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Sir Richard Bransonon Entrepreneurship
Syllabus Coverage
• Introductiono Meaning & Definition of Entrepreneurship, Entrepreneur & Enterpriseo Differences between Entrepreneurship, Entrepreneur & Enterprise
• Functions of Entrepreneuro Role of Entrepreneur for Economic Developmento Factors influencing Entrepreneurshipo Pros and Cons of being an Entrepreneur
• Differences between Manager and Entrepreneuro Qualities of an Entrepreneuro Types of Entrepreneur
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Learning objectives
• Who is an entrepreneur ando What are his /her functions, qualities,
contributiono What are the types of entrepreneurso Distinction between a manager and
an entrepreneuro Highs / lows of being an
entrepreneur
• What is entrepreneurshipo What influences entrepreneurshipo What are entrepreneurial
competencies and how can the be developed
• Entrepreneur Vs. Entrepreneurship Vs. Enterprise
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Entrepreneur
• Credit for coining the term, generally, goes to theFrench economist Jean-Baptiste Say,o But in fact the Irish-French economist Richard
Cantillon defined it first
• Cantillon defined the term as a person who paysa certain price for a product and resells it at anuncertain price: "making decisions aboutobtaining and using the resources whileconsequently admitting the risk of enterprise."
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Entrepreneur is originally aFrench word - anindividual who organizesor operates a business orbusinesses.
The word first appeared inthe French dictionaryentitled "DictionnaireUniversel de Commerce"compiled by Jacques desBruslons and published in1723.
Definitions of “Entrepreneur”1734: Richard Cantillon Entrepreneurs are non-fixed income earners who pay known costs of production but earn
uncertain incomes
1803: Jean-Baptiste Say An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.
1934: Schumpeter Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.
1961: David McClelland An entrepreneur is a person with a high need for achievement. He is energetic and a moderate risk taker.
1964: Peter Drucker An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.
1975: Howard H. Stevenson (HBS)
Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.
1975: Albert Shapero Entrepreneurs take initiative, accept risk of failure and have an internal locus of control.
2013: Ronald May An Entrepreneur is someone who commercializes his or her innovation.
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Definitions of “Entrepreneur” (Contd.)
• The common elements are:o Innovationo Risk takingo Commercialization o New products / services
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Relevance of an entrepreneur
• The need arises from the need to speed up and activate the factors of productiono Leads to economic growth
o Develops backward and tribal areas by creating employment opportunities
o Improves the standard of living of the weaker sections of the society
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Relevance of an entrepreneur
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1
8
9 2
3
6 5
1 Commercializing new inventions, develop technologies
2 Re-structuring andtransforming the economy
3 Breathe vitality into large organizations, serve the government
4 Reduce ossification of social institutions, and concentration of economic power
5 Make markets more competitive, stabilise staticand dynamic market efficiency
Stimulate redistribution of wealth, income and
political power
6
Improve social welfare of a country by harnessing
overlooked talent
7
Create new markets andfacilitate international
expansion
8
Help in job creation, raise productivity
9
Functions of an entrepreneur
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PUBLIC RELATIONS
PROJECT DECISION
RAISING FINANCE
PRODUCTION PLANNING
MARKET RESEARCH
RISK BEARING
INNOVATION
MANAGERIAL FUNCTIONS
Characteristics of a successful entrepreneur
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Hard work Self confidence
Ambition Independent
Innovation Involvement
Intelligence Initiative
Creativity Business secrecy
Foresight Accepting challenges
Communication ability Risk taking
Technical knowledge Motivating
Administration & Organizational capability
Determination & perseverance
Public relations Goal oriented
Qualities of an entrepreneur
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Motivation Dynamism Self confidence Ambition
Creativity Aptitude Intelligence Stress taking
Vision Adaptability Knowledge Clarity
Organising ability Will power Commitment Opportunity explorer
Pride Determination Instinct Integrity
Risk taking Tactfulness Foresight Dedication
Optimistic
Types of entrepreneurs
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Aggressive assemblage of ideasDevelops a business by novel combination of factorsINNOVATIVE ENTREPRENEUR
The adoptive entrepreneurImitates other successful modelsIMITATIVE ENTREPRENEUR
Timid and cautious Imitates other models carefullyFABIAN ENTREPRENEUR
Restricts entrepreneurial activity to one or two innovationsDRONE ENTREPRENEURClarence H Danhof
Types of entrepreneurs (contd.)
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Little revolutionary, follows heuristicsEMPRICIAL ENTREPRENEUR
Qualified, well informed and introduces revolutionary changesRATIONAL ENTREPRENEUR
Timid, well informed and introduces some new things after seeking advice and services of expertsCOGINITIVE ENTREPRENEUR
Arthur H. Cole
Types of entrepreneurs (contd.)
AREA Urban Rural
GENDER Male Woman
TECHNOLOGY Technical Non-technical Professional
BUSINESS Business Trading Industrial Corporate Agricultural
GROWTH Growth Super-growth
MOTIVATION Pure Induced Motivated Spontaneous
OWNERSHIP Private Public
DEVELOPMENT First generation Modern Classical
OTHERS Inherited Forced Immigrant
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Entrepreneur Vs. Manager
Areas Entrepreneur Manager
Status Owner of the enterpriseShould be able to perform all functions
Works for an enterpriseAppointed to manage
Risk Bears all risks No, or low risks
Motive Personal or social gain Renders service in lieu of compensation
Rewards Rewards for risk bearing Salary as reward for work
Innovation Is the innovator Is the executor
Qualifications Should possess entrepreneurial qualities
Should possess specific qualification for the job
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The entrepreneur differs from the professional manager in that he undertakes a venture for his personal gratification. Usually!
Women entrepreneurs
“A small scale industrial unit / industry relatedservice or business enterprise, managed by oneor more women entrepreneurs in proprietaryconcerns, or in which she /they individually orjointly have a share capital of not less than 51%as partners /shareholders / directors of privatelimited company / members of corporatesociety”
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Ekta KapoorBalaji Telefilms
Shahnaz HussainShahnaz Herbals
Swati PiramalPiramal Healthcare
Kiran MazumdarShawBiocon
Amira ShahMetropolis Healthcare
Sairee ChahalFlexi-moms
Problems of women entrepreneurs
Problem of finance Low risk bearing capacity Limited mobility
Male dominated society Family involvement Competition
Lack of education Scarcity of raw materials Sexual harassment
Shortage of power High cost of production Recession
Initial hesitation and inhibitionLack of experience and information
Lack of freedom
Lack of encouragement False sense of security Fear of failure
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Pros and Cons of being an entrepreneur
Pros (Advantages) Cons (Disadvantages)
Love for doing independent business Risks
Self employment Time keeping
Source of income Long hours
Alternative wage employment Making decisions
Being one’s own boss Stress
Freedom
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Definitions of entrepreneurshipSource Definition
Knight (1921) Profits from bearing uncertainty and risk
Schumpeter (1934) Carrying out of new combinations of firm organization—new products, new services, new sources of raw material, new methods of production, new markets, new forms of organization
Hoselitz (1952) Uncertainty bearing...coordination of productive resources... Introduction of innovations and the provision of capital
Cole (1959) Purposeful activity to initiate and develop a profit-oriented business
McClelland (1961) Moderate risk taking
Casson (1982) Decisions and judgments about the coordination of scarce resources
Gartner (1985) Creation of new organizations
Stevenson, Roberts, & Grousbeck (1989); The pursuit of opportunity without regard to resources currently controlled
Shane & Venkataraman (2000) A field of business seeks to understand how opportunities create something new…
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…
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Definitions of entrepreneurship (contd.)
• The common elements are:o Creativity and innovationo Resource identification, acquisition, and
marshalingo Economic organization
o Opportunity for gain (or increase) under risk and uncertainty
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Forbes 20 most promising entrepreneurs in Africa 2014Christian Ngan Senai Wolderufael Eric Kinoti Nick Kaoma Ronak Shah
CameroonMadlyn Cazalis(bio cosmetics)
EthiopiaFeed Green Ethiopia Exports Company (spice blends)
KenyaShades System East Africa(tenting)
South AfricaHead Honcho Clothing(apparel)
KenyaKronex Chemicals Ltd(household cleaning supplies)
Patrick Ngowi Heshan de Silva Julie Alexander Fourie
Sangu Delle Uche Pedro
TanzaniaHelvetic Group(solar power systems)
KenyaDSGVenCap(travel insurance with bus tickets)
South AfricaiFix(Apple, samsung phone repair)
GhanaGolden Palm Investments(early stage VC)
NigeriaBellaNaija(new media)
Bankole Cardoso Isaac Oboth Barclay Paul Seth Akumani Jonathan Liebmann
NigeriaEasyTaxi Nigeria(Taxi mobile app)
UgandaMedia256(telly production)
KenyaImpact Africa Industries(low cost sanitary pads)
GhanaClaimSync(claims processingsoftware)
South AfricaPropertuity(real estate)
Issam Chleuh Tebogo Ditshego Tunde Kehinde Adii Pienaar Zaheer Cassim
MaliAfrica Impact Group(socially relevantinvesting)
South AfricaDitshego Media(PR firm)
NigeriaJumia Nigeria(online retailer)
South AfricaWoothemes(Wordpress themes, plugins)
South AfricaOne Way Up Productions(telly production)
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Of the next 10, there are
5 Kenyans,1 Nigerian,
2 Egyptians,1 South African,
and 1 Cameroonian
Entrepreneurship – influencing factors
South Africa, 7
Kenya, 9
Nigeria, 4
Egypt, 2
Ghana, 2
Tanzania, 1
Cameroon, 2
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Entrepreneurship – influencing factors
South Africa, 7
Kenya, 9
Nigeria, 4
Egypt, 2
Ghana, 2
Tanzania, 1
Cameroon, 2
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ECONOMIC FACTORSCapitalLabourRaw MaterialsMarket
NON-ECONOMIC FACTORSSocial ConditionsSocial MobilityMarginalitySecurity
PSYCHOLOGICAL FACTORSNeed AchievementWithdrawal of status / respect
OTHER FACTORSAvailability – tech know howState of art / cultureExistence of marketGovernment policies
Entrepreneurship
• Entrepreneurship, is the control and deployment of resourcesto create an innovative economic organization (or network oforganizations) for the purpose of gain or growth underconditions of risk and uncertainty.
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INPUT
Resources
OUTPUT
Innovative Economic Organization
PROCESSControl & Deployment
GAINand / or
GROWTH
UNCERTAINTY
RISK
Entrepreneurship – creation & innovation
• Schumpeter’s categories of “new combinations” are:o A new product or service offered?o A new method or technology employed?o A new market targeted and opened?
o A new source of supply of raw materials and resources used?
o A new form of industrial organization created? (rarest of all ?)
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Entrepreneurship – then and nowThen Now
Small-business founderBossLone RangerSecretiveSelf-reliantSeat of the pantsSnap decisionsMale ownership
True entrepreneurLeaderSocial and business networkerOpenInquisitiveBusiness planConsensusMixed ownership
Idea Execution
Knows the trade Knows the business
Automation Innovation
Born with it Made with practice
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Entrepreneurial competencies
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The characteristics possessed by an entrepreneur which result insuperior performance are called “Entrepreneurial competencies”
Collection and retention ofinformation in one’s mind.Entrepreneur also needsskills to translateknowledge into action
Ability to translate andtransform a system.Both knowledge and skillsare needed.
Tool which helps in activatinggoals. The concern ofachievement of goals leads aperson to perfection.
Knowledge
Skill
Motive
Entrepreneurial competencies (contd.)
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GOAL
ORIENTED
INDEPENDENT
COMMITTED
EFFECTIVE
STRATEGIST
PROBLEM
SOLVER
SELF
CONFIDENT
INITIATIVE
INFORMATION
SEEKER
OPPORTUNISTIC
QUALITY
CONSCIOUS
PERSISTENCE
EFFICIENCY
SEEKER
ASSERTIVE
EMPLOYEE
WELL WISHER
PERSUASIVE
PLANNER
Developing competencies
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Competencies thru EDPs
Self assessment
Feedback Practice
Discussion
• What is the relationship between an entrepreneur, entrepreneurship and an enterprise?
• What could cause a discord between these three?
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PROCESS OPTIMIZATION TRANSFORMATION
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DEVELOPMENT
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RETAIL / CONSUMER PRODUCTS
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