• Local infrastructure improvements
• Globalization Opportunities
35
 HEC Endeavors
• Entrepreneurship courses
• Technology Development Fund
• ORICs in every university
• Innovation Steering Committee
 NUST Endeavors
NUST Research, Innovation and Commercialization ecosystem
•Center for Innovation and Entrepreneurship

– Technology Incubation Center

• Science & Technology Ventures Ltd
• Professional Development Center
• Research Directorate
• I&C Directorate
•Corporate Advisory Council

• 11 Industries identified
•National Science and Technology Park

37
SEECS Entrepreneurs
 Paradoxes of Entrepreneurship
• Intelligence vs Business Success
– ‘If you are so smart, why aren’t you rich?’

• Barriers to Entry
– ‘you don’t want to enter any industry that would
have you’

“There is no law of Entrepreneurship.”

39
 Dimensions of Entrepreneurship
• New Venture Creation
1. The Individual
2. The Environment & Opportunity Analysis
3. The Organization

40
 Dimensions of Entrepreneurship
• New Venture Creation
1. The Individual
2. The Environment
3. The Organization

41
 1. The Individual
• Psychological, sociological and demographic
characteristics
• Personal experience, knowledge, experience and
training
• Personal integrity

42
 Entrepreneur – Personality Traits
• Desire for responsibility
• Preference for risk taking – moderate, calculated
• Confidence in ability to succeed
• Desire for immediate feedback
• High level of energy
• Future orientation
• Skill at organizing
• Value of achievement over money
 Entrepreneur - Characteristics
• High degree of commitment
• Tolerance for ambiguity
• Flexibility
• Tenacity
 Sam Walton’s Ten Best Rules
• Commit to your business and believe in it
• Share your profits with your partners (employees)
• Motivate your partners, challenge them and keep
score
• Communicate everything
• Appreciate your associates with well
chosen words
• Celebrate your success
45
 Sam Walton’s Ten Best Rules
• Listen to everyone and get them talking
• Exceed your customers’ expectations
• Control your expenses

• BREAK ALL THE RULES. Swim upstream. Go

the other way 

46
 2. The Environment
• Opportunities:
– In the form of resources:
• Money
• People
• Technology

• Acquire resources and combine them with the

ones already present.

47
 2. The Environment
• Constraints or Threats
– Competition
– Government Influences
– Political environment
– Economy

48
 3. Economic Organization
• Something of value to offer
• Form and structure-Functional level strategies
• Entry wedges or points- To penetrate or create a market
• Isolating mechanisms- To protect its positions
• A culture - Determines performance and QUALITY

49
Entrepreneur – The Decision Maker

• Entrepreneur must understand all quality

perspectives to be able to make decisions based
on the current situation
50
action oriented
 Course Outcomes
After completing this course, you should be able to:
1.Explain the nature of entrepreneurship
2.Analyze the environment and develop an
entrepreneurial perspective by recognizing
entrepreneurial opportunities
3.Know the components of a business model canvas and
a business plan
4.Identify the sources of capital for a business venture
5.Set up a business organization
52
 SEECS Entrepreneurs

• Faisal Zahid (BIT-7)

• Swaggable is a website that offers everyday
consumers the opportunity to try out new products,
write reviews and help spread the word on the
products being tested.
• www.swaggable.com
 Entrepreneur Do’s and Don’t’s
• Entrepreneur: Mehreen Akhtar
• Venture: Garments
• Reasons for Failure:
– Response acha nahi aya!
• People couldn’t afford bedsheets and abayas sold by them
– Price – Cost
 Businessman Versus Entrepreneur
• Difference
– Perspective on profit
– Level of risks taken
– Innovation versus status quo
– Long term orientation versus short term
– And a lot more to explore during semester…
• Watch Links
– https://www.youtube.com/watch?v=RbK1hysVl78&t
=71s
Resources and Capabilities

Chapter 2

57
 Resources
• Any thing or quality that is useful
– Can help an organization implement its strategy
– Valuable
– May not be available to all competitors
– Rare
– May not be able to be duplicated easily
or expensively
– Hard to copy
– May not be the same as the resources of another firm
– Non-substitutable

58
 New Venture Creation
Entrepreneur
•Acquires Resources and Skills at an appropriate
cost
•Transforms resource/skill into product or service
•Deploys and implements
•Creates Value and generates
Wealth
 Types of Resources
• Physical
• Reputational
• Organizational
• Financial
• Intellectual and Human
• Technological

60
 Physical Resources
• Tangible property of the organization
– Plant and equipment
– Location and amenities
– Natural resources

• Can these be a source of sustainable competitive

advantage?

61
 Reputational Resources
• Perceptions that people in the firm’s environment
have of the company
– Product level – brand loyalty
– Corporate level – global image

• Most important attributes

– Product quality
– Management integrity
– Financial soundness
62
 Fortune Magazine Criteria
• Quality of management
• Use of corporate assets
• Financial soundness
• Firm’s value as an investment
• Quality of products and services
• Innovativeness
• Ability to attract, develop and retain top people
• Community and environment responsibility
63
 Organizational Resources
• Intangible
– Organization’s structure, routines
and systems or
– Formal reporting systems
– information generation & decision making systems
– Formal or informal planning
• Structure that promotes adaptation with speed can be
a valuable resource
• Skills and capabilities of personnel
• Company life cycle is also important
64
 Financial Resources
• Most important resource???
• High tech industries rated it 8th out of 11 and
service industries 5th out of 11
• Depends on the state of the economy
• Apple and HP (cash rich)

65
 Intellectual and Human Resources
• Entrepreneur and his/her team
– Collective knowledge, training and experience
– Individual: judgment, insight, creativity, vision and
intelligence
– Entrepreneur’s social skills and knack for
recognizing opportunity
– Relationship Capital:
• Not what you know but who you know

66
 Technological Resources
• Processes and systems
• Labs, R&D facilities, testing and quality control
• Real resource is knowledge generated by the
above: to be protected by
– Patents
– Licenses
– Trademarks
– Copyrights
• Technological versus Intellectual capital
67
 Strategic Resources Summary
Resources Valuable Rare Hard to Copy Nonsubstitutable

Physical Yes KK Not usually KK

Reputational Yes Yes Yes Yes

Organizational Yes Yes Yes Yes

Financial Yes KK No No

Intellectual Yes Yes Usually KK

Technological Yes KK KK KK

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 MGT271

Value Proposition
Creating and Communicating Value

Courtesy: Sanna Chaudhry

 Agenda

• Understanding “Value”
• Creating Value
• Value proposition
– Examples
– Dimensions of value
– Design Process
“That which serves, creates value”
A value proposition is a statement
of the unique benefits delivered by
your offering to the target
customer
 A value proposition is a
hypothesis that your offering will
bring certain values to a target
customer. *

* Like any hypothesis, it needs to be rigorously

tested in the lab (read: marketplace) before money
is put into scaling.
Value Proposition is Not:
An elevator pitch: a 30 second
conversation starter

• “I buy dead magazines…”

• “We un-think marketing…”
Value Proposition is Not:
A tag-line: an ad compliment

• “We know money”

• “What Happens Here, Stays Here”
• “The City That Never Sleeps”
• “Built for the road ahead”
Value Proposition is Not:
A mission statement: a statement of the
purpose of your business.

• “NUST’s mission is to become a comprehensive,

research-led university with a focus on
Technology, Innovation and Entrepreneurship”

• “Google's mission is to organize the world's

information and make it universally accessible and
useful”
The value proposition statement should consist
of these components:

1. What your product/service is

2. The target customer

3. The value you provide them

Emergent property: why your product is unique
 Examples: What is it?
For whom?
Values?

Good: “Winners is a Bad: “Winners is an

department store that off-price department
offers fashion store owned by TJX
conscious consumers that employs
the latest brand international
names for up to 60 sourcing and buying
per cent power.”
off.”
 Examples: What is it?
For whom?
Values?

Good: “Winners is a Bad: “Winners is an

department store that off-price department
offers fashion store owned by TJX
conscious consumers that employs
the latest brand international
names for up to 60 sourcing and buying
per cent power.”
off.”
 Examples: What is it?
For whom?
Values?

Good: “Google is the Bad: “Google uses a

World’s largest search patented page
engine that allows ranking
internet users to find algorithm to
relevant information make money through
quickly and easily.” ad placement.”

Are Internet Users really Google’s

customers?
 Examples: What is it?
For whom?
Values?

Good: “Google is the Bad: “Google uses a

World’s largest search patented page
engine that ranking
automatically provides algorithm to
advertisers with make money through
potential customers ad placement.”
tailored to the ad
content, increasing
click-through rates and
conversion rates.”
Selling to Selling to
Customer Business

Usability
Health Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Value Enabling function
Self-Actualization
Convenience
Environmental
Quality

Ethical Customizable
Social
Inclusion
 Selling to
Business

Lower risk
Saving time
Saving/making
money
Convenience
Quality
 Selling to
Business

Lower risk
Saving time
Saving/making
money
Convenience
Quality
 Selling to
Business

Lower risk
Saving time
Saving/making
money
Convenience
Quality
 Selling to
Business

Lower risk
Saving time
Saving/making
money
Convenience
Quality
 Selling to
Business

Lower risk
Saving time
Saving/making
money
Convenience
Quality
 Selling to
Business

B2B Sales: Lower risk

- Rational Saving time
Saving/making
decision
money
making Convenience

- Overt Values Quality

Selling to Selling to
Customer Business

Usability
Health Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Value Enabling function
Self-Actualization
Convenience
Environmental
Quality

Ethical Customizable
Social
Inclusion
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
Aesthetics
Status
Newness
Environmental
Ethical
Selling to
Customer

Usability
Health
B2C Sales:
Aesthetics
Status - Emotional
Newness decision
Self-Actualization
making
Environmental
Ethical - Latent
Social Inclusion
Values
Selling to Selling to
Customer Business

Usability
Health Lower risk
Aesthetics
Saving time
Status
Saving/making money
Newness
Value Enabling function
Self-Actualization
Convenience
Environmental
Quality

Ethical Customizable
Social
Inclusion
 Process
1. Draft a Value Proposition
2. Test your Value Proposition
 Process
1. Draft a Value Proposition
2. Create a Minimum Viable Product (MVP)
3. Test your MVP

Iterations
 Summary
The value proposition statement should consist
of these components:
1. What your product/service is
2. The target customer
3. The value you provide them

Write – Test – Iterate

Prototype – Test - Iterate
 SEECS ENTREPRENEURS
• Afnan Sharief (BESE-3)
• Waseem Khan
• Design studio with web
design and development
services, software
development, brand design,
graphic designing and
internet marketing - One
stop solution!
Creativity and Idea Generation
 Creativity and Idea Generation
(Peter Drucker)

• Idea Generation
– Combining environmental scanning with creativity
techniques
• Creativity
– Initiation of a product or process that is:
• Useful
• Correct
• Appropriate
• Valuable to the task at hand
• Task is heuristic rather than algorithmic
 Environmental Scanning
• Scanning: to detect change
– Early warning system
– Sources:
• Journals, news, reports
• Professionals, professors, consultants

• Monitoring: to track development

– More focused than scanning
– Specific periodicals, experts and focused groups
108
 Creativity
• Occurs at the dynamic intersection of 3 forces
– The individual with intelligence, experience
– The domain of knowledge chosen to work within
– The field or social context within which the merits of
the work or product produced are evaluated and
judged
 1. The Individual
• All individuals are creative in one of two ways:
• 1. Improvement Approach:
• Do things better. Change what is already there
• 2. Do Things Differently Approach:
• Find new and novel solutions to problems
 2. The domain of Knowledge
• Arts, Sciences, Business areas or New Venture
creation
• For creativity one must have:
– Understanding of knowledge base
– Skills at manipulating this base
– Be prepared to be creative
 3. Field or Social Context
• Idea/Product must be judged creative as opposed to
crazy and weird
• Judges:
– Arts: Critics, judges and curators
– Business: Marketplace
– If idea sells it was creative otherwise not

• Paradox of Creativity: If rules of creativity can be

made then it would be algorithmic and not heuristic
 Types of Creative Behavior
• 3 general ways of creative behavior
• 1. Pure Invention: something out of nothing
• Available only to a chosen few
• 2. Synthesis: joining previously unrelated things
• e.g. computer with small and personal = PC
• 3. Modification: Product/Process improved
 Creativity Techniques
• Creative Pause: Disrupt routine to concentrate on a
point or process
• Focus: On an object, a process or policy
• Challenge: Are there other ways?
• Alternatives: What else is available vs new ways
• Provocation: What if? Experiment in thought
• Mind Mapping: Multistage process
– Start with clear statement of problem
– Associations and patterns to get insights and solution
Mind Mapping
 Creative thought into a business
• Imagination: The creative act of originality
• Incubation: Time between idea and breakthrough
• Illumination: The point when the entrepreneur
sees how idea can be turned into a business
• Implementation: Transformation of the idea and
concept into a physical entity
• Verification: Application or test to prove idea has
value, Validation
The Creative Process
 Windows and Corridors of Opportunity
• Window: a time horizon before an opportunity exists before
something else happens to eliminate it
 A unique opportunity, once shown to produce wealth, will attract
competition, and if the industry is easy to enter, it will become quickly
saturated (Paradox 2)
 Every product or service has had an optimal period of time for
commercialization
 Those introduced too early have failed, and those introduced too late
suffered from crowded markets
 Entrepreneurs must therefore not only recognize opportunities, but also
take advantage of them while windows exist, to be successful

• The Corridor principle suggests that opportunities evolve from

entrepreneurs being positioned in similar work or having had
experience with related ventures so that when a window opens, it is
easy for them to move quickly into a new venture
 As a venture becomes expert in one activity, related opportunities
evolve, and many of them are more rewarding than the initial activity
 Examples…
• Bicycles did not become viable products until people
needed them as transportation. When that occurred,
hundreds of bicycle manufacturers rushed to take
advantage of the “Window of Opportunity”
• PCs hit the fast growth curve after VisiCalc spreadsheet
software demonstrated the 'What if' phenomenon
• VisiCalc, was quite successful. IBM Lotus 1-2-3 and
Microsoft Excel Program soon entered the market. By
1986, Lotus had set the industry standard, and then
Microsoft took over.
 More Examples…
• Also interesting to note: Google not the first
search engine nor Facebook in social networking
• Bill Gates of Microsoft was first approached by
IBM in 1980 to program an operating system for
the PC. He turned down the offer. But he realized
the opportunity and began working
independently to create the MS DOS system. This
is a corridor. (CP/M vs MS-DOS)
 According to Jeffery Timmons...
Critical factors for start-ups:
1. Opportunity
2. Entrepreneur (and Team)
3. Resources
 The Timmons Model of the
Entrepreneurial Process
Communication

Opportunity Resources
Business Plan
Fits and Gaps
Ambiguity
Exogenous Forces
Creativity
Leadership
Team
Uncertainty Capital Market Forces

Founder (Timmons, 2000)

 Course Outcomes
After completing this course, you should be able to:
1.Explain the nature of entrepreneurship
2.Analyze the environment and develop an
entrepreneurial perspective by recognizing
entrepreneurial opportunities
3.Know the components of a business model canvas and
a business plan
4.Identify the sources of capital for a business venture
5.Set up a business organization
123
The Entrepreneur’s Environment
Political

Industry

Ecological Economic

The Venture

Environment

Sociodemographic Technological

124
 The Entrepreneur’s World
• III. Core (control)
– The business and its resources
• II. Industry (influence)
• I. Macro-environment (no control?)
– 1. Political
– 2. Macro-economy
– 3. Technology
– 4. Socio-demography
– 5. Ecology
125
 Environmental Analysis
• Scanning: to detect change
– Early warning system
– Sources:
• Journals, news, reports
• Professionals, professors, consultants

• Monitoring: to track development

– More focused than scanning
– Specific periodicals, experts and focused groups
126
 Environmental Analysis
• Forecasting: to project the future
– Series of techniques to provide insight to the future
• 5 step process:
– Choose variables critical to new venture
– Select sources of data for forecast
– Evaluate forecasting techniques
– Integrate results into plan
– Track and compare… back to 1 if required
• Assessing: to interpret data
– What does it all mean
– Entrepreneurial vision
127
 I. Macro-environment Analysis
• i. Political analysis
• ii. Macro-economic analysis
• iii. Technological analysis
• iv. Socio-demographic
• v. Ecological

128
 I. Macro-environment
• i. Political and Government Analysis
– Stakeholder analysis
• Which groups are friendly and hostile
– Global and International Issues
• Trade Barriers, tariffs, agreements
• Political risk
– National and Regional Issues
• Taxation
• Regulations: licensing, incorporation, patenting
• Incentives
• Government spending
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 I. Macro-environment
• ii. Economic Analysis

• Macroeconomy: The total of all goods and

services produced, distributed, sold and
consumed.

• Global, national and local levels

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 I. Macro-environment
• ii. Economic Analysis

– Structural change
• Permanent shift of resources from one segment to another

– Cyclical change
• Periods of growth and contraction
• Procyclical: with the economy
• Counter-cyclical: against the economy
• Acyclical: not affected
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 I. Macro-environment
• iii. Technological Analysis

– Pure Invention
• Different from existing technologies or products
• Monopoly at first
• If useful, becomes industry
– Process Innovation
• Purpose: to create efficiency
• Source of entrepreneurship

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 I. Macro-environment
• iv. Socio-demographic Analysis

– Demography: the study of trends in human

population
• Size, subgroups, age, distribution by territory, ethnicity,
income and wealth
• Form the essence of consumer demand, industrial capacity
and purchasing power

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 I. Macro-environment
– iv. Socio-demographic Analysis
– Social Values and Trends:
– Value: “Conception, explicit or implicit, distinctive of an
individual or characteristic of a group, which influences
the selection of available means and ends of action.”
– Choices we make reflect our values:
• Political
• Regulatory
• Social
• Economic
• Religious

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 I. Macro-environment
• v. Ecological Analysis

– Focus towards sustainable development:

• “Meeting the needs of the current generation without
compromising the needs of future generations”.
• Pollution and waste disposal
• Recycling
• Protection of wildlife
• Workplace safety and hazards

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 Entrepreneurial Opportunities in
the Macro-environment
• The unexpected (good news/bad news)
• The incongruous (how things ought to be)
• The process need (technological breakthroughs from
point A to point B)
• Industry and market structures (adapt early and make
late adaptors obsolete)
• Demographics (predictable or unpredictable)
• Changes in perception (changes in attitude/behavior)
• New knowledge (or convergence e.g. computer)
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New Knowledge based on Convergence
– 17th century: Binary Theorem
• All numbers expressed by two numbers only: 0 and 1
– 19th century: Charles Babbage
• Binary theory applied to a calculating machine
– 1890: Herman Hollerith
• Punchcard invented to convert numbers into instructions
– 1906: Audion tube invented to create era of electronics
– 1910-13: Bertrand Russell & Alfred Whitehead
• Symbolic logic to express all logical concepts as numbers
– World War I: Concept of programming and feedback
antiaircraft guns
– 1918: All knowledge available to develop a computer
– 1946: First computer becomes operational
 SEECS ENTREPRENEURS
• Ahsan Tahir BESE-1
• Techlets
• Artificial Intelligence &
Big Data Driven Media
Monitoring
• www.techletspk.com
 What is an Industry? (1/3)
• Any grouping of businesses that share a
common method of generating profits
• The manufacturing (making) and selling of a
particular type of goods and services
• Industries contain those companies that operate
along similar “lines of business”
• A large system, in which products or goods are
manufactured and sold in a systematic and
mechanical method
 What is an Industry? (2/3)
• A horizontal array of firms at a particular stage
or level in a marketing channel. The firms in the
same industry are rivals and competitive
relationships exist among them
• “Industry” as a category that describes business
activities: unique categories that reflect different
methods used to produce goods (industries are
described and classified by the primary activity
or product)
 What is an Industry? (3/3)
• Defined by the (similar) ways of production
• Defined by the actors (firms) competing /
strategizing against each other
• Defined by a market (customers)
Location of an industry
 II. Industry Environment
• i. Industry Analysis
– Determine why industry is attractive
• Above normal profits
• High growth
– How to achieve high profitability:
• Differentiation Strategy (customer willing to pay high
price)
• Low Cost Strategy (produce at a lower cost)
– Focus strategy implies either of the above strategy
on a sub-segment of a market
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 II. Industry Environment
• Porter’s Model
• 5 forces determine the industry’s margins
– a. Buyer power
– b. Supplier power
– c. The threat of substitutes
– d. Threat of new entrants (Entry barriers)
– e. Rivalry between firms
Porter’s Five Forces Model
 II. Industry Environment
• a. Buyer or Customer Power
– Concentration: Sellers + => Prices -
– Costs: Price + => Buyers more sensitive
– Similar products => buyer has more power
– Switching costs - => buyer is powerful
– Full Information => buyer is powerful
• b. Supplier Power
– Concentration: Sellers - => Sellers have power
– Substitutes - => Sellers have more power
– Switching costs + => sellers have power
– Quality : Component critical to success of industry
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 II. Industry Environment
• c. Threat of substitutes
– Entrepreneur first to enter. Others will follow
– Substitutes will diminish returns
– Usually entrepreneur has time to maneuver before
threat is recognized

147
 II. Industry Environment
• d. Barriers to Entry (Threat of New Entrants)
– Paradox of entrepreneurship
• Structural Barriers
– Capitol requirements, distribution channels etc
• Retaliatory Barriers
– Large firms react when:
» Reputation is at stake
» Core business is attacked
» Industry is slow growing
– Actions:
» Price cutting
» Legal challenges
148
 II. Industry Environment
• e. Rivalry between firms
• Likely to happen due to:
– Large number of competitors
– Slow industry growth
– High fixed costs
– Commodity products

149
 II. Industry Environment
• ii. Competitor Analysis

– Identifying Competition
• Ask customers – current or potential
• Look up business directories and public databases

– Ranking competitors
• In terms of
– PROFIT

150
 Porter’s Model
• https://www.youtube.com/watch?
v=9CHZ44_at6I