PB 201 : Entrepreneurship

PB 201 : ENTREPRENEURSHIPIntroduction to Entrepreneurship

Chia Soi Lee1Definition of EntrepreneurAn individual who takes moderate risks, bring innovation / starts something new.

A person who has possession of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome.

Entrepreneurs plan, persuade, raise resources, and give to birth to new ventures.

2Definition of EntrepreneurshipDescribing what entrepreneurs do.

Not restricted to business and profit.

Involves bringing about change to achieve some benefit. This benefit may be financial but it also involves the satisfaction of knowing you have changed something for the better.

Act of creation requiring the ability to recognize an opportunity, shape a goal, and take advantage of a situation.

3Concept of Entrepreneurship One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.

The process of seeking business opportunities under conditions of risk.

Process of creating something new of value by devoting the necessary time and effort, assuming the accompanying financial.

4An entrepreneur should be motivated, confident, responsible and diligent.

Should also be an information seeker, risk-taker, takes personal initiative and possesses mental and physical fitness.

Be knowledgeable in law, management, economics, accounting, values, business and culture as well as project management. Concept of entrepreneurship 5Major skills :decision-makingproblem solvingnegotiation and communication creativityteam workmanagementtechnical skillConcept of Entrepreneurship 6Differences Between an Entrepreneur and Small BusinessmanEntrepreneurSmall BusinessmanTimeUnlimitedLimitedNature of jobFlexibleRigidDecision-makingMake own decisionsFollow the decisions made by othersEffort and commitmentContinuousLowRisk-takerModerateLowGoalMaximizes self-potential by utilizing available opportunitiesSolely for profit maximization7Responsibilities of Entrepreneur toward:CustomersSociety / communitySuppliersStaffCompetitorsCountry 8Competencies of EntrepreneurshipPersonal initiativeSeize opportunitiesEndurance (ketahanan)Information-seekerHigh work qualityCommitment towards work agreementsEfficientSystematic-planning9Competencies of EntrepreneurshipCreative problem solvingSelf-confidenceAssertion (ketegasan)Persuasion (memujuk)Power and authority

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11Loh Boon Siew (Boon Siew Honda)The entrepreneurship spirit showed by the Chinese immigrant was so classic that it granted him entry in the schools curriculum.

The late Boon Siew was the man responsible to start the dealership of Honda motorcycles in Penang, hence it does not come as a surprise when he was often referred as Mr Honda.

With virtually no education, he arrived in Penang at a tender age of 12, backed with little money, and a pinch of determination.

Boon Siew started his job as a mechanic, before making his way to prominence with Honda dealership, and in the process, beat all odds.

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13Tony Fernandes (Air Asia)Tony Fernandes is the man behind AirAsias journey to world domination.

With RM1, Tony bought a defunct carrier, along with over RM40 million in debts, and created Asias most successful budget airline company.

From an ailing company deep in financial trouble, AirAsia went through a remarkable turnaround and made its first profit merely after 7 months of operation.

From thereon, they never looked back and created records after records

14Ananda Krishnan (Astro)With an MBA qualification from Harvard University in America and a Degree from Melbourne University in Australia, its safe to say that Ananda Krishnan is the smartest entrepreneur in the list.

With more than $7 billion of networth, only Robert Kuok is richer than him in this country.

Ananda has a long list of business involvement, that includes Astro, Measat, Maxis, Aircel, TGV Cinemas and many others.

15Steven Sim (Secret Recipe)A modern type entrepreneur, Dato Steven Sim established the popular Secret Recipe cafe and turned it into one of the most successful homegrown franchises.

From merely 6 employees, the company has grown by leaps and bounds and is today backed by more than 300 staff nationwide and still growing.

Secret Recipe today can be found in almost all major cities and towns, and is expanding beyond the international border with oversea operations in Singapore and Indonesia16Azman Hashim (Ambank)A horrible car accident almost wrecked his life, but Tan Sri Azmans never-say-die attitude eventually rewarded him with larger than life achievements.

With good academic background in accounting field, Azman was quick to maneuver his career along the corporate path, joining several established corporations in the process.

Since acquiring Arab Malaysian Bank (now Ambank), Azman is credited for his effort to transform a relatively unkown bank into one of the largest financial institutions in the country.

17E-business (Electronic Business), derived from such terms as "e-mail" and "e-commerce," conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.any business that takes place over a computer network, though the term usually refers to those businesses that exist on the World Wide Web.18Companies are using the Web to :

buy parts and supplies from other companies

to collaborate on sales promotions

to do joint research

Exploiting the convenience, availability, and world-wide reach of the Internet

many companiesImportance19work for yourself - you don't have a boss, all the income you make after expenses goes directly into your pocket.

ability to work where ever and whenever you like, as long as there is internet access.

deal with any problems that arise, and anytime your website is down, you lose money and you don't have a guaranteed paycheck to fall back on.

takes time to keep running, sometimes a lot of time, which cuts into other parts of your life.

Ownership20Costs And Setuplow-cost start-up

easier to start a business: all you need is a computer and access to the internet.

21Speed And EfficiencyOnline ordering systems can process payments and orders in real-time, usually faster.

more accurately and cheaper than human workers.

can store and access any product catalogs and information online.

saving the time and money required to print, and mail or hand them out. certain products, such as music, files, e-books, applications, are hosted and downloaded directly from your site, which means no physical inventory or shipping costs and delays.

22CompetitivenessLow startup costs mean that new businesses can be just as competitive and responsive as those that have been around for years.

The online customer is more focused on getting the product or service quickly and accurately rather than what the website looks like or who the business is.

23Securitycontinued improvements in e-commerce security are whittling away at the danger.

It is still something to pay attention to, however, because if a virus or hacker attacks you, you could lose important data, customers and might even have the site come down.

time required to learn about good security measures, including digital signatures and encryption. If you don't take that time, the damage could end up costing you even more.

24Removes location and availability restrictions - An online business has a global marketplace. Information about the product can be accessed from anywhere in the world with the help of internet facility. Similarly orders can also be booked online. Therefore users need not necessarily be present in the same location where the company is.

Reduction in time and money spent Many of the traditional business procedures can be replicated with electronic means. Less paperwork is one of the major cost cutting factors in an e-business application. Similarly, cost of paying rent at a physical location can also be saved as compared to cost of maintaining an online site.

Gives competitive advantage Easy access to real time information is an important benefit of the internet, enabling a company to give efficient and valid information. An organisation can gain competitive advantage over those companies that are not there on the internet (onlinebusiness.com, 2006) http://onlinebusiness.volusion.com/articles/e-business-advantages/ (31/12)

Reduced cost of doing business It helps reduce inventory, employees, purchasing cost, transaction costs, order processing costs related with fax, phone calls, etc.

25Trust: People are quite reluctant to buy high value goods or services using electronic medium. The main reasons for such mistrust are security and hesitation to release personal information on the internet.

Security: One of the biggest disadvantages of e-business is security. Other people can easily get personal and financial information of the customers. Most of the companies dont have authentic and secured transaction systems. Many developments have been made to make transactions over the internet safe and secure, like pay pal, secure server, etc.

Technological standards: Technological standards develop quickly in electronic markets. Some of these standards are not secure or have problem of integrating with standards in other areas.

Re-intermediation: One of the problems is difficulty in finding the exact suppliers of goods and services.

Higher number of errors: The amount of mistakes made with customers and suppliers is much more visible in electronic markets (Davies, 2004)

26Advantages

Worldwide PresenceThis is the biggest advantage of conducting business online. A firm engaging in e-business can have a nationwide or a worldwide presence. IBM was one of the first companies to use the term e-business to refer to servicing customers and collaborating with business partners from all over the world. Dell Inc., too, had a flourishing business selling PCs throughout the U.S., only via telephone and the Internet till the year 2007. Amazon.com is another success story that helps people buy internationally from third parties. Hence, worldwide presence is ensured, if companies rethink their business with regard to the Internet.

Cost-effective Marketing and PromotionsUsing the web to market products guarantees worldwide reach at a nominal price. Advertising techniques, like pay per click advertising, ensure that the advertiser only pays for the advertisements that are actually viewed. Affiliate marketing -- where customers are directed to a business portal because of the efforts of the affiliate, who in turn receive a compensation for their efforts meeting with success -- has emerged on account of e-business. Affiliate marketing has helped both the business and the affiliates. Firms have managed to use cost-effective online advertising strategies to their advantage.

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Developing a Competitive StrategyFirms need to have a competitive strategy in order to ensure a competitive advantage. Without an effective strategy, they will find it impossible to maintain the advantage and earn profits. The strategy that the firms can pursue, can be a cost strategy or a differentiation strategy. For instance, till the year 2007, Dell Inc. was selling computers only via the Internet and the phone. It adopted a differentiation strategy by selling its computers online and customizing its laptops to suit the requirements of the clients. Thus, e-business resulted in Dell Inc. managing to capture a chunky segment of the market using the differentiation strategy.

Better Customer ServiceE-business has resulted in improved customer service. Many a time, on visiting a website, the customer is greeted by a pop-up chat window. Readily available customer service may help in encouraging the customer to know more about the product or service. Moreover, payments can be made online, and products can be shipped to the customer without the customer having to leave the house.

Curtailing of Transaction CostThe nature of online business is such that, the costs incurred for every transaction to go through smooth and sound, there is no acting middleman. Websites are sufficiently loaded with directions to facilitate stress-free transactions. Simple and succinct instructional tabs, generally, save the potential buyer from predicaments of any sort. The mode of payment is predetermined, promising security to the customer. Thus, online payments are a no-ho-hum affair. All that you are left with, as the proprietor of your online business, is to download the requirement order and ship it. This demands effort, too; however, the toil is far less than a tangible business profile.

Overhead Costs Are ReducedAn E-business, essentially, is independent of costs that are incurred due to business having a physical entity. Utility bills and other expenses are manageable. You also cut back on costs incurred for hiring personnel and retaining them with competitive incentives topped with abundant facilities. Running an e-business is highly convenient as the proprietor does not require to rent another site to execute the business.

28Disadvantages

Sectoral LimitationsThe main disadvantage of e-business is the lack of growth in some sectors on account of product or sector limitations. The food sector has not benefited in terms of growth of sales and consequent revenue generation because of a number of practical reasons, like food products being perishable items. Consumers do not look for food products on the Internet, since they prefer going to the supermarket to buy the necessary items as and when the need arises.

Costly E-business Solutions for OptimizationSubstantial resources are required for redefining product lines in order to sell online. Upgrading computer systems, training personnel, and updating websites requires substantial resources. Moreover, Electronic Data Management (EDM) and Enterprise Resource Planning (ERP), necessary for ensuring optimal internal business processes, may be looked upon, by some firms, as one of its disadvantages.

Question of SafetyWith the world beguiled by the Internet, it's a fat chance that you are not one among the aficionados. The Internet is second to none, not to oxygen even, to say the least. Well, one breathes Internet. Shoppers act live wires when it comes to online pick and pay. However, with far and many pacing about, there are a few, who twitch at the mention of online payment. Instances of dupery have no intentions of nailing up anytime soon, and pseudo sites merrily mushroom. All the customer can do, is remain in a state of doubt.

Data SecurityTo carry out online transactions, the websites ask for your email address and other contact details. Customers brake at the mention of providing personal details, lest defiling of some nature occurs. Besides, certain sites have a complicated operational structure. Thanks to them, hackers have a job! They fiddle with accounts, meddle with important files, and corrupt data. This, certainly, cannot be termed ethical hacking! Viruses metastasize every second damaging the database, sometimes awarding disastrous repercussions, too.

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Site Integrity"We respect privacy. The information provided by the customer will be protected. We refute dissemination practices as much as you do." Does this statement not tintinnabulate in the ears. Well, we have come across these paraplegic oaths several times. Are they true to their word? May be ... may be not. Some sites are known to trade their customers' details for monetary benefits. The question remains: Can we trust them?

System UpgradationOnce a system is developed, the responsibility of ad hoc upgradation at intervals follows suit. If this does not happen, the site turnover would be poor. To improve site performance and tow in a good share of online customers, keeping up with the advancements is pivotal. Though, some sites may find doing this an unnecessary feature.

Momentary IntangibilityNo matter what e-business may try, their chances of selling products -- like furniture and appliances -- successfully, are bleak. Unless a buyer has the liberty to splurge the kitty, the 'E' sector fights a battle, it absolutely isn't a part of. For instance, if you are planning to buy a sofa set, you would want to sit on it, get the feel of the upholstery used, the finish, and what have you! An online furniture bay, by no means, can consider a proposition like this one. It is better to accept that, there, indeed, are certain things not meant to be bought online due to the spatial creep; for the rest there is e-transaction!

E-business does have its set of pros and cons. However, eventually, every business -- be it partially or completely -- has to change its modus operandi, and adopt e-business practices in order to ensure survival and success30